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An Investment-FriendlyState

The discussion in all the foregoing chapters makes one thing abundantly clear:

favourable regulation, simple procedures, and a mind set of partnership between

the Governm ent and the bu siness commun ity are critical to achieving the grow th

agenda. Recognising this, the Governm ent has resolved to d evelop integrated and

stable policies, simple and rational p rocedures an d a bu reaucracy emp owered to

cut out red tape. By 2020, Andhra Pradesh should have the best business

environment and the best business-government interface in the country.

The State has already mad e a good start in achieving this transformation and has

developed a programme to realise the vision. This includes making policy and

procedure in Andh ra Pradesh favourable towards bu siness and the commun ity.

A GOOD START

The State Government has taken several steps to make it easier to do business in

Andhra Pradesh.

A single-window clearance system for new businesses, the State Investment

Promotion Board (SIPB), has been set u p. On subm ission of a Comm on Application

Form (CAP), the SIPB prov ides statu tory ap provals like pollution clearance, land

use certification, etc. This has considerably redu ced the time required for procedures

and clearances. In another u seful action, the And hra Pradesh Ind ustrial Investment

Corporation (APIIC) has identified land for indu strial estates. This spares investors

the critical but cum bersome and time-consum ing step of iden tifying suitable land,

with ad equate w ater and pow er, for their projects.

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Similarly, in a bid to be investment-friendly, the Ind ustries Departm ent has circulated

brochures listing the various clearances required to start projects in different

indu stries. This has proved a w elcome step in an environm ent in wh ich the investoris given the ru n arou nd just to find out w hat clearances are needed for a project.

It has to be accepted, however, that these initiatives fall well short of providing a

highly investor-friendly environment with minimal procedural obstacles. For

example, the single-window system is often labelled a ‘forwarding agency’ because

officials staffing it are n ot emp owered to take overarching p olicy d ecisions. In case

of a conflict between policies of different depar tmen ts, they have almost no say in

wh ich policy shou ld p revail.

APIIC’s ind ustrial estates are prim arily either und eveloped or un derd eveloped andso have n ot been attractive enough to investors in th e past. Moreover, the amou nt

of land provided to an ind ividu al investor (about 1 acre per investor) is not enou gh

for a large project.

Furthermore, no action has yet been taken in several other areas, e.g., updating

land records and simplifying land acquisition processes.

FAVOURABLE POLICY AND PROCEDURE

The successful imp lementation of the growth agenda will hinge on the Governm ent’sability to remove bottlenecks to growth by reforming po licy and procedure. To do

this, the Governm ent w ill need to act on the following fronts: frame an integra ted

and stable set of policies and bu ild awareness among the bureaucracy about them;

create high quality information systems to exped ite decision-making on clearances;

review, rationalise and simplify procedures in key areas and, where possible,

autom ate clearances; empower different levels of the bureaucracy to quickly p rovide

clearances. In ad dition, the Government w ill need to launch a sustained campaign

to bring about a more favourable attitude tow ards investors.

An integrated and stable set of policies

To minimise policy conflicts and consequent procedural delays, the Government

need s to form ulate a set of integrated and overarching policies in consultation with

all the relevant government departments. The policies should be relatively stable

and transparent. For example, after consulting each other, the Industry and

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Environment Departm ents could frame a set of indu strial policies that w ould satisfy

minimum environmental requirements.

However, this in itself is not enou gh to sp eed u p p rocedure. To do so, it is critical to

create awareness of these integrated policies among adm inistrators responsible for

giving app rovals and clearances.

Rationalised procedures

To simplify and exp edite the entire clearance process, the Governm ent w ill set up a

task force to review the various clearances required for establishing and operating

industrial un its in variou s sectors. These clearances will then be ra tionalised and / 

or consolidated . The task force will also look for ways to make procedu res simp lerand more transparent. For instance, clearances with straightforward decision-

making criteria could be automated. The task force could also classify clearances

into bu ckets to be tackled at va rious levels of bureau cracy. To simp lify the app roval

process, the Government w ill need to cut d own the vast nu mber of regulations that

curren tly app ly. Mexico used a fairly radical app roach for doing this. A ‘deregulation

czar’ was appointed; any citizen wanting a regulation to be discarded could

approach the ‘czar’. This official was obliged to review the regulation and give a

decision within 45 days. If no decision was forthcoming at the end of this period,

the regulation was automatically scrapped. The State Government could consider

a similar in itiative.

Accurate and comprehens ive information systems

The most effective way to speed up business processes is to provide accurate,

compu terised information systems. The Governm ent will need to invest significantly

in collecting accurate and app ropriate data and building compu terised d atabases

from which information can be quickly accessed. For example, since lack of 

information is the biggest bottleneck in land identification and acquisition, the

Government could collect data and maintain readily useable, computerised

databases on land ownership, project-suitable land, the availability of water and

pow er, etc., to facilitate the land identification/ acquisition process and preven t

disputes.

The Electronic Governmen t initiative will greatly simp lify p rocedures (see Chap ter

28, ‘People-Centred, Growth-Oriented Governance’). It will help provide instant,

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accurate information, ensure transparency and improve speed of response. Investors

will be able to access publicly ava ilable electronic databases to find out th e deta ils

necessary for the approval of an investment proposal. They can track the status of their app lications online and get instant feedback on wh ether a p articular ap plication

is in the correct forma t. Currently, a key reason for procedu ral delay is that form s

are not subm itted in the prop er format. This happ ens mainly because the correct

format is not widely known .

Empowered bureaucracy

Once clearances have been rationalised, streamlined, selectively automated and

classified into various bu ckets, the Government could empow er ad ministrators at

various levels to sanction clearances. The ran ge of an ad ministrator ’s discretionary

pow ers wou ld be m inimised and clearly defined. This will redu ce the pressure on

the State Government departments and the head offices of the relevant agencies

that today have to approve even the most minor clearances. This will reduce file-

pu shing and red-tape and h ence ensure quicker processes.

Changed mindset towards investors

Regulation reform is not all that is need ed to facilitate business in the State. What is

also needed is a change in the bu reaucracy’s mindset towards bu siness and investors.

The bureaucracy should now look on investors as partners in progress. This calls

for a change in the en tire app roach to serving th e customer ranging from p roviding

helpful directions an d information on procedures and clearances required th rough

an ‘investor serv ices centre’ to changing the w ay staff dea l with custom ers.

By reforming and simplifying its procedu res in this way, And hra Pradesh will soon

make itself the best Indian state to invest in.

An Investm ent-Friend ly State