Regulations that pose as a burden on large firms need to be addressed to bring small and large firms on a level-playing field, the NITI Aayog has recommended.
In a survey on "Ease of Doing Business", the premier policy think-tank says that though there is no evidence of adverse regulatory environment for large firms (by employees), in many areas, larger companies are at a disadvantage compared to smaller ones.
The survey covers over 3,000 enterprises across India.
Niti Aayog warns that if large firms perceive regulatory obstacles as big, then it would discourage smaller firms from growing larger.
Apart from this, the survey suggests that the government should encourage entry of new enterprises and expedite the timely exit for sick enterprises to better business environment.
This will in turn augment dynamism in the Indian industry, boost productivity, job creation and economic growth in the long term.
The survey says that the new bankruptcy code is an important start in improving the exit process. A similar platform must be created for small firms trying to enter the market which is often deterred due to regulatory burden and compliance costs.
Apart from these, the survey conducted under Niti Aayog’s parting vice-chairman Arvind Panagariya revealed several lapses in the ease of doing business in India. The report said enterprises need to be better informed about improvements in the ease of doing business. Most enterprises, especially start-ups, are not aware of single window facilities for clearances and permissions that many states have created in recent years. It revealed that reforming labour laws and achieving greater flexibility in their implementation can greatly help enhance the ease of doing business.
The survey said addressing bottlenecks created by power shortage will enhance efficiency, productivity, and job creation in crucial power-intensive sectors. Enhancing access to low-cost capital could be an important vehicle to improve business environment, it said.