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Partners column

August 31, 2012
As I  sit  down to write the partner’s column, I  am  wondering what is apropos in the current environment  that would interest the reader.    Diverse subjects such  as logjam in Parliament due to CoalGate, dwindling Indian economy, labor unrest, sub- optimal rain fall, Apple and Samsung patent fight, fate of Companies Bill  etc., come to my mind yet I  feel  I  will share my thoughts on two structural issues  connected with the business and corporate. Ease of doing Business in India The World Bank and International Finance Corporation 2012 report, on the ease of doing business in India , ranks India a lowly 132 out of 183 countries, well below the other BRICS and most of the SAARC countries. While India unleashed liberal economic polices since 1991, computerized various regulatory and approval processes by government organs, there has been no significant improvement in this ranking.  The Central and State Governments are spending  vast  sums of money on e-governance but the benefits of the same are yet to be  realized  due to what I perceive   are huge implementation and monitoring issues. Just to give an example – the MCA 21 Project which  has been implemented by the Ministry of Corporate Affairs is a great success – 24X7 docs can be viewed and filings can be done from anywhere at anytime.  However a few arms of the MCA  are  yet to fully utilize e-governance platform whereby  the speed of delivery of services can be further improved.,  while technology enables incorporation of a company within a day,  in reality it takes more  time. We should move to a single application for multiple registrations such as PAN, TAN, VAT, CST, IEC , Service Tax etc. and all registrations delivered from one window.    I am happy to notice that MCA has set up a committee under the former SEBI Chairman, Mr. Damodaran for ‘Reforming the Regulatory Environment for doing business in India’ together with all corporate honchos of India Inc as members. The improvement in  ranking will help better the perception of  business community in India and overseas resulting in  positive impact on FDI. Gender diversity in Board rooms -Does Gender Diversity in the Boardroom Mean Better Returns? This topic has  seized  the attention of  capital market regulators, governments, corporates over the last couple of years.  The Report by Credit Suisse suggests that  Companies with one or more women on the  Board have delivered higher average return on equity, lower gearing, better average growth and higher price / book value multiples over the course of the last six years.  Various governments have recommended the  Boards to bring diversity and enhance the presence of women; few countries like  Italy has recently passed a law requiring listed and state-owned companies to ensure that by 2015, one-third of their Board members would be women. EU presently has 14% and US has 16%  Board members as women while they have  set a target of 30%. India currently has only 5.3% of women on the Board which is far below the global norms. The Ministry of Corporate Affairs has proposed making at least one woman director mandatory in prescribed type of companies in the proposed Companies Act. Large Indian Corporates are also taking steps in this direction.  Let us hope that the government mandate coupled with the Indian corporate's active persuasion of this objective, we will have better women representation on the Boards and  better results for all the stakeholders. Regards Raghu Babu G
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