NITI Aayog responds to the survey done on ease of doing business in IndiaOctober 7, 2017
A recent survey on ease of doing business suggests that in fact, it takes a longer time to set up a company in India now, as compared to previous estimates. This is surprising since the government’s objective is to improve the business incorporation procedure in the country. So, the Niti Aayog has clarified today that the research document doesn’t represent the government’s views.
Facing flak after they released the document, the Aayog mentioned that this report relies on an enterprise survey conducted jointly by the government and the IDFC Institute. “The report itself states that it is meant to be a research document and its contents do not represent the views of the Government of India or Niti Aayog,” the statement said.
According to the survey, it takes a total of 118 days on average to set up a business in India. These conclusions deviated sharply from the ones drawn in the World Bank report which showed that it only took 26 days to set up a company in India as of 2016.
India ranks at number 130 in the ‘Ease of Doing Business’ survey done by the World Bank, but it was confined only to two of India’s metro cities viz. Delhi & Mumbai. But the NITI-IDFC Survey covered 3,276 manufacturing enterprises spread across India. The government think-tank said, “The survey was conducted between April 2015 and April 2016 and does not reflect any changes in the ease of doing business since then.”
The NITI Aayog still claims that there has been tremendous progress when it comes to easing various business-related processes in recent years. They also said that enterprise responses hinged on their past experiences and their perception of doing business, which dates to over a decade back. “Reforms such as single-window clearance systems would not apply to many firms covered in the survey,” it said.
The statement said, “It did not cover unorganised manufacturing and the services sector that constitutes the vast majority in India” and only took inputs from businesses in the formal manufacturing sector. It further mentioned that it is important to note that the methodology of the present enterprise survey differs from the World Bank’s business survey. The Niti Aayog survey found that firms in many states are taking considerably lesser amounts of time in obtaining approvals than reported by the World Bank data. “On average, firms reported taking far less time in getting construction permits,” it observed.
In conclusion, the statement declared that the Niti Aayog-IDFC Institute of Ease of Doing Business report shows that real experiences of the businesses are better than expert perceptions reported in the past surveys. Yesterday, the same report said that India needs to reform with the objective of improving the ease of doing business as it is the best way to eradicate poverty and give millions a chance at a better life.
They have also put forward a strong case for labour reforms, easier entry and exit of firms and levelled the playing field for small and large enterprises. As concerns labour reforms, the report stated that improving labour laws and increasing the flexibility of their implementation can significantly enhance the ease of doing business. “According to our survey’s finding, firms in labour-related regulations particularly are onerous. This fact translates into enterprises avoiding labour-intensive sectors,” the report had noted.