Goa Business School and Fomento, in their panel discussion with stakeholders of different industries, discuss and deliberate ways to take Goa ahead on the EODB index
Why is it necessary to enhance Ease of Doing Business in Goa? Goa is one of the least populated, literate states and has the highest per capita net state domestic product (NSDP) in the country.
Apart from being one of the most sought after tourist destinations, Goa also has the highest industrial estate per million in India. But the state has one of the highest unemployment rates in the country with a constant decline in the EoDB index, when, on the other hand, India is climbing steadily in the international sphere.
To solve this problem it is necessary that all the stakeholders like government, industry, educational institutions, financial institutions and society at large work cohesively to help Goa rise to the top of the ladder, as the most sought after business destination in the country.
Goa Business School in association with Fomento, held a panel discussion with stakeholders of different industries in Goa as panelists to discuss, deliberate and brainstorm in order to draw up a holistic roadmap for the stakeholders to take Goa ahead.
In the recently announced Ease of Doing Business Index, Goa faced a rude shock of slipping down to the 24th position from 19th position. Goa is a state with the best law and order situation in the country, which is again one of the most important prerequisite for having a conducive business environment. Goa is also a leading state on Human Development Index (HDI) in the country. In spite of having the most conducive factors to do business, Goa is steadily slipping down on the ease of doing business rankings. Goa is a fast-growing state with financial problems, with one of the highest per capita debt burden, local entrepreneurs are finding it increasingly hard to do business in Goa.
Goa is a state with the highest literacy in the entire country which means Goa has the potential to offer to the industry skilled and educated labour, which is the need of the hour.
Quality of Life in Goa
Goa has a low population, high literacy rate, high digital penetration, high per capita usage of internet and smartphones, high per capita NSDP, very small population below the poverty line, very less crime rate, and a high number of industrial estates and high human development index.
This enables the residents of Goa to enjoy a good quality of life. ‘Will this quality of life sustain for future generations?’ this is the question that requires an urgent response. The high unemployment rate and lower index of ease of doing business, coupled together may lead to the decline of the state’s economy. Further, the high debt burdens accentuate the desolation. The primary requirement for any government is to have a balance sheet wherein the key constituents are balanced. In case the government doesn’t have this, then the ease of doing business is very difficult to achieve. Goa’s balance sheet is in a ‘shambolic state’ and it was because they have been borrowing at a high-interest rate. Currently, the interest rate has touched 9%.
In the State Budget speech 20-21, the estimates state that out of every rupee earned, approximately 36.9 percent goes towards salaries, and wages, whereas 12.7 percent goes towards debt servicing. After considering other such committed expenditures, only 28.5 percent remains for developmental works and maintenance of existing infrastructure.
The implications could be that today’s younger generation is only interested in acquiring government jobs, the
entrepreneurship spirit is lost and hence the industry then has to import labour and in turn gets critiqued for. To further aggravate this condition, the mining industry in Goa has stopped, leading to a precarious financial and social strife.
How Does Ease of Doing Business benefit the Government?
1. Ease of doing business attracts businesses, attracts industries thus bringing prosperity to the state.
2. Ease of doing business creates revenue for the Government with which the Government functions.
3. Ease of doing business creates employment in the state.
4. A striking example of attracting a particular sector has been the pharmaceutical sector, where certain incentives were given for a short period that helped them to establish their footprints in Goa. Currently, the organic expansion and growth of this sector is contributing to the state and nation at large. It is also contributing to the exports.
Causes for drop in the ranking of Ease of Doing Business
1. One of the major reasons for Goa’s rank slipping down from 19 to 24 on the parameters of EoDB is the drastic change in the evaluation criteria. Earlier they accounted for the number of points based on actual implementation and provide corroborative evidence. However recently end-user feedback is also an essential part of the evaluation methodology.
2. A weak end-user feedback further emphasises that there is scant ease of doing business in Goa. Andhra Pradesh, Assam, Haryana, Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Odisha, Punjab, Rajasthan, Tamil Nadu and Telangana, Gujarat, Uttar Pradesh and Uttarakhand had also reported completion of this reform, which was confirmed by DPIIT. Goa is not even there in this list. We are yet to comply with these reforms.
Issues that need to be addressed
1. Over concretisation everywhere in Goa will lead to a loss of its natural beauty.
2. Goa has 24 industrial estates, out of which only 2 industrial estates – Verna and Pilerne are large and functional. The rest are small and medium situated in rural areas with an intention to create employment in those areas. However, not much growth is seen in these areas. For example, Canacona Industrial Estate is almost non-functional.
3. Many policies and schemes are being provided by the state and central government but either they are under-utilised – for example, 12% of the fund for tribal welfare is currently unutilised; or the lack of information supply whereby these schemes do not reach the deserving persons.
4. High rate of unemployment coupled with a low entrepreneurship spirit within the locals’ further leads to fewer jobs generation in the state, complicating the situation of ease of doing business.
5. Co-working spaces, either shared or personal spaces are slightly expensive in Goa as compared to other states. For example, there is a very established co-working space in Arpora that faces the same issues of clearances.
6. Any business to start in the state requires multiple department clearances and multiple licenses. Delay in these clearances and licenses leads to a loss of revenue for the state.
7. Also the tenure of these permissions and licenses is too frequent. For example ‘Shops and Establishment Act’ points out that the license needs to be renewed every year.
1. Licenses Renewal Process should be streamlined which will reduce the time, cost, and manpower currently required by the government. For example, in the tourism industry, if one wants to start a business, then by the time one gets permission a lot of time and money is lost.
2. The government should remove the restrictions on licenses for doing business
3. The faster any business gets permissions and licenses, the faster they can start any business and faster the prosperity can come to the state.
4. Hunt for the investors and businesses that are willing and interested to start their business in Goa. Facilitate the process to start their business by giving licenses within a week.
5. Government needs to reduce its roles and presence as much as possible and bring in professional efficiency.
6. Ease of doing business would be achieved if certain services are taken online in the application process and eliminating what is unnecessary.
7. Export strategy is the only document that lays out the important sectors.
8. The environmental sustainability and keeping Goa the way it is an important condition as currently the thrust is highly on one particular sector, that is tourism.
Goa Investment Promotion and Facilitation Board’s (IPB) role in the upcoming reforms as given below
1. Further strengthening to provide better support to the industry; Making single window an actual single window.
2. Increased synergy between IPB and GIDC for better investor experience.
3. Grievance redressal system to undergo a complete overhaul to bring accountability and transparency in the delivery of service.
4. Greater emphasis to be given on investment promotion activities to attract quality investment in the state.
5. Policy-level support in the form of investment and logistics.