Licence and Permit Raj still thriving in Delhi, says CCS Report

Centre for Civil Society (CCS), India's leading think-tank advocating social change through public policy, released `Doing Business in Delhi : An analysis of the progress on business environment reforms in the state'. The Report is a compendium of research papers investigating the reality of doing business in Delhi, India's second largest commercial city.

The report released in collaboration with Friedrich Naumann Foundation (FNF), New Delhi and ATLAS Foundation, finds that the license and permit raj governing businesses is still thriving in Delhi, particularly for ubiquitous urban services provided by micro, small and medium enterprises.

For instance, the report finds that obtaining essential licenses to open a restaurant takes 120 to 150 days, and costs between Rs. 18,000 to Rs. 1.8 lakh (averaging over 30% of per capita income). Contrastingly, the average time to start an enterprise as recorded by The World Bank is 16 days, and the average cost is about 12% of per capita income.

The business environment is also plagued with several imprudent rules which make it difficult for businesses to operate and thrive. For instance, in Delhi all private meat slaughter is illegal due to municipal corporation regulations.

Second, the report finds that efforts to streamline the inspection process are largely a window-dressing. For instance, the Delhi Pollution Control Board, contrary to its claims, has not been using computerised risk assessment for inspection, and continues to make inspection decisions manually through an executive committee, an avenue for bias and rent-seeking.

Similarly, Delhi Labour department does not adhere to inspections Standard Operating Procedures, including recording information correctly and consistently, sticking to timelines and maintaining procedural hygiene.

Third, the report finds that measures to improve contract enforcement are not substantive. For instance, while a commercial bench was instituted at the High Court of Delhi to resolve commercial cases swiftly, the same roster of judges hears all cases and no specific time is allocated to commercial cases.

Moreover, the time spent on commercial cases is lesser than non-commercial cases and not in keeping with pendency levels.These findings indicate the need for more effective reforms which enable an exercise of economic freedom while protecting consumers' interests and fulfilling long term policy goals.