Bihar Polls For Change, But 3 Reasons Why Patna Is Good For Starting A Business

Bihar elections are making news with the final and fifth phase of the assembly elections closing today. Political rhetoric in the recent past has veered towards lack of development in the state including its capital city Patna. While political chaos and sloganeering leave little to cheer about, data show that Patna is a city with great potential for real estate development.

In the World Bank's 2009 ranking on Ease of Doing Business in Indian cities, Patna was at the second spot among 17 Indian cities surveyed for the ease of starting a business. The World Bank has not conducted such a study since then, but architects and urban policy experts like Hafeez Contractor are of the view that Patna's unlocked potential is as great as that of Mumbai's largest slum Dharavi. Contractor, in an interview to Times of India, opined that a new city can be built in Patna, channelising river streams, alongside the Ganges.

Here are three arguments in favor of Patna's unfulfilled destiny, largely based on World Bank's study in 2009: 

Starting a business in Patna is Easy

Though ranked 14th out of the 17 Indian cities surveyed in World Bank's Ease of Doing Business Index in 2009, the city ranked second for ease of starting a business, close on the heels of Delhi occupying the first spot. At 11, the number of procedures required to start a business in Delhi and Patna was the same. What's more, Patna is among the four Indian cities which initiated local reforms between 2006 and 2009 to make it easier to start a business, register properties and get construction permits.

Entrepreneurship in Patna is a cost-effective proposition

The cost of obtaining approvals to start a business in Patna is the least expensive, relative to income. According to World Bank, the process costs merely 38 per cent of the per capita income. In Bengaluru and Mumbai, it costs nearly twice as much. Patna is also one of the few cities in India with computerised land records, making it easier for entrepreneurs to check for encumbrances. 

Enforcing contracts is cheaper in Patna, as it costs only 16.9 per cent of the claim value. This can be as high as 32.5 per cent and 39.5 per cent of the claim value in Bengaluru and Mumbai. Moreover, entrepreneurs have to comply with lesser norms in the Bihar capital. For example, entrepreneurs do not have to register for professional tax or under Shops and Establishments Act in Delhi and Patna. Local government fee and tax in Patna too was 50 times lower when compared to cities like Mumbai.

Land plentiful, great for building affordable homes

In 2012, Architect Hafeez Contractor points out that Patna is abundant in large tracts of fallow land and abundant river water. This leaves plenty of room for vertical growth resulting in more housing units at affordable prices.  Even though the then chief minister Nitish Kumar's administration responded positively to Hafeez Contractor's proposal to redevelop Patna, there was not much progress made in this direction.

How has Patna fared since 2009?

According to the Economic Freedom of The States Of India 2013 report prepared by Swaminathan Aiyar, Laveesh Bhandari and Bibek Debroy for Cato Institute, Bihar's economy grew at an average of 11.8 per cent between 2004-05 and 2011-12. Bihar, however, was at the 20th position in economic freedom. Patna's economy performed much better than Bihar's, with a per capita income of Rs 63,063 in 2011-12 while Bihar's per capita income in 2012-13 was merely Rs 30, 930. The social infrastructure in Patna is good, with a minimum of 9 and a maximum of 63 private schools located within a radius of 1 km from existing government schools. The markets are open till late into the night, though not long ago, markets used to shut down by 6 PM.

What Needs to Still Fix:

- According to the World Bank, obtaining building permits takes more than three months in Patna, three times the time it takes in cities like Bengaluru and Hyderabad

- It also takes longer to comply with tax norms in Patna. In , for instance, it takes 233 hours on average in a year to comply with all tax norms, while it takes 305 hours in Patna. 

Learning from real estate policies of Hyderabad and Bengaluru - breeding grounds for technology startups - can take Patna notches higher than its counterparts in attracting and nourishing ecosystem for successful businesses. The Economic Freedom Of The States Of India report 2013 warns that without implementing economic reforms in Patna in particular and Bihar in general, Bihar's high economic growth may soon come to an end. Let us hope that the government which will soon be in power will work towards making it easy to do business in Patna.