Where Rajasthan ranks in ease of doing business

Rajasthan offers an array of incentives to attract companies to set up their business in the state. We take a closer look at some of the initiatives that have caught the eye of the corporate world.

 

Rajasthan currently ranks 16th on the ease of doing business index according to a recent government report. Over the years the government has implemented several strategic initiatives to cater to the businesses operating in the region and the overall economic well being of the state. 


These initiatives are targeted at small, medium and large scale industries in both rural and urban areas. Ease of doing business is a significant indicator of how business friendly a particular region is. Hence, working towards improving it enables the state to accelerate its economy. If a state ranks higher on the ease of doing business, then more companies and startups will come forward to set up their offices or manufacturing units. This in turn will create more jobs and  enhance the state’s financial ecosystem. 



Factors contributing to ease of doing business


The World Bank publishes the ease of doing business index as an aggregate figure that gives a picture of measures and regulations instituted across 190 economies on parameters that affect a business through its life cycle. 


India’s apex policy think tank, Niti Ayog, too evaluates the states against these parameters to arrive at a ranking. States that make it easier for companies to run their businesses usually rank higher. A few of the criteria that are considered during this process include credit and electricity availability, property registration, construction permits, paying taxes, trading across borders, contracts enforcements, protection of minority investors and resolving insolvency. 


Business reforms action plans


The Department of Promotion of Industry and Internal Trade (DPIIT) annually issues a business reform action plan for states in the country. In partnership with the World Bank, the department then gauges the ease of doing business.


Rajasthan has already implemented the action plan, which includes recommendations relating to single window clearance system, online approvals, rationalisation of inspections, transparency enablers and policy reforms. 


Why does Rajasthan rank so low?


High electricity costs in the state significantly increase the input costs for domestic businesses. The state’s electricity cost is higher when compared to other Indian states since power is generated here by purchasing coal from other states, which adds on to the price. This pushes businesses to move to states that offer cheaper electricity. 


In addition to this, there is a lot of paperwork involved to convert agricultural land into a commercial one in the state. Dileep Baid, ex-chairman of CII-Rajasthan notes that Rajasthan takes decades to convert the usage of land and that entrepreneurs prefer not to wait that long. 


In the past, the state government has heavily contested its dismal ease of doing business ranking, calling for reforms in the assessments which are done by the centre. 


Reforms in MSME


The Micro, Small and Medium Enterprises (MSME) sector is very dynamic and is a true showcase of regional entrepreneurial talent in a state. The state government has taken several steps to facilitate ease of doing business for companies in this sector. The Rajasthan Financial Corporation (RFC) offers long term financial support to MSMEs. 


Rajasthan has worked to cut down on 2,645 compliances to promote ease of living and business within the state, according to a government report. Marquee reforms have been undertaken to help small as well as large businesses. 



In line with this, the state government allows MSMEs to start and operate their business for 3 years without any license or registration. Along with this, investment proposals have been fast-tracked by digitising 100+ services across 14 departments through 'Rajnivesh Portal', which is a single window portal. 


An MSME can now obtain director identification number online from the Ministry of Corporate Affairs and also reserve the company’s name digitally.


Agricultural business reform


Rajasthan’s agricultural policies support marketing, packaging and refining of agricultural produce. But, it continues to struggle in this sector because of a scanty number of agro-based industries. Therefore, a lot of focus is being placed on enhancing the state’s agricultural produce. Policy endeavours are directed towards turning the state into a production and supply hub for processed agricultural products. 


In line with this, the state has developed 338 industrial areas encompassing 82,000 acres of land, under the Rajasthan Industrial Development and Investment Corporation Ltd. Provisions have also been made in the State Agricultural Produce Markets Act to offer unified license, contract farming and direct purchases outside the market yards. It has also removed the mandi fee or user charge on perishable goods such as vegetables and fruits. 


When the Prime Minister Formalisation of Micro Food Processing Enterprises (PM-FME) was launched by the central government, the state set up the Rajasthan State Agricultural Marketing Board as the nodal agency to implement the scheme. This is expected to lead to an organised supply chain, improve marketing, increase access to incubation services and processing facilities. It may also allow farmers to easily network with enterprises, professionals and avail technical support. 


Looking ahead


Though the pandemic is not over, the majority of Indians are now vaccinated. So  state governments are putting in efforts to design schemes and subsidies to boost their regional economies. And, Rajasthan is no different. 


In December, 2021, the state government attracted investment proposals worth a whopping Rs 69,000 crore at the Invest Rajasthan Roadshow - Exploring Investment Opportunities. The event was organised by the Rajasthan government in partnership with the Confederation of Indian Industry (CII) to showcase the growth and business opportunities provided by the state. 


Shubhra Singh, Rajasthan Additional Chief Secretary, focused on giving a big push to renewable energy, mining and textile sectors at the event. Singh asked investors to explore the potential of these industries.


"Our state is doing good in these sectors. The government offers full support to those looking to invest in the state," said Singh.

Among those who have already signed an agreement to invest in the state include Jindal Aluminium Ltd., JK Lakshmi Cement and Lenskart. 


 

Edited by Roshni Shroff

 

Some resources to help you understand the ease of doing business index:


Centre works on new ease of doing business reforms


Ease of Doing Business rankings: how are they calculated and where India stands