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Ease of Doing Business was never focussed earlier. Namumkin Ab Mumkin Hai!

by Samriddhi Patni - Feb 27 2019 2:29PM

The business landscape of a country has a huge impact on the development of a country. Lately, in a bid to make India grow better and faster the government has been doing a lot to boost the business class of the country. Since business is not a product, it is an outcome of several policies and schemes by the government that makes it easy for the business class to practice their profession. Prior to 2014, the business environment was one of gloom and distrust. The policy paralysis of the earlier UPA government led to stalling of projects and building up of NPAs. The struggle of businesses got reflected in the falling GDP until 2014. It is in this background, that the policies of the NDA government to promote business have to be seen.

The government believes that in a country like India, with a large youth population the scope of growth is high. The youth of today will be leaders of tomorrow. To harness the young strength we have, we need to educate them and provide them with opportunities which will further transform the country. To bring new opportunities for the youth of the country Prime Minister Narendra Modi launched the Startup India Scheme to encourage the young entrepreneurs to involve in innovative businesses for a better future, and creating job opportunities. Till date, more than 16000 startups have been recognized. The touchstone of Angel Tax was also sorted out recently, making it easy to access funding.

Mere recognition is not enough. For a business to grow fast adequate finances are required. To ‘Fund the Unfunded’ Prime Minister launched a scheme aiming to uplift small businesses and entrepreneurs - Pradhan Mantri MUDRA (Micro-units Development and Refinance Agency) Yojana, which provides loans up to Rs. 10 lakh to the non-corporate, non-farm small/micro enterprises, where the government bears the responsibility of the loan. The scheme has been a grand success with more than 15 crore loans granted totaling to an amount of 7 lakh crore rupees.

The MSMEs are also in the spotlight. The loan sanctioning has always been tedious and this processing time often affects the business. To reduce the processing turnaround from 20-25 days to 59 minutes, the government launched a special portal for the 59-minute loan scheme under the MSME Program. The loans will be processed without human intervention sanction and/or disbursement stage. An MSME can take a loan from Rs. 10 lakh to Rs. 1 crore, with the rate of interest 8% onwards, with government linking the platform directly to CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) scheme.

Earlier to start a business in India entrepreneurs had to get VAT registrations from the state sales department, with each state having different procedures and fees. With Goods and Service Tax (GST) aka One Nation, One Tax we got a centralized process eliminating multiple VAT registrations, making GST registration applicable across India, therefore increasing the ease of doing business. MSMEs which were unorganized, lacking documentation often leading to inefficiency, the introduction of GST introduced MSMEs to formal business. Over 1.12 lakh loans were processed by the end of 2018!

Making the business environment favorable, smooth and predictable is also equally crucial. For big corporates, steps like easing of FDI rules, ease of compliance with company laws, single-window clearances and a helping hand to de-stress the corporate balance sheets have been undertaken. Access of funding from foreign nations has been made easy through liberal External Commercial Borrowing norms.

A similar focus has been laid on MSME too. The Budget of 2018-19 revised the definition of MSME from investment based to turnover based. This made it easy to comply with GST norms too. Owing to the impact of GST, the MSME were given leeway by letting their loan accounts be classified as “standard” till 31st December 2018, even if they defaulted to pay up loans after a certain time. This ensured MSME loans don’t get classified as NPA. Udyog Aadhar ensured online and easy compliance with labor laws.

The business-friendly norms and regulations impact the way business is conducted in India. As per the Ease of Doing Business ranking released by World Bank, India now ranks 77 among 190 countries assessed. India being recognized as one of the top improvers for the year has improved its rank by 65 positions in last 4 years, making India the first BRICS and South Asian country to be recognized as top improvers in 2 consecutive years.

There was a time during the License-Raj era that profit was considered to be a bad word. Businessmen were perceived to be thieves and exploiters of labor. The results were a paltry GDP growth rate and an imminent crisis in 1991. India has traveled a long way since those dark days and made business easy and simple!

 

Samriddhi Patni is an analyst and columnist based out of New Delhi. She keenly observes developments in the digital and financial sectors. 

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