Ease of Doing Business in West Bengal: Hurdles and Road Ahead

Ease of doing business in West Bengal: Regulatory hurdles and THE way forward

Moushumi Bhattacharya

Summer Intern-Government Consulting, PwC

PGDM Marketing

Institute of Management Technology, Ghaziabad

Raj Nagar, Ghazaibad-201001

mkt16mbhattacharya@imt.ac.in

CONTENTS

ABSTRACT        3

INTRODUCTION        3

        4

THE INDIAN PERSPECTIVE: EODB INDIA        7

EODB INDIA: WEST BENGAL FOCUS        8

WAY FORWARD        10

CONCLUSION        12

ABSTRACT

This white paper will examine the impact of regulatory policies of the state of West Bengal on the Ease of Doing Business and the ways of mitigating the influences that constrain business proliferation. The World Bank ranks 190 economies on their ease of doing business. The ranking measures the effect of business regulations and their enforcement across the 190 economies in the national, sub-national and regional level. A higher rank means it is easier to do business in that region whereas a lower rank means the regulatory environment is not conducive enough for starting a firm or even its operation. The ranking is determined by calculating and then sorting the economies based on eleven parameters. The eleven parameters are: Starting a Business, Dealing with Construction Permits, Getting Electricity, Registering Property, Getting Credit, Protecting Minority Investors, Paying Taxes, Trading across Borders, Enforcing Contracts, Resolving Insolvency and Labor Market Regulations. The last parameter of labor regulations has been added this year. The ranking measures the economy’s distance to the ‘frontier’ for each parameter, the ‘frontier’ being the best performance observed by an economy in that particular parameter. So the ranking is comparative and therefore provides an impetus to the other states to compete towards better regulations by the process of reforms; offers measurable benchmarks of best performance; and serves as a resource for academicians, journalists, private sector researchers and others interested in the business climate of each economy.

In addition to the national level comparisons, Ease of Doing Business rankings also compare the subnational areas. This comparative study exhaustively covers the business regulations in different cities in the nation. The reports rolled out by Doing Business also suggests reforms to improve the conduciveness of doing business in each of these locations.

INTRODUCTION

In the recent years, the Ease of Doing Business Rank released by World Bank, is the most widely followed statistic measure of a country’s performance in comparison to other countries. This measure, based on some pre-decided factors, has become a major turnkey in the Indian polity circles, more so in the last two years as our country failed to make much progress as far as the ranking is concerned.

The doing business purview sheds light on how easy or difficult it is for small or medium enterprises to do business in a region, complying with the local business regulations affecting the different facets of the lifecycle of the project. The analysis of such features across 190 economies from Afghanistan to Zimbabwe; presents the indicators, analyzes their relationship with economic outcomes and presents business regulatory reforms.

The analysis suggests that way back in 2005 it was possible to get the permits to start a business in less than 20 days in only 41 economies but by 2016, this possibility has spread to 130 economies. These comparisons create an optimism and a continued unrestrained effort by polities in different regions to bring out new ideas that will eventually help them achieve better results. The Doing Business methodology has its own limitations. The factors like the economies proximity to large markets, the quality of infrastructure, the security of property, transparency of Government procurement and other macroeconomic factors have not been considered by Doing Business.[pic 1]

Table.01 What Doing Business measures-11 areas of Business Regulation^[1]

The purpose of this paper is to analyze the differentiated environment of business regulations with a global perspective and the current trends that promise better development and improved business regulations for business to flourish. The paper will then restrict the same analysis to a regional profiling of South Asia. The flow will then move to Doing Business in India to a dedicated special focus on West Bengal, the regulatory policies in this state and the reforms needed for giving it a competitive advantage against the rest of the cities in focus in the Doing Business survey.

WORLD VIEW & CURRENT TRENDS

[pic 2]

In 2017, 190 economies have been analyzed based on eleven parameters. The comparison has evolved from focusing on the efficiency of Government regulations and processes to also measuring and comparing the quality of business regulations. It now includes the post filing process under paying taxes. This includes tax refunds, tax audits and tax appeals. It included the measure of gender difference under the purview of starting a business, registering property and enforcing contracts.[pic 3]

Another pilot indicator adopted to study the Ease of Doing Business this year is ‘selling to government’. Public procurement generally forms 25% of the GDP, making it a unique opportunity for private firms to generate revenue. The process of public procurement was studied across five main areas of interest: accessibility and transparency, bid security, payment delays, incentives for small and medium-size enterprises and complaints mechanisms.^[2] 

Table.02 Top 10 economies improving the most across three or more areas measured by Doing Business in 2015/16[pic 4]

New Zealand has ranked the highest with the average Distance to Frontier score of 87.01, with India at 130 and an average DTF score of 55.27. Between June 1, 2015 to June 1, 2016, 283 business reforms were recorded by Doing Business and 137 countries actually participated in implementing at-least one reform out of the lot. This represents a 20% increase as compared to last year when only 122 countries, which implies more economies are eager to improve.