Not honouring pacts biggest hurdle for ease of doing business

Mumbai: Biggest constraint to doing business in the country is poor contract enforcement, and the blame for the same rests mostly with the government, a top finance ministry official said.

The government delays payments or does not deliver on promises made earlier, posing challenges to businesses, principal economic advisor to the finance minister Sanjeev Sanyal said.

Even as we have leapfrogged on the overall ease of doing business ranking, we are still ranked 163rd among 190 countties when it comes to enforcing contract, and only "dysfunctional and war-affected" countries follow us, he said.

"The biggest constraint to doing business in our country is simply the business of enforcing contracts. Unfortunately, many people have whined about it for long, but very little actual thinking has gone into it," Sanyal told an event organised by impact investing firm Aavishkar.

The economist-turned-policymaker sought to take the blame for the same onto the government.

"In many cases, the poverty of contract enforcement relates not to two private parties, but the government which is violating these contracts," he said, adding this happens as both the Centre and the states "violate" honouring payments or other commitments.

He assured that the present government is working on these issues through interventions like ensuring the timely payments to vendors.

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