Ease of doing business rankings: India needs to work on building business confidence

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Published: October 26, 2019 2:33:34 AM

The high-income OECD economies do so in 589.6 days. Further jumps, thus, would depend on the willingness of the government to carry out judicial reforms.

Although India ranks better than its South Asian counterparts, enforcement of contracts is one indicator where it lags countries like Bangladesh.

India climbing up 14 positions in the latest ease of doing business (EoDB) rankings—the 2020 report was released on Thursday—is good news for the country, which is struggling with a slowdown. While the report lauds the government’s efforts in implementing taxation reforms (GST), the real change has been in resolving insolvency. India’s score has improved to 62.0 from 40.8, a 21.2 jump from last year. The report highlights that the recovery rate is now 71.6 cents against a dollar, and time has gone down to 1.6 years. But, there is still scope for improvement.

The country is ranked 136th on starting a business, 154th on registering property, 115th on paying taxes and 163rd on enforcing contracts. Increased reliance on technology may help with these reforms; the difficulty lies in transforming the judicial process in the country. Although India ranks better than its South Asian counterparts, enforcement of contracts is one indicator where it lags countries like Bangladesh.

The average time taken for a case is 1,445 days, while the cost, calculated as a percentage of claim value, is 31%. China, on the other hand, takes 496 days for case resolution, and costs stand at 16.2%. The high-income OECD economies do so in 589.6 days. Further jumps, thus, would depend on the willingness of the government to carry out judicial reforms.

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