For the first time, India moved to 100th rank in the World Bank’s ease of doing business global rankings, up from its 130th position last year, helped by a string of key reforms in taxation, licensing, investor protection and bankruptcy resolution implemented by the Narendra Modi Government.
In its annual report “Doing Business 2018: Reforming to Create Jobs”, the World Bank said that India’s ranking reflects nearly half of the 37 reforms, adopted since 2003, implemented in the last four years.
“India is the only large country this year to have achieved such a significant shift. India’s score went from 56.05 in doing business to 60.76. This means, last year India improved its business regulations in absolute terms — indicating that the country is continuing its steady shift towards best practice in business regulation,” said the report.
The ranking comes at a time when the Modi Government has faced severe criticism for note ban and the hasty implementation of the Goods and Services Tax (GST).
Finance Minister Arun Jaitley said India was the only major country named for undertaking structural reforms in the report. “Taking India into the top 50 in ease of doing business rankings is doable and India saw a jump in investor protection initiatives, credit availability in the World Bank’s ease of doing business ranking,” Jaitley said, adding that the biggest jump India got in the ease of doing business was on taxation reforms.
“We are ranked 29th in providing credit. This is a significant position we have achieved. In taxation reforms we have moved up 53 places to 119. In protecting minority shareholders, we are at number 4,” Jaitley said.
The parameters of the ranking that witnessed improvement in 2016-17 were India making it faster to start a business, reduction in procedures and time required to obtain building permits, easier access to credit, protecting minority investors, ease of paying taxes, trading across borders, enforcing contracts and resolving insolvency easier.
“This is the first time India has broken into top 100 nations. India, which was ranked 130th among the 190 nations, is one of the top 10 improvers in this year’s assessment, having implemented reforms in 8 out of 10 ‘doing business’ indicators,” the World Bank said.
The WB report captures reforms implemented in 190 countries between the period June 2, 2016 to June 1, 2017. In the report, Bhutan ranks at 75th place, which is the highest-ranked economy in South Asia, followed by India (100) and Nepal (105). The region’s lowest-ranked economies are Afghanistan (183) and Bangladesh (177). However, Sri lanka is ranked at 111, Maldives at 136 and Pakistan at 147.
The ranking, however, does not take into account the business environment post GST implementation which wove the country of 1.3 billion into one market with one tax and removed inter-State barriers for trade.
“India has moved to 100th rank as a result of a number of reforms by the Government. India is moving ahead in absolute ranking as well,” said Annette Dixon, World Bank Vice-President, South Asia region, adding that it will be only over a period of 1-3 years that the full impact of GST reform on ease of doing business can be assessed.
“India made paying taxes easier by requiring that payments are made electronically to the Employees Provident Fund and introducing a set of administrative measures easing compliance with corporate income tax,” the report stated.
Dixon said, “The significant jump this year is a result of the Indian Government’s consistent efforts over the past few years. It indicates India’s endeavour to further strengthen its position as a preferred place to do business globally.”
In starting a business, India has reduced the time needed to register a new business to 30 days now, from 127 days 15 years ago. The time taken to enforce a contract is longer at 1,445 days than it was 15 years ago. However, the number of procedures is still cumbersome for local entrepreneurs who still need to go through 12 procedures to start a business in Mumbai.
“Tackling these challenging reforms will be the 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 and their institutions to implement change and transform the framework of incentives and regulation facing the private sector,” Junaid Ahmad, Country Director India, World Bank said.