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2007 Assessment

India: Integrity Indicators Scorecard

India: Integrity Scorecard Report > Sub-Category: Business Licensing and Regulation
Indicators		Score
67	Are business licenses available to all citizens?	81
68	Are there transparent business regulatory requirements for basic health, environmental, and safety standards?	100
69	Does government effectively enforce basic health, environmental, and safety standards on businesses?	33

Indicator and sub-Indicator Details

Are business licenses available to all citizens?

67a: In law, anyone may apply for a business license.

Score:

YES

Comments:

References: Companies Act

Peer Review Comments: This provision is subject to the service rules if a person is employed.

67b: In law, a complaint mechanism exists if a business license request is denied.

Score:

YES

Comments:

References: Companies Act

Peer Review Comments: A complaint mechanism exists within the Ministry of Company Affairs and, of course, the legal option for appeal can also be made there.

67c: In practice, citizens can obtain any necessary business license (i.e. for a small import business) within a reasonable time period.

Score:

100

Comments: There are procedures involved. Some feel that they are too cumbersome.

References: Company Act; www.mca.gov.in;

www.tribuneindia.com/2002/20020902/himachal.htm -www.bis.org.in/other/seminarpgd223.htm;

www.thehindubusinessline.com/2007/02/22/stories/2007022203600100.htm

Peer Review Comments: In practice, it is not easy for citizens to get business licenses, particularly for import businesses.

67d: In practice, citizens can obtain any necessary business license (i.e. for a small import business) at a reasonable cost.

Score:

100

Comments: The formal cost may often be less threatening as the informal costs in the form of bribes and speed money.This may still be a legacy of the `control raj`, the vestiges which still continue in some ways, if not in laws and regulations but at least in attitudes.

References: www.business-anti-corruption.com/normal;

www.rru.worldbank.org/Discussions/Discussion

Peer Review Comments: The "control raj" is also called the "'permit license raj." The present situation is much better when compared to the pre-liberalization era.

Are there transparent business regulatory requirements for basic health, environmental, and safety standards?

68a: In law, basic business regulatory requirements for meeting public health standards are transparent and publicly available.

Score:

YES

Comments: The law prescribes the public health standard clearly. It is not as categorical when it comes to its applicability in practice.

References: Web site of the concerned ministries/ departments: www.nic.in

Peer Review Comments: This has been a highly controversial issue in India. In many cases, Indian law is archaic and seldom updated. Though there are some laws relating to the issue, they are too narrow in scope and sweep.

68b: In law, basic business regulatory requirements for meeting public environmental standards are transparent and publicly available.

Score:

YES

Comments: The law prescribes the standards but they are often breached. Today new projects require the clearance of the Ministry of Environment.

References: www.envfor.nic.in/

Peer Review Comments: My earlier observation is valid here also: This has been a highly controversial issue in India. In many cases, Indian law is archaic and seldom updated. Though there are some laws relating to the issue, they are too narrow in scope and sweep. Jurisprudence on this topic in India is still nascent.

68c: In law, basic business regulatory requirements for meeting public safety standards are transparent and publicly available.

Score:

YES

Comments: Yes, they are, but they are not often fully implemented. The Health and Labor Ministries Web sites outline those standards.

References: www.labour.nic.in;

www.mohfw.nic.in

Peer Review Comments: My observations on the two earlier statements apply here also: This has been a highly controversial issue in India. In many cases, Indian law is archaic and seldom updated. Though there are some laws relating to the issue, they are too narrow in scope and sweep. Jurisprudence on this topic in India is still nascent.

Does government effectively enforce basic health, environmental, and safety standards on businesses?

69a: In practice, business inspections by government officials to ensure public health standards are being met are carried out in a uniform and even-handed manner.

Score:

100

Comments: In practice, there have been complaints about extra-constitutional/legal means of influencing decision- making in this regard. There is a tremedous element of subjectivity in determining the correctness or otherwise the fulfillment of the standards.

References: www.timesofindia.com;

www.deccanherald.com

Peer Review Comments: The answer is an emphatic "no." Only when civil society organizations and media make noise is attention paid to the issue. Business inspection by government officials is a den of corruption and callousness. It seldom works in the public interest.

Peer Review Comments: There is a lot of corruption and cover-up in this regard.

69b: In practice, business inspections by government officials to ensure public environmental standards are being met are carried out in a uniform and even-handed manner.

Score:

100

Comments: In practice, many would argue that there is a creative subjectivity in interpreting these norms and this leaves a lot of space for corruption and misuse.

References: www.cpcb.nic.in/oldwebsite//Inspection/ch60503.htm; www.indiaresource.org/news/2005/2001.html

Peer Review Comments: My earlier observations apply: The answer is an emphatic "no." Only when civil society organizations and media make noise is attention paid to the issue. Business inspection by government officials is a den of corruption and callousness. It seldom works in the public interest.

Peer Review Comments: The norms are violated with impunity, and the concerned officers see this an opportunity to enrich themselves through illegal gratification.

69c: In practice, business inspections by government officials to ensure public safety standards are being met are carried out in a uniform and even-handed manner.

Score:

100

Comments: A former chief vigilance commissioner in India is on record saying that the plethora of rules alone when seen in isolation would make India seem like a `haven of correctness`. A moment into the application brings out the reality. The public safety standards are quite strict but then are given the go by. A classical example in India would be the regularizing of irregular constructions, which violate all safety and health norms.

References: cvc.nic.in/vscvc/cvcspeeches/sp10sep01.pdf;

www.india-today.com/itoday/20000731/states2.html -;

www.staging.unchs.org/programmes/ump/documents/wp6

Peer Review Comments: Inspections are more of a cover-up than attempts to ensure that the standards are enforced.