States must ease sugar sector norms for better Ease of Doing Biz rank: Kant

NITI Aayog CEO Amitabh Kant on Friday called upon states to ease regulations for sugar, alcohol beverages and tourism sectors to help improve the country's Doing Business ranking.

Kant highlighted that tourism, alcohol-beverages and sugar industries have the potential to generate jobs and fuel India's growth story.

Government at best can be a facilitator, a catalyst, he noted, adding that wealth creation has to be done by the private sector and therefore, there is a need to do away with all these rules and regulations which have been amassed over the years.

Kant was speaking at the launch Ease of Doing Business in India report based upon a case study of sugar, alcohol-beverage and tourism industries.

 

While noting that India looks to improve the ease of business ranking to top 30 in the next two years, Kant pointed out that improvement at the state level is needed to achieve the target.

"Much of the investment, much of the decision making, much of what happens in India happens in states and therefore we need to make states easy and simple," he explained. India ranks 77th the World Bank's latest Doing Business report.

While acknowledging improvement by states in their rankings at the national level, he pointed out that some of the sectors are still heavily controlled by them.

"There is a massive amount of control by the states in terms of rules and regulation procedures and actually there are several sectors which are still persistent with the inspector raj," he explained.

"A very little of digitisation has taken place in these sectors and this is critical, particularly for areas like sugar and alco-beverages, as these are sectors where India has to grow. For tourism to grow, you need conversion of many of these sectors."

Speaking on the sugar sector, he highlighted the Centre has taken many steps to support the segment but states have trifled with the industry.

"I still feel that the state governments have dabbled with the sugar industry in a terrible way. In many-many ways, they are making it commercially non-viable. Therefore a lot of freedom is necessary, some of the issues have been pointed out in this report," he said.

"As sugarcane industry grows and prosper, Indian economy will grow and prosper, farmers will benefit and therefore a lot of flexibility in ease of doing biz is necessary," he added.

Abinash Verma, Director General of Indian Sugar Mills Association (ISMA) said that there is a need to look at the sector with an open mind.

He said the government forces sugar mills to buy cane at higher prices from farmers which makes Indian sugar export uncompetitive in the global market.

On the alcohol-beverages industry, Kant said the sector is poised to grow rapidly over the years as Indians are travelling more aboard and want good quality liquor. Besides, the increase in disposable income, rising middle class and aspirations of young people will drive demand for the liquor industry.

"We need to move away from a controlled inspector raj which is existing in the sector to a laissez-faire regime."

The report ' An Integrated Value Chain Approach for Ease of Doing Business: A Case Study of Sugar, Alco-Bev and Tourism' done by Pahle India Foundation said that these three industries together provided employment to about 8 crore people in India in 2018.

It has recommended overhauling of state excise practices, including moving from offline systems to online, along with several other policy measures for improving Ease of Doing Business (EoBD) and GDPs of states.

"A sector-specific approach to ease of doing business will allow states to implement immediate reforms in sectors that are most crucial to their economy. For example, by merely reducing the time taken to grant approvals for restaurants (PBCL segment) from 9 months to 3 months, the state will accrue an additional revenue of Rs 38.76 crore, and the sugar millers/distillers will receive an additional revenue of Rs 51 lakh which could potentially find its way towards payment of dues of a sugarcane cultivator," said Nirupama Soundarajan of Pahle India Foundation.

The report recommends that in place of following the generic method of ranking, a sectoral approach should be adopted.

"This will allow the states to pick sectors that are the most important to them, and take measures to reform those on a priority basis," the report said.