India’s bureaucratic ‘killer apps’ that businesses would like axed
4 min read . Updated: 18 Aug 2020, 08:24 PM ISTThe humble NOC and mighty PIL are among the ‘apps’ that can constrain the ease of doing business
During the years of the Narendra Modi government, India has moved dramatically up the World Bank’s rankings on ease of doing business, from No. 142 at the end of the United Progressive Alliance regime to No. 63 last year. Last week, the central government announced a taxpayers’ charter and other measures to make an assessee’s interactions with the taxman “seamless, painless and faceless".
All these, no doubt, constitute “progress", but why do we not hear whoops of joy in the business community beyond the usual politically correct statements from industry associations that things are improving? The answer is that India continues to be a world beater in terms of bureaucratic “killer apps", or rules and regulations that trip business-folk at every step. And often unobtrusively.
A blog written by an entrepreneur, titled, I tried starting a manufacturing unit in India…, reads like a horror story that could deter almost anyone from trying to set up shop in India. The piece is about the (re)discovery of the biggest business killer app of them all: the humble NOC, or no-objection certificate. One would think that no one ought to have any objection to someone starting a business and creating jobs, but no. Apparently, you need a non-agricultural certificate to make products in a rural area. For the blog’s author, getting this document meant getting NOCs from 13 other agencies, including the local public works department, power distribution company, irrigation and health departments, forest department, pollution control board, etc. The request for an NOC from one agency often led to the need for a couple of more NOCs from yet other agencies.
This story, however, had a happy ending. The blogpost was removed after it was discovered that the NOCs were supposed to be obtained by the revenue department itself, and some lower-level staffer forgot to add this entrepreneur’s needs to its to-do list and sent him scurrying from one government office to another. This was the state of affairs in Maharashtra, the country’s top business destination. One wonders what the situation is like in states that are not so “business-friendly".
However, the NOC isn’t the only business killer app around. We must add several more, including the judicial PIL (public interest litigation), the “show cause notice", which is used with lethal effect in the public sector to kill all initiative by making employees worry about whether even bona fide decisions will attract the Vigilance Commission’s adverse attention, and tax demands.
It is the last problem that the Modi government has tried to address with its taxpayers’ charter and “faceless" interactions with the revenue department’s eager enforcers. Then, there are affidavits and declarations to be made to the effect that if anything goes wrong, the state will not be held responsible. You must take on this liability through a self-declaration.
PILs deserve a special mention as business disablers, for they can be initiated by almost anybody on almost any claimed grounds of “public interest". Worried about drunken driving? File a PIL, and you can look forward to a court verdict saying no bars can be set up anywhere near a highway, damaging businesses that never knew things would end up thus. If you find non-transparent processes were used to allot telecom spectrum or coal mines, our courts are unlikely to hold the government responsible for the mess. The alleged beneficiaries of wayward decisions have to pay the price, as licences get cancelled wholesale and investments worth hundreds of crore are reduced to cinder. Pollution in the city? The Supreme Court can mandate that no sport-utility vehicles will be registered in Delhi and even impose an extra tax on new registrations—something that is exceedingly odd, since the Constitution does not grant the judiciary taxation powers. And if there is a dispute over the term “adjusted gross revenues" in telecom, the courts will not only stop at an interpretation of the term, but even decide how and when these dues are to be paid, and look into issues like whether companies already in insolvency courts can sell available “assets" such as spectrum. Several judicial decisions seem to bear a disposition that is inclined less towards business logic, and more towards causes like protecting government revenues or enforcing some standard of probity in how public resources are handled. Last year, senior counsel Harish Salve alleged that court rulings were a large contributing factor in the current economic slowdown, and there is some truth to this assertion.
The devil, they say, is in the details. India does not always need big ticket reforms or bold vision statements to speed up growth. It needs these micro-reforms that often escape notice, for they seem logical in the regulatory scheme of things. A staffing services firm, TeamLease, released a report in July pointing out that companies have to grapple with over 1,500 laws, 69,000 compliances, and 7,000 filings at various levels of government. While these laws may not apply in all states and to all firms, the sheer numbers tell you what the ground reality is. We have to take an axe to such business killer apps before we can claim genuine improvement in the ease of doing business.
R. Jagannathan is editorial director, ‘Swarajya’ magazine
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