India still ranks poorly in ease of doing business

Written by fe Bureau | New Delhi, Sep 10 | Updated: Sep 11 2008, 06:17am hrs
The Doing Business Report 2009, brought out by IFC and the World Bank, shows that regulatory reforms are gaining momentum across the world. According to the report, 113 countries implemented 239 reforms between June 2007 and June 2008.

But India slipped to 122nd position from 120th because it remains the most difficult country to enforce contracts in court or otherwise. While the report was prepared much before Singur erupted, such problems are a grim reminder of why India ranks 180 among the 181 countries on this score. The report notes that it takes 1,420 days (around four years) to enforce a contract in India compared with 150 days (or, five months) in Singapore, the country that retains the top spot in the global business ranking.

According to Sabine Hertveldt, co-author of the report, India has otherwise made great strides in most other parameters in the last one year, like making foreign trade rules simpler. It has also adopted technology in a big way to implement electronic registration of business, electronic collateral registration and online submission of customs forms and payments. She said despite all these improvements, India has slipped in the sixth edition of the report because other countries have moved even faster.

The central government had last year formed a committee of secretaries to work on improving Indias ranking. Hertveldt said such initiatives were welcome, but they would take time to deliver results. The report, according to her, should not be used to judge why global investors find India attractive. It is not an investment attractiveness index, but it is an index of

regulatory complexity of economies, she said.

Among Bric countries, Russia at 120 is just a shade ahead. It was at 112th position last year. Both China and Brazil have improved their positions, from 90 to 83 and from 126 to 125, respectively. The Doing Business Report ranks economies based on ten indicators that impact business. But it does not consider macro economic policy, quality of infrastructure, currency volatility or investor perception.