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WB's thumbs up to India's regulatory reform
29 Feb '16
3 min read
The Indian government's ambitious programme of regulatory reform aimed at making it easier to do business, represents a great deal of effort to create a more business-friendly environment, particularly in Delhi and Mumbai, the World Bank Group said in a flagship report titled Doing Business 2016 - Measuring Regulatory Quality and Efficiency. The programme was launched in 2014.
One important focus is to make starting a business easier. In May 2015 the government adopted amendments to the Companies Act that eliminated the minimum capital requirement. Now Indian entrepreneurs no longer need to deposit Rs 100,000 - equivalent to 111 per cent of income per capita - in order to start a local limited liability company. The amendments also ended the requirement to obtain a certificate to commence business operations, saving business founders an unnecessary step and five days. Several other initiatives to simplify the start-up process were still ongoing on June 1, 2015, the cutoff date for this year's data collection. These include developing a single application form for new firms and introducing online registration for tax identification numbers, the report said.
Another focus is to make the process for getting a new electricity connection simpler and faster. Toward that end the utility in Delhi eliminated an internal wiring inspection by the Electrical Inspectorate - and now instead of two inspections for the same purpose, there is only one. The utility also combined the external connection works and the final switching on of electricity in one procedure. The utility in Mumbai reduced the procedures and time for connecting to electricity by improving internal work processes and coordination. It combined several steps into one procedure - the inspection and installation of the meter, the external connection works and the final connection. Now companies can get connected to the grid, and get on with their business, 14 days sooner than before.
Improvements have also been initiated in other areas measured by Doing Business. To make dealing with construction permits easier, for example, a single-window system for processing building permit applications is being started in Mumbai - with the promise of greatly reducing the associated bureaucratic burden once fully implemented. And online systems for filing and paying taxes are being further improved to simplify tax compliance.
According to the report, fostering an environment more supportive of private sector activity will take time. But if the efforts are sustained over the next several years, they could lead to substantial benefits for Indian entrepreneurs along with potential gains in economic growth and job creation. (SH)
One important focus is to make starting a business easier. In May 2015 the government adopted amendments to the Companies Act that eliminated the minimum capital requirement. Now Indian entrepreneurs no longer need to deposit Rs 100,000 - equivalent to 111 per cent of income per capita - in order to start a local limited liability company. The amendments also ended the requirement to obtain a certificate to commence business operations, saving business founders an unnecessary step and five days. Several other initiatives to simplify the start-up process were still ongoing on June 1, 2015, the cutoff date for this year's data collection. These include developing a single application form for new firms and introducing online registration for tax identification numbers, the report said.
Another focus is to make the process for getting a new electricity connection simpler and faster. Toward that end the utility in Delhi eliminated an internal wiring inspection by the Electrical Inspectorate - and now instead of two inspections for the same purpose, there is only one. The utility also combined the external connection works and the final switching on of electricity in one procedure. The utility in Mumbai reduced the procedures and time for connecting to electricity by improving internal work processes and coordination. It combined several steps into one procedure - the inspection and installation of the meter, the external connection works and the final connection. Now companies can get connected to the grid, and get on with their business, 14 days sooner than before.
Improvements have also been initiated in other areas measured by Doing Business. To make dealing with construction permits easier, for example, a single-window system for processing building permit applications is being started in Mumbai - with the promise of greatly reducing the associated bureaucratic burden once fully implemented. And online systems for filing and paying taxes are being further improved to simplify tax compliance.
According to the report, fostering an environment more supportive of private sector activity will take time. But if the efforts are sustained over the next several years, they could lead to substantial benefits for Indian entrepreneurs along with potential gains in economic growth and job creation. (SH)
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