The Centre, on Sunday, granted permission for additional borrowing of over ₹16,700 crore to 5 States on account of completing stipulated citizen centric reforms. These States are Andhra Pradesh, Karnataka, Madhya Pradesh, Tamil Nadu and Telangana.

In view of the resource requirement to meet the challenges posed by the Covid-19 pandemic, the Government of India had on May 17 enhanced the borrowing limit of the States by 2 per cent of their GSDP (Gross State Domestic Products).

Half of this special dispensation was linked to undertaking citizen centric reforms by the States. The four citizen centric areas for reforms identified were - Implementation of ‘One Nation. One Ration Card’ system, ‘Ease of doing business’ reform, Urban Local body/utility reforms and Power Sector reforms.

So far, 10 States have implemented the ‘One Nation. One Ration Card’ system, five States have done ‘Ease of Doing Business’ reforms, and two States have done local body reforms.

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What are the ‘Ease of Doing Business’ reforms?

It is an important indicator of the investment-friendly business climate in the country. Improvements in the ease of doing business will enable faster future growth of the State economy. Therefore, the government of India had in May 2020, decided to link grant of additional borrowing permissions to States who undertake the reforms to facilitate the ease of doing business.

The reforms stipulated in this category include the completion of first assessment of ‘District Level Business Reform Action Plan’ and the elimination of the requirements of renewal of registration certificates/approvals/licences obtained by businesses for various activities under various acts.

These acts are The Shops & Establishment Act, The Contracts Labour (Regulation and Abolition) Act, 1970, The Factories Act, 1948, The Legal Metrology Act, The Inter State Migrant Workmen (RE&CS) Act, 1979.

Drug Manufacturing/ Selling/ Storage License and Trade License issued by the Municipal Corporations.

The reform also talks about implementation of computerised central random inspection system under the Acts, wherein allocation of inspectors is done centrally, the same inspector is not assigned to the same unit in subsequent years, prior inspection notice is provided to the business owner, and inspection report is uploaded within 48 hours of inspection.

This includes the inspection under, the Equal Remuneration Act, 1976, the Minimum Wages Act, 1948, the Shops and Establishments Act, the Payment of Bonus Act, 1965, the Payment of Wages Act, 1936, the Payment of Gratuity Act, 1972, the Contract Labour (Regulation and Abolition) Act, 1970, the Factories Act, 1948, the Boilers Act, 1923, the Water (Prevention and Control of Pollution) Act, 1974, the Air (Prevention and Control of Pollution) Act, 1981, and the Legal Metrology Act, 2009 and Rules

What next?

Centre has also a scheme of ‘Financial Assistance to States for Capital Expenditure’ for States completing three out of four reforms.

This scheme has total outlay of ₹2,000 crore. States have also been granted more time to undertake reforms. Now, if the recommendation from the nodal Ministry concerned regarding implementation of the reform is received by 15th February, 2020, the State will be eligible for reform linked benefits.

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