- Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.
World Bank’s Ease of Doing Business
What to study?
For Prelims: About the index, top and bottom performers, performance of India.
For Mains: Challenges for India and ways to address these challenges to reach the target set.
Context: World Bank’s ease of doing business ranking released.
10 top improvers are Saudi Arabia, Jordan, Togo, Bahrain, Tajikistan, Pakistan, Kuwait, China, India, and Nigeria.
About Doing Business project:
It provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level.
Launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle.
This year’s study covers 12 indicator sets and 190 economies. Ten of these areas—starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency—are included in the ease of doing business score and ease of doing business ranking.
Doing Business also measures regulation on employing workers and contracting with the government, which are not included in the ease of doing business score and ranking.
Performance of India:
- India went up 14 rungs in the 2020 survey to score a 63, making it the one of world’s top 10 most improved countries for the third consecutive time.
- However, India failed to achieve government’s target of being at 50th place. It was 77th last year.
- This is the third year in a row that India has made it to the top 10 in Doing Business, which is a success which very few countries have done over the 20 years of the project.
- India still lags in areas such as enforcing contracts (163rd) and registering property (154th).
- It takes 58 days and costs on average 7.8% of a property’s value to register it, longer and at greater cost than among OECD high-income economies.
- It takes 1,445 days for a company to resolve a commercial dispute through a local first-instance court, almost three times the average time in OECD high-income economies.
What helped India improve its ranking?
- Sustained business reforms over the past several years.
- India conducted four reforms in the 12-month period to May 1. Among other improvements, India made the process of obtaining a building permit more efficient.
- Importing and exporting also became easier for companies with the creation of a single electronic platform for trade stakeholders, upgrades to port infrastructure and improvements to electronic submission of documents.
In 2015, the government’s goal was to join the 50 top economies on the ease of doing business ranking by 2020. While the competition to move up the ladder would increase and become much tougher, India is on track to be within top 50 of the Ease of Doing business in the next year or two. And to come under 25 or below 50, the government needs to announce and start implementing next set of ambitious reforms now, as these reforms takes a few years to be realized on the ground.
Sources: the Hindu.