Odisha Completes Ease of Doing Business Reforms to become the 7th State of the Country

IN NEWS

Odisha has become the 7Th state, after Andhra Pradesh, Karnataka, Madhya Pradesh, Rajasthan, Tamil Nadu and Telangana to achieve the ‘Ease of Doing’ business reforms in the country.

ABOUT

1. Department of Expenditure, Ministry of Finance has stipulated that Odisha has successfully undertaken the ‘Ease of Doing ‘reforms to become the 7th state in the country.
2. This would help the state to get additional grant of Rs 1,429 crore through open market borrowings.
3. Until now a total of additional grants sanctioned to other six states, Andhra Pradesh, Karnataka, Madhya Pradesh, Rajasthan, Tamil Nadu and Telangana is Rs 20,888 crore.
4. To enable faster growth of the economy, Government of India in May 2020 decided to give additional grant permission to the states those who completed the ease of doing reforms.
5. Seeing the requirement of resources during COVID pandemic government has increased the borrowing limit by 2 per cent of the state GSPD. Half of this additional (extra) grant was to be given to states who undertake citizen centric reforms.
6. The four citizen centric areas where reforms where spotted were (a) Implementation of One Nation One Ration Card System, (b) Ease of doing business reform, (c) Urban Local body/ utility reforms and (d) Power Sector reforms.
7. Hitherto, One Nation One Ration Card system has been implemented in 10 states, Ease of Doing business reforms have been completed by 7 states and two states have done local body reforms.
8. Reforms that are set forth for additional borrowing permissions to States are: a) Fulfillment of first assessment of ‘District Level Business Reform Action Plan’. b) Withdrawal of prerequisite of renewal of registration certificates/approvals/licences obtained by businesses under various Acts. c) Implementation of computerized central random inspection system.

Ease of Doing Business

Two leading economists at the World Bank, Simeon Djankov and Gerhard Pohl, jointly created the Ease of Doing Business Index. Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.

A nation's ranking on the index is based on an average of 10 sub-indices:

• Start of business – Procedures, time, cost, and minimum capital to open a new business
• Dealing with construction permits – Procedures, time, and cost to build a warehouse
• Getting electricity – procedures, time, and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse
• Property registration – Procedures, time, and cost to register commercial real estate
• Getting credit – Strength of legal rights index, depth of credit information index
• Protecting investors – Indices on the extent of disclosure, the extent of director liability, and ease of shareholder suits
• Paying taxes – Number of taxes paid, hours per year spent preparing tax returns, and total tax payable as a share of gross profit
• Trading across borders – Number of documents, cost, and time necessary to export and import
• Enforcing contracts – Procedures, time, and cost to enforce a debt contract
• Resolving insolvency – The time, cost, and recovery rate (%) under a bankruptcy proceeding

India ranks 63rd out of 190 nations in Ease of Doing business, 2020. India has jumped 14 positions in comparison to previous year. New Zealand has been at the top rank since past three years from 2018 to 2020.

Department for Promotion of Industry and Internal Trade (DPIIT) ranked Andhra Pradesh as the top state in the annual ranking of states and Union Territories in ease of doing business. The ranking promotes completion among states that improves the business climate to attract domestic as well as foreign investments. Uttar Pradesh is at the 2nd position registering a jump of 10 places in the rankings.

The broader aim of attracting investments and escalating ease of doing business in each State was sought to be achieved by introducing an element of healthy competition through a system of ranking States based on their performance in the implementation of Business Reform Action Plan.