Calling For Freedom

Indian entrepreneurs want easier rules to make conducting business easier

- Clifford Alvares

HOW LONG DOES IT TAKE to open a simple business bank account even after complying with all the requisite KYC?,” laments a small businessman Rajesh Shah, “You would be surprised. It still takes a long, long time. More than three weeks despite all the paperwork being correct.”

The fact that India, in quite a short while, has leapfrogged into the top 100 (from 164) on the Ease o f D o i n g Business rankings 2018 of the World Bank is little respite as necessary procedures such as opening a bank account continue to niggle at Indian entrepreneurs.

Sure, improvements in procedures, such as having a single window for company incorporation, have been streamlined, with processes to acquire PAN, TAN, DIN, Company Incorporation and Name Reservation being incorporated on a single application form. But the cost of delay in starting a business is huge.

In fact, the World Bank report noted that efficient and non-discretionary business regulations are important drivers of productivity. “A study of India, for example, shows that inefficient licensing and size of restrictions cause misallocation of resources, reducing total factor productivity by preventing efficient firms from achieving their optimal scale and allowing inefficient firms to remain in the market,” The study further adds that these restrictions would “boost total factor productivity by an estimated 40-60 percent.”

So, no surprise that India needs to boost its rankings significantly if it has to lead in productivity-related gains. But, can India really climb up the ladder to the top 25 countries on the ease of doing business?