Doing business becomes easier in traditionally backward states than the developed ones

Competition amongst states to unshackle the potential for businesses, industry and services is a sure shot way for India to move ahead in the global sweeps stakes in ‘ease of doing business’. Southern states like Andhra Pradesh and Telangana along with Haryana in Northern region have emerged with flying colours on the 340-point business reform action plan put together by World Bank and Department of Industrial Policy & Promotion (DIPP) at the centre. Interestingly enough, Jharkhand that’s perennially labeled as a backward state, overtook industrially better off states like Prime Minister’s home state Gujarat and the country’s business state, Maharastra this time.

Contest among states for ranking high on ‘ease of doing business’ and ‘reform programme’ was very keen. For instance, Andhra Pradesh and Telangana jostled for the top spot with both fighting for every decimal point to upend the other.

These rankings, no doubt, shape perceptions of investors – both foreign and domestic – influencing their decision to set up businesses. Also, given that feedback from all stakeholders like industry, business and consumers was taken, ease of doing business survey hints at what’s in store for a state.

Unless industry and businesses flourish, there’s hardly any other way to achieve double-digit economic growth that Prime Minister Narendra Modi talked about at the recent meeting of Niti Aayog general council. Andhra Pradesh chief minister N Chandrababu Naidu deserves all praise for making a serious attempt to attract investments in a fledgling state that’s trying to find its feet.

Though Telangana dropped by one place, chief minister K Chandrasekhar Rao seems to have aggressively pursued a business reforms agenda. Maharastra with a huge industrial base seem to have fallen behind by four places given the stiff competition from outliers. Even Tamil Nadu seems to be losing steam given the political instability, infighting and churn with entry of new state actors.

All the spin notwithstanding, it’s a fact that India as a country stands at a lowly 100th position in global ranking index on ease of doing business environment. While India was celebrating the leg up, the huge fracas over World Bank chief economist Paul Romer sacking simply cast a huge shadow on the way the report was put together.  Paul Romer stepped down as chief economist of the World Bank, 12 days after an incendiary interview with the Wall Street Journal in which he suggested that the political leanings of bank staff may have marred its annual rankings of the ease of doing business around the world. His resignation, and retraction of those remarks, created a maelstrom. In any case the dubious report only looked at Mumbai and Delhi while collating the report and rankings.

On wonders whether the bureaucratic stranglehold that unnerved many an investor has actually eased. Still, global investors may not get the positive vibes to commit their funds if competitive geographies offer better deals. Though, there has been a jump of 30 places and the Prime Minister has set the objective of moving into first 50-ranks in ease of doing business, the sneers and jeers on India’s chaotic federal democracy seem palpable.

Second issue that comes upfront is corruption that’s perhaps omnipresent especially in states. Though there’s a perceptible difference in the way central government officials behave, the last GIS survey had put Tamil Nadu on the top in the most corrupt states chart. If Naidu and Rao were to take credit for the two states high ranking on ease of doing business, they must equally be responsible for topping the most corrupt states chart.

A combination of factors will work and business environment cannot be seen in silos. Different political parties, ideologies with varied policy priorities should not be seen as a stumbling block to get into top ten positions vis-à-vis ease of doing business.

Instead every economic development model should be tried out, from ‘poorna swadeshi’, mixed economy to whole hog right wing liberalized business environment. Being open, flexible and the propensity to absorb or try out new ideas should work for a large diverse country like India. Monotony, uniformity and conformity should be shelved.

But, common objectives and goals as a society and country will drive businesses, expand industry and deepen prosperity for the people that could in turn propel demand for goods and services.

Even trying to standardise processes, products or services as in western models will not work in Indian context. Instead, India will have to exploit its own diverse systems to become number one nation on business front. India has enough depth and wherewithal to develop its own parameters to measure ‘ease of doing business’, innovations index or for that matter even the credit rate its economy.