RSTV: IN DEPTH- EASE OF DOING BUSINESS- INDIA’S ROLE
Introduction:
In the World Bank’s Ease of Doing Business rankings this year, India has moved from the 77th to the 63rd position. The World Bank also highlights India’s efforts to reach this position. In particular it mentions four new business reforms that were brought in in the past year. India in fact has now become one of the world’s top ten improvers in the Ease of Doing Business for the third year in a row. It is the only large country to achieve such a significant shift. The climb of 14 rungs this year is a major boost for the Modi government. Not only does it highlight its reformist zeal, but also bolsters India’s credentials as an alternative investment destination to China. Prime Minister Modi has set a target of India making a place for itself among the top 50 countries in the ease of doing business rankings by 2020.
Ease of Doing Business Report:
- Ease of Doing Business is an annual survey published by World Bank.
- The report was introduced in 2003 to provide an assessment of objective measures of business regulations and their enforcement across 190 economies on ten parameters affecting a business through its life cycle.
- The report measures the performance of countries across 10 different parameters namely-
- Starting a Business, Dealing with Construction permits, Electricity availability, Property registration, Credit availability, Protecting minority Investors,
- Paying Taxes, Trading across borders, Contracts enforcement, and Resolving Insolvency.
- This time 11th parameter employing workers was measured but was not factored into the score.
- Delhi and Mumbai are used as samples for ranking India under the World Bank’s Doing Business report.
Performance:
- 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.
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.
How will the ranking help?
- As the World Bank ranks 190 countries, investors have a comparable template to make crossborder investment decisions.
- The ranking provides a significant input to their decision-making process.
- It acknowledges the structural reforms the government has been undertaking.
- Improvement in India’s rank will boost SMEs, job creation: World Bank.
- There are examples across the world where an improved Doing Business ranking has resulted in increased employment and inclusive growth.
Criticism:
- The Doing Business report bases the rankings on field surveys and interviews with corporate lawyers and company executives in Delhi and Mumbai.
- The report has often attracted criticism for not being representative enough.
- To get a true picture of doing business, manufacturing hubs such as Bengaluru and Tamil Nadu should be looked at.
Way Forward:
- As many nations have cut down on procedures on “starting a business” to improve their rankings, India needs to make drastic changes to rank higher.
- Coordination across all departments and between the Centre, the States and local level to get the implementation right and fast.
- It is imperative to create awareness of the reforms introduced so that the enterprises can benefit from it.
- Regular feedback on reforms undertaken, and ensure the reforms are implemented at the ground level.
- Bureaucracy must continue to be an active agent of process re-engineering.
- To secure changes in the remaining areas will require new laws, online systems and deepening the investment.
- India’s ambition must be to become the easiest and simplest place for investors to do business in.
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