Ease of Doing Business in Delhi is Mostly Window Dressing – New Report by Centre for Civil Society

New Delhi: Centre for Civil Society (CCS), India’s leading think-tank advocating social change through public policy, released‘Doing Business in Delhi: An analysis of the progress on business environment reforms in the state’. The report is a compendium of research papers investigating the reality of doing business in Delhi, India’s second largest commercial city. The ‘Doing Business in Delhi’ report puts a reality check into the jubilation around India’s progress in ease of doing business. Many of its findings run counter to the findings of the World Bank’s updated rankings and the claims of Department of Industrial Promotion and Policy of Government of India. The report released in collaboration with Friedrich Naumann Foundation (FNF), New Delhi and ATLAS Foundation, argues that while we are making progress on big-ticket items, at the state and lower levels of the government, we are not embracing the principle of economic freedom for all with any sincerity.

First, the report finds that the license and permit raj governing businesses is still thriving in Delhi, particularly for ubiquitous urban services provided by micro, small and medium enterprises. For instance, the report finds that obtaining essential licenses to open a restaurant takes 120 to 150 days, and costs between Rs. 18,000 to Rs. 1.8 lakh (averaging over 30% of per capita income). Contrastingly, the average time to start an enterprise as recorded by The World Bank is 16 days, and the average cost is about 12% of per capita income. The business environment is also plagued with several imprudent rules which make it difficult for businesses to operate and thrive. For instance, in Delhi all private meat slaughter is illegal due to municipal corporation regulations.

Second, the report finds that efforts to streamline the inspection process are largely a window-dressing. For instance, the Delhi Pollution Control Board, contrary to its claims, has not been using computerised risk assessment for inspection, and continues to make inspection decisions manually through an executive committee, an avenue for bias and rent-seeking. Similarly, Delhi Labour department does not adhere to inspections Standard Operating Procedures, including recording information correctly and consistently, sticking to timelines and maintaining procedural hygiene.

Third, the report finds that measures to improve contract enforcement are not substantive. For instance, while a commercial bench was instituted at the High Court of Delhi to resolve commercial cases swiftly, the same roster of judges hears all cases and no specific time is allocated to commercial cases. Moreover, the time spent on commercial cases is lesser than non-commercial cases and not in keeping with pendency levels.

These findings indicate the need for more effective reforms which enable an exercise of economic freedom while protecting consumers’ interests and fulfilling long term policy goals. The latest ‘Doing Business’ report released by the World Bank recently ranks India at the 77th position, a leapfrog of 23 positions over the past year. However, the report (https://bit.ly/2PpbhN0) and other evaluations of the business environment rely largely on self-reported data, do not account for variations at the state and local level and nearly ignore the small-scale service sector.

About Centre for Civil Society: Centre for Civil Society advances social change through public policy. Our work in education, livelihood, and policy training promotes choice and accountability across private and public sectors. To translate policy into practice, we engage with policy and opinion leaders through research, pilot projects and advocacy.We are India’s leading liberal think tank, ranked 80 worldwide by the annual study conducted by the Think Tanks and Civil Society Program at the University of Pennsylvania.