India is placed in the 142nd position among 182 countries and on the account of this, World Bank said that India is a difficult place to do business and that the country needs various reforms to improve its ranking in the global 'Doing Business Index'.
World Bank released ranks of states on ease of doing business under the title 'Assessment of State Implementation of Business Reforms' which was prepared in association with the Department of Industrial Policy and Promotion (DIPP), Ficci, CII and KPMG.
India is placed in the 142nd position among 182 countries and on the account of this, World Bank said that India is a difficult place to do business and that the country needs various reforms to improve its ranking in the global 'Doing Business Index'.
What is 'Ease of Doing Business'?
DIPP reports reveal that by 2020, India will be home to 1.35 billion people and out of the lot, 906 million will be of working age. Hence, to sustain India's growth, these 906 million people will need jobs and it can be provided only if manufacturing and service sectors in India have a sustainable growth.
Therefore, to achieve this, in December, 2014, a workshop was organised namely 'Make in India' where state governments agreed to a 98-point action plan for business reforms for all States and Union Territories.
Prime Minister Narendra Modi had requested the World Bank Group to support the efforts made by India and increase manufactured exports.
The main objective of the action plan was to target at increasing transparency and improve the efficiency and effectiveness of government's functions and services for doing business in India.
The methodology of 'Ease of Doing Business':
The main areas that were put in mind to assess the states in 'Ease of doing business' are:
1. Setting up a business.
2. Allotment of land and obtaining construction permit.
3. Complying with environment procedures.
5. Complying with labour regulations.
6. Registering and complying with tax procedures.
7. Carrying out inspections.
8. Enforcing contracts.
Along with these, Employee State Insurance Corporation (ESIC) and Employees' Provident Fund Organisation (EPFO) as well as the provision of gas connections were also inspected.
According to the DIPP report, States have made good progress in terms of tax reforms which includes mandating e-registration for VAT and CST. It includes online payments and filing of tax returns.
Construction permits and land allotments have also done fairly well in terms of implementing reforms.
In terms of setting up a business, Punjab stood first with 81.48%, followed by Andhra Pradesh with 78.57%.
In terms of complying with labour regulations Jharkhand was placed first with 100% followed by Gujarat at 76.47%.
Madhya Pradesh was placed first in allotment of land and obtaining construction permits with 72.73%.
In complying with environment procedures Gujarat was placed first with 100% followed by Andhra Pradesh with 85.19%.
Maharashtra was placed first with 88.89% in obtaining infrastructure related utilities.
Coming to registering and complying with tax procedures Karnataka stood first with 97.73% followed by Andhra Pradesh with 90.63%.
In terms of carrying out inspections, Jharkhand with 72% was placed first.
Maharashtra was placed first again in terms of enforcing contracts followed by Madhya Pradesh.
Here are the top 10 States in 'Ease of Doing Business':
1. Gujarat: Gujarat emerged as number 1 state in ease of doing business with 71.14% according to World Bank reports.
The state introduced an Investor Support System to facilitate in ascertaining suitable locations for setting up an industry. The Investor Facilitation Portal provides details and timelines for various services across government departments.
To enhance labour reforms, the state approved an online web application to register. Integrated inspection procedures were also enabled for inspection and timely submission of reports.
In terms of tax reforms, an online system is enabled by the state government for VAT, CST and professional tax related services. Along with this, an end-to-end online system has been implemented for consents and authorizations with fee calculation functions.
2. Andhra Pradesh: Andhra Pradesh is placed second with 70.12% in ease of doing business.
A single Desk Policy 2015-20 has been formulated to create a facilitative ecosystem which provides all clearances and approvals within 21 working days to set up an industry, according to DIPP reports.
The state offers an online single window portal with clearly defined timelines for application filing, tracking and approvals.
Online system has been implemented for registrations and renewals of various laws.
In terms of land a web system has been enabled to identify industrial land, connectivity and infrastructure. An online system for tax returns fling has also been enabled.
