1. Experts pull plugs in Gujarat’s biz friendly image, slam worst tax administration, high levels of corruption

Experts pull plugs in Gujarat’s biz friendly image, slam worst tax administration, high levels of corruption

A senior IIM Ahmedabad faculty who is also on the Technical Advisory Committee of RBI's Monetary Policy and works closely...

By: | Ahmedabad | Updated: March 10, 2015 9:41 PM
Anandiben Patel, Anandiben Patel Gujarat CM, Anandiben Patel Congress In perception of corruption, Anandi Ben Patel’s Gujarat is the 10th worst state, high levels of corruption, tax administration is not good, says experts. (PTI)

A senior IIM Ahmedabad faculty who is also on the Technical Advisory Committee of RBI’s Monetary Policy and works closely with the Finance ministry slammed Gujarat’s business-friendly image on Tuesday by citing data that showed it having the “worst tax administration regime” and in perception of corruption by the industry than Bihar and that it fared badly on time taken to enforce contracts and solvency processes.

Speaking at a panel discussion on ‘Make in India- Make in Gujarat: Transforming Business, Enhancing Growth” at the CII Gujarat Annual Day 2015 held at a city-based hotel, Errol D’Souza, senior Economics faculty at IIMA cited the 2010 business reports done nationwide and said, “There used to be these lovely surveys on doing business nationwide, for some reason in the last few years they have not taken off. But they are pointers to what’s been happening. If you look at the survey then and the institutional constraints that businesses report it is quite striking that in Gujarat two sorts of variables stand out. One is the perception on tax administration, quotes the worst tax administration than does Bihar.

The survey which is actually pretty robust , the sample sizes are very good and the data survey is done worldwide, so there is no reason not to believe what the survey is saying. The perception of corruption, Gujarat is the 10th worst state, high levels of corruption, tax administration is not good. In fact Gujarat is just one step ahead of Bihar as Bihar is 11th. This is based on data… we tend to think of things in a certain way when you have large mass of data it gives you a little check on reality.”

He added, “If you look at the time and cost of starting a business in Gujarat, then you find that it basically takes 34 days, costs about 46% of the per capita income , which is not too bad. In terms of ease of enforcing contracts and time it needs to enforce a contract, the time you take to go through a court etc, it is 1295 days, this is two thirds longer than in Bihar. Contract enforcement cost in terms of attorney fees is also very high, you pay about 30.9 % of value of claims. Finally in solvency processes and debt enforcement now the bankruptcy code is being thought about, even this is not very good in Gujarat according to the data, which is 6.8 years, which is slightly less than the all India average. You loose a large value for the business when you do it. I’m only reporting the negatives because we talk a lot about and in many other variables, Gujarat is positive.”

Other panelists at the session included Yatindra Sharma, MD of KHS Machinery Pvt Ltd, Ramakant Jha, MD of GIFT city who spoke about the need for evolving Gujarat 2.0 version ably aided by the twin pillars of digitalization and innovation.

Tanmoy Chakrabarty- VP and Head of Government Industry Solutions Unit (ISU), TCS said, “We run tax in 14 states of India, Gujarat was one of the pioneers, therefore their systems right now are definitely jaded and many more states have implemented many more modern, more efficient techniques, including end to end e-filing, e-payments, mobile apps, some of which have to come into Gujarat… The second example I would talk about is financial management again where Gujarat was one of the pioneers. Now this basically manages the money of the government, end-to-end. Now that also Gujarat was a pioneer and there are many more developments that have taken place and can be incorporated in the (Gujarat) 2.0 platform. For example in Karnataka, we close the books of the government daily. In Gujarat it is monthly and daily will bring more efficiency, will increase transparency, in real time give ways and means of the finances of the government on a real time basis. Intent is there in Gujarat, they have to elevate and migrate, leaders here are open, hunger to take it to next level.”

Citing examples of e-filing platform and investor facilitation portal which Gujarat pioneered, Chakrabarty said that the state’s opportunity to become a benchmark for other states to follow lay in becoming the truly digital state in India.

He added, “Fair amount of strides have been taken in state in terms of not only intent but also the execution and the core systems that have been put in place in Gujarat. As you have been pioneers in many areas; going ahead in terms of comparison from other state some of the systems have plateaued and therefore there is a need to rediscover, reinvent and probably bring in next injection of creative technology, transparency and efficiency in the system which will be a catalyst to really fast forward the concept of ‘Make in Gujarat’.”

Apart from many local business heads and corporate professionals, the conference saw eminent speakers and industry bigwigs speak at the sessions including Kunjal Patel, MD of Voltamp Transformers Ltd, Sanjay Kirloskar, CMD of Kirloskar Brothers Ltd, Chetan Tamboli- CMD of Steelcast Ltd, Ajit Ranade, Chief Economist at Aditya Birla Group, Mark Pierce, Australian Consul General among others.

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