An insight into PM Modi's mind
India’s ascent in the World Banks report card on the Ease of Doing Business (EODB) is laudatory for the political will displayed by the Modi government in India’s spectacular rise from being ranked 142 in 2014, to inching up to 77 in 2018. There is unmistakable euphoria in the celebrations at Lok Kalyan Marg, where the PM lifted the benchmark even higher for successive years in the presence of captains of industry with a sermon: “There’s no problem should you miss a target... but lowering one’s targets was an unacceptable norm.”
Targets set
No goal is too big. That was an insight into the mind of a man who relentlessly nudged industry and his government to reach for a $5 trillion economy. In that pursuit, the PM seemed to suggest that in aspiring to reach the "Top 50" in the World Banks pecking order, the sky was the floor and not the ceiling for India’s ambitious growth. The increase in the rankings is reflective of improved corporate governance because of Modi's vision to rebrand Business India through multiple purging exercises.
Like demonetisation, which helped reduce the cash-to-GDP ratio, with tax compliance going up by 80.53 per cent from 2014 to 2018; achieving GST collections of 6.8 lakh crores between April to October 2018, is the formulation of a stringent Bankruptcy Code, and the scrapping of 1,400 archaic laws.
A continuity of policies, should it be Modi 2.0 in 2019, is projected to achieve a tax to GDP ratio of 20 per cent. Should the taxpayer base progressively surpass 14 crore, increased revenues would mean higher resources for infrastructure and public investments, which converts to higher employment.
The quantum jump came from three indicators where India leaped to the 25th position in providing universal energy access with 100 per cent electrification of villages; easing the availability of credit to help businesses access capital from banks; lessening the time taken to get construction permits and protection of Minority Investors. Reducing turnaround time by 15 per cent by optimising on technology has reduced discretionary powers and human interface, which have been root causes of corruption.
Had the Lokpal ombudsman been in place, India would have been successful in lessening lower-bureaucracy corruption, which remains a pain-point despite the government’s best efforts. India still lags behind in starting businesses, registration of property and regularising land records, the ease of paying taxes, resolving insolvency and enforcing contracts.
Even as India reduced the time needed to register a new business to 30 days from 127 days 15 years ago, the number of procedures, as many as 12, was still cumbersome. To improve on parameters of property registration, ownership and titles need to be further streamed online, which is a complex process as land comes under local state governments.
Crucial factors
It’s now critical to sustain the EODB momentum, parallel with improving Ease of Living, as also scaling up on Financial Inclusion parameters. For India's internal report card, we need a holistic approach to economic progress that not only hastens progress in industry and commerce, but also improves per capita earnings for the marginalised at the bottom of the pyramid. On this last count, the Modi-government deserves maximum credit in moving factors that have the potential of being future force- multipliers in EODB by concurrently accelerating initiatives that aim at improving the quality of life and livelihood for 85 per cent of the marginalised unorganised sector, who comprise those ‘Excluded’ from the gains of economic progress.
The latest edition of the Global Findex (GFX) showed India’s GFX was 35 in 2011, 53 in 2014, and 80 in 2017. This shows leapfrogging on another parameter, suggesting that relevant Indian policies in the last few years have worked well. Financial Inclusion Index is now used as a composite measure in development indicators.
On FI, the Modi government has delivered more than previous governments by way of affordable housing, free LPG scheme, the JanDhan Yojna and Mudra Loans which were collateral free, the DBT that benefited 40 crore beneficiaries bypassing middle men, all of which helped to lift the ease of living for the rural poor.
Quantum leap
As the World Bank ranks 190 countries, its annual ratings offer global investors a comparable template to make informed decisions, providing vital inputs for any project manager's spreadsheet while doing due- diligence. EODB is a facilitator that depicts opportunities and challenges as an investment.
However, there are multiple factors experts consider, like predictabilty of government policies on taxation, preferring a congenial vs a predatory tax regime; environmental pollution; health and education facilities in proximity to the location of industry or commerce; the Corruption Index, where cost of graft is factored into cost of doing business; Freedom of Speech index etc. These comprise the multiple other criteria vital to consider before infusing capital into favoured investment destinations, particularly for FDI.
India under Modi has made quantum leaps on multiple parameters, with more than $40 billion into the startup ecosystem since 2014. Yet, “governments make policies, legislators make laws, and bureaucracy sabotages both”. And while governments get voted out, bureaucracy outlives them all. Even the best-intentioned government moves are sabotaged by a well-entrenched bureaucracy which strives at retaining their relevance in stymying progressive policies. It is this bottleneck that GOI must rectify, particularly lower-level bureaucracy.
(Courtesy of Mail Today)
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