‘Ease of doing business’ rankings leave a sense of unease in states

The ranking of states by the central government in categories like attracting businesses and nurturing start-ups presents a picture of paradox that is too glaring to ignore. The Telugu states of Andhra Pradesh and Telangana illustrate this irony more sharply.

Despite scaring away many industrial promoters, arbitrarily cancelling several projects and creating a hostile environment for potential investors, Andhra Pradesh has been ranked number one in the country in the “Ease of Doing Business” (EODB) index.

The EODB rankings, introduced in 2014, is a joint initiative by the Department for Promotion of Industries and Internal Trade (DPIIT) and World Bank to improve the overall business environment in the states. The rankings are based on reforms undertaken by them on designated parameters.

On other hand, the “States’ Start-up Ranking 2019”, also carried out by the DPIIT, gave zero score for Telangana in the category of incubation, seed funding and venture funding support. This has, understandably, shocked the Telangana government because Hyderabad is widely hailed as a thriving start-up hub of India.

T-Hub, an ambitious venture launched in 2016 in Hyderabad to promote start-up ecosystem, has already attracted global companies such as Facebook, Intel, Uber, Boeing, Microsoft, Samsung, and Qualcomm, among others as corporate partners.

The state government has asked the Centre to re-evaluate the scores.

Curiously, the ruling party in Andhra—YSR Congress Party headed by Y S Jagan Mohan Reddy—has been warming up to the BJP while its counterpart in Telangana—Telangana Rashtra Samithi (TRS) headed by K Chandrasekhar Rao has, of late, stepped up its attack on the NDA government, raising several federal issues.

Opposition TDP takes credit

Andhra Pradesh topped the ease of doing business rankings, fourth time in a row, followed by Uttar Pradesh and Telangana.

Andhra was found to be the best in India in formulating and executing the state business reforms action plan-2019 (BRAP-2019) under the Atmanirbhar Bharat initiative.

The rankings were announced by Union Finance Minister Nirmala Sitharaman and Union Commerce Minister Piyush Goyal.

What is surprising is that AP has been witnessing a steady exit of big industrial groups from the state during the last one year while new investments are hard to come by. The state has been bogged down by a bitter political row over the location of the new capital city while a string of whimsical policy reversals by the Jagan Mohan Reddy government has created a negative narrative, scaring away investors.

Related news: Centre’s ‘Ease of Doing Business’ ranking is pointless, it must be dumped

“The ease of doing business ranking is result of the hard work and proactive policies of the previous Telugu Desam Party government,” claimed Ch Kutumba Rao, the economic advisor to the former Chief Minister N Chandrababu Naidu.

Overcoming the bifurcation blues, the TDP government had taken several initiatives to attract investments into the state, Rao claimed and pointed out that AP had consistently ranked number one since 2016.

“The credit for the top position in the latest index must therefore go to the TDP and Chandrababu Naidu,” he said.

Rao also claimed that Naidu’s reforms not only ensured state top ranking in EODB but it had helped India’s global rankings as well.

Telangana unhappy

“There must have been some mistake in calculations. There are three categories where we have been given a score of zero. We have clarified to the Centre that the actual situation is much different and have furnished all the supporting information. We have asked them to verify their records and re-evaluate and review our ranks,” the Telangana Industry and Information Technology Secretary Jayesh Ranjan said.

Telangana scored a mere 1% on awareness and outreach, 15% on institutional support, 37% in simplifying regulations and 34% in easing public procurement. This is despite the aggressive push being given to the start-up sector since K T Rama Rao took over as the IT Minister in 2014.

Telangana has over 30 state-supported incubators and dozens of private ones. Among them is the ambitious T-Hub, spread over 70,000 square feet, housing over 200 start-ups. There is also a women entrepreneurs-focused incubator WE-Hub and CIE, which is among the oldest in the state.

Related news: Andhra Pradesh best state to do business: Centre

In the latest rankings, Gujarat was adjudged as the best state while Telangana was grouped among the states categorised under ‘aspiring leaders.’

“The state supported incubation in Telangana is highest in the country. Whichever way you look at it, incubation can’t be zero. The rankings don’t reflect the reality,” said Ramesh Loganathan, Professor of Practice (co-innovations) at Indian Institute of Information Technology (IIIT), Hyderabad.

Mani Kishore Vajipeyajula, co-founder and CEO of Hyderabad-based plastic recycling start-up Banyan Nation said the Telangana government was one of the first customers for Banyan’s data intelligence platform. Banyan Nation is also the first ever Indian firm to win the Dell People’s Choice Award for Circular Economy Entrepreneur as part of the Circulars Awards at the World Economic Forum held at Davos in January 2018.

The state government is now hoping that the Centre would re-evaluate documents submitted by it and modify the scores and ranking. “This is a correctable mistake and they should be able to correct,” the IT Secretary said.

Quick approval system

Meanwhile, Andhra Pradesh minister for industries M Gautam Reddy said the state government took several measures to encourage entrepreneurs for starting an enterprise with low-cost and quick single desk approvals. He claimed Andhra was the first to have come up with the “ReSTART” package in post-Covid scenario for business continuity of micro-small-and-medium enterprises (MSMEs).

Among other things, Andhra kicked in reforms for easy setting up of industries, provided exemption for shops and establishments from renewal under AP Shops & Establishments Act, 1988; introduced single integrated returns under all labour laws and amended the Single Desk Policy, he said.