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India has a long way to go when it comes to ease of doing business. It could learn from Google and Facebook.

On October 2, 2006, my father inaugurated a new handloom and handicraft store in South Delhi — a tribute to Gandhi in socialist India. As he was going to get a trade license from the Municipal Corporation of Delhi (MCD) office, someone advised calling on a middleman who would understand the paperwork well. The fee? Rs 2000 only. Once we had the application knuckled under, it was a month-long wait for a letter requiring us to provide a few more documents within eight days — which included the death certificate of my grandfather, who never even saw Delhi. (He died in the 1947 partition riots in Pakistan a few days before my father was born.) We also had a photograph of the shop’s front and the signboard annexed with the original application. Further, MCD asked for a current bank account proof. My dad first visited a public-sector bank and then a private bank—only to find out that you need a trade license to open the account.

After three years and a dozen visits, he gave up. I was in the final year of my LLB course. I filed an RTI application. And yes — we got the license in a week.

Fast forward to 2018. The MCD has now branched out into South, East and North MCD. The South MCD has an online application platform, and it nonetheless necessitates six documents for a trade license: proof of legal occupancy, site plan, identity proof, photograph of the shop premise, copy of PAN, and a photo of the applicant. Most of these documents customarily exist in government records. It makes little sense for a government agency to again ask for proofs, numbers and records generated and stocked in other government registries. Whether it is MCD, Delhi Government or Delhi Development Authority, they all represent the government as far as citizens are concerned. The document number should be enough for reference and verification.

Let’s pick up on these documents required for trade license.

First off, proof of legal occupancy. Any of these — an allotment letter from a government agency, tenancy proof, electricity/water connection bill, landline telephone bill or lease deed/sale deed/GPA — could serve as legal proof. Please note these as well as the site plan are property-related records. It’s strange for the MCD to ask for a proof of legal occupancy because it collects property tax from property holders on the foreground: the Sub-Divisional Magistrate (SDM) registers property transactions, whether for lease, sale or GPA, accompanied with the site plan. While dealing with the water or electricity bill, the  MCD should merely ask for the connection or document registration number instead of a bill copy, and verify the bill from Delhi Jal Board or Discom.

Second, for proof of identity, attested photocopies are not needed. The MCD could ask for Aadhar, passport or driving license number, and all it needs to do is double-check. All three identification cards make verification possible with just the number.

Third is a photograph of the shop premise with display of goods being traded or business being carried out. This is difficult to catch. If it is a proof of business being carried out, then it leads to a chicken-or-egg conundrum. It implies that the MCD wants you to start the business first and run it without a trade license.

Fourth, it asks for PAN, TIN or VAT. VAT is outdated and it should ask for GST instead. In any case, these too are government-issued numbers. The onus should be on MCD to access the records and verify them.

The application form nowhere mentions the response timeline and consequences for delay. Apparently, the single-window model consolidates the procedures, but does not necessarily cut down on paperwork.

Documents and Delay

As soon as a citizen enters any government agency database, he should avail all government services and products without repeated sign-ups. Why can’t one government authority access and verify the credentials from other government agencies directly if the applicant allows them to access his data? Imagine if there was a legal obligation not to ask for any document issued by another government agency. It would drastically shrink the number of documents required, make the lives of citizens comfortable and compel the bureaucracy to be more efficient. It then pivots on the agency to manage this via manual cataloguing, technology or outsourcing. For a citizen — whether agency X or authority Y — they are all part of the same government.

To draw an analogy — one signs up on Google and can then avail any of Google’s services like email, news alerts, etc with the same login ID and password. It neither requires another login nor a repeat sign-up. Besides, one can now sign up for many non-Google websites through a Google ID, with consent. The same goes for Facebook. One can access many other applications through the Facebook login.

The idea of ‘one government’ can be applied to every government-citizen interface. Be it GST registration, construction approval, trade license, electricity or water connection, one needs to submit a proof of identity, age, residence, and in some cases PAN and caste certificate. Let’s shift the millstone to the agency. The railway department, for booking tatkal tickets, requires the passenger to provide an ID number and not a photocopy of the ID card. The passenger may carry the ID card while travelling.

Preventing Delay

Time-bound approvals are already part of the reform agenda. Having said that, whenever a delay does arise, complaints and redressal mechanism cause further lag.

A good practice is the Right to Clearance or Deemed Approval policy in Telangana and Andhra Pradesh. In absence of a clear rejection before the deadline, an application for a permit is deemed to be approved. Should the government want to ensure reasoned clearance, it can choose to penalise officers responsible for delay but it is an internal matter. So far as the entrepreneurs are concerned, neither would they have to worry about the redressal mechanism nor wait for ages to get a permit. It would also safeguard entrepreneurs against the technical glitches as well as the whims and fancies of the bureaucrats.

Transforming the Role of the State

The present-day environment calls for a radical change in the way the government perceives itself. It is not the controller but the facilitator, and it can be so only if it manages its records well. Unfortunately, there is neither accountability nor incentives for public officers to manage their registries. Technology is not in question here — it is widely available. Incentives are the issue.

Ease of doing business — moor it to legal guarantee. It will impel the bureaucracy to put in place strategies and technology. It may adopt blockchain, invite a private partner for efficiency, or do both. The Union Government can either prescribe a model bill for states or pass a law to entrench ‘one government’ and ‘deemed approval’ in our culture of governance. It does not have to be bound to business licensing, it can be a norm for all types of government-citizen interfaces.

An East European country, Georgia, jumped from rank 112 to rank 37 in a year, and now it stands at an impressive rank of 9 on the Ease of Doing Business Index—mainly by virtue of ‘deemed approval’ and ‘one government’. Where will India stand if DIPP (Department of Industrial Policy & Promotion) were to implement both these recommendations?

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About the author

Prashant Narang

Prashant Narang is a lawyer practising in the High Court of Delhi and the Supreme Court of India. As a doctoral candidate at Center for the Study of Law and Governance, Jawaharlal Nehru University, he is working on a critical study of Supreme Court judgments on the Fundamental Right to practise business, trade and profession in India.