The government has set the ball rolling on the second round of Ease of Doing Business reforms, as part of multi-pronged strategy to catalyse the private investment cycle.
According to official sources, it has prepared a draft framework to assess the cost of regulation (CoR), that is, the fraction of overall cost of doing business in the country that is attributable to compliance with various regulations and legal requirements. The estimate will be used as a critical input to another set of administrative reforms being planned to bring these costs down, the sources said.
The idea is to not just curb the financial costs, but also cut the procedural delays that contribute to these.
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The draft framework has been prepared in consultation with states and union territories, and businesses. Wider consultations will be held with industry chamers and institutions like Institute of Chartered Accountants of India (ICAI) to finalise it.
ICAI along with Federation of Indian Chambers of Commerce and Industry, Federation of Indian Micro and Small & Medium Enterprises (FISME) have been working with the department for promotion of industry and internal trade (DPIIT) since CoR framework was mooted to assess time and cost impact of various regulations for important areas across business lifecycles.
The framework pays attention to complex information requirements, substantive compliance obligations, frequent un-coordinated changes, delayed approvals and over or under regulation. It also includes Regulatory Impact Assessment or cost-benefit analysis of regulations, the sources added.
The services where regulations are being relooked at include land allotment, building plan approval, factory building plan approval, factory licence and its renewal, environment clearance, water and power connection, and no objection certificate for fire.
The framework deals with CoR in areas like time cost of regulations, intermediary cost (professional fee), delay cost and statutory cost (fee payable to government).
Areas impacting time costs are long and complex application forms, coordination with multiple departments, unclear information and compliance requirements, inefficient query management system. Within intermediary costs include uneven frequency of compliance requirements by different departments, maintaining multiple registers and independent certification or audit requirements.
Costs from delays come through lack of coordination among departments, queries at the last moment and ineffective single window systems. Statutory costs include charges prescribed in regulation that are payable to the government such as administrative charges, licence, permit, registration, accreditation and fees, levies, and mandatory insurance premiums.
The first round of ease of doing business reforms had led to a jump in India’s global rankings on the Doing Business Report of the World Bank to 63rd position from 142nd position in 2014. These reforms have brought down the time taken to start a business through simplification of procedures related to applications, renewals, inspections and filing records.
Legal provisions were also rationalised by repealing, amending or omission of redundant laws, digitization of government processes by creating online interfaces and decriminalisation of minor, technical or procedural defaults.
The second round of reforms seek to go deeper and deal with everyday issues faced by the businesses that add to their costs and competitiveness.
From: financialexpress
Financial News
