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‘Ease of doing business’ refers to the regulatory environment in a country to set up and operate a business. Every year, the World Bank compares the business environment in 190 countries in its Ease of Doing Business Report. In its report released yesterday, India’s rank improved to 100 out of 190 countries in 2017, from its rank of 130 in the previous year.[1],[2] In this context, we explain the parameters on which each country is ranked, what has led to India’s improvement in rankings, and some recommendations made by committees to further improve the business environment in the country.
What parameters is a country ranked on?
The ease of doing business rankings are based on a country’s performance on 10 parameters such as enforcing contracts and starting a business. In India, these rankings are based on the business environment in Mumbai and Delhi. A lower rank indicates better performance on that parameter, whereas a higher rank indicates worse performance on the indicator. India’s ranking improved in six out of the 10 parameters over the previous year, while it remained the same or fell in the remaining four (see Table 1).
Note that these parameters are regulated by different agencies across the three tiers of government (i.e. central, state and municipal). For example, for starting a business, registration and other clearances are granted by central ministries such as Finance and Corporate Affairs. Electricity and water connections for a business are granted by the state electricity and water boards. The municipal corporations grant building permits and various other no objection certificates to businesses.
What has led to an improvement in India’s ease of doing business rankings?
According to the 2017 report, India introduced changes in some of these parameters, which helped in improving its ranking.1 Some of these changes include:
What are some of the other recommendations to improve the business environment in India?
Over the last few years various committees, such as an Expert Committee constituted by the Department of Industrial Policy and Promotion and the Standing Committee of Commerce, have studied the the regulatory requirements for starting a business in India and the made recommendations on the ease of doing business.[7],[8],[9] Some of the issues and recommendations made by these committees are discussed below.
Starting a business: The Standing Committee observed that regulations and procedures for starting a business are time-consuming.8 The Committee observed that as a consequence, a large number of start-ups are moving out of India and setting base in countries like Singapore where such procedures are easier. It emphasised on the need to streamline regulations to give businesses in India a boost. Note that the government announced the ‘Start-up India Action Plan in January 2016.[10] The 19-point plan identified steps to simplify the process for registering and operating start-ups. It also proposed to grant tax exemptions to these businesses.
The Committee had suggested that the procedures and time period for registration of companies should be reduced. In addition, a unique business ID should be created to integrate all information related to a debtor. This ID should be used as sole reference for the business.
Acquiring land, registering property: Under the current legal framework there are delays in acquiring land and getting necessary permissions to use it. These delays are on account of multiple reasons including the availability of suitable land and disputes related to land titles. It has been noted that land titles in India are unclear due to various reasons including legacy of the zamindari system, gaps in the legal framework and poor administration of land records.[11]
The Standing Committee observed that the process of updating and digitising land records has been going on for three decades. It recommended that this process should be completed at the earliest. The digitised records would assist in removing ambiguity in land titles and help in its smooth transfer. It also suggested that land ownership may be ascertained by integrating space technology and identification documents such as Aadhaar. Note that as of September 2017, land records had been linked with Aadhaar in 4% of the villages across the country.[11]
Several states have taken steps to improve regulations related to land and transfer of property.8 These steps include integration of land records and land registration by Andhra Pradesh and Gujarat, and the passage of a law to certify land titles in urban areas by Rajasthan. The Committee also recommended creating a single window for registration of property, to reduce delays.8
Construction permits: In India, obtaining construction permits involves multiple procedures and is time consuming. The Standing Committee had observed that it took 33 procedures (such as getting no objection certificates from individual departments) over 192 days to obtain a construction permit in India.8 On the other hand, obtaining a similar permit in Singapore involved 10 procedures and took 26 days.
