In New Zealand, it takes one procedure and one day to start a business. In India, it takes an average of 12 procedures and 34 days. Costs of doing the same are 0.4% and 47% of income per capita in New Zealand and India, respectively. Even the Pakistanis pay almost 4 times less than entrepreneurs in India to start a business. But within India, there are great variations. For example, the value-added tax certificate of registration can be obtained within 24 hours in Madhya Pradesh and Rajasthan, but takes 25 days in Kerala. These are some of the findings of the World Bank and the International Financial Corporation?s Doing Business rankings for 2009. We find that they illustrate two main points. One, India?s regulatory environment still has a long, long way to go before reaching international benchmarks for helping unleash entrepreneurial forces. We might even be seeing some regression on this front given the fact that India has dropped down two ?ease of doing business ranks? to number 122 over the past year (as opposed to New Zealand staying put at the second spot). Two, on a more buoyant note, if individual cities and states in the country just adopted each other?s best practices, India would gain easy ascendancy in the international rankings game. As Doing Business reports, cutting the time to get construction licences to build a warehouse to the level of Hyderabad?80 days?would put India ahead of Germany. That?s just one example from a pool of plenty.
If we give any weight to studies suggesting that 85% of reforms occur in the first 15 months of a new administration, then this is the best of times for them to be undertaken in India. Again, we highlight two main points. The first concerns Mexico. When the first subnational Doing Business study of the country was published in 2005 and administrators found themselves challenged to explain why it took more time and money to do business on their beat, things changed. Subsequent reforms cut the time to start a business from 58 to 27 days. Second, if we just look at the kind of impact that already instituted reforms have had, instituting more of the same becomes a no brainer?quite apart from proving wrong the cynics who can?t remember the last reform they saw. For example, the Ministry of Corporate Affairs? national e-governance initiative?MCA-21?for electronic business registration has seen company name approval come down to 2 days from 4-6 in 2006. Technology and consistent governance across states seem the magic combination for the future.
