No Ease Of Doing Business

17 September 2015
Rising Kashmir
Zafar Choudhary

Srinagar: Jammu and Kashmir these days, it seems, has turned into a highly productive news factory. New trends in insurgency, Centre's indifference in extending economic support and bickering on petty issues in the ruling alliance is daily staple of the news mill while as the most recent leads are catchier and newsier. The High Court intervention on enforcing beef ban; whether the marathon runners were molested; whether separatist veteran Syed Ali Geelani operates a twitter handle are the issues that are shaping the recent debates. So it is obvious that Jammu and Kashmir's ranking by a recent World Bank report on the 'Ease of Doing Business' could not catch much attention -neither in Kashmir nor in Jammu, neither among the pro-beef nor among the anti-beef lobby. The Report Since earlier this year all states in the country have been participating in an agreed set of reforms to make setting up of businesses easy. Prime Minister Narendra Modi's flagship 'Make in India' Programme identified and finalized a 98-point action plan for 'Ease of Doing Business' in a meeting of state Chief Secretaries in December 2014. The current report is an evaluation of the progress made on the action plan. Therefore, the World Bank report, which has placed Jammu and Kashmir at rank 29, captures findings of the evaluation of implementation of 98-point action plan. Not only the poor ranking but also the detailed analysis on reforms agenda suggests that Jammu and Kashmir has made very little progress in the first six months (evaluation was carried out in the month of June, 2015). To be able to understand more clearly as where the state lags behind in improving environment for setting up businesses, one has to look at the eight critical areas which serve as framework on the basis of 98-point action plan. These areas of assessment are: setting up a business, allotment of land and obtaining construction permission, complying with environmental procedures, complying with labour regulations, obtaining infrastructure related utilities, registering and complying with tax procedures, carrying out inspections and, finally, enforcing contracts. India is currently implementing a 98-point action plan to make setting up businesses less cumbersome. The report has converted the implementation status of each state into a percentage on the basis of which the state rankings have been worked out. So, Jammu and Kashmir's percentage ranking is at 5.93 and there are only three states which are still worst. Guess it right! These are Meghalya, Nagaland and Arunachal Pradesh. The survey has divided the states into four groups viz Leaders (those scoring above 75 per cent; not single in whole country), Aspiring Leaders (scoring between 50 and 75 per cent; Gujarat leads this group of seven states), Acceleration Required (there are nine states in this category of 25-50 per cent score; our neighbouring Punjab is one among them) and last category called Jump Start Needed features Jammu and Kashmir almost at the bottom of 16 other states. Where is J&K placed Sitting as proverbial crown of India, Jammu and Kashmir has been ranked at the bottom of the list of states in an assessment of prevailing system environment for setting up businesses. In a state constantly and profusely bled red by heavy dependence on government jobs the finding of poor business environment is perhaps bad of all the news. Way back in 2006 the then Prime Minister Manmohan Singh had constituted five Working Groups to study and make recommendations on 'issues' of Jammu and Kashmir. One of the Working Groups, heading by a former Reverse Bank of India Governor, dealt with the issue of Economic Developments. The report submitted in 2007 made a detailed account of obsolete and cumbersome laws coming in way of setting up businesses. A look at the recent report of the World Bank assessment on 'Ease of Doing Business' which puts Jammu and Kashmir at 29th number, would suggest that recommendations of the Prime Minister's Working Group on economic development must have been gathering dust on some shelf. The Public Sector Guarantee Act of 2011 has been lauded as landmark reform which could help simplify setting up businesses. The Act covers a number of services related to setting up industries and businesses in Jammu and Kashmir. The services range from that of commercial tax, getting power connections and pollution clearances etc. The Act also lists punitive provisions if the services are not delivered within a stipulated period. The areas of concern where Jammu and Kashmir needs to focus more have been identified as: single window clearance system, construction permits, property registration, taxation laws, labour laws and laws related to inspections etc. Is Article 370 Obstruction? The answer is no. With Jammu and Kashmir sitting at the bottom of the list of those states where investors would not like to venture in, many may want to attribute this scenario to the disturbed political and security situation or the special status, particularly in terms of land acquisition. Interestingly, the so called special status and Article 370, as far as this study is concerned, is neither an advantage nor an obstruction in creating a business environment in Jammu and Kashmir. Comparability across all states has been taken as a key factor in the methodology. This means, the factors identified for enabling ease of doing business are comparable across all states, Jammu and Kashmir being no exception. Further, in case, a particular factor is not relevant for implementation in a state, the same has not been considered for assessment of implementation.