Ease of doing business: India eyes record ranking on ‘good reforms’

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Published: October 24, 2019 1:10:28 AM

Last year, India witnessed a 23-notch jump to a record 77th position in ease of doing business index that captured the performance of 190 countries.

The country slipped 10 spots to the 68th rank in the latest global competitiveness index of the Geneva-based World Economic Forum (WEF), having witnessed lower rank for a third straight year.

India is expecting a third straight year of good jump in the ease of doing business index on the back of ‘good reforms’ when the World Bank releases its latest rankings for various nations on Thursday. The government is confident of substantial progress in some of the crucial indicators (where the country has huge scope to improve) like starting a business, trading across the borders, resolving insolvency, paying taxes and construction permit, sources told FE.

However, as many 12 countries, including China, have also undertaken massive reforms in ease of doing business. So, India faces huge competition this year to improve its rank, according one of the sources. The government has set a target for the country to break into the group of top 50 nations in the coming years.

Last year, India witnessed a 23-notch jump to a record 77th position in ease of doing business index that captured the performance of 190 countries.

Each year’s rank reflects stakeholders’ perception of reforms undertaken up to the month of May of the previous year (except for the ‘paying taxes’ category where the deadline is end-December). For instance, the 2019 rank, released last year, had captured these reforms in the year through May 2018.

The country’s rank under the Modi government jumped from 142nd in the World Bank’s 2015 report (which reflected reforms undertaken mostly up to May 2014) to 77 in the last report. In the past two years alone, India jumped 57 spots, the most by any country.

However, India’s stellar show in ease of doing business in recent years is in a stark contrast with its slide in some other indicators, including the global competitiveness index. The country slipped 10 spots to the 68th rank in the latest global competitiveness index of the Geneva-based World Economic Forum (WEF), having witnessed lower rank for a third straight year.

Last year, the country recorded improvement in the ease of doing business index in six of the 10 parametres, having witnessed a leap of 129 notches in the ever-laggard ‘construction permit’ to 52nd spot, 66 in ‘trading across borders’ to the 80th position and 19 in ‘starting a business’ to 137th rank among 190 countries. The government believes further improvement in these indicators can be expected this time.

Similarly, with the relative streamlining of the goods and services tax (GST) and the insolvency and bankruptcy code (IBC), the government hopes for a marked improvement in indicators such as ‘paying taxes’ and ‘resolving insolvency’ in which its rank had worsened last year, despite expectations to the contrary. Its rank in ‘paying taxes’ last year dropped by two notches to 121st position, while in ‘resolving insolvency’, the fall was by five spots to 108th.

As for insolvency, while the resolution of some of the large cases, including Bhushan Steel, has raised the chances of a better performance this year, the unusual delay in the resolution of cases like Essar Steel due to litigations may serve as a dampener. But the government’s recent step to mandate the conclusion of the insolvency resolution process within 330 days (including litigation) would help expedite the cases from now on.

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