Representational image of a restaurant in Hauz Khas Village, New Delhi | Photo: Commons
Representational image of a restaurant in Hauz Khas Village, New Delhi | Photo: Commons
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New Delhi: In Delhi, buying a gun is far easier than getting a licence to open a restaurant, according to the 2019-20 Economic Survey.

An individual needs to show just 19 documents to procure new arms in Delhi, as against 45 documents to get a restaurant licence. The individual will also need 26 approvals to open a restaurant, as against four in China or Singapore, the survey states.

The survey’s findings show that while India has climbed up the World Bank’s Doing Business rankings — from 142nd position in 2014 to 63rd in 2019 — it still has a lot of catching up to do compared to countries in South-East Asia and beyond.

“A lot more needs to be done… Some further simplification of processes in India has been implemented very recently, but it is too early to gauge their impact,” the survey states.

It adds that in a sector like services, which is a big employment generator, unnecessary delays will have an adverse impact on the economy.


Also read: How Economic Survey used ‘Thalinomics’ to defend Modi govt’s inflation management


Registering property, paying taxes still a problem

The Economic Survey says India continues to trail on parameters such as Ease of Starting a Business, where it is ranked 136th, to registering property (154th), paying taxes (115th), and enforcing contracts (163th).

Registering a property in India takes nine procedures, at least 49 days, and 7.4-8.1 per cent of the property value. Compare this to New Zealand, which takes only two procedures and a cost of 0.1 per cent of the property value.

“…the number of procedures, time and cost have increased over the last 10 years,” the survey notes, adding that it takes 35 days to get a water and sewerage connection in Delhi.

The survey states that though the number of tax payments per year has significantly reduced from 59 to 12 over the last decade, the time spent in paying tax has not reduced much.

“While India takes 250-254 hours per year to pay taxes, New Zealand spends just 140 hours a year,” it says.

The Economic Survey also points out the improvements in some areas, such as the process to obtain construction permits, which has improved considerably over the last five years. In Delhi, it takes just four months to obtain a construction permit, as against a minimum of a year earlier. But even then, India is nowhere near a territory like Hong Kong, where it takes just over two months to obtain a construction permit.

India comparable to Indonesia & Brazil in starting a business

The Economic Survey notes that China fares much better than India on virtually all parameters. However, in some areas, comparisons with other nations are not so one-sided.

“An entrepreneur has to go through 10 procedures to set up a business in India, taking 17-18 days to do so. On the other hand, Indonesia and Brazil require one extra process than India to open a business,” the survey states, adding that Indonesia takes four days less than India to complete the process, while Brazil takes almost the same time.

Countries that have less cumbersome processes to start a business than India include Pakistan, Turkey and Sri Lanka, which are ranked 72nd, 77nd, and 85nd respectively on the this parameter.

“A major challenge most companies face is the complex architecture of the Indian governance framework, including the density of legislation and statutory compliance requirements,” the survey states.

To boost India’s export competitiveness, the efficiency of logistics within India needs to improve, the survey adds. It quotes a study that found that an apparels consignment going from Delhi to Maine in the United States takes roughly 41 days, but 19 of these are spent within India due to delays in transportation, customs clearance, ground handling and loading at sea-ports.


Also read: It’s not inflation but economic stagnation that poses a bigger worry for India


 

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