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Improving ease of doing business: Think tank moots sector-based model

While the World Bank's ranking rests on ease of doing business in Mumbai and Delhi, the DPIIT's is based on reforms done in states

Indivjal Dhasmana  |  New Delhi 

"Much of the investment, much of the decision making, much of what happens in India happens in states and therefore we need to make states easy and simple," Amitabh Kant, Chief Executive, NITI Aayog

Pahle India Foundation, a policy think tank, has come out with its model of ease of doing business, which is different from those compiled by the World Bank and the Department for Promotion of Industry and Internal Trade (DPIIT). The foundation said the rankings by the World Bank and the DPIIT on have not led to discernible differences in the economic conditions at the ground level.

“In fact, studies state that there is an insignificant, even if positive, impact of parameters on either economic growth or on investment per se,” the foundation said in a statement.

While the World Bank’s ranking rests on in Mumbai and Delhi, the DPIIT’s is based on reforms done in states.

However, the foundation in its study said ease of doing business should rest on sectors that contribute most to the revenues of the states concerned. The study, released by Chief Executive Officer Amitabh Kant, proposed an integrated value chain approach so that inter-linkages of these sectors can be tapped to benefit states. It was Kant who initiated ranking of states in terms of ease of doing business as then DIPP secretary (DPIIT was known as DIPP then).

In its case study, the foundation assesses ease of doing business in the integrated sectors of sugar, alcohol beverages and tourism. It said these three sectors created employment for 80 million in India in 2018 and that the integrated value chain approach to ease of doing business will lead to more quantifiable gains and higher contribution of the business sectors to state gross domestic products.

Nirupama Soundararajan, a co-author of the study, said a sector-specific approach to ease of doing business will allow states to implement immediate reforms in sectors that are most crucial to their economy.

Citing an example, she said by merely reducing the time taken to grant approvals for restaurants from nine months to three months, the states will accrue an additional revenue of Rs 38.76 crore, and the sugar millers/distillers will receive an additional revenue of Rs 51 lakh, which could potentially find its way towards payment of dues of sugarcane cultivators.

“The purpose of these calculations is to show that by merely reducing the amount of time for issuing licence, and the government incurs no expense in doing so, there is a significant economic gain,” she said.

Asked as to why only these three sectors are taken into account, she said that is only for case study. For different states, different sectors should be taken into account, she said.

First Published: Sat, September 14 2019. 00:29 IST