5) “The progress made in Ease of Doing Business (EODB) rankings is real, but it’s time for another exercise that takes a ground-up look at our current regulatory frameworks.” Analyze in the context of regulatory architecture for MSMEs?(250 words)

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Topic: Indian economy – issues

5) “The progress made in Ease of Doing Business (EODB) rankings is real, but it’s time for another exercise that takes a ground-up look at our current regulatory frameworks.” Analyze in the context of regulatory architecture for MSMEs?(250 words)

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Why this question

The article highlights the problem of regulatory maze that surrounds the MSME sector and the challenges it creates for them. At a time when credit availability for MSMEs has been focussed on a lot, simplifying the regulatory architecture will also help in the progress of MSMEs.

Key demand of the question

The question expects us to highlight the plethora of regulations that exist for MSME sector and why and how rationalising these regulations will help in freeing up the shackles of MSME sector and accelerate their growth.

Directive word

Analyze  – When asked to analyze, you  have to examine methodically the structure or nature of the topic by separating it into component parts and present them as a whole in a summary.

Structure of the answer

Introduction – Highlight that India has recently made rapid strides in EODB rankings. To further improve EODB for MSMEs there is a need for relook into the regulatory architecture for MSMEs.

Body

  • First of all highlight the sheer quantum of regulations that the MSME sector has to contend with.
  • Discuss the challenges caused for the MSME sector as a result of the present regulatory architecture – compliance burden, lack of capacity etc
  • Discuss what needs to be done. Mention that focus has to be on 3 things – vectors—rationalization (cutting down the number of laws), simplification (cutting down the number of compliances and filings) and digitization (architecting for true paperless, presence-less and cashless). Also bring out how the same can be achieved.

Conclusion – Emphasize on the importance of MSME sector for the economy and how tackling this issue would have a multiplier effect on our economy.