Ease of doing business: In Telangana, you needn't meet even one government official to start up

New Delhi: Any potential investor who wishes to set shop in Telangana, the state which has now topped the list for ease of doing business (EODB) in India, need not meet a state government official even once to get his project cleared.

The state (which is in a tie with Andhra Pradesh for the top slot) claims it has put a system in place which obviates the need for any personal meeting with any sarkari karamchari and no investor has to worry about running around to get myriad clearances. Something that the Indian bureaucracy is typically known for. Telangana promises time-bound clearances for all matters which are handled at the state-level, no need for a personal interactions and accepts self-certification from investors on a specified list of parameters – further simplifying the process of setting up any business in the state.



The EODB rankings released by the Commerce Ministry make for interesting reading, specially as they follow close on the heels of the dismal performance the country as a whole has shown in the global rankings of ease of doing business. India moved up just one place in the latest World Bank rankings from last year to settle at 130, causing much heartburn in Lutyen’s Delhi. Perhaps the Centre can take a leaf out of Telangana’s (or Andhra Pradesh’) book to improve its showing?

In the rankings released this week, last year’s top performer Gujarat has been relegated to the third spot, after Telangana and AP. Maharashtra, which has always been perceived as an industry-friendly state, barely makes it to the list of the top 10 states in India in EODB, pipped by Chattisgarh (4th), Jharkhand (7th), Uttarakhand (9th) and Rajasthan (8th). Madhya Pradesh and Haryana are at the 5th and 6th place respectively.

The rankings were based on the percentage each state received for implementing key parameters defined earlier. Delhi comes in at the 19th spot in a list of 36 states, with just 47.62 percent implementation score- meaning it did not comply with even half the parameters needed in the EODB list. Tamil Nadu, just ahead of Delhi at the 18th spot, was considerably better with implementation percentage 62.8. Even West Bengal – a state not really known for its attractiveness for investors – had an implementation score of 84.23 percent, outstripping both Delhi and TN.

Kerala barely had a fourth of the checks in place with implementation score of just 26.97 percent, but it is the north-eastern states which put up a pathetic performance. The best score – a dismal 16.167 percent - was secured by Tripura while Meghalaya was at the bottom of the pile with an implementation score of just 0.30 percent. Toppers Telanagana and AP earned 98.78 percent
whereas Gujarat was close by with 98.21 percent and Maharashtra stood at 92.86 percent.

Speaking to Firstpost, Principal Secretary (Industries, Mining and Energy) of Telangana, Arvind Kumar, listed out three things he would advise other states to do to raise their profile in the EODB pecking order:

1)Go Online: Change traditional mindset and ensure that practically and theoretically no investor needs to ever meet a single state government official. Remove all requirements for human interaction to get clearances at the state-level.

2) Remove subjectivity in fee: Simplify this as far as possible and make the various levies public. For example, in Telangana, any investor interested in setting up a solar power unit now knows he has to pay Rs 25,000 per acre for land conversion. The price has been fixed. Earlier, this levy varied widely as different land owners asked for different prices, subject to the demands of each Panchayat, etc

3)Defined process for clearances: Tell potential investors how long it will take for their project to get all state-level clearances and stick to those timelines. Telangana offers a three week window for clearing all projects bringing in investments of less than Rs 200 crore but for anything over Rs 200 crore, the timeline is just 15 days. It has also defined levels within the government which need to award final clearance to a project. For a small project up to Rs 5 crore, district-level clearances suffice. For anything between Rs 5-200 crore, the Commissioner of Industries needs to take a final call and for projects over Rs 200 crore, an empowered group of state ministers is the final authority.

The methodology followed for the latest rankings is quite different and difficult compared to the process followed in the first year when India’s states were ranked on parameters to judge EODB. There were just 96 parameters in the first year but for 2015-16, states were judged on 340 parameters. Kumar said the criteria will be further modified for 2016-17, after consultation from stakeholders.

So will Telangana be able to retain the top slot in 2016-17 too? Kumar said the strict parameters Telangana has promised investors has not just been done for topping the EoDB list alone. The state claims to have cleared 2,550 proposals in 2015-16, of which more than 1,200 have begun commercial operations and promise to bring in Rs 60,000 crore investments.

Updated Date: Nov 01, 2016 12:08 PM

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