India has made historic progress by being ranked 100 among 190 countries in the recently released World Bank’s ease of doing business rankings report. The index covers 10 indicators which span the lifecycle of a business. The key parameters on which the countries were assessed included - starting a business, dealing with construction permits, getting electricity, registering property, accessing credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency along with labour market regulation improvement indications.
India has been recognized this year as one of the top 10 improvers, having implemented reforms in eight out of 10 indicators covering 53 regulatory reforms, making it much easier to conduct business. However, the country still lags behind in starting a business, enforcing contracts and dealing with construction permits. This year, DIPP carried out a comprehensive B2G feedback on the quality of implementation of reforms claimed by States and Union Territories.
Coming to the ranking of states in India, this time it has been done solely by the World Bank while DIPP has assumed the role of a facilitator between the bank and the states.
No doubt the state’s ranking has come down by two spots compared to last year. But this is no reason to conclude that the state’s place is slipping. The silver lining in the ranking for Karnataka is that the state has climbed five spots higher compared to the 13th position it held in the country in 2016 and today, is the eighth highest ranking state in India as far Ease of Doing Business (EODB) is concerned. This indicates that the reduction of EODB parameters which stood at a whopping 96 clauses a few years ago, has now been pruned to less than 20, which in itself to a good precursor for the bureaucracy and the government to reduce the clauses even further, so Karnataka regains its glory of being a business proactive state.
The state has managed to score 98.64% for 373 parameters which require documentary evidence of reforms undertaken. It continues to occupy the leading position in the country for attracting investments. However, its ranking would have been still better if scores from certain parameters like feedback from businesses had not brought down the final combined score. So yes, there is certainly scope for improvement in providing timely approvals for building and construction, provision of water supply, power and waste management and we need to look into these to further improve our State’s ranking in the next year.
Karnataka has taken the lead in terms of policy promotion and investments for boosting the startup ecosystem and Bengaluru, which has emerged as a magnet for start-ups boasts highly-skilled tech workers along with the continuous influx of youthful talent. Both these factors contribute to the startup surge.
However, most of the investments in the state have been concentrated in IT services and the startup culture has also been confined mostly to Bengaluru. Business has to grow beyond and into other districts of the state. This will decongest the city and make for a more equitable distribution of development. In this regard, Tier II cities like Shimoga, Gulbarga, Hubli, Hassan and Mysore, which have very good rail and road connectivity, offer excellent opportunities for growth of Karnataka’s economy in the coming years. Such regions in the state should be promoted to attract investment; creating an enabling ecosystem in these places by replicating the factors and forces which made Bengaluru a hub for economic progress is a good way to go. This requires an area-specific approach because different regions in the State offer varied potential, based on the local availability of resources which need to be tapped for wealth creation and employment generation. This is the urgent need of the hour because growth has to be accompanied by equity across regions and all sections of people. The standard of living of all residents of Karnataka, especially the deprived sections need to be uplifted.
As president of FKCCI, my vision is to extend economic activities beyond Bengaluru to the rest of the 29 districts of Karnataka which are developing rapidly and are expected to do much better in the coming years. We need to showcase the opportunities available in these regions for investors to accelerate their economic progress which has the potential to grow by leaps and bounds, just as Bengaluru has done.
In my opinion, the Industrial policy of Karnataka has been misunderstood to be discouraging to industry since land use cannot now be changed like earlier. Actually, in the long run, this measure will encourage genuine entrepreneurs to invest and discourage land grabbing entrepreneurs from misusing government land allotted for industry purposes. So I think this is a step in the right direction and should be properly understood by investors and not seen as a discouraging move.
Karnataka has around 6, 45,000 youth population in the 25 -35 age group, who need to earn their livelihood. We need to impart skills to them and at the same time encourage them to become job providers by motivating them towards entrepreneurship. There are a lot of schemes to benefit young entrepreneurs but the challenge is to make them aware of these and help them gain access.
The key to Karnataka’s progress is not merely in attracting investments, but creating livelihood opportunities for people in the state. MSMEs have a big role to play in this regard and FKCCI is, therefore, determined to lay greater emphasis on supporting the growth of MSMEs in all the districts of the state. My dream is to unlock the schemes to encourage and support new entrepreneurs, especially among the youth.
In Karnataka, we have a large number of exporters and there is a need to enable them to access world markets. Consequently, FKCCI is organizing a B2B meeting of all the 30 districts of Karnataka in November 2018 and also a meeting of 24 Chambers of ASEAN countries in January 2019, with the aim of showcasing MSME products to the national as well as global markets.
The ease-of-doing-business ranking is an important one since it influences investment and economic activity in a state. With Karnataka losing out to Andhra Pradesh, Telangana and Maharashtra on some projects, the state cannot afford to be complacent. Karnataka has been a pioneer in e-governance and remained ahead of other states in many respects. There is a need for all the departments of the state government to coordinate and work together to ensure that all timelines are met to improve the state’s ease of doing business ranking next year.
FKCCI, as the apex body representing Industry, Commerce and Services in the State has, over the last two years, worked consistently with the district chambers and trade associations to support business activities and address their grievances. We have persistently followed up with the state government departments and other stakeholders to promote the business interests of our members. FKCCI is ready to extend support and cooperate with the government to accelerate economic growth and ensure the all round progress of people of Karnataka.
The writer is President, FKCCI
