When it comes to the ease of doing business, there is no doubt that India's performance is shameful. In 2014 we ranked 142nd out of 189 nations, down two ranks from last year. The reasons are not hard to find. Layers of overlapping bureaucratic procedures, corruption, excessive regulations, unclear policies and a largely ineffective judicial system are some of the main factors. 10 years of the UPA government only made it worse. We are now in a situation where India ranks 186 out of 189 nations in terms of enforcing contracts. In this most basic of business requirements, India fares better than only Angola, Bangladesh and Timor-Leste!
However, there may be light at the end of the tunnel. The Modi government seems to be in a hurry to change the situation for the better. Prime Minister Modi has set out an ambitious goal for his government: to get India's ranking up into the top 50 within the next two years. For this purpose, the Department of Industrial Policy and Promotion (DIPP) has drawn up a detailed list of actions to be taken by various ministries and departments. The Prime Minister's Office (PMO) has sent out letters to these ministries and departments asking them to speed up the process and by giving a deadline of 31 March 2015.
This is certainly good news we believe. By clearly fixing responsibilities and ensuring time bound action, the government can make good progress on this front. However, let us be very clear about one thing: this must be only the beginning. Faster clearances and fewer procedures are most welcome but they will not be enough. If India has to emerge as one of the most preferred business destinations in the world, we will need to move fast and decisively on many fronts.
State governments will need to be brought on board; most of the paperwork will need to be put up online, fast track courts will have to be established for speedy conflict resolution and perhaps most importantly, corruption must be drastically curtailed. For the government's dream to become a reality, it will require a lot of political will and close co-ordination between ministries and departments. There will be legal issues as well that will need ironing out. Having said this, we believe that the Modi government has definitely set the ball rolling in the right direction.