Ease of Doing Business: A Step to Upsurge Indian Economy

Indian businesses have got a big nod from the government to ease the process of business as a measure to give a boost to the country’s economy. The Finance Ministry has stated that five states would be eligible to borrow an additional fund of Rs.16.728 crore post the completion of the stipulated reforms taken for ‘Ease of Doing Business’. The states that get access to borrow extra are Andhra Pradesh, Karnataka, Madhya Pradesh, Telangana, and Tamil Nadu. This decision has been taken in the month of May this year to give extend the borrowing limits to states with reforms to facilitate the ease of doing business.

In the World Bank’s ease of doing business index, India has moved reached 63rd position among 190 economies. India’s ranking has remarkably escalated in the last few years, with the scope to enhance the EDB with proactive policy action like the domain of enforcing contracts, initiating a business, and registering property. With its strong commitment towards enhancing the ease of doing business and innovation ecosystem that would boost the Indian economy globally in the following few years relying on science, technology, and innovation across every sector. However, this could be expected as the ill effect of the COVID-19 relaxes.

Rajiv Kumar, Vice Chairman Niti Aayog states, "Steps and reforms have been taken by the government in all the sectors, like agriculture, modern medicine, traditional medicine, New Education Policy, small and medium enterprises, labor sector and so on to target being among the world's top three economies." Commenting on the structural reforms of the government to help the Indian economy compete with the best of the world, Kumar further adds, "The government is committed to improving the ease of doing business, innovation ecosystem where every school student has access to the innovative tools and trends."

Therein, the center should be the primary movers of producing knowledge that utilizes knowledge with the help of appropriate stakeholders and also be a motivation for other players to take a step ahead in the research challenges. Alongside, our country has also not utilized the complete potential as an FDI destination over the past few years despite successive liberation of sectoral caps as well as projecting the attractiveness of its domestic market.

Moreover, India has certainly elevated its position despite its FDI failings has bettered its Ease of Doing Business ranking globally by 79 positions that have elevated from 142nd place to 63rd place duration of five years during the period 2014 to 2019.
The recent FDI policies, which includes proscribing FDI in only eight sectors, should have grabbed the investor confidence and the inflow of FDI should expand manifold, inconsiderate of these presuppositions the paper indicates that a completely different picture arises when one looks closely at the FDI statistics.

To match the need for the states' extra fund on account of the COVID-19 pandemic, the Centre has decided to raise the borrowing limit of the states by two percent of their Gross State Domestic Product (GSDP), over and above the three percent limit set under the Fiscal Responsibility and Budget Management (FRBM) Act.

Nevertheless, the five states are expected to complete four specific reforms namely implementing 'One Nation, One Ration Card' system, ease of doing business reforms, urban local body/utility reforms, and power sector reforms at the earliest. Thus, such states would get the benefit of additional borrowing that is equivalent to 0.25 percent of their GSDP for completing each reform. This facility of additional borrowing of up to Rs 2.14 lakh crore is available to the states on completion of all above mentioned four reforms.
Thus, analyzing the report it is been noted that as of now, 10 states have implemented the One Nation One Ration Card system, 5 states have done Ease of Doing Business reforms, and 2 states have done local body reforms. Hence, this initiative taken by the government is expected to push the Indian businesses to gear up as that result would show up in the country's economy.