IndiaÂ has slipped three positions to 134th spot in the latest ranking onÂ ease of doing business in India , which is topped by Singapore, according toÂ World Bank. Â In this article, we present our views on this , some ofÂ things which the government should do to make India more attractive are, single window clearance mechanism, the funding option should be made easy, employment related incentives, issues between the state and Centre should be resolved In the ‘Ease of Doing Business’ ranking of 189 economies, India has dropped from 131 spot last year whileÂ SingaporeÂ continues to remain at the top.Â Â Singapore is followed by Hong Kong and New Zealand at the second and third positions, respectively.Â Â Other nations in the top ten are United States (4), Denmark (5), Malaysia (6), Korea (7), Georgia (8), Norway (9) and UnitedÂ Kingdom(10).Â Â Â India has been ranked lower at 179 in terms of ease ofÂ starting a business at a time when its government is making efforts to improve the country’s business climate. Last year, based on this criteria India was placed at 177th spot. The ranking of countries are based on various parameters including starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.Â “The ranking on the ease of doing business, and the underlying indicators, do not measure all aspects of the businessÂ environmentÂ that matter to firms and investors or that affect the competitiveness of theÂ economy. “Still, a high ranking does mean that the government has created a regulatory environment conducive to operating a business,” the report said.Â India had earlier expressed concerns about the report. Earlier this year, a World Bank-appointed independent panel of experts, in its review report, had suggested scrapping the ranking system with regard to ease of doing business. Recently, a government-appointed panel had suggested a slew of measures to improve the country’s business climate.The Committee was asked to look into various parameters which affect the regulatory environment for doing business in India and make appropriate recommendations. The Committee came up with following recommendations: Firstly, the committee upheld that keeping in view the recent changes in trade and commerce, the government should examine all the laws and rules that can make India a better place to do business. Moreover, the use of civil courts for resolving contractual disputes should be discouraged and arbitration should be encouraged. Secondly, the Committee states that new regulations should not be knee-jerk response to a specific situation or context. The Committee recommends that a regulatory review authority should be set up which would carry out a regulatory impact assessment and should determine the effort and the cost involved and review the need for the regulation and cost thereof. Regulatory authorities should not be dependent on government for financial supports. It should also self evaluate itself in every 3 years. The appointments for the regulatory authority should be made by way of a transparent procedure. The members should appear before an appropriate Parliamentary Committee once in six months to report on the developments that have taken. Moreover, for drafting a law there should be two levels of consultation process to be carried out, one, stakeholdersâ€™ consultation process and two, revised draft consultation. The regulatory impact assessment should precede the public consultation process. Most importantly, it wants to ensure that the content of the regulation should be simple and should have more clarity so as not to have too many interpretations. It also recommends a provision for advance ruling. Also, the committee recommends the setting up of over-arching body as there exists lack of coordination in terms of policy formation and statutory enforcements among the Central and the State Governments. It also feels that it is necessary to have a single window mechanism to help small business entities and a hassle free tax payment regime. It has been recommended to each State to appoint a nodal person and a nodal office which can be contacted by people for obtaining information on procedural and substantive conditions for setting-up a business.
Taxmantra.com view on this issue
If you analyse the recommendations of Damodaran committee you will realize that it has not come up with anything new. In our opinion, following things should be taken care of so that India is viewed as a better place to do business: Firstly, there should be a single window clearance mechanism in which clearance should be sought from one person instead of approaching different persons to seek clearance. Secondly, the funding option should be made easy, it should be easy to procure funds for business. Also, new businesses should be motivated to employ more people by giving employment related incentives. And finally, the tax laws should be stable. All the issues between the state and Centre should be resolved so that the assessee is not under any sort of confusion whether a particular provision of Act is applicable to him or not. For instance, GST is being lingering for years only because states and centre could not agree on tax revenue mechanism. Thanks for reading for this article. Please feel free to write to us,Â We want to hear it all!Suggestions? Complaints? Feedback? Requests?Â at [email@example.com] or call us at +91 88208208 11. We would be more than happy to assist you.