Telangana engages PwC to retain top slot in ease of doing business rankings

India's youngest state had shared the Number 1 rank with Andhra Pradesh in 2016

Telangana government has started the work on the new set of reforms early, in order to retain the top slot in the Ease Of Doing Business (EODB) rankings this year. It has engaged global consultancy firm PricewaterhouseCoopers (PwC) to assist the departments in implementing proposed reform measures.

India's youngest state had shared the Number 1 rank with Telugu-speaking neighbour, Andhra Pradesh, in 2016 by leapfrogging from its 13th position in 2015. 

The on-line approvals system backed by a legislation, with deemed approval clause effective in case of a delay in granting the approval, has helped the state in gaining the top position, among other things.

"We are confident of doing well this time around as well," said Jayesh Ranjan, principal secretary, departments of Industries and IT, Telangana government. "The state has already made a significant progress on around 300 parameters and we have prepared the time lines for implementation of all the new sets of reforms, which would be in place by June 2017." 

Some of these new steps are related to the issuance of new GOs (government orders) and circulars by the respective departments, while the other steps include putting in place the IT (information technology) systems, procedures etc.

The early internal timelines give the government a head start in the implementation of new initiatives with a 5 month lead time to perfect the new initiatives before the October 31 deadline set by the Union Commerce Ministry.

On April 13, the Department of Industrial Policy and Promotion (DIPP) had released the new business Reforms Action Plan for implementation by states and union territories. The action plan includes 103 new set of reforms, which add up to a total set of 405 reforms on regulatory processes, policies, practices and procedures spread across 12 reform areas. 

Meanwhile, a similar exercise has started at the department level in Andhra Pradesh government too. "Chief Minister Naidu will review the progress on the EODB reforms once he comes back from the ongoing US tour," an AP official told Business Standard. 

Staying on top in the EODB rankings may not be an easy task for a state any more; Not just that the competition among the states was growing by the day but also because the Union Commerce Ministry, for the first time, will be taking the feedback from businesses on the quality of implementation of these reforms instead of simply depending on the states' reports.

"The feedback scores will be used to generate a ranking of states/UTs in terms of reform implementation. Such ranking will be different from the last year's ranking, which was a ranking of de jure reforms (or reforms based on evidence submitted by states)," the Ministry said last month.

In the light of these changes, the Telangana government has decided to reach out to industries and businesses to create awareness among them on the reforms undertaken by the government, so as to ensure a positive feedback when the Centre crosschecks the state's reports with the users on the effectiveness of these reforms.

The new set of reforms for 2017 focus on central inspection system, on-line land allotment system, on-line single window system for granting construction permits, registration under Inter-State Migrant Workmen (RE&CS) Act, 1979, approval for boiler manufacturer and boiler erector besides a set of measures in healthcare and hospitality sectors. The states will have to work on the upgradation of 131 ongoing reform measures on top of the new ones, according to the officials.

A strong legacy in using technology for governance and the delivery of public services had particularly helped AP and Telangana, which had both got a score of 98.78 each in 2016 rankings, thus, reaching the top position. But the other states are not far behind in the EODB efforts either. A total of 12 states with scores ranging between 90-100 were categorised as the leader states in 2016 rankings, while 9 of them had got the score of above 96. Gujarat, which was ranked Number 1 in 2015 rankings, came third with a score of 98.21 last year.

However, a senior KPMG consultant, who is working with AP government on the EODB reforms, believes that AP and Telangana have an edge to possibly retain their leadership position in business reforms despite the competition. 

"I think the single desk system is a very big differentiator because many states still do not have such as single window system for industrial approvals. AP had introduced the single desk system two years ago while the Telangana had brought TSiPASS last year," the KMPG official said on condition of anonymity. 

The number of transactions that have taken place on these on-line systems will also be taken into account while judging the performance of states on the reforms front, according to the consultant.

Officials from Madhya Pradesh have recently visited Andhra Pradesh and Telangana to study the single window system ahead of their exercise for this year's reforms agenda. A team from Gujarat is also expected visit both the states to study these practices as the front line states look to fill the gaps in EODB.