Ease of Doing Business State Ranking: Analysing the Impact of Business Reform Action Plan on Micro,Small and Medium Enterprises (MSMEs) Among Top and Emerging States

Abstract

Micro, small and medium enterprises (MSMEs) are considered a crucial part of the Indian economy. They contribute significantly to the country’s GDP and conduces social growth through inclusive development. The rural parts of India are getting an upliftment with the help of growing MSMEs. The Government of India (GoI) takes several initiatives to support the MSMEs, and one such step was taken in the year 2014. In respect to that, GoI proposed a framework in 2015 that would evaluate the ease of doing business (EoDB) among Indian states. The initiative was taken to create more favourable entrepreneurial ecosystem across all Indian states. This paper tries to analyse the impact of Business Reform Action Plans (BRAPs) on the increase/decrease of MSMEs in the top and emerging states. States ranked as top achievers and achievers in EoDB ranking (2016–2017 and 2017–2018) are considered the top performing states, and fast-moving states are considered emerging states for the analyses. Some states show a positive relation between BRAP scores and MSMEs count, but some have contrary results. BRAP actions of top and emerging states with no point scoring are studied to determine which actions contribute to growing MSMEs. For this, the reports of BRAP published by the Department for Promotion of Industry and Internal Trade were studied. The results revealed four major action plans: commercial dispute resolution enablers, construction permit enablers, labour regulation enablers and availability of land, influencing the increase/decrease of MSMEs in Indian states/union territories (UTs).