Taxation: The Standing Committee had noted that the tax administration in India was complex, and arbitration proceedings were time-consuming. It observed that the controversies on the Minimum Alternate Tax on capital gains and the tax disputes with companies like Vodafone and Shell had harmed India’s image on taxation matters. Such policy uncertainty and tax disputes have made foreign companies hesitant to do business in India.8
The Committee observed that for ‘Make in India’ to succeed, there is a need for a fair, judicious and stable tax administration in the country. Further, it suggested that to reduce harassment of tax payers, an electronic tax administration system should be created.8 Such a system would reduce human interface during dispute resolution. Note that the Goods and Services Tax (GST) was introduced across the country from July 1, 2017. The GST framework allows for electronic filling of tax returns, among other measures.[12]
Enforcing contracts: Enforcing contracts requires the involvement of the judicial system. The time taken to enforce contracts in India is long. For instance, the Standing Committee noted that it took close to four years in India for enforcing contracts. On the other hand, it took less than six months for contract enforcement in Singapore. This may be due to various reasons including complex litigation procedures, confusion related to jurisdiction of courts and high existing pendency of cases.8
The Standing Committee recommended that an alternative dispute resolution mechanism and fast track courts should be set up to expedite disposal of contract enforcement cases. It suggested that efforts should be made to limit adjournments to exceptional circumstances only. It also recommended that certified practitioners should be created, to assist dispute resolution.8
[1] ‘Doing Business 2018’, World Bank, http://www.doingbusiness.org/~/media/WBG/DoingBusiness/Documents/Annual-Reports/English/DB2018-Full-Report.pdf.
[2] ‘Doing Business 2017’, World Bank, http://www.doingbusiness.org/~/media/WBG/DoingBusiness/Documents/Annual-Reports/English/DB17-Full-Report.pdf.
[3] Insolvency and Bankruptcy Code, 2016, http://www.prsindia.org/billtrack/the-insolvency-and-bankruptcy-bill-2015-4100/.
[4] G.S.R. 436 (E), G.S.R. 437 (E) and G.S.R. 438 (E), Gazette of India, Ministry of Labour and Employment, May 4, 2017, http://labour.gov.in/sites/default/files/Notifications%20for%20amendment%20under%20EPF%2C%20EPS%20and%20EDLI%20Schemes%20for%20e-Payment_0.pdf.
[5] Finance Bill, 2017, http://www.prsindia.org/billtrack/the-finance-bill-2017-4681/; Memorandum explaining the provisions of the Finance Bill, 2017, http://unionbudget.nic.in/ub2017-18/memo/memo.pdf.
[6] National Judicial Data Grid, http://njdg.ecourts.gov.in/njdg_public/index.php.
[7] Report of the Expert Committee on Prior Permissions and Regulatory Mechanism, Department of Industrial Policy Promotion, February 27, 2016.
[8] ‘Ease of Doing Business’, 122nd Report of the Department Related Standing Committee on Commerce, December 21, 2015, http://164.100.47.5/newcommittee/reports/EnglishCommittees/Committee%20on%20Commerce/122.pdf.
[9] Ease of Doing Business: An Enterprise of Survey of Indian States, NITI Aayog, August 28, 2017, http://niti.gov.in/writereaddata/files/document_publication/EoDB_Single.pdf.
[10] Start Up India Action Plan, January 2016, http://www.startupindia.gov.in/pdffile.php?title=Startup%20India%20Action%20Plan&type=Action&q=Action%20Plan.pdf&content_type=Action&submenupoint=action.
[11] Land Records and Titles in India, September 2017, http://www.prsindia.org/parliamenttrack/analytical-reports/land-records-and-titles-in-india-4941/.
[12] The Central Goods and Services Tax Act, 2017, http://www.prsindia.org/billtrack/the-central-goods-and-services-tax-bill-2017-4697/.
The National Medical Commission Bill, 2017 was introduced in Lok Sabha recently and is listed for consideration and passage today.[1] The Bill seeks to regulate medical education and practice in India. To meet this objective, the Bill repeals the Indian Medical Council Act, 1956 and dissolves the current Medical Council of India (MCI). The MCI was established under the 1956 Act, to establish uniform standards of higher education qualifications in medicine and regulating its practice.[2]
A Committee was set up in 2016, under the NITI Aayog with Dr. Arvind Panagariya as its chair, to review the 1956 Act and recommend changes to improve medical education and the quality of doctors in India.[3] The Committee proposed that the Act be replaced by a new law, and also proposed a draft Bill in August 2016.
This post looks at the key provisions of the National Medical Commission Bill, 2017 introduced in Lok Sabha recently, and some issues which have been raised over the years regarding the regulation of medical education and practice in the country.
What are the key issues regarding the regulation of medical education and practice?
Several experts have examined the functioning of the MCI and suggested a different structure and governance system for its regulatory powers.3,[4] Some of the issues raised by them include:
Separation of regulatory powers
Over the years, the MCI has been criticised for its slow and unwieldy functioning owing to the concentration and centralisation of all regulatory functions in one single body. This is because the Council regulates medical education as well as medical practice. In this context, there have been recommendations that all professional councils like the MCI, should be divested of their academic functions, which should be subsumed under an apex body for higher education to be called the National Commission for Higher Education and Research.[5] This way there would be a separation between the regulation of medical education from regulation of medical practice.
