IET Kranti Nation: Walk The Tech Talk with Dr Jaijit Bhattacharya

My views on currency depreciation last year on CNN TV18

https://www.news18.com/news/business/rupee-appreciates-but-experts-worried-about-further-slide-fuel-to-become-costlier-1875515.html

How Easy is it to really do Doing Business in India?

First appeared in Mint https://www.livemint.com/Opinion/j9Uew2P8hAynnV9dt42cxJ/Opinion--Contract-enforcement-needs-to-be-improved-on-war-f.html

It has been a long a arduous trek for India to move from a pathetic 142 ranking in 2015 in the World Bank’s Ease of Doing Business ranking to the 77^thrank this year. This is a very laudable achievement by any standards, especially given the complexities involved, including multiple governmental jurisdictions in India.

However, the World Bank’s methodology involves only two cities – Mumbai and Delhi. And hence, in the mammoth subcontinent of India, the World Bank’s ranking would not be representative of what the actual Ease of Doing Business in India would be. This is something that was well recognized by the Central government, which initiated a process of ranking of the States on the business process reforms achieved by them. Therefore, there was a broader based attempt by the government to spread the Ease of Doing Business beyond the two cities of Mumbai and Delhi.

But, as is the proverbial saying, the devil lies in the details. India has made impressive strides in areas such as “Trading across Borders”, wherein India’s rank has gone up from 146 to 80. Similarly, India’s ranking in “Dealing with Construction Permits” has surged from 129th to 52^ndrank and India’s rank in “Getting Electricity” has shot up to 24th. However, since this change is limited to only the two cities of Delhi and Mumbai, where there are hardly any manufacturing entities being setup, it distorts the real picture of easy it may be to setup manufacturing facilities in India. The battery of approvals needed to start construction in a state, especially of a manufacturing entity, is not something that even large investments find it easy to handle, leave alone the more modest investors who may want to setup greenfield manufacturing.

Which brings us to the aspect of merely starting a business in India. Despite the many improvements in the process of “Starting a Business”, India is still at 137^thrank out of 190. So as India improves, other countries are improving even more, making it challenging to move up the rank. More importantly, if we are not easy to start a business, then we are nipping many new businesses in their bud, and for whom the rest of ease of doing business becomes meaningless.

More importantly, legitimate businesses will find it difficult to operate in environments where there is a lack of contract enforcement. Contract enforcement is the lifeblood of private enterprise. Sadly, India stands at 164 rank out of 190 countries. As we observe business practices in India, there is significant disregard for upholding commercial contracts. Inspite of regulatory changes allowing dedicated commercial courts to be established by state governments, hardly any state has actually setup the commercial courts which could have helped in greater contract enforcement in the country. And contract enforcement is not just a challenge with other private sector entities but also with the government. Government contracts get modified or nullified post contract signing, leading to significant damage to shareholder value. This has especially been observed in the infrastructure sector, where concessionaire agreements have been summarily discarded, with the remarks that the concessionaire has made enough profits and need hence need not make more profits. This is against the spirit of the contract. If the concessionaire had made “enough” losses, would the government have stepped in and said that they have made enough losses and so government will step in make good further losses? Therefore, if contracts cannot be upheld, the risk of doing business in India goes up very significantly, which is what foreign enterprises who have recently entered India, are discovering. In addition, we are at 121^strank in terms of “Paying Taxes”, which is also a reflection of corruption in the system at the lower levels.

This is also one of the key reasons why Indian capital has been regularly investing outside of India but has been shy of investing within India. 

So, if one finds it difficult to start a business and then finds it challenging to get into any commercial contract and enforce the contract, then the rest of the aspects of Ease of Doing Business become significantly less relevant. India therefore needs to bring in improvement in ease of “Starting a Business” and in “Contract Enforcement” on a war footing, to really make it easier for legitimate businesses to flourish in India and to generate jobs and bring in prosperity.

My views on Cryptocurrencies in CNN TV18

https://www.news18.com/videos/india/reporters-project-why-india-has-banned-cryptocurrencies-1980637.html

My views on Cryptocurrencies in India