EASE OF DOING BUSINESS - NOT YET EASY IN INDIA

By Ruma Dubey

The Ease of Doing Business Ranking. This is Narendra Modi’s pet peeve. This is what he has harped on about and promised us how he would work towards improving India’s ranking. The last two and half years, he surely has worked and ushered in some good reforms but those are yet to start bearing fruit and show positively on this World Bank ranking.

The latest report for 2017 shows that India’s overall raking has moved up by only one notch to 130 and this was on the back of betterment in four indicators – getting electricity, enforcing contracts, trading across borders and registering property.

The World Bank does not seem to agree that India is doing all it can to improve its ranking because even in its list of “World Top 10 Improvers”, India’s name does not figure out. The Top 10 improvers are - Brunei Darussalam; Kazakhstan; Kenya; Belarus; Indonesia; Serbia; Georgia; Pakistan; United Arab Emirates (UAE); and Bahrain.

In terms of global country rankings, number one position was given to New Zealand, Singapore ranks second, followed by Denmark; Hong Kong SAR, China; Republic of Korea; Norway; United Kingdom; United States; Sweden; and Former Yugoslav Republic of Macedonia.

India comes under the region of “South Asia” and in this, it ranks fourth, with top ranking going to Bhutan, followed by Nepal and SriLanka.

So what are the points considered to arrive at this ranking? It is mainly reforms making it easier to do business and under this there are 10 categories:

1: Starting a business

2: Dealing with construction permits

3: Getting electricity

4: Registering Property

5: Getting Credit

6: Protecting minority investors

7: Paying taxes

8: Trading across borders

9: Enforcing contracts

10: Resolving insolvency

Not surprisingly, India ranks right at the bottom, 185th rank when it comes to dealing with construction permits. A company, to set up business and get the permits, in the city of Mumbai, one 42 procedures or permits. We are equally bad when it comes to Enforcing Contracts and Paying taxes, our ranking at a poor 172. But in terms of protecting minority investors we are good at number 13 and getting electricity at number 26. Starting a Business ranking is poor at 155, with 14 procedures needed to be completed, requiring 26 days. New Zealand requires only one procedure to start a business - Apply online for registration with the Companies Office (including IRD number application and registration for GST). Once this is done, in less than a day, a person can start his legal business in NZ.

In terms of getting electricity, Korea is the easiest and most difficult is in Somalia and South Sudan, Yemen in Bangladesh. In India, there are 5 procedures to deal with and takes 47 days. For registering property, India has 7 procedures and takes 46.5 days. For ease of paying taxes, there are 25 payments per year, taking 241 hours per year and the total tax rate comes in at 60.6% of the profit earned. India’s worst performance is in terms of enforcing contracts, where it takes 1420 days!

One can sit and wonder the need to have this index. But in today’s time where Govt is banking its entire economy on FDI, this index and India’s ranking on this index holds immense significance. This index is like a mirror, showing the Govt its own face, where improvement is needed and where a complete makeover is required.

Such an Index is required to make India introspect. For more details, one can read through the entire report for more insight: http://www.doingbusiness.org/Rankings