The Hindu Business Line : Starting businesses in India easier now: IFC report

The latest report of the IFC and the World Bank has drawn a comparatively good picture of India as far as starting business in the country is concerned by saying it is easier to start and operate business now than it was three years ago in many large Indian cities. Not surprisingly, the cities at the bottom of the list are Kochi and Kolkata.

A look at the list of projects announced and currently under implementation in Kerala would reveal that the assessment of the IFC may not be far from the truth. For instance, the LNG terminal under implementation in the Puthuvypeen Island in Kerala by Petronet LNG Ltd (PLL), which is scheduled to be commissioned by early 2012, is a standing testimony to how projects are delayed in execution in the State.

This project was sanctioned along with the Dahej terminal in Gujarat, which was commissioned long back, and its expansion is also understood to have been completed.

At last, this project is going to be translated into reality, while several others announced by the State continue to remain non-starters.

The IFC report says it is easier to do business in Ludhiana, Hyderabad and Bhubaneswar, while it is more difficult to start and operate businesses in Kochi and Kolkata.

KERALA-SPECIFIC ISSUES

This stigma has been haunting Kerala in general and Kochi in particular probably because of the excessive politicisation of everything. To make things more worse is the bureaucracy, ego clashes and the style of functioning.

A large number of projects were conceived and announced by the successive governments but none of them has been implemented so far for obvious reasons. Such projects are: SmartCity Kochi Project, Infopark/Technopark expansion and other district level IT projects, Kuttanad and Idukki agricultural rehabilitation packages, development of inland waterways and State canals, Vizhinjam International Container Terminal, Kochi Metro Rail project, Kannur Airport and expansion of other airports, Railway Coach Factory (Palakkad), Construction of roads/by-passes, Kasaragode mega power project, JNNURM projects, KSUDP projects, Private/ PPP industrial/commercial projects, and Railways development/ rail over-bridges.

A senior technocrat and management expert has told Business Line that each of these projects suffers problems of one kind or the other that have to be addressed to facilitate quick implementation.

Revenue related hurdles in the absence of prudent policy and political will, he said, are holding back several projects in the State. A policy needs to be formulated with regard to allocation of land to private sector projects. Also, effective measures have to be devised to retain land held by public bodies under government ownership, which may only be leased to joint ventures, he said.

In the case of projects such as Kannur Airport, Rail Coach Factory, Palakkad and district level IT parks allocation of land needs to be expedited by assigning the task to specific teams.

A major issue the State is currently facing in implementation of projects handled by various departments is that the secretaries in charge of the departments are burdened with a series of other responsibilities.

They normally do not get enough time to keenly follow up implementation of projects considering it as their main task, he pointed out. Therefore, he said, projects do not get the requisite priority over other routine activities.

It is often told that time is the essence of projects. This is very much forgotten and it takes several weeks to decide on a crucial aspect relating to the project or to reply a vendor or client with regard to project related queries. The time over-run invariably results in extensive cost over-runs also.

A Programme Implementation Ministry (PIM) is in existence in the Union Ggovernment to monitor Ccentral projects under implementation. But, when it comes to the Sstate level projects, which do not come under any kind of review as is done in the case of centrally sponsored projects by the PIM, the situation is rather much deplorable. A Cconstant follow-up and troubleshooting will help to address these issues inhibiting the progress of the work then and there and facilitate speedy implementation of projects on schedule.

Report findings

`Doing Business in India 2009' shows how government regulations and practices ease or constrain business activity. In 14 of the 17 locations it benchmarks, the report records significant business reforms at the national, state, and municipal levels.

These include computeriszing records, putting tax registration online, and setting up single-window systems for permit applications - all making it easier for businesses to comply with rules and regulations.

While all cities in India have a similar legal and institutional framework, local regulations and the implementation of national laws vary. And these variations across India in the regulatory ease of doing business show the potential for cities to learn from one another.

The report finds it is easiest to start and operate a business in Ludhiana, Hyderabad, and Bhubaneswar. Starting a business is fastest in Mumbai and Noida, at 30 days. According to the report reforms produced tangible results, such as reducing the average time to open a business from 54 to 35 days in 10 cities. Time to obtain a building permit was reduced by 25 days on average.

The report compares business regulations across 17 Indian cities. Focussing on on local regulations that affect seven 7 stages in the life of a small or mid-sized domestic enterprise: starting a business, dealing with construction permits, registering property, paying taxes, trading across borders, enforcing contracts, and closing a business.

The report shows that differences in city- and Sstate-level regulations and practices in the implementation of national-level regulations can enhance or constrain local business activity. It also suggests that cities in India can learn from each other and adopt good practices that are already working within the country.

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