India crawls up one spot to 130 in Ease of Doing Business Index

Government aims to consolidate on new reforms

Business & Politics

News - Biz@India

October 26, 2016

/ By / Kolkata


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Reforms such as GST or Bankruptcy Code are expected to turn the tide next year

Reforms such as GST or Bankruptcy Code are expected to turn the tide next year

While government campaigns such as ‘Make in India’ is trying to encourage international market players to start businesses in India, the World Bank continues to rank India lowly in ‘Ease of Doing Business Index’.

In the annual report published by the World Bank, India moved up one position from last year’s rank of 131 out of the 190 economies assessed on various parameters. Although India remained the only country for which the World Bank report has a special box mentioning the ongoing economic reforms, the Indian government seems to be unhappy about the ranking which allegedly missed the key reforms undertaken by the government. It is also a setback to the government’s target to be within the top 50 countries in the next three years; however, experts believe that reforms such as Bankruptcy Code and GST will definitely bring a positive change in the upcoming index.

“Wide ranging reforms have been undertaken in the last few months, that have led to improved investment climate as is evident from increased FDI inflows. Ease of doing business is key to competitiveness of a business and the approach adopted by the Government is in the right direction,” said Harshavardhan Neotia, President, Federation of Indian Chambers of Commerce and Industry (FICCI).

Setback to PM’s hopes

The Indian Prime Minister, Narendra Modi, was quite vocal about his aim to see India among the top 50 nations by 2018. According to the statements by Ramesh Abhishek, the Secretary of Department of Industrial Policy and Promotion (DIPP), the World Bank has taken into account the reforms implemented only up to June 1, while most of the important ones such as the GST Bill were passed after that. India’s score improved only on two parameters out of the 10 that the World Bank uses to rank economies in terms of ease of doing business. The dive in all the other eight parameters remains a major challenge for India’s industrial surge.

The 10 parameters used by World Bank to rank the countries are very basic strategic points such as starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority shareholders, paying taxes, enforcing contracts, trading across borders and resolving insolvency. While India has improved in the metrics allied to getting electricity and enforcing contracts and registering property, areas such as protecting minority investors (from 10th position to 13th position) and getting credit (from 42nd position to 44th) dropped significantly.

Replacing Singapore, New Zealand climbed to the top spot in the Ease of Doing Business Index 2017, followed by the likes of Denmark, Hong Kong and Republic of Korea. China climbed six spots from its earlier position at 84. India is a slow-runner among the BRICS countries as well compared to Brazil (123), Russia (40), China (78) and South Africa (74).

To materialise the expectations from the new reforms of the government and bring a major change in the scheme of things will be a challenging job for the country. With the gap between introduction of a reform and its implementation in the public and private sector being slowly bridged, the DIPP secretary is expecting an impact in the coming years.

Pledging FICCI’s support, Neotia added, “States need to deepen the reforms in specific areas for improving the rankings further. A regular feedback mechanism as suggested by the Government to implement the reforms shall help in achieving results faster and FICCI would be happy to support government in this regard.”

Here’s what the netizens had to say about the poor show :


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