Streamlining Business: Tackling Corruption & Bureaucracy

Context

• Even when significant efforts are made to combat corruption, bribery and unnecessary bureaucracy, the problem remains for companies trying to set up in India. The India Business Corruption Survey 2024 discovers two thirds (66%) of businesses have given bribes – some 54% claim it was done because they had been coerced into doing so in order to obtain quicker government services, to obtain licenses or in defiance of rules.
• This problem is much more severe in the regulated sectors such as taxation, pollution, property registration, health and pharmaceuticals. It should be accepted that the effect of corruption happens on the economy, the obstacles to compliance adoption, the stimulation for the digital transformation and how these factors impact India’s occasion by emerging as a growth competitor on a global level.

The Economic Impact of Corruption

• Increased Cost of Doing Business

• • Corruption adds to the costs of businesses, inefficiently preventing more efficiently the functioning of the companies, particularly of small and medium enterprises (SMEs).
  • Many business organizations have to give bribery time and time again in order to operate rationally and come to a rough time financially every time.

• Corruption will chase away foreign direct investment (FDI).

• • As per EY-FICCI survey, 80% of respondents hold corruption responsible for hindering FDI in the country.
  • Foreign investors would like to get their money heisted in countries that are transparent and also fair minded to the corporate world because India’s issues of corruption certainly creates the discomfort of hesitation among foreign investors.

• Impact on Entrepreneurs

• • New companies fail because of bureaucracy and corruption.
  • Rather too many start-ups leave an entry attempt on the drawing board because regulations / and/or bribery is unbearably expensive.

• Fewer Jobs and Economic Growth

• • Otherwise, bribing officials, overcoming connections in the government can be spent for hiring of staff, training of staff, to increase production.
  • Corruption results in the misuse of the resources which result in a loss of productivity of various sorts of businesses.

• Negative Impact on India’s Reputation
  • Corruption comes as a barrier in front of India’s role as an emerging economy.
  • Countries with fewer regulatory hurdles and accountability get the most investment and talented employees.

Challenges of Constantly Changing Compliance Regulations

• Complex and Ever-Changing Rules

• • Businesses are plagued by the endless incremental variances of the regulations with a habit of change.
  • In this year so far, India has witnessed 9,420 compliance updates–9 changes every day.
  • This controversial development is either a sign of bad governance or provides scope for getting bribes.

• Bureaucratic Manipulation

• • Government officials may utilitize compliance rules to blackmail officials for licenses in spite of full compliance elsewhere.
  • This issue was addressed by the Food Safety and Standards Authority of India (FSSAI) by passing a regulation to drop down the number of changes allowed to be made in food label regulations to happen once a year, making it more predictable.

• Labour Law Reforms Remain Stalled
  • India has integrated 29 obsolete Labour laws into four modern labour codes however the codes are yet to get implemented.
  • This alteration is important in simplifying compliance regulations as well as sentences in prison that are governed by compliance.

The Need for a Digital-First Compliance System

• Inefficiency in Business Registration

• • Starting a business in India means риз Responsible filing 40+ Govt department instrument.
  • This defunct system contributes to corruption and delays to job interrogators.

• Solution: A Unified Digital System

• • An Unique Business ID accompanying a secure digital storage (such as DigiLocker) will bring in compliance.
  • This would then allow regulators to obtain validated documents digitally on the go, which would be processed in days as opposed to months.
  • India offers businesses a herd of identification documents such as PAN, GSTIN, CIN and plenty of others which every need to be renewed distinctively individually.
  • One Business One National India ID can merge all of them to one identity vehicle, Simplifying laws and eliminating corruption.

• Global Best Practices

• • Countries in US are using business ease through governance reform such as Department of Government Efficiency (DOGE)
  • India must also take similar steps to remain in one and attract investors.

Conclusion

India requires a transition from a small fix to a big thing – essentially simplify compliance, stamp out corruption and bring regulatory stability.

• Jan Vishwas 2.0 is a starting step, much more, is needed reform.
• Outmoded imprisonment clauses should be revised out, and conformity processes reeling into a virtual framework.
• A business-friendly and transparent and low hanging regulation would help India be attractive to the investors and to its indigenous entrepreneurs.

The window of opportunity is available –India has to focused towards efficiency, transparency & growth, and for it to be a globally recognized economic power.

Source: The Hindu

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