3. Jharkhand: In ease of doing business, Jharkhand has been placed 3rd with 63.09% where the state has put up an online portal which allows online registration, licencing and renewal under various Labour Acts.
Placed first in labour reforms with 100%, the state has online portals for e-registration and e-stamping of property.
Tax returns have also been computerised which allows e-registration of VAT and CST, professional tax and entertainment tax.
The state has also developed an online management system for key statutory clearances related to the State Pollution Control Board.
4. Chhattisgarh: With 62.45% Chhattisgarh has been placed 4th in ease of doing business.
The State has enacted The Chhattisgarh Lok Sewa Guarantee Act 2011 and Chhattisgarh Audyogik Nivesh Protsahan Adhiniyam, 2002 which covers all departments, and mandates time bound delivery of services.
In terms of tax reforms, the state government has implemented an online payment system with same day registration for VAT. Another online system has been introduced to allocate inspectors to check various labour laws where the inspections will be carried out once every 5 years with prior notice.
Building plans and environment related consents will also be assessed through online mechanism.
In terms of enforcing contracts, the state has filled up more than 80% of vacancies for judges in district courts, according to DIPP reports.
5. Madhya Pradesh: Madhya Pradesh is placed 5th with 62%.
The state introduced an online application where status of construction permits are tracked and drawings are scrutinised. The portal allows people to upload remarks, reports, photographs through mobile. This even enables calculation of fees and online payments.
Over 540 industries have been identified to receive streamlined PCB clearance procedures along with online system that allows fee calculation, online payment and downloading digitally signed certificates in terms of environment reforms, according to the DIPP reports.
In terms of infrastructure only 2 documents are required for electricity connections. Pollution control certificates are not required.
6. Rajasthan: With 61.04%, Rajasthan has been placed 6th in ease of doing business.
The Government of Rajasthan has introduced a Single Window Clearance system which aims to act as a single point of contact for all application and clearances. An online portal is provided to track application forms & clearances.
According to the DIPP reports, the portal also tries to provide information to investors on relevant rules, acts, policies, licencing rules and any other document required for engaging in business.
7. Odisha: Odisha stands at 7th position with 52.12%. The Government of Odisha provides e-registration of VAT, CST, Professional and Entry tax. In terms of labour laws the government allows self-certification.
Under The Odisha Right to Public Services Act, 2002, the government provides clear timelines to get various clearances that is required for an industry or business.
An online portal is enabled to manage approval and authorisation of environmental reforms.
8. Maharashtra: With 49.43%, Maharashtra stands at 8th position.
Maharashtra government has implemented online systems for tax related processes and a single window is commissioned to address queries.
Maharashtra Industry, trade and investment facilitation cell (MAITRI) is expected to provide guidance to investors through hand-holding support, an online portal and management of various departments and agencies, according to the DIPP reports.
The government has also digitised all land banks in the state and procedures and timelines have been published for land allotment.
9. Karnataka: Karnataka stands at 9th position with 48.50%.
To tackle tax reforms, the Karnataka government has introduced an online platform for registration, filing and payment of taxes. The government also provides with 669 services of more than 50 departments and institutions.
The state also has constituted a single window clearance mechanism as per Karnataka Industries (Facilitation) Act, 2002 for approvals of investment proposals in the State.
10. Uttar Pradesh: The tenth state in ease of doing business is Uttar Pradesh with 47.37%. The state provides one-stop solution to enclose all the services offered by the department.
In terms of starting a business, the state government has implemented an online system for filing EM1 and EM2. To ease infrastructure reforms, the government has reduced the required documents for electricity connections to 2. Online portals have been implemented to apply for filing and payments under environment reforms and to pay taxes.
Here is the list of all the states with their rank and scores according to World Bank reports:
The main motive of this report according to the DIPP is to bridge gap between States and to encourage them to share knowledge and information regarding business practises.
(With Agencies)
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