What India needs to do to sustain in Doing business report

India jumps to 100 Position in Ease of Doing Business Report 2018

According to World Bank Ease of Doing Business Report 2018 shows India moves up from 130th position to 100th position. Whereas Prime Minister now set his target to reach the top 50s in the Ease of Doing business index.

World bank has noticed some key changes like :- 

  • Introduction of the new insolvency and bankruptcy resolution process
  • Simplifications in the payment of statutory dues such as provident fund contributions and corporate taxes
  • Easier access to credit.

What is more notable is that India is now the 4th best placed in the world for minority investors, well ahead of several developed nations.

Goods and bads for india in ease of doing business report 2018
Goods and bads for india in ease of doing business report 2018

Marking its 15th anniversary, the report notes that India has adopted 37 reforms since 2003. Nearly half of these reforms have been implemented in the last four years. The report captures reforms implemented in 190 countries in the period June 2, 2016 to June 1, 2017.

This year, the eight

indicators on which reforms were implemented in Delhi and Mumbai, the two cities covered by the report are:

  • Starting a business
  • Dealing with construction permits
  • Getting credit
  • Protecting minority investors
  • Paying taxes
  • Registering Property
  • Trading across borders
  • Enforcing contracts
  • Resolving insolvency
  • Getting Electricity Connection

World Bank has also recognized India lagging in such areas are :-

  • Starting a Business India – has reduced the time needed to register a new business to 30 days now, from 127 days 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
  • Enforcing Contracts – In fact, the time taken to enforce a contract is longer today, at 1,445 days, than it was 15 years ago (1,420 days), placing the country in 164th place in the global ranking on the Enforcing Contracts indicator.
  • Dealing with Construction Permits
  • Registering property
  • Getting Electricity Connection

What India needs to do now if India wants to be ahead of China  ?

This is how India & china stack up in Ease of doing business report 2018 :-

China & India rankings in ease of doing business report 2018
China & India rankings in ease of doing business report 2018

India needs to do more in such areas like :-

  • Registering property : The total number of procedures to register a property in China is 4, whereas in India it doubles to 8! Not only that, on average it take 19.5 days to register a property in China, but 53 days in India! For 2017, India’s ranking was 138, and has seen a further decline to a disturbing 154. This is one aspect that requires immediate attention of the respective authorities and government.
  • Enforcing contracts : World Bank notes that “India made enforcing contracts easier by introducing the National Judicial Data Grid, which makes it possible to generate case management reports on local courts. This reform applies to both Delhi and Mumbai.” However, in China, which ranks 5 on this indicator, it takes just 496 days to enforce contracts. In India, this figure is as bad as 1,445 days.
  • Resolving insolvency : India has made huge and noteworthy progress on this parameter. From a rank of 136 to 103, a jump of 33 is difficult to ignore. “India made resolving insolvency easier by adopting a new insolvency and bankruptcy code that introduced a re-organisation procedure for corporate debtors and facilitated continuation of the debtor’s business during insolvency proceedings. This reform applies to both Delhi and Mumbai,” says World Bank. China, however is at 56. For example, it takes an average of 1.7 years to resolve insolvency in China. In India this time period is 4.3 years!
  • Dealing with construction permits :- This year World Bank has noted India’s efforts to improve procedures. “India reduced the number of procedures and time required to obtain a building permit by implementing an online system that has streamlined the process at the Municipality of New Delhi and Municipality of Greater Mumbai,” says World Bank. Nevertheless, at 181, a lot more still needs to be done to resolve issues faced by businesses in this area.
  • Start with a business :- India has reduced the time needed to register a new business to 30 days now, from 127 days 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, which is considerably more than in OECD (Organisation for Economic Co-operation and Development) high-income economies, where it takes five procedures on average.
Conclusion :-

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 and their institutions to implement change and transform the framework of incentives and regulation facing the private sector. India’s focus on ‘doing business’ at the state level may well be the platform that sustains the country’s reform trajectory for the future.

Leave a Reply