Ease of Doing Business and India

Ease of Doing Business and INDIA

What is Ease of Doing Business?

 

The World Bank ranks economies on the Ease of Doing Business Index on the basis of regulatory environment within a country. Whether the same is conducive for starting and operating a local firm or not. The following are the parameters used by the World Bank to rank the countries:

  • Starting a business
  • Dealing with construction permits
  • Getting electricity
  • Registering property
  • Getting credit
  • Protecting investors
  • Paying taxes
  • Trading across borders
  • Enforcing contracts
  • Resolving insolvency

India’rank in Index

The Doing Business Report 2017, which ranks as New Zealand as Number 1, ranks India 130 among 190 countries, just one rank higher than last year. This is a matter of concern since it shows the worrisome pace of the economic reforms in India. Even the one rank improvement is because India had been downgraded in the 2016 edition to 131 from 130 earlier. India does not feature on the top 10 improvers list as well, which includes Pakistan as well.

The present government had set a target for India to enter the top 50 in ease of doing business ranking in three years after breaking into top 100 this year. However, certain areas of concern which still continue to exist and keep pulling India down the ladder are:

  • Retrospective taxation
  • Simpler land acquisition norms
  • Status quo in ranks in parameters of starting a business and registering property
  • Delays in litigations in matters of payment of bonus and mining royalties
  • Lack of labour law reform

 

The Positive Side:

The World Bank has identified certain areas where India has shown satisfactory performance. The identified areas are as highlighted below:

  • Simplifying tax payments
  • E-biz portal
  • Simplifying trade procedures and contract enforcement
  • Ease in getting an electricity connection, where India has jumped 26 spots and obtained a rank of 26
  • Electronic system for paying Employee State Insurance Contributions, electronic filing of integrated customs declarations
  • Legislative overhauls by way of Goods and Service Tax (GST), Insolvency and Bankruptcy Code and Companies (Amendment) Act are other ways to move up the ladder.
  • Special mechanisms for resolving commercial disputes.

Suggestions:

India hopes that various reforms being implemented will bear fruits in years to come and also feels that some of the reforms have not been considered in the report, of which some were not implemented before the cut off date. Apart from waiting for World Bank to be considerate towards these concerns, for India to shine brighter on this global platform a few additional steps need to be taken as well.

  • Put in place a single window mechanism for registering companies
  • Building a unified database of security interests over movable assets
  • Improving customs clearances
  • Upgrading the rules for registering property and digitizing records
  • Promote role modelling by promoting steps taken by states such as Tamil Nadu and Gujarat who have shown exemplary performance in promoting investor friendly environment.
  • Efficiency in the functioning of bureaucracy and judiciary

Leave a Reply

Your email address will not be published. Required fields are marked *