The Hindu Business Line : India moves up in World Bank's `Doing Business' rankings

Doing business became easier in India in 2005-06, with the country moving up four ranks in the latest World Bank-International Finance Corporation's `Doing Business 2007' report on the basis of reform measures such as simplification of business registration, easier cross-border trade and improved access to credit. Although reforms improved India's ranking over the previous year, it still ranks relatively low at 134 and lies 41 places below China, the report said.

According to the report, five reforms in India reduced the time, cost, and hassle for businesses to comply with legal and administrative requirements. India implemented reforms to simplify business registration, cross-border trade, and payment of taxes, as well as easing access to credit and strengthening investor protection. India, as a leading reformer in South Asia, has taken over the top spot from Pakistan in last year's report.

India cut the time to start a business from 71 to 25 days and reduced the corporate income tax rate from 36.59 per cent to 33.66 per cent. A Supreme Court decision made enforcing collateral simpler — easing access to credit. New risk management procedures in customs lowered import time by two days and exports by nine days. And reforms to stock exchange rules toughened investor protections.

The report, however, finds that the greatest remaining obstacles in the South Asian region, which ranks the lowest among all the other regions in terms of ease of business, are its slow courts and rigid labour laws.

Problem areas

"One thing to note on India's performance is its low ranking in the area of enforcing contracts (ranking 173 out of 175 countries). `Doing Business' takes a typical case of a contract dispute between two companies and asks local experts how it would be resolved in the courts. India's procedural rules require litigants to go through 56 steps, taking over four years to complete on average (1,420 days to be exact) to resolve the case in the courts. Improving court efficiency for commercial cases would be one area the government could focus on to make it easier to do business in India. Greater court efficiency is also associated with higher foreign direct investment," Ms Melissa Johns, Investment Policy Specialist, Doing Business Project, World Bank, told Business Line.

The top-10 list

The report cites Singapore as the easiest country in the world to do business in, while New Zealand is the second most business-friendly place. The report, which ranked 175 economies in terms of regulations that enhance or constrain business, has the US, Canada, Hong Kong (China), the UK, Denmark, Australia, Norway, Ireland making up the top 10.

The top 10 reformers are, in order, Georgia, Romania, Mexico, China, Peru, France, Croatia, Guatemala, Ghana, and Tanzania, according to the report.

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