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Sunday, July 22, 2018

India leaps 30 places to 100th rank in World Bank’s ‘ease of doing business’ index

World Bank's report notes India is one country which has made structural reforms this year, said the Finance Minister. 

By: ENS Economic Bureau | New Delhi | Updated: October 31, 2017 10:23:25 pm
 Arun Jaitley, India ease of doing business, world bank, world bank's ease of doing business report, jaitley on indian economy, india news, indian express Union Finance Minister Arun Jaitley (Reuters Photo/ File)

India jumped 30 places to the 100th rank among 190 countries in the latest edition of the World Bank’s global rankings on Ease of Doing Business. According to the World Bank Ease of Doing Business 2018 report, India figures among the top 10 countries that have marked an improvement this year, moving up on eight out of 10 Doing Business indicators.

The World Bank said the improvement in ranking for India has come on the back of “sustained business reforms” over the last four years. The new indirect tax regime of Goods and Services Tax was, however, not a part of the report and will be a part of the evaluation process from next year. Demonetisation was also not reflected in the report as it was not comparable across countries being a one-time event, World Bank said. Last year, India gained one slot in the World Bank’s rankings, from 131 to 130.

The World Bank said the big improvement in rankings for India has come in the areas of “protecting minority investors”, “getting credit”, “paying taxes” and “resolving insolvency” but it continues to lag in areas such as “starting a business”, “enforcing contracts” and “dealing in construction permits”.

A release by the Bank noted that the time taken to enforce a contract is longer today — at 1,445 days — than it was 15 years ago (1,420 days), placing the country at 164th place in the global ranking on the Enforcing Contracts indicator.

“In starting a business, India has reduced the time needed to register a new business to 30 days now, from 127 days 15 years ago. However, the number of procedures is still cumbersome for local entrepreneurs who still need to go through 12 procedures to start a business in Mumbai, which is considerably more than in OECD high-income economies, where it takes five procedures on an average,” the release said.

South Asian economies in the World Ranking

Annette Dixon, Vice President, South Asia region, World Bank said, “This is a significant improvement in rankings and is a result of a number of reforms which have been implemented by the government in 8 out of the 10 areas that Doing Business collects its indicators for…the significant jump this year is a result of the Indian government’s consistent efforts over the past few years.’’

India ranks among the top 5 in the world for protecting minority investors and in top 30 in three indicators of protecting minority investors, getting credit and getting electricity, Dixon said. “India’s efforts have been instrumental in helping to close the gap towards international best practice. Not only India has moved in its relative ranking to other countries, it’s also moving up in its absolute ranking in terms of distance to frontier metric,” Dixon said.

The ‘distance to frontier metric’, the underlying metric of the Doing Business rankings, improved by over 8 per cent to 60.76 in 2018 from 56.05 in 2017.

Asked what India needs to improve to be in the top 50, Dixon said, “What we see amongst countries that do consistently well in improving doing business, they have, year after year, put in persistent effort. It’s not the one-time things that a country does. Each year, they actually identify areas where they can continue to make progress, and in doing so, are actually pushing the frontier forward.”

Dixon said that the efforts cannot be taken at only one level of government and would also involve implementation at the local or state levels of government.

In September 2014, Prime Minister Narendra Modi at the launch of ‘Make in India’ had said that if the government brings transparency, India can move to 50th ranking. “If we have to come to 50 from 135, then Government alone can do this. If Government brings transparency in its decisions and rules, pushes works with simplicity we can occupy number 50 from 135 in ease of doing business,” he had said.

In May 2016, NITI Aayog CEO Amitabh Kant had even given a timeline of 3-4 years to reach the top 30 ranking. “Our objective is that in the next three-four years, India must come in the top 30 countries as far as ease of doing business is concerned,” Kant had said.

On GST, Dixon said that it is a “complicated reform” to roll out across the country and they expect to see the full impact of it only in next 2-3 years showing up in the Survey.

Dixon also emphasised that the growth of small and medium enterprises is important for job creation. “We see a very strong correlation from Doing Business between performance in Doing Business and role of performing economies who do create jobs. In India, we would like to see the SMEs growing to be larger. SMEs in India tend to be smaller in India than in other countries… India has over a million new job seekers joining the labour market every month and so, seeking growth in SMEs is going to be very important for creating jobs at the rate that India needs,” she said.

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