Ease of doing business: India rising on the rank

The country’s vault from rank 100 to 63 in three years amounts to a major milestone and speaks volumes for becoming business friendly, reports BHARAT HITESHI

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When everyone was talking of slowdown in India, the country has achieved another feat by bucking the slump and emerging stronger on the Ease of Doing Business ranking of the World Bank. India’s improvement in the World Bank’s ease of doing business index is a transformative moment for the country. India’s vault from rank 100 to 63 in three years amounts to a major milestone and speaks volumes for becoming business friendly. It is a strong signal that India means business. 

With this, India has risen 14 places in the World Bank’s latest Ease of Doing Business global rankings, inching closer to its target of being counted as part of the top 50 club. The ‘Doing Business 2020’ report, ranks India at 63rd position against 77th last year. India had breached the 100th mark two years ago, jumping 30 places from the 130th position. Last year, it gained 23 places to reach 77th, among a total of 190 countries.

In the latest report, India managed to better its ranking on seven of the World Bank’s 10 parameters, compared to six last year. As a result, the country has been placed in the list of ‘economies with the most notable improvement’ for the third year in a row. India has been adjudged the 9th best performing nation. “Given the size of India’s economy, these reform efforts are particularly commendable,” the report, said.

Among categories, the country had the best performance in ‘Resolving Insolvency’, where it jumped 56 places to take the 52nd spot. “The recovery rate in case of insolvency has improved to 71.6 per cent from 26.5 per cent last year.

As a result, reorganisation has become the most likely procedure for viable companies as measured by Doing Business now. In the past, foreclosure was the most common procedure
reported by legal practitioners according to the Bank.In ‘Dealing with Construction Permits’, where it jumped by a massive 129 places in the previous year, India has managed to continue improving. It is now the 27th easiest place to construct a business unit.

The country’s third best improvement was in ‘Trading across borders’, where it rose 12 places to come in at the 68th spot.In the neighbourhood, China has moved up to 31st position from the 46th rank while Pakistan rose from 136th place to become the 108th easiest to do business in nation.The Doing Business assessment provides objective measures of business regulations and their enforcement across 190 economies on ten parameters affecting a business through its life cycle. The DBR ranks countries on the basis of Distance to Frontier (DTF), a score that shows the gap of aneconomy to the global best practice. This year, India’s DTF score improved to 67.23 from 60.76 in the previous year.

India has improved its rank in 6 out of 10 indicators and has moved closer to international best practices (Distance to Frontier score) on 7 out of the 10 indicators. But, the most dramatic improvements have been registered in the indicators related to ‘Construction Permits’ and ‘Trading across Borders’. In grant of construction permits, India’s rank improved from 181 in 2017 to 52in 2018, an improvement of 129 ranks in a single year. In ‘Trading across Borders’, India’s rank improved by 66 positions moving from 146 in 2017 to 80in 2018. The chart shows changes in six indicators where India improved its rank.

The World Bank has recognized India as one of the top improvers for the year.This is the second consecutive year for which India has been recognized as one of the top improvers.India is the first BRICS and South Asian country to be recognized as top improvers in consecutive years.

India has recorded the highest improvement in two years by any large country since 2011 in the Doing business assessment by improving its rank by 53 positions.

As a result of continued performance, India is now placed at first position among South Asian countries as against 6th in 2014.

Parameters:

Procedures reduced from 37 to 20 in Mumbai and from 24 to 16 in Delhi Time reduced from 128.5 to 99 days in Mumbai and from 157.5 to 91 days in Delhi Building quality control index improved from 12 to 14 in Mumbai and 11 to 14 in Delhi Cost of obtaining construction permits reduced from 23.2 percent to 5.4 percent DTF score improved from 38.80 to 73.81 Robust Risk Management System has reduced inspections significantly e-Sanchit allows traders to file all documents electronically

Time and cost to export reduced through the introduction of electronic self-sealing of container at the factory Procedures reduced from 11 to 10 in Delhi and 12 to 10 in Mumbai

Time reduced from 30 to 16 days in Delhi and 29.5 to 17 days in Mumbai PAN, TAN, DIN now merged with SPICe making it a single form for company incorporation No requirement of inspection for registration under Shops & Establishment in Mumbai Distance to Frontier improved from 75.40 to 80.96

Access to Credit

Rank improved from 29 to 22

DTF improved from 75 to 80

Strength of legal rights index improved from 8 to 9

Secured creditors will now be repaid first during business liquidation hence given priority over other claims

Access to Electricity

Procedures reduced from 5 to 3 in Delhi and 5 to 4 in Mumbai

DTF improved from 85.21 to 89.15

Improvement have taken place due to the commitment of the Government to carry out comprehensive and complex reforms, supported by the bureaucracy which has changed its mindset from a regulator to a facilitator. The Government has undertaken an extensive exercise of stakeholder consultations to understand challenges of the industry, government process re-engineering to provide simplified and streamlined processes to create a more conducive business environment in the country. As a result of continued efforts, India’s rank has improved as per the graph.

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