Niti Aayog survey on ease of doing business in India

The Niti Aayog survey about the ease of doing business in India has revealed some surprising facts about the Indian enterprises. The report reveals that the awareness about single window systems which was instituted by states is very low among the enterprises across India. The survey was carried out by Niti Aayog along with the IDFC Institute, a Mumbai-based think tank.

About 20% of the recent startups report using the single window facilities which were introduced by the state government for setting up a business. Even among experts, about 41% have knowledge of the existence of these facilities which shows that there is a need for creating awareness. Those cases where there is poor functioning of the service, the functioning should be improved.

The facilitation of a single window system was aimed at increasing the ease of doing business. The system allows businesses to complete the regulatory formalities from a single location. The lack of awareness about the same is surprising. The survey comprised of 3,276 manufacturing enterprises which included 141 early stage firms across 23 manufacturing sector categories. It assessed the implication of the regulations for enterprises by focusing on the time taken for getting various approvals which was higher than the prescribed fee and enterprises’ perceptions of how the regulatory processes impede their business.

The survey also found some surprising facts which mention that the enterprises in high growth states are less likely to report major obstacles in land and construction related approvals as compared to enterprises located in low growth states. Further, enterprises in high growth states take less time on an average for all the aspects of doing business. The high growth states do very well in getting construction permits, labor renewals and access to water and electricity connections. The firms in high growth states report 25% less power shortage in a month as compared to firms in low growth states.

Why it is difficult for firms to scale up or grow in size

For firms with fewer employees, it is different as compared to larger firms. Firms with more than 100 employees take longer to get necessary approvals as compared to smaller firms with less than 10 employees. Larger firms are likely to complain that a major obstacle to doing business is the regulatory requirements. They are also likely to report higher costs for getting the necessary approvals.

The grievances of large firms show that it remains difficult for firms to scale up or expand in size. This is the reason why firms in India remains small.