Business regulatory environment: State fails to find a place in top league

It fares well in environment clearance and tax compliance: survey

It may be a frontrunner in attracting investments, but a survey that assessed States based on their business regulatory environment for manufacturing shows the State lagging behind southern States.

The survey for the Union Planning Commission puts Tamil Nadu, Andhra Pradesh and Kerala in the top 33.33 percentile among southern States, in terms of overall business regulatory environment.

The State figures next, that is in the middle 33.33 percentile category of States. Six dimensions of regulatory compliance were evaluated for the survey, involving manufacturing units, industry bodies and even officials of State governments.

The sample size of the survey, conducted by Deloitte Touche Tohmatsu India Pvt. Ltd., comprised 402 manufacturing units, around 50 industry associations and nearly 100 officials of State governments.

The State’s absence in the top league, which, besides the southern States, had Chhattisgarh, Gujarat, Haryana, Madhya Pradesh, Odisha and Rajasthan, does not mean it fell short of expectations in all the parameters.

Environment clearances and compliances related to finance and tax, besides labour law, were areas where the State fared well.

The areas that required improvement were infrastructure and utility-related approvals, and land and building-related approvals.

Other ratings

The rating it got in “other business regulatory compliances” dimension, which included effectiveness of process for single-window clearance mechanism in terms of the departments being covered, also brought down the overall rating.

The survey that began in September 2013 was completed in five months and covered 28 States.

The focus, the report says, was to assess the relative maturity of policy/institutional framework and the processes/practices as well as the end-user experience of complying with business regulations.

Improvements needed

On the specific improvements required in the State, the report suggests that in infrastructure and utility-related approvals, there was scope for deployment of IT-enabled, including GIS-enabled applications, processes with strong monitoring mechanisms for power connections and no-objection certificate/licences from the fire department.

It would reduce the time taken to process applications and increase process-effectiveness and transparency.

Towards increasing the efficiency of land allotment in industrial estates, the State could consider adopting an IT/GIS-enabled land application and land allotment system, which enables sharing of information in a transparent manner.

The single-window mechanism can be improved by revising and standardising the list of documents to make it comprehensive and also prescribe a time limit for individual clearances.

The report also wanted the State to develop an IT-based tracking system to monitor the status of the applications.