UP's star performance in ease of doing biz rankings raises questions

UP's star performance raises questions

The Centre’s Business Reform Action Plan (BRAP) is a constructive exercise that began in 2015 and ranks states and Union Territories on the ease of doing business. The rankings in the previous editions that have been published so far combined specified metrics of business process reform (whether a state had single-window clearance, for example) with user feedback and mostly reflected general perceptions with minor surprises. The 2019 edition, however, appears to have surpassed expectations with Uttar Pradesh (UP) dramatically zooming 10 points up the rankings to second place even as Gujarat slipped five places to number 10, Haryana 13 places to number 16. That UP, which ranged between 9 and 12 in earlier rankings, outperformed these states as well as, say, Delhi, is remarkable by any yardstick. At least part of the doubt about UP’s performance concerns the fact that this edition’s feedback is not strictly comparable with earlier BRAPs because it is driven principally by user feedback, a methodology that increases the element of subjectivity and could potentially be open to management, and some amount of self-declaration by states of reforms they have undertaken.

States such as Odisha, which slipped 15 places in the rankings, have complained that they were unable to complete surveys in time for the report. It is possible, however, that UP’s transformation under the vigilante-turned-administrator Chief Minister Yogi Adityanath is not unlikely. The state says it has implemented 186 out of 187 reforms suggested by the Department for Promotion of Industry and Internal Trade (DPIIT) and its “Nivesh Mitra” single-window portal, which is monitored by the chief minister’s office, has cleared 94 per cent of the no-objection certificate applications. In a famously lawless state, Mr Adityanath has taken a rough and ready approach with his controversial endorsement of “encounter” killings of alleged criminals, and his attempt to abolish labour laws for about three years to revive post-lockdown economic activity. This unique tactic plus the considerable influence Mr Adityanath wields within the ruling dispensation in New Delhi appears to have persuaded big-ticket names such as PepsiCo and Microsoft to invest in the state. Mr Adityanath’s expressway plans also appear to be on track and he has expanded the ambit of the state’s ambitions to a defence corridor project and 12 new airports.

The question is whether all of this amounts to the kind of fundamental turnaround that the latest BRAP report suggests. Doubts linger, given that the state remains unstable in terms of law and order in spite of high-profile encounters, has abysmal social sector metrics — illiteracy is high and the lack of skilled workers is a major impediment — an ailing micro, small and medium enterprises sector and much of the development is skewed towards regions bordering the National Capital Region. There are also questions over whether the top-down approach can substitute for root-and-branch reform of the state’s bureaucratic and judicial apparatus, which is not known for probity or efficiency. Finally, UP’s outstanding performance in the latest BRAP rankings does not reflect in investor intentions. In 2019, according to the data from the Secretariat of Industrial Approvals, the state attracted 147 investment proposals worth Rs 16,799 crore. This is respectable but significantly behind Gujarat (433 proposals worth about Rs 3.44 trillion), or Maharashtra (410, more than Rs 1.15 trillion). All of this points to the need for a more robust methodology.