Ease of Doing Business: A Cultural Change Needed

India lags behind in the Ease of Doing Business rankings is not only very visible but painful given the fact that the efforts taken to rectify this situation is very sincere and commendable. Given this, a right question to ask is what could change the equation and make India climb the rankings rapidly.

The crux of Doing Business is in the interface between the business and the bureaucracy and the culture that is embedded in these exchanges. While the word culture may have different definitions with subtle nuances, broadly it means a way of life, the set of beliefs, values and behavior that is not only accepted but also expected. Given this, could Ease of Doing Business have less to do with the laws, rules and regulations and more to do with the work culture of our bureaucracy?

India has implemented multiple digital initiatives that address a lot of core issues to do with Ease of Doing Business. Prominent amongst them are the Aadhar Card for Identification, Driving License and Passport for address proof, PAN for Income Tax, DIN for Directors and CIN for Companies. All these if properly used by the bureaucracy could promote Ease of Doing Business, but in reality they do not.

In various regulatory interfaces, applications are required to be accompanied by one or more of these identifications which is provided by one or the other arm of the government. Rather than just providing the number the applicant is required to provide a photocopy of the document, with the only grace being it can be self-certified. Would it not be a lot easier, if the applicant is only required to give the number and the regulator could check the veracity of the document by accessing the database of the issuing government department?

Here is where I think culture plays a role. What is the belief, values and behavior that is expected in the business-bureaucracy interface? Among the top 3 beliefs would be

1. Businesses prioritize only profits
2. The job of bureaucracy is to only regulate
3. Businesses need to prove to the bureaucrat that they are compliant on paper.

Given this belief-set, it is logical to expect the business to produce all the documents for the bureaucrat in one place so that they can ‘adjudicate’ and dispose it off as appropriate.

If for a moment we assume that this belief-set is the problem, how could we change the work culture and promote Ease of Doing Business in India? At the cost of being simplistic, we could consider a twin point solution:

1. Adequate IT infrastructure with internet access is to be provided to the bureaucracy to enable them to verify all documents at the issuing department. This in turn will remove the need to provide copies of documents, self-attested or otherwise.

2. Professionals like CS, CA and Lawyers to play the role of quasi-business, quasi-regulator. The work by professionals to be taken at face value for approval as is the case with forms filed with MCA. The regulators can do a post-mortem for validation. If professionals are found to have erred or wrongly exercised their discretion, they can be appropriately dealt with.

If we go this path, we don’t need more legislation but only a change in work culture. As the mice found, easy solutions have a big problem of execution: who will bell the cat?