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No Freedom from Licence Raj for Restaurants


AS WE prepare to raise a toast to another Independence Day (so what if it’s a dry day!), the lords of our bureaucratic jungle need to seriously ask themselves if they are honestly prepared to liberate the economy from the shackles that stifle entrepreneurial spirit. India officially bid farewell to the licence-permit raj, but for creators of wealth and jobs, very little has changed on the ground. Ask restaurant owners and they’ll tell you how.

A restaurant honcho in a neighbouring state was explaining to me how it takes Rs 10 lakh to get an excise licence — without which you can’t serve liquor, which is a substantial source of easy revenue for any establishment — worth Rs 3 lakh. The difference is the sum newbie restaurants pay as ‘facilitation charges’. It is no longer OK to call a bribe a bribe! And the rules ensure that there are multiple points of and opportunities for bribe collection.

In this neighbouring state, for instance, you need to get no-objection certificates from four local officials, who, anyway, gave you the licences to open the restaurant (for some strange reason, you have to obtain an excise licence after you’ve opened a restaurant, which is why new eateries can’t normally serve liquor in their initial months unless they are in five-star hotels). You have to go back to each one of them and re-establish your credentials (and the city magistrate get to sit  over your case twice, once to start the process and then to certify that the process has been completed satisfactorily) before your file can move up to the state excise department, which is another hell hole.

My source shocked me with his stories on the extent of bribery in the state excise department. Peons, who double as ‘facilitators’, demand ‘walking money’ to deliver a file from one office to another. Personal assistants of officials ask for gratification before they tap on the print command to get an important printout.

And even after you have greased the relevant palms, your file may come back with ridiculous objections such as the one raised on a particular restaurant’s application. If more licences are given out in this particular district, noted the objective official, the workload of the district excise administration will go up so much that it wouldn’t be able to handle it. The district excise administration was therefore advised to state whether it would be able to cope with the burden of handling that one additional licence!

Well, if the state exchequer earns Rs 3 lakh every year from each excise licence, it can jolly well second officials to the district excise administration to manage the ‘overload’. Restaurateurs therefore take the easy way out and sign up facilitators who profession it is to liaise with the relevant officials–read, pay bribes to get files moving. A major fast food chain has a vice-president with a staff of three dedicated to this honourable task, which includes skilful management of accounts, for the facilitation charges are paid in cash.

Maximum government, as opposed to maximum governance, continues to be the bane of the country’s Rs 75,000-crore organised food service sector, which contributes Rs 12,000 crore annually to the national kitty. That is exactly the point made by the  of India (NRAI) at a recent meeting with Tourism Minister .

Restaurateurs across India have to obtain 12-15 licences from 10-12 different authorities before they can operate. These licences have to be renewed every year, the rules vary from state to state, and worse, despite years of representations to various governments, the organised restaurant sector has not got anyone to agree to a single-window, corruption-free, online clearance. Did anyone say the licence-permit raj is over? It is, but in Communist China, where you need four licences to open a restaurant. Time to move from Chandni Chowk to China?

Reproduced with permission from Mail Today (India Today Group)