Terming the jump in World Bank’s Ease of Doing Business ranking also as an improvement in ‘Ease of Living Life’, Prime Minister Narendra Modi on Saturday promised to undertake more reforms. Modi also hinted at more measures for small and medium enterprises under Goods and Services Tax (GST), saying that if no state raises an objection, then the necessary changes required for businesses would be undertaken in the upcoming GST Council meeting on November 9-10.
“Is ranking ko bhale Ease of doing Business kehte hain lekin main maanta hun ki yeh Ease of doing Business ke saath hi Ease of Living Life ki bhi ranking hai. Yeh ranking sudharne ka matlab hai ki desh mein aam nagrik, desh ke madhyam varg ki zindagi aur aasaan hui hai (This ranking may be called Ease fo Doing Business but I beleive that along with Ease of Doing Business, this is also ranking for Ease of Living Life. The improvement in this ranking implies that life has become easier for the country’s common man and middle class),” Modi said at an event to mark the jump in India’s ‘Doing Business’ ranking to top 100.
He said that most of the issues raised by small businesses are being “positively accepted” and the recommendations of the committee of ministers, which was formed by the GST Council, would be taken up in the next GST Council meeting. “Aur jo 9-10 ki GST Council meeting mein agar koi rajya kathinayi paida nahi karega toh mujhe vishwaas hai ki bharat ke vyapar jagat aur bharat ki aarthik vyavastha ko nayi taqat dene mein jo bhi aawashyak sudhaar honge woh kiye jayenge (If no state raises objection in GST Council meeting on November 9-10, then I believe that the necessary changes required for the country’s businesses and the country’s economy would be taken),” Modi said.
A Group of Ministers (GoM) constituted to make the composition scheme more attractive has finalised its recommendations of providing more rebate to small businesses under the GST. The panel has recommended a proposed flat rate of 1 per cent for all three categories of composition dealers — traders, manufacturers and restaurants against the existing rates of 1, 2 and 5 per cent, respectively, for these categories of. An increase in the annual turnover threshold for the composition scheme to Rs 1.5 crore from the revised limit of Rs 1 crore, and a 12 per cent GST rate for both AC and non-AC restaurants are also part of the panel’s suggestions, which would be taken up in the GST Council meeting in Guwahati on November 9-10.
Modi added that some issues may crop up in future as well, since a new system (GST) has to be accepted and a system prevalent from many years has to be removed and for this, not only the government but all stakeholders should participate to make it a better system.
The Prime Minister also took a dig at the Opposition that those who have been at the World Bank are questioning the improvement in India’s Doing Business ranking. “Kuch logon ko bharat ki ranking 142 se 100 hone ki baat samajh nahi aati. Unhe koi fark nahi padta. Inme se kuch log toh World Bank mein bhi reh chuke hain. Woh aaj bhi bharat ki ranking par sawaal utha rahe hain. (Some people do not understand the jump in India’s ranking from 142 to 100. It does not matter to them. Some out of these people have been in World Bank. They are questioning India even today),” he said.
He further said that had legal reforms like insolvency code, bankruptcy code and commercial courts taken place earlier, the country’s ranking would have improved earlier than this. “Kiya kuch nahi, aur jo kar raha hai us par bhi sawaal kar rahe hain (They didn’t do anything and those who are doing it, they are raising questions on them),” he said.
He said that it’s a coincidence that the World Bank’s Ease of Doing Business report was started in 2004 and it’s well know who was in power till 2014. “Main aisa pradhan mantri hun jisne World Bank ka building bhi nahi dekha hai jabki pehle World Bank ko chalaane wale log yahaan baitha karte the (I am such a Prime Minister who has not even seen the World Bank building, while earlier those who used to run World Bank were seated here),” Modi said.
The Prime Minister also said that the World Bank’s report has not taken into account the implementation of the GST and the rankings would further improve next year when it’s taken into account. “As you all know, GST is the biggest tax reform in the Indian economy. And it impacts many aspects of doing business. With GST, we are moving towards a modern tax regime, which is transparent, stable and predictable,” he said.
Modi also said that there are many other reforms which have already happened, but need gestation and stabilisation time, before they are taken into account by the World Bank. “There are a few other reforms where our team and the World Bank team need to find common ground. All this, combined with our conviction to do even better, gives me the confidence that India will occupy a place of pride in the World Bank report next year and in the years thereafter,” he said.
Commerce and Industry Minister Suresh Prabhu speaking at the same event said that India has seen an “exponential growth into infrastructure development” in the last three-and-half-years and “all of this infrastructure investment is not for today but for coming years”. He said the government is making plan for rankings of districts within each state to understand which are the districts doing well and which are not doing so well.
World Bank CEO Kristalina Georgieva said that a jump in rankings of this nature is “very rare but it is particularly rare when we talk about a country of the size of India”. “I understand in a cricket loving nation, hitting a century is a very important milestone, so what we face here is an incredible achievement,” she said.
Georgieva, however, expressed concerns over the small size of firms in India. “Challenge in India is the size of firms…two thirds of jobs in private sector firms are in firms with less than six workers and the most common size of firms is one. If we want the economy to grow, want more jobs to be created, we ought to see an increase in size of firms and their capacity to generate employment,” she said.
She said that India will have to be persistent on the reforms front going ahead, adding that it is possible for India to alleviate extreme poverty. “We know that there is a very strong condition that extreme poverty would be history in India. The target date that was set that was 2026, I understand the Prime Minister intends to shorten to 2022 and given the track record so far, I have no doubt that it would be possible. And I have no doubt that when India hits another century, the century of Indian independence in 2047, most people in India would be part of the global middle class, India will be a high middle income country,” she said.
India needs to reform the policy environment and the institutional framework to deliver on policies along with investment in child development, skills, promote female participation in the labour force and work on health conditions including sanitation in urban and rural areas, Georgieva said.