Where is the “ease” in doing business?

Goa is in the news again and for the wrong reasons. It is ranked 21 among all the States and Union territories. The ASSOCHAM report which similarly stated that Goa needed to do a lot more was brushed aside by the Government and an Industry body came to the Governments rescue. The Industry reaction was viewed with suspicion as it did not reflect the ground realities but pandered to the Governments need for support. This report prepared by the Center in conjunction with the World Bank cannot be brushed aside and only highlights the fact that “all is not well” when it comes to helping business function easily.

The much touted IPB (Investment Promotion Board) formed under the Investment Promotion Act, lost it legs a few days ago when the Chief Minister declared it was not a single window for investment in the State as was given to believe. The statement coming on the heels of questions raised by the High Court only proves that acting in haste and trying bulldoze the opposition to accept projects without thinking, ends up in actually delaying projects and increasing the tension of doing business in Goa.

The statement by the Chief Minister is also surprising. If this was the case why was the “in principle” approval assumed to be fait accompli and why was the impression that IPB subsumed every other statutory body eg: TCP, GSPCB etc given. Why was this clarification not issued earlier. Actually, the reason real reason for creating the impression that it was a single window was to convey to the other arms of governance that there should be no questions asked and the applications have to be fast tracked irrespective of the situation, the IPB has seen the power point presentation and approved.

The IPB drafting committee did not have a single hotel industy expert, after its formation it was decided that the “investment’ in IPB would include hotel projects, originally it meant manufacturing and services. Hotels, are an investment, question is what prompted their inclusion.

If one studies the hotel projects approved (now reverted to in principle approval) by the IPB and study the details of when the properties were purchased, one will surprisingly note that the properties were purchased before 2012, however none of these properties could have seen the light of day as hotels because they were all either Kazan, orchards, fields or no development zones as per the Regional plan. Once the IPB came into existence, all these properties immediately submitted their plans for hotels and were immediately approved. Now we will have to wait and watch what happens in court as other than TCP, IPB cannot make a zone change.

The IPB has to follow the IP Act which lists thrust areas. It was surprising to note and see that an alcohol manufacturing unit was accorded approval in an orchard. Alcohol is not a thrust area, new alcohol manufacturing projects are banned in the industrial estates. One Government, two rules. Should alcohol manufacturing be allowed or not is not part of the discussion, why different interpretation by different arms of the same Government. This project also had the distinction of needing support of a notification which classified all the toddy tappers in the State as grasshoppers by declaring coconut trees were not trees.

The IPB has many mandates, approve projects is one, what about others. The IPB is supposed to recommend or decide how business can be facilitated. These has two aspects, infrastructure building and administrative reform. It is not only land that is scarce and needs to be provided, what about electricity and water.

The IPB in its wisdom actually rejected a project of a steel processor, this decision was over ruled by a cabinet decision despite a cabinet decision banning new steel mills. The electricity department assured the project 10MW of power, yet industry is crying for power for expansion and there is none. Should the IPB not be studying the power and water scenario and recommending to the Government ways to augment the same.

Administrative reforms are what industry has been harping on and this was just the right place to make a difference. The IPB application could have been designed so that when one applies to the IPB all information required for other departments concerned in also included and any department can process the same applicaion. The investor makes only one application to the IPB and the IPB passes it on to the respective departments and gets their approval or objections based on which the IPB gives its own in principle approval. The difference here is the investor is not following up with the departments but the IPB. This way post the in principle approval, departments cannot raise any new issues or decide against the project.

The “Ease of doing Business” ranking is very objective with 325 plus issues that need to be reformed by a State, these could have been discussed by the IPB and recommendations made to Government to reform areas like, inspection, online submission, multiple applications, increased use of IT for uploading returns etc. The IPB did nothing of this and the result is clear to see. RANK 21.

Going forward the IPB has to sit back and take stock of the situation...THINK. The best place to start is the ranking report. Being objective it gives clear guidelines as to where and what has to be done, let the IPB start doing this, forget giving rushed and dubious clearances, they will anyway get delayed when aggrieved citizens approach the court. Keep politicians out, bring in domain experts, clean up the business environment and the good projects will come. Goa is a great State and if the system supports, it will be a great State to do business.