Ease of doing business report: India climbs four places to 130

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Published: October 29, 2015 1:04:28 AM

India climbed up four places from last year to 130 among 189 countries in providing ease of doing business, the World Bank said late on Tuesday, but analysts said the pace of improvement was far from what is needed to achieve the Narendra Modi government's target of catapulting the country to among the top 50 by 2017.

India climbed up four places from last year to 130 among 189 countries in providing ease of doing business, the World Bank said late on Tuesday, but analysts said the pace of improvement was far from what is needed to achieve the Narendra Modi government’s target of catapulting the country to among the top 50 by 2017.

India’s 2015 rank, pertinently, was revised to 134 from 142 earlier due to a change in the methodology and revisions of data due to new information, the World Bank said.

India was elevated in the pecking order mainly due to an improvement in “getting electricity” and “starting a business”, but in the crucial criterion of enforcement of contracts, one area India continues to be ranked among the last 10 countries, no change was seen.

“I am grateful that the World Bank has recognised that India is now becoming an easier place to do business. A large number of steps which we have already taken are going to be reflected in the rankings next year,” finance minister Arun Jaitley said. The government has been flagging steps taken to ease the setting up of businesses, the streamlining of tax administration by electronic means as well as legislative measures like the National Company Law Tribunal being set up to fast-track exit from and closure of businesses to drive home the point that it is becoming easier to do business in the country.

Recently, the World Bank and the Department of Industrial Policy and Promotion (DIPP) did a joint study which revealed that Gujarat topped among states in implementing an ‘action plan’ on ease of doing business, with Andhra Pradesh placed next, and Jharkhand coming in at third position. Outlined in December 2014, the action plan, the first in a series, was seen to be carried out in earnest by many states during the six-month assessment period (January-June 2015) and improvement was most visible in tax (VAT/CST) reforms, the world body said, but revealed that on average, only 32% of the proposed reforms had been implemented on a pan-India basis.

In enforcement of contracts, only 20% of the action plan materialised in the assessment period, although, the bank noted, this was a medium-term objective. But when it came to dealing with construction permits, where again India was found among the 10 most laggard nations, a reasonable improvement was noticed.

India’s rank on ‘getting electricity’ and ‘starting a business’ improved in 2016 by 29 and 9 places respectively. Businesses can now get electricity 14 days sooner on faster internal processing and the removal of redundant inspections. It is also relatively more reliable.

Similarly, starting a business now takes 29 days from 34 in the previous report and requires less procedures. In addition, starting a business has been made easier by eliminating minimum capital requirements of R1 lakh through amendments to the Companies Act in May 2015. The amendments also ended the requirement to obtain a certificate to commence business operations.

Compared with other emerging markets, India’s ranking lags behind peers the most in dealing with construction permits, enforcing contracts and resolving insolvency. With reform efforts ongoing, including the likely introduction of a bankruptcy law in the winter session of Parliament, this trend of improving the ease of doing business in India should continue.

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