India hopes to shoot up in World Bank’s ‘ease of doing business’ ranking

Improved efficiency in granting construction permits, starting a business and resolving insolvency is expected to improve India’s overall ranking in the World Bank’s ‘ease of doing business’ survey 2018, which will be published in October this year.

The GST regime implemented from July 1 this year, however, will not influence India’s ranking as the period of evaluation ended May 31, a government official told BusinessLine .

“We have to wait till the next report for the improvement in the taxation structure to get reflected. However, this year our improved performance in construction permits, starting a business and handling insolvency will certainly reflect on the country’s ranking,” the official said.

In last year’s ranking, India had moved up just one rung, to 130 among the 190 countries evaluated.

Improvements were recorded in four of the ten parameters, which included getting electricity, paying taxes, trading across borders and enforcing contracts.

The other criteria for judging performance are starting a business, registering property, resolving insolvency, giving out construction permits, getting credit and protecting minority investors.

“In the areas of construction permits, starting a business and resolving insolvency, although some reforms were introduced in the previous years as well, the effect of those will be felt on the ground more this year as it takes some time for changes to take effect,” the official said.

“As the World Bank ranking is more about what businesses experience, we hope there would be better feedback this year resulting in improved ranking,” the official added.

The ease of doing business ranking is taken seriously by participating countries as they believe that it helps investors, especially foreign investors, decide where to invest.

To improve ease of doing business, India has sharply cut down on the time taken to grant construction permits.

According to the Department of Industrial Policy & Promotion (DIPP), which works closely with the World Bank in submitting data for the report, it now takes only 60 days following eight online procedures to get a construction permit in Delhi and Mumbai as opposed to more than 160 days earlier.

Concrete steps have also been taken to improve ease of starting a business. Earlier this year, the Income-Tax Department had tied up with the Ministry of Corporate Affairs to issue a Permanent Account Number and a Tax Deduction Account Number within a day to improve ease of doing business in India.

Five procedures for starting a business are now integrated and can be done simultaneously in one step.

Similarly, the Insolvency & Bankruptcy Code, 2016 is likely to improve the ease of doing business by reducing non-performing assets and delays in resolution of bankruptcy cases and recovery of debt.

“Now that most of our rules and regulations are in place to improve ease of doing business and wherever possible we are trying to improve things, our ranking in the ease of doing business index will continuously improve,” the official said.

Earlier this year, the DIPP Secretary had said that the government wanted India to jump 40 ranks to the 90th position on the index this year and to 30th spot by 2020.

Last year, New Zealand topped the ‘ease of doing business’ ranking followed by Singapore and Denmark.

Pakistan was ranked behind India at 144, but Nepal and Sri Lanka were ahead at 107 and 110 positions, respectively.

COMMENT NOW