Ease of Doing Business: How Did Indian States Perform?

We all are aware of the fact that the result of all- India State/Union Territory wise Ease of Doing Business, came with some good news, as well as with some huge disappointments. These rankings were announced on Monday by the Commerce and Industry Minister, Nirmala Sitharaman. It is on the basis of a 340-point business reform action plan, as well as their implementation by the different States, which covers the period from July 1, 2015, to June 30, 2016. All the states that have been promoted should fix a target of maintaining the same rank, even in the next year’s result, while the ones who have been demoted, should prepare itself to give a tough competition, the next year.

Let’s Start With The Good Ones

There are some states that have performed exceptionally well. It is very interesting to note that four out of the seven states have made their path in the top ten, of the ranking index. It is also worthy to note that all these seven states had an implementation rate of over 75 per cent. These low income states include Chhattisgarh, Madhya Pradesh, Jharkhand, Rajasthan, Odisha, Uttar Pradesh and Bihar, with their ranking index as four, five, seven, eight, eleven, fourteen and sixteen respectively. Haryana, Punjab and Uttarakhand that had ranked below Bengal last year have performed better, climbing up from 14th to 6^th, 16^th to 12^th, and 23^rd to 9^th positions respectively.

 It can be clearly seen from the results that while till last year; only seven states were able to implement over 50 per cent of the total reform points. Also, till last year, no state had implementation percentage of over 75 per cent. But this time, things have changed. This year saw 17 states crossing the 50 per cent implementation mark. Also, 16 states have an implementation percentage of over 75 per cent.

Not To Miss The Bad News

Let us start with Tamil Nadu. It has slipped to the 18th rank. Last year, Tamil Nadu stood 12 in this ranking, but this year, it has fallen behind. Even Bihar has done better than Tamil Nadu that is far less industrialized by it, in every means. Also, Karnataka, that is considered as India’s IT capital, had slipped from last year’s 9^th position, to this year’s 13^th position. Because of this IT capital, anyone would think that ease of doing business in Karnataka would be a cake walk. But unfortunately, this was not the case.  Not to forget about Gujarat, even it slipped from the pedestal. Even Arvind Kejriwal’s Delhi has dipped from last year’s 15^th rank to this year’s 19^th. Also, Bengal and Odisha has slipped to rank 15 and 11 respectively.

Significance Of These Ranking Indices

All the States that have implemented less than 40 per cent of a total of 340 reforms were classified as those where a jump start is needed. These States include Kerela, the North Eastern States, Goa, Jammu & Kashmir, and also several Union territories. This year’s ranking showed a very healthy competition among all the States, which is a very important aspect in the government’s agenda, in the path of transforming India. There are some states that have been put in the list of ‘acceleration required’. These states include TN and Bihar as well. The top 12 states had implemented over 90 per cent of the reforms and were classified as ‘leaders’, while others, such as Karnataka, West Bengal, Bihar and Uttar Pradesh were classified as ‘aspiring leaders’.

How Can This Ease of Doing Business Index Improve Further?

We saw a fierce competition breaking out among states on these Ease of Doing Business rankings, with every states contesting at every point. But unfortunately, despite all the efforts put up by Narendra Modi to sweep out arcane rules, and simplify the procedures, India remains one of the other toughest places to do business with. Many significant steps, and also policies were announced in the last 3 years that shows the commitment of the states towards Ease of Doing Business. But, now the time has come where government should focus on implementation criteria. It is usually seen that entrepreneurs are not able to start new units, until and unless they pass through loads of difficulties. These delays in getting approvals are a cause of great concern. Hence, transparent and accountable processes should be implemented.

Even though from Gujarat’s loss, the fact that stands out the most, is Telangana’s rise. Founded in just 2014, this state has risen phenomenally from last year’s 13^th rank. Every state should try to implement the good practices that Telangana had implemented, such as “self certification” to replace NOC.