Essay – Role of Bureaucracy and Ease of Doing Business in India
The bureaucrats in India are the actual change makers and that is why they have been called the backbone of the country. The policymakers make the policy but it is the bureaucrats that ensure the implementation of it. Therefore, it is surprising that while the bureaucrats are crucial for our country, the word, ‘bureaucratisation’ has a negative connotation. Thus, when talking about case of doing business, we must realise that, although the significance of bureaucrats cannot be undermined we should be careful that there is reduction of bureaucratisation.
Improving the case of doing business requires improving the regulatory environment for which reforming the bureaucracy is indispensable. Indian bureaucratic structure carries the burden of the colonial past, which is more inclined towards strict regulation than allowing autonomous functioning of the business entities. However, there is also a legitimate fear that policies that are more liberal might encourage cronyism, collusions and corruption. What is required is healthy intervention by the bureaucracy.
The popular perception is to ensure reform among the top-level offices. It is believed that it will have a trickle-down effect. While change is essential in the higher level of bureaucracy, the middle and lowers levels cannot be ignored. It has been found that officers at these levels are not amenable to changes, which they believe, encroach their authority. It can be as simple as making registration online which officers might oppose. It will be a wiser approach to target all officers across positions.
Bureaucratic delays are one of the biggest reasons for the low rank of India in the Ease of Doing Business Report by the World Bank. These delays are encountered by business people at every stage of the process — from registering themselves to exiting the market. Delay is not confined only when a company wants to enter or exit a market. It is prevalent even during the routine work. Business entities have to take numerous clearances. Apart from delay, it also adds to their costs which make India a less attractive market especially for entrepreneurs.
The problem of delay is often caused due to large number of rules and regulation. To circumvent these, it makes more sense to take the illegal route. Over regulation, hence, breeds corruption and paying bribe becomes the new norm.
Rule Making Power
Bureaucrats being the permanent executive are also involved in making delegated legislations in the form of rules and regulations. There have been complaints by small businesses that sheer number of regulations makes it difficult for them to enter the market as it immensely increases their input cost. Additionally these regulations are changed frequently which makes the business environment uncertain. Certainty, on the other hand, certainty is needed for entities to have sustained profits.
Although change of rules is understandable as it may be necessary at times, the timing of the same must be factored in. Any change in the middle of the financial year is naturally going to disturb any planning done by the companies.
Thus, Suggestions of the Economic Survey are valuable in this regard. It suggested publishing rules in three languages and vouched for Transparency of Rules Act (TORA). In this digital era, making rules available online can go a long way in building confidence among business fraternity. To take an example, tax compliance by companies will obviously be better if they know what they have to comply with in the first place.
Additionally, the turf wars between various departments of the government such as environment department, electricity department, land office, etc. makes the corporates run from office of one to another for clearances of all kind. The bureaucracy must invest in single window clearances. The bureaucratic vision must incorporate the perspective of the companies who have to interact with all branches of government in order to operate. A bureaucratic set up that has departments working in isolation with each other makes it difficult for commerce and trade to flourish.
Innovative procedures to smoothen the whole process are necessitated. However, this is possible only when decision makers are safeguarded against their decisions that had poor consequence but were taken in good faith. Bureaucrats are always under the scrutiny of various vigilance and oversight bodies, which cripples them to take innovate measures. They feel more obligated to follow the rule than the objective for which the rule was made. Thus, more space must be given to the officials so that they can work efficiently.
Minimum Government and Maximum Governance
One mantra that can be useful in interactions between the government and business persons is of ‘minimum government and maximum governance’. Businesses prefer less interference of the government. Therefore, they should be informed the rationale of any intervention and unreasonable inspections must be curbed. Adequate IT knowledge can smoothen the function of bureaucrats in dealing with businesses. Further, professionals like CA, CS and lawyers can work as quasi regulators. Bureaucrats can do a post mortem for validation. If these professionals err then they can be separately dealt with.
Another problem encountered by business persons is lack of exchanges with government officials. It is well known that only few big players have access to the officials at senior levels where they can voice their grievances and hope for a better policy. However, most do not have this access and therefore are left out. Usually the small and medium enterprises are at the receiving end of it. Their peculiar problems are not addressed. Government officials therefore at all levels must take into account the viewpoint of businesses across spectrum. Bureaucrats must realise that they do not have specialised training and therefore the inputs of business entities is beneficial for better policymaking.
The ease of doing business is pre-requisite for growth of a country. Bureaucrats are mindful of the same. That is why in four years India managed to improve its ranking from 142 to 77. It will be incorrect not to give bureaucracy its due credit. There is general awareness among the bureaucrats regarding the role played by them in ensuring ease of doing business. Therefore, they have tried to be at the helm of various reforms in this direction. For instance, the Secretary of Department of Industrial Policy and Promotion (DIPP) started the system of ranking states in order to increase competition among them. These ranking were based on ability of states to ensure ease of doing business norms.
Let bureaucracy remain a steel frame, as envisaged by Sardar Vallabhbhai Patel and not a steel cage for business in India. As stated by Prime Minister Narendra Modi besides working to improve the ranking of ease of doing business, focus should also be on increasing ‘ease of living’ for small businesses and common person.
The bureaucratic hurdle can be surpassed if a cultural change is effected in the way civil so function. This will require busting the myths — that businesses prioritize only profits, which of bureaucracy are just to regulate and lastly that businesses need to constantly prove that they are complying with the law on paper. Bureaucrats must consider that businesses provide jobs as improve the quality of living for many. They should also consider how as bureaucrats they can their power to bring about positive change. This will require them to take a pro-active role.