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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.
CHAPTER 1CHAPTER 8
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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