An Expert Committee led by Prof. Ranjit Roy Chaudhury (2015), recommended structurally reconfiguring the MCI’s functions and suggested the formation of a National Medical Commission through a new Act.3 Here, the National Medical Commission would be an umbrella body for supervision of medical education and oversight of medial practice. It will have four segregated verticals under it to look at: (i) under-graduate medical education, (ii) post-graduate medical education, (iii) accreditation of medical institutions, and (iv) the registration of doctors. The 2017 Bill also creates four separate autonomous bodies for similar functions.
Composition of MCI
With most members of the MCI being elected, the NITI Aayog Committee (2016) noted the conflict of interest where the regulated elect the regulators, preventing the entry of skilled professionals for the job. The Committee recommended that a framework must be set up under which regulators are appointed through an independent selection process instead.
Fee Regulation
The NITI Aayog Committee (2016) recommended that a medical regulatory authority, such as the MCI, should not engage in fee regulation of private colleges. Such regulation of fee by regulatory authorities may encourage an underground economy for medical education seats with capitation fees (any payment in excess of the regular fee), in regulated private colleges. Further, the Committee stated that having a fee cap may discourage the entry of private colleges limiting the expansion of medical education in the country.
Professional conduct
The Standing Committee on Health (2016) observed that the present focus of the MCI is only on licensing of medical colleges.4 There is no emphasis given to the enforcement of medical ethics in education and on instances of corruption noted within the MCI. In light of this, the Committee recommended that the areas of medical education and medical practice should be separated in terms of enforcement of the appropriate ethics for each of these stages.
What does the National Medical Commission, 2017 Bill seek do to?
The 2017 Bill sets up the National Medical Commission (NMC) as an umbrella regulatory body with certain other bodies under it. The NMC will subsume the MCI and will regulate the medical education and practice in India. Under the Bill, states will establish their respective State Medical Councils within three years. These Councils will have a role similar to the NMC, at the state level.
Functions of the NMC include: (i) laying down policies for regulating medical institutions and medical professionals, (ii) assessing the requirements of human resources and infrastructure in healthcare, (iii) ensuring compliance by the State Medical Councils with the regulations made under the Bill, and (iv) framing guidelines for determination of fee for up to 40% of the seats in the private medical institutions and deemed universities which are governed by the Bill.
Who will be a part of the NMC?
The NMC will consist of 25 members, appointed by the central government. It will include representatives from Indian Council of Medical Research, and Directorate General of Health Services. A search committee will recommend names to the central government for the post of Chairperson, and the part-time members. These posts will have a maximum term of four years, and will not be eligible for extension or reappointment.
What are the regulatory bodies being set up under the NMC?
The Bill sets up four autonomous boards under the supervision of the NMC, as recommended by various experts. Each autonomous board will consist of a President and two members, appointed by the central government (on the recommendation of the search committee). These bodies are:
What does the Bill say regarding the conduct of medical entrance examinations?
There will be a uniform National Eligibility-cum-Entrance Test (NEET) for admission to under-graduate medical education in all medical institutions governed by the Bill. The NMC will specify the manner of conducting common counselling for admission in all such medical institutions.
Further, there will be a National Licentiate Examination for the students graduating from medical institutions to obtain the license for practice. This Examination will also serve as the basis for admission into post-graduate courses at medical institutions.
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[1] The National Medical Commission Bill, 2017, http://www.prsindia.org/uploads/media/medical%20commission/National%20Medical%20Commission%20Bill,%202017.pdf.
[2] Indian Medical Council Act, 1933.
[3] A Preliminary Report of the Committee on the Reform of the Indian Medical Council Act, 1956, NITI Aayog, August 7, 2016, http://niti.gov.in/writereaddata/files/document_publication/MCI%20Report%20.pdf.
[4] “Report no. 92: Functioning of the Medical Council of India”, Standing Committee on Health and Family Welfare, March 8, 2016, http://164.100.47.5/newcommittee/reports/EnglishCommittees/Committee%20on%20Health%20and%20Family%20Welfare/92.pdf
[5] “Report of the Committee to Advise on Renovation and Rejuvenation of Higher Education”, Ministry of Human Resource Development, 2009, http://mhrd.gov.in/sites/upload_files/mhrd/files/document-reports/YPC-Report.pdf.
