One of the flagship schemes of Narendra Modi Government has been #MakeInIndia and considerable efforts have been put in by the Modi Government to attract Foreign Direct Investment to spur growth and create jobs. With surging FDI numbers, industrial growth rates stable/high in this global weak markets it would be safe to assume that the initial steps have been taken in the right direction.
So what do Companies like Foxconn or General Motors, who have committed billions of dollars in investment, look at when they invest in any market? Generally they see if there is a demand supply “gap” which NaMo “markets” very well, like say “a population of 125 cr Indians” etc. Other important factors are ease of “Entry options” which allow capital repatriation back to home country, stable laws/government, tax laws which allow stable outlook of future tax incidents, skilled manpower, ease of availability of utilities like power/water/raw materials, strong legal framework which allows strict enforceability of IP laws and contracts, availability of credit and resolving insolvency etc. All these criteria’s are measured by an Index called “Ease of Doing Business”.
Various schemes started off by Narendra Modi govt try to address these issues either directly or indirectly. It shows that the focus of the government is clear and all the departments and ministries are working in sync with this single objective.
To briefly highlight: Skill India is to address manpower requirements, Power Sector reforms under Piyush Goyal is to address utilities issue which bled Industry under UPA, introduction of Bankruptcy Code is to resolve delays in insolvency cases, amendments to Companies Act are to allow ease of business, Mauritius Tax Treaty and recently passed Goods and Service Tax will bring tax uniformity so on and so forth.
So why is Modi government so desperate to improve its ranking in the Ease of Doing Business index?
To answer this in most simple way, when an entity decides to invest in a market via FDI, this ranking is a consideration in their decision making process” and a major consideration thereat. When India’s rank is better, then naturally there are better chances of attracting fresh investments. Higher investments=more jobs and as people get jobs they get income and income will lead to expenditure and expenditure leads to demand and the cycle continues.
It is pertinent to note that “it is either the state government or central government employees” who are implementing these policies/schemes. This post is not to highlight the “achievements” of the Government. This primer was necessary to explain “what else” can/should be done to improve India’s ranking.
Apart from above mentioned criteria, the ranking also takes into account “Benchmarking Public Procurement” “registering Property” “Citizen Engagement in rulemaking”. When a Company is setup it has to “deal” with 3 authorities namely Central Government, State Government and Local authorities. It’s clear that the new business will interact with many government employees. Investors perception depends on how fast their “work is done”. So how can the Government ensure this?
In 2011 a Bill was proposed “The Right of Citizens for Time Bound Delivery of Goods and Services and Redressal of their Grievances Bill, 2011”. The salient features of the bill are highlighted below:
- Mechanism to ensure timely delivery of goods and services to citizens.
- A citizen’s charter is published within six months.
- The Charter will detail the goods and services to be provided and their timelines for delivery.
- A citizen may file a complaint regarding any grievance related to: (a) citizens charter; (b) functioning of a public authority; or (c) violation of a law, policy or scheme.
- A penalty of up to Rs 50,000 may be levied upon the responsible officer for failure to render services.
One may read the salient features in detail Here
This Bill as introduced by UPA was opposed by the BJP and rightly so. The main reasons were:
- Parliament may not have the jurisdiction to regulate the functioning of state public officials as state public services fall within the purview of state legislatures. The Bill could provide Model Law to state legislatures to adopt but that was not done by UPA.
- This Bill text is drafted such that it creates a parallel grievance redressal mechanism as many central and state laws have established similar mechanisms. (14 State govts have such a law in place)
- Appeals from the Commissions’ decisions on matters of corruption will lie before the Lokpal or Lokayuktas. The Lokpal and some Lokayuktas have not been established.
- Only citizens can seek redressal of grievances under the Bill. The Bill does not enable foreign nationals who also use services such as driving licenses, electricity, etc., to file complaints.
Modi government could address these above issues which they had opposed when in Opposition and pass this particular bill. Apart from ensuring accountability from Central and State Government employees, it will boost up the confidence of not just the investors but also of general public. What rights currently do we have if there is an inordinate delay in say issuing a passport or driving license? What if the Government officer is simply sitting on your file, he isn’t accepting nor rejecting it? These are very common cases faced by citizens as well as corporate citizens.
Under UPA many mining Companies bled into red because of huge delays in environment clearances from Ministries. Many State Governments already have passed state specific laws however a Central legislation is needed to bring under its ambit the central govt employees.
Government “goods and services” are an essential part of citizens lives. The general perception is government officers are lethargic and government products are sub-standard. One of the pre-poll slogan by Narendra Modi was Indians needs to change their “Mera Kya, Mujhe kya” attitude. This is actually very prominently seen in government employees. Demanding accountability, quality and timely services will change this perception for good.
Such “statutory commitments” are also highly appreciated in international business circles. Faster and/or timely approvals will surely improve India’s rank in the global business Index. This sort of a “delivery mechanism” with strong weapon, in the hands of corporates and citizens alike, to seek redressal in case of deficiency in services will go a long way in ensuring accountability. This will be yet another step towards #EaseofDoingBusiness.