How much small businesses suffer from red tape and government bureaucracy? Fat bundles of paperwork, countless certificates, long hours of waiting, irritating haggling with unresponsive officials . . . whenever our small entrepreneurs talk about public bureaucracy involved in owning and running a small business, they spew venom. There are a myriad of inconceivable obstacles at every step -- right from registering a business or getting an electricity connection to paying taxes or getting loans.
A recent report on "Doing Business 2013, Smarter Regulations for Small and Medium-Size Enterprises" published by the World Bank and the International Finance Corporation (IFC), gives the same picture. In the list, India ranks very low at 132 th position out of 185 economies surveyed, faring particularly poorly on some of the sub-indices such as starting a business (173), dealing with construction permits (182), getting electricity (105), paying taxes (152), trading across borders (127), enforcing contracts (184), resolving insolvency (116).
The report adds that Indian SMEs have to comply with 12 procedures that take on average 27 days to start a business. Similarly, dealing with construction permits involves 34 procedures and a 196-day waiting period, getting electricity involves 7 procedures and a 67-day waiting period, registering property requires 5 procedures and a 44-day waiting period. For exports, an SME needs to collect 7 types of document, including Bill of Lading, Certificate of Origin, Commercial invoice, Foreign exchange control form, Inspection report, Packing list, Shipping Bill, Technical standard certificate, and Terminal handling receipts -- all these requiring a total of 16 days on average.
Beyond doubt, such a level of bureaucracy and red tape is a real headache for our SMEs. Small business owners, with their weak financial muscles and limited hiring power, have to keep themselves busy as a bee in handling a lot of daily chores at office and keeping a close eye on every single aspects of their business. It is therefore of crucial importance that regulatory burden on them is cut as much as possible to free up their time and money. But unfortunately we never see the government doing much in this direction.
In addition, I fear that the time, costs and difficulties in fitting in with all the aforesaid rules and regulations usually go much higher than the figures as reflected by the World Bank report. Here, I would like to invite feedback from our readers on how government bureaucracy creates unnecessary barriers for SMEs. Do you think that most of the norms and paperwork do not serve any public interest and they are unnecessary? And what are the ground realities? What steps are need to be taken by the government to help the SME sector get out of this labyrinth of red tape.
Note: Recently, in one of our editorials we covered the issue whether or not the government schemes are benefiting the SME sector, and considering huge response on the story, with majority of feedback giving a very grim picture, we have written to the Ministry of MSME regarding it. We hope that soon we would have the opportunity to discuss the issue further with the ministry. |
