CCS paves way for ease of doing business reform in India

Indian businessman

The New Delhi-based Centre for Civil Society (CCS) has been recognized, for its work reducing barriers to prosperity and opportunity in India, as the winner of Atlas Network’s $50,000 Leveraging Indices for Free Enterprise Policy Reform (LIFE) Award. CCS has been driving a public dialogue on the improvement of India’s competitiveness and ease of doing business, and its role as a thought leader has propelled many associated policy wins. The LIFE award was a culmination of the three-year grant program offered to 16 Atlas Network partners. Of the 16, CCS was chosen as the winner of the $50,000 award. The LIFE grant program was made possible by the generosity of the John Templeton Foundation and several other supporters of Atlas Network.

“The winning of the award is first of all a tremendous morale boost to the CCS team and particularly those who worked on the project,” said Parth J Shah, president of CCS. “We have been doing this work for a long time with few successes, but we now know our efforts are top-notch within the think tank community. It's a heart-warming recognition, validation, and appreciation, which will inspire us to continue the good fight. It strengthens our credibility and helps amplify our noise in the ears of the state.”

A comprehensive campaign for multifaceted change

CCS’s work on the project has culminated in numerous policy wins promoting the ease of doing business in India. One of its greatest victories was advocating for and realizing the elimination of minimum capital requirements for new businesses in 2016. Previously, India’s minimum capital requirements stifled entrepreneurship throughout its economy by requiring 111.2 percent of per-capita income to be deposited before opening up shop. Those requirements are no longer a barrier to starting a business, nor is the need to obtain a government certificate before beginning business operations, because both were rescinded due to CCS’s policy reform efforts.

“The burden of the Indian state on the people is not as much in high taxes but in myriad regulations that minutely control business decisions and activities,” continued Shah. “The laws define the minimum distance that must be kept between two water trollies in public space; local regulation requires that the owner and driver of a cycle rickshaw must be the same person. So, in the Ease of Doing Business work of CCS, our focus has been on removing or amending laws and regulations. Where it's difficult to do that, we target implementation of those laws and regulations – fewer, simpler processes, fewer permits and licenses, fewer points of contact with the bureaucracy.”

CCS employed a comprehensive approach to driving ease of doing business reforms in India:

Removing Minimum Capital Requirements

The requirement for paid-in minimum capital is now zero (from 111.2 percent).

Easing registration

CCS helped bring about reductions in both the number of procedures and length of time required to register a business.

Repealing out-dated legislation

Out of the 100 laws proposed by CCS for repeal to the Union (federal) Government relating largely to business regulation, outmoded labor relations, and arbitrary taxation, to name a few, 23 laws were successfully repealed. In a similar exercise with the state of Maharashtra, the state government repealed 19 out of 25 proposed laws.

Making registration more accessible

CCS’ recommendation for a one-stop online registration portal for businesses relating to the registration for Permanent Account Number (PAN), Tax Deduction Account Number (TAN), Employees' Provident Fund Organization (EPFO), and Employee's State Insurance Corporation (ESIC) has been implemented. The registration can now be made through a single form (applicable for multiple registrations) on an “eBiz” portal.

Easing registration at the state level

CCS has similarly advocated easing the opening of schools as a part of its ease of doing business and education policy reform work. It scored a win when Brihanmumbai Municipal Corporation (BMC) launched an online registration portal for private primary schools in the state of Maharashtra. Registration of such schools formerly involved an arduous process concerning several government offices across the state, requiring 17 documents and taking 6 months. The online registration service reduces the registration time to 35 days.

“While the annulment of minimum paid-in capital [requirements] has been a big win for us, we are also excited about the endorsements and acceptance that our ideas and recommendations have received from [government ministries and agencies] in India,” said Bhakti Patil, senior associate of development for CCS. “They have meant for us, a marked shift in the government mindset, and have inspired us to continue the good fight, to translate ideas into policy reform. For instance, our recommendations have been endorsed by the Upper House of the Indian Parliament, they have also been incorporated into the Department of Industrial Policy and Promotion’s – the apex body responsible for facilitating the ease of doing business in India- Reform Action Plan … One of our biggest wins, of course, has come from our long fight for the rights and recognition of street vendors in the state of Rajasthan. It’s been a remarkable journey for CCS and for the street vendors who have so doggedly battled extortion, arbitrary regulations and harassment in earning a living on the streets of Rajasthan.”

