World Bank report says India simplified registration norms for new business, streamlined electricity approval process and digitalised land records
Washington : India now ranks 130 out of 189 countries in the ease of doing business, moving up 12 places from last year, according to a World Bank report. “India made significant improvements by eliminating the minimum capital requirement and a business operations certificate, saving entrepreneurs an unnecessary procedure and five days wait time,” the World Bank said after releasing its annual report ‘Doing Business 2016’.
Prime Minister Narendra Modi, who came to power in May 2014, had made ease of doing business one of his focus areas. “India’s ranking this year is early recognition of its efforts,” Industrial Policy and Promotion Secretary Amitabh Kant said. “If process continues and is sustained, we could see big jump in the coming year,” he said.
Among its immediate neighbours, India was behind China (rank 84), Nepal (99) and Sri Lanka (107), but ahead of Pakistan (138) and Bangladesh (174) Singapore was rated as the best country in ease of doing business, followed by New Zealand and Denmark.
“A forward movement of 12 spots in the ease of doing business by an economy of the size of India is a ‘remarkable achievement,” World Bank’s Chief Economist and Senior Vice President Kaushik Basu said.
GST key reform
World Bank Country Director in India Onno Ruhl said that India can raise the rank to 50 in 3-4 years with “hard work”. Taking the example of Russia, Ruhl said its ranking in the index rose from 123 in 2011 to 51 in 2016. He said two major reforms that led to increase of 12 spots in India’s ranking were the amendment of the Companies Act and simplification of the process of getting an electricity connection in Delhi and Mumbai.
Reforms such as enactment of the Bankruptcy Code, streamlining the process of obtaining a construction permit in Mumbai and new systems for e-filing and e-payment of taxes may help India improve further in the ranking, he said.
Onno Ruhl said the proposed GST law is the most important reform towards creating a single market in India and if it is implemented by April 2016 then its impact will be visible by 2018.
29 days to start a new biz in India
India stands for having made big strides toward better and more efficient business regulation. In 2004 it took 127 days to start a business in India. In 2005 this has been reduced to 29 days, the report said. In India the establishment of debt recovery tribunals reduced nonperforming loans by 28 per cent and lowered interest rates on larger loans, suggesting that faster processing of debt recovery cases cut the cost of credit. Research also shows that a badly designed tax system can be a big deterrent for businesses, it said.
In 2010, India established an online system for value added tax registration and replaced the physical stamp previously required with an online version.
The report said in dealing with construction permits, India ranks 183 and in registering property it ranks 138. But in getting electricity India is now ranked at the 70th spot. In protecting minority investors, India now ranks eight and in getting credit it is now placed at the 42nd spot. In paying taxes and enforcing contracts India is now ranked at 157th and 178th spots respectively. In trading across borders, India ranks 133rd and in resolving insolvency, it ranks 136th, the report said.
India is ranked 8th globally when it comes to protection of minority investors, ahead of many developed economies including the US, Germany and Japan. This is the only sub-ranking where India figures among the top-ten countries globally and reflects the reforms carried out with regard to regulations for companies and capital markets including by the Securities and Exchange Board of India (Sebi) and the Ministry of Corporate Affairs.
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India can be in top 100: Basu
It is not impossible for India to be among the top 100 countries in ease of doing business next year if it continues with its set of planned economic reforms, including the crucial GST and cut down on the bureaucratic cost, a top World Bank economist has said, the World Bank Chief Economist and Senior Vice President, Kaushik Basu told PTI.
Basu said there are three areas where India needs reforms and initiatives. “First, India needs to cut down transactions costs and the bureaucratic hurdles it places on individuals and small enterprises. As I just said, there is reason for optimism on this,” he said. “Second, India needs better infrastructure—roads, railways, ports. There has already been improvement in infrastructural investment. But the momentum needs to be kept up,” he added.
India’s rankings to improve further: FM
Finance Minister Arun Jaitley said the improvement in ranking does not fully reflect the reforms initiated and the position will improve further next year. “I am grateful that the World Bank has recognised that India is now becoming an easier place to do business… I believe that this 12 point movement does not reflect the full pace of reforms that we have done,” he said.
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