The Narendra Modi government has high hopes from the World Bank’s Ease of Doing Business Ranking as it expects India to make it to the top 100 countries for the first time this year after a disappointing performance last year. The reason: Three major reforms implemented by the government this year. The World Bank will release 2018 edition of the Ease of Doing Business today, and the government is hopeful that India will jump nearly 30 places from its poor 130 ranking due to recent reforms including three big ones: Implementation of the GST, the Insolvency and Bankruptcy Code, and simplifications introduced in starting a business.
“We have worked very hard so we are definitely expecting,” DIPP Secretary Ramesh Abhishek told PTI when asked if the country’s ranking would improve. Commerce and Industry Minister Suresh Prabhu had recently hinted about the same, saying the country would soon hear “good news” on the ease of doing business front.
Last year, India performed poorly on the index rising just one rank to 130 in 2017 report from 131 in 2016, following which Prime Minister Narendra Modi reportedly ordered ministries to work towards improving India’s rank in ease of doing business.
GST: The Goods and Services Tax, implemented this year in July, is seen as one of the biggest reforms in India’s history aimed to make complex taxation system easier. Still, in its primary stage, GST, has lifted hopes of global companies who expect to set their businesses easily in India due to a single taxation system and subsequently lesser red-tapism and unnecessary delay.
IBC: The Insolvency and Bankruptcy Code, under which it has become easier to take necessary action against failed companies, has also improved India’s position in ease of doing business as it would lift the confidence of investors who now have a mechanism in place to recover their money.
Simplification: The Ministry of Commerce and Industry this year introduced a lot of simplification measures aimed to attract more businesses in India. From reducing red-tapism to speeding up construction permits, the government has undertaken several changes to make it easier for global players to register and establish their businesses in India.
India’s ranking in the ease of doing business is crucial for the Narendra Modi government as the Prime Minister had been pitching the country as an ideal place for businesses with initiatives like ‘Make In India” and “minimum government, maximum governance”.
It was a set back for India to rank poorly on the index last year, leaving room for critics to question Prime Minister’s vision to pitch India as an ideal place for doing business. The World Bank reportedly took under consideration reforms claimed by India. In the last three-and-a-half years, India has received foreign direct investment (FDI) of above USD 170 billion.
The ease of doing business is an index created by the World Bank to measure regulations directly affecting businesses and overall environment such as market situations, infrastructure, inflation, crime et al. New Zealand, Singapore and Denmark were the top three countries in the last report.