India hits 100 in ease of doing business

India jumped up 30 notches into the top 100 rankings on the World Bank’s ‘ease of doing business’ index, thanks to major improvements in indicators such as resolving insolvency, paying taxes, protecting minority investors and getting credit.

“The significant jump this year is a result of the Indian government’s consistent efforts over the past few years and India’s endeavour to strengthen its position as a preferred place to do business,” said Annette Dixon, Vice President, South Asia region at the release of ‘Doing Business 2018: Reforming to Create Jobs’ on Tuesday.

India’s fastest single-year jump in the World Bank’s Ease of Doing Business ranking has been a meticulously planned exercise. It began with the World Bank agreeing with the government that the survey (that underlies the ranking) should be conducted in two cities (Mumbai and Delhi) unlike the pre-2016 methodology of ranking reflecting the perception of business in Mumbai alone.

GST will improve rank

There is significant improvement in many criteria such as protecting minority investors, availability of credit and getting an electricity connection. On the taxation index, India had vaulted up 53 places; once the impact of the GST is factored in, the ranking will improve further. The cut-off for the rankings was June 1.

An improvement in the rankings will help not only foreign investments but also domestic investors.

India is among the top ten improvers this year, with improved ranking in six of the ten indicators, while its performance in absolute terms improved in nine. The six areas of improved ranking include dealing with construction permits and enforcing contracts.

Where India slipped

In the category of starting a business, though, the need for local entrepreneurs to go through 12 procedures to start a business, as opposed to five in high-income countries, worsened India’s ranking in the category to 156 from 155 last year.

There was also a major slip in ranking in the category of registering property — from 138 last year to 154 this year — due to increase in time taken, cost and number of procedures for registration.

Bhutan, in 75th place, is South Asia’s highest-ranked economy, followed by India (at 100) and Nepal (at 105).

This year, the report recognised eight areas in which reforms were implemented in Delhi and Mumbai, as opposed to just four last year.

India’s corporate law and securities regulations were recognised as highly advanced, placing it in fourth place in the global ranking on protecting minority investors. The time taken to obtain an electricity connection in Delhi reduced from 138 days four years back to 45 days now, against a 78-day average in OECD high-income economies, the report observed. This put India in 29th place in the category.

India still lags in areas such as starting a business, enforcing contracts and dealing with construction permits. It takes longer to enforce a contract today, at 1,445 days, than 15 years ago (1,420 days).

Further Reading:

Ease of Doing Business Report

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