Narendra Modi’s dream of steering India into the best countries to do business took a giant stride forward today with the country vaulting 30 places straight into top 100 in the World Bank’s Ease of Doing Business ranking 2018.
Narendra Modi’s dream of steering India into the best countries to do business took a giant stride forward today with the country vaulting 30 places straight into top 100 in the World Bank’s Ease of Doing Business ranking 2018. In the World Bank’s latest ‘Doing Business’ report, India ranked 100th for the first time, leapfrogging 30 places from the last year’s 130, firmly aided by implementation of reforms in as many as eight out of 10 fronts, including the crucial ones such as starting a business, paying taxes and resolving bankruptcy.
The World Bank’s Doing Business report assesses 190 economies on ten parameters — starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.
“India for the first time moved into the top 100 in the World Bank’s Ease of Doing Business global rankings on the back of sustained business reforms over the past several years,” the organisation said in a statement. “India is the only large country this year to have achieved such a significant shift,” the statement added.
“Having embarked on a strong reform agenda to improve the business environment, the significant jump this year is a result of the Indian government’s consistent efforts over the past few years. It indicates India’s endeavour to further strengthen its position as a preferred place to do business globally,” Annette Dixon, Vice President, South Asia region, World Bank, said in the statement.
The significant ranking improvement comes as a shot in the arm for Narendra Modi BJP ahead of elections in Himachal Pradesh and Gujarat, and the impending Lok Sabha elections in 2019, as the report expressly notes that of the 37 reforms of the last 15 years behind India’s improved ranking, nearly half have been implemented in the last four years — roughly around the time the new government came to power.
India’s ranking in the ease of doing business is crucial for the Narendra Modi government as the Prime Minister has been pitching the country as an ideal place for doing businesses with initiatives like ‘Make In India’ and ‘minimum government, maximum governance’. It was a setback for India to improve its rank only by one place last year, leaving room for critics to question Prime Minister’s vision to pitch India as an investment opportunity.
Scope for improvement
The report notes that out of the eight areas in which India has made substantial progress, the country still lags in starting a business; enforcing contracts, and dealing with construction permits, it said. “In starting a business, India has reduced the time needed to register a new business to 30 days now, from 127 days 15 years ago. However, the number of procedures is still cumbersome for local entrepreneurs who still need to go through 12 procedures to start a business in Mumbai, which is considerably more than in OECD high-income economies, where it takes five procedures on average,” World Bank statement said.
Notably, ‘getting electricity’, which was a major improvement area for India in the last year’s ranking, was not among the eight parameters on which India has implemented reforms this year. Even so, it is one of the three areas in which India performs well, along with “protecting minority investors” and “getting credit”, according to the World Bank.
“The country’s corporate law and securities regulations have been recognised as highly advanced, placing India in 4th place in the global ranking on ‘protecting minority investors’,” World Bank statement said, adding that India places in the 29th spot in the global ranking on the ‘getting electricity’ indicator.
India’s ranking is based on the study of the system in the two cities of Mumbai and New Delhi. 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. The ‘Doing Business’ project provides objective measures of business regulations for local firms in economies and selected cities at the sub-national level.