Policy

India makes it to Top 100 in ‘ease of doing business’

Our Bureau New Delhi | Updated on January 09, 2018 Published on October 31, 2017

Climbs 30 spots on back of reforms; top 50 rank is doable, says Jaitley



India jumped up 30 notches into the top 100 rankings on the World Bank’s ‘ease of doing business’ index, thanks to major improvements in indicators such as resolving insolvency, paying taxes, protecting minority investors and getting credit.

“The significant jump this year is a result of the Indian government’s consistent efforts over the past few years and India’s endeavour to strengthen its position as a preferred place to do business,” said Annette Dixon, Vice President, South Asia region at the release of ‘Doing Business 2018: Reforming to Create Jobs’ on Tuesday.

Prime Minister Narendra Modi hailed the jump in India’s ranking as “historic” and said it was a result of “all-round and multi-sectoral reform push.”

Finance Minister Arun Jaitley said India’s jump is the highest by any country, and that reaching the ‘top 50’ target set by Prime Minister Modi is “doable”.

GST will improve rank

“There is significant improvement in many criteria such as protecting minority investors, availability of credit and getting an electricity connection,” Jaitley said, adding that on the taxation index, India had vaulted up 53 places; once the impact of the GST is factored in, the ranking will improve further. The cut-off for the rankings was June 1.

“Work is in progress in many areas such as enforcement of contracts and building construction permits. The reforms in starting a business have not been factored in,” Jaitley said. “If we expedite this work in the next few months, India can come in even higher.”

An improvement in the rankings will help not only foreign investments but also domestic investors. The Centre, Jaitley said, would talk to States to expedite construction permits. These initiatives would help India improve its position by at least 30 points, he said.

Asked about India’s low ranking in registering property, DIPP secretary Ramesh Abhishek said, “There are over 100 reforms in progress that have not been factored in this year.” Only two of 42 completed reforms had been accepted, and two others had been partially accepted, he said.

India is among the top ten improvers this year, with improved ranking in six of the ten indicators, while its performance in absolute terms improved in nine. The six areas of improved ranking include dealing with construction permits and enforcing contracts.

Where India slipped up

In the category of starting a business, though, the need for local entrepreneurs to go through 12 procedures to start a business, as opposed to five in high-income countries, worsened India’s ranking in the category to 156 from 155 last year.

There was also a major slip in ranking in the category of registering property — from 138 last year to 154 this year — due to increase in time taken, cost and number of procedures for registration.

Bhutan, in 75th place, is South Asia’s highest-ranked economy, followed by India (at 100) and Nepal (at 105).

This year, the report recognised eight areas in which reforms were implemented in Delhi and Mumbai, as opposed to just four last year.

India’s corporate law and securities regulations were recognised as highly advanced, placing it in fourth place in the global ranking on protecting minority investors. The time taken to obtain an electricity connection in Delhi reduced from 138 days four years back to 45 days now, against a 78-day average in OECD high-income economies, the report observed. This put India in 29th place in the category.

India still lags in areas such as starting a business, enforcing contracts and dealing with construction permits. It takes longer to enforce a contract today, at 1,445 days, than 15 years ago (1,420 days).

“Tackling these challenging reforms will be key to India sustaining the momentum towards a higher ranking. To secure changes in the remaining areas will require not just new laws and online systems but deepening the ongoing investment in the capacity of States to implement change and transform the framework of incentives and regulation facing the private sector,” Junaid Ahmad, Country Director World Bank said.

Published on October 31, 2017

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