Measurable Impact

Coinciding with CCS’s policy successes have been an increased rating in the World Bank’s “Doing Business Index,” up from 142 of 189 in 2015 to 130 in 2017. India’s ranking in the “starting a business” indicator was 179 of 189 countries ranked in 2014. It climbed to 158 in 2015, and 155 in 2017. Meanwhile, its ranking in “enforcing contracts” category rose from 186 of 189 in 2015 to 172 of 190 in 2017. This demonstrates directly how responsibly developed indices can be leveraged for policy reform. While India has much work left ahead of it to make itself a more amenable environment for entrepreneurs and businesses to thrive, CCS has jumpstarted the country’s recent move to transforming a bureaucratic landscape fraught with red tape into one that fosters productive economic activity and growth.

Throughout its work CCS sought input and feedback from entrepreneurs on-the-ground to ascertain whether the hard-fought improvements in the World Bank’s Doing Business rankings had actually filtered down to those who in theory would benefit from them. Its online crowd-sourcing initiative – available at easeofdoingbusiness.org – gathers and shares human interest stories of entrepreneurs about their experiences in setting up new businesses throughout India. CCS received feedback from all over India, representing diverse industries, from E-commerce and education to agriculture and advertising. Common complaints documented were lack of information (as well as misinformation), bribes demanded by corrupt officials, delays in paperwork processing, and over-lapping jurisdictions, rules, and regulations. This sea of primary data helped CCS build targeted solution-based reform recommendations and enabled it to revisit its strategy as new information was received.

“There is an urgent and increasing relevance of the ease of doing business reforms in India – particularly for reforming the regulatory environment to incentivize formalization of enterprises, marking a shift from the informal, shadow economy to the formal sector,” concluded Patil. “The full realization of the index’s potential also necessitates addressing policy gaps and regulatory bottlenecks that continue to stymie efforts for more inclusive markets, fostering greater freedom and prosperity for India’s people.”

Leveraging Indices for Free Enterprise Policy Reform (LIFE) Grant Program

The LIFE grant program provided grants to sixteen Atlas Network partners to conduct research, advocacy campaigns, and media campaigns to promote policy reforms that measurably move the needle in a specific prominent ranking or index. Such indices include the Ease of Doing Business Index by the World Bank Group, the Economic Freedom Index by the Heritage Foundation in partnership with the Wall Street Journal, and the Economic Freedom of the World Report by the Fraser Institute. The participants in the grant program received US$100,000 divided over the course of three years, starting in 2015.

Additional noteworthy participants in the Leveraging Indices for Free Enterprise Policy Reform (LIFE) grant program were The TaxPayers’ Alliance (TPA) and Lithuanian Free Market Institute (LFMI).

The TPA's LIFE project centered around its Spending Plan, which set out a comprehensive program of ways in which the UK’s government could and should reduce public spending. The TPA’s goal was to reduce UK public expenditure, as measured by the Heritage Foundation’s Index of Economic Freedom, from 48.2 percent of GDP in the 2014 edition of the Index to 44.7 percent of GDP or lower in the 2018 edition. As measured by the 2017 Heritage Foundation’s Index of Economic Freedom, the UK’s public expenditure as a proportion of GDP had measured 44 percent over the last three years. Likewise, the UK’s score for Government Spending in the same index has now risen to 41.9 (significantly up from 30.3 in 2015). Promoting good governance, cutting wasteful spending, and curtailing the size of government all go to benefit UK taxpayers.

Access to electricity and an overbearing set of regulations on the construction industry in Lithuania have hamstrung would-be entrepreneurs and nascent businesses. LFMI put forward reputable policy proposals and encouraged the government to pass several meaningful, commonsense reforms that empower Lithuanians to improve their own lives.

In March 2016, the Ministry of Energy incorporated four LFMI proposals for accelerating electricity connection that reduced the number of days for getting connected from 95 to 75 and resulted in many other improvements relating to access to electricity. A few months later in July 2016 a piece of legislation reforming the framework regulating construction was passed and produced many positive results, among them being the reduction of time required to get a construction license by over 30 percent (103 to 69 days) and the removal of two excessive procedures for getting construction permits, along with other associated improvements in Lithuania’s construction industry specifically and its climate for doing business generally.

Read DB INDIA 2014

Read DB INDIA 2015

Read DB INDIA 2016

Read DB INDIA 2017

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