India climbs 14 notches in ease of doing business rankingApprox Read Time: 5 minutes
In News: (India climbs Business Ranking)
- India improved 14 rungs in the World Bank’s Ease of Doing Business 2020 survey to stand at 63, among 190 countries.
- The indicator measures the performance of countries across 10 different dimensions in the 12-month period ending May 1, 2019.
- As per the Doing Business 2020 study, India’s ranked achieved the highest ever position of 63rd (out of 190 countries) in 2019 (for the 12-month period ending May 1, 2019).
- The 10 top ranking countries with respect to the indicator were: New Zealand, Singapore, Hong Kong, Denmark, Republic of Korea, United States, Georgia, United Kingdom, Norway, and Sweden.
Key areas that separate good performers from bad performers:
- The commonalities among economies that ranked highest included the widespread use of electronic systems and online platforms for facilitating regulatory requirements.
- South Asian region generally underperforms with regard to enforcing contracts and registering property. For instance, it takes 108 days for a business to register a property transfer in South Asia, compared to the 24 days it takes in OECD (Organisation for Economic Co-operation and Development) high-income countries.
- Resolving a commercial dispute is another area. For example, it takes three years in South Asia – twice as long as the OECD high-income country statistic.
Background: India’s ranking over the least few years:
- India ranked 77th among 190 countries in 2018, while it was ranked 100 in 2017.
- Since 2003-04, India has implemented 48 reforms captured by doing business. India’s achievements is build on a sustained multi-year reform effort.
- As a result of continued efforts by the Government, India ranking over the past few years has seen significant improvement.
- The Indian government aims the country to figure in the top 50 in the Ease of Doing Business.
About: Ease of doing business
- Ease of doing business is an index published by the World Bank.
- Each country is scored and also ranked (a comparison).
- Score: The 0-100 score measures any given country’s performance with respect to the best practice across the entire set of countries. A score of 0 signifies worst regulatory performance and 100, the best.
- Rank: 190 economies are ranked on their ease of doing business, with the best performing country ranked 1.
- A good rank in ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm.
- The rankings are determined by sorting the aggregate scores on 10 topics, each consisting of several indicators, giving equal weight to each topic.
- The 10 indicators are as follows:
- Starting Business
- Dealing with construction permits
- Getting electricity
- Registering property
- Getting credit
- Protecting minority investors
- Paying taxes
- Trading across borders
- Enforcing contracts
- Resolving insolvency
Note: An 11th area – employing workers – is measured, but not factored into the score.
India’s performance: (India climbs Business Ranking)
Improvement in score and ranking:
- India’s score in the Ease of Doing Business Index improved from 67.3 last year to 71.0 this year, to move up from 77th to 63rd rank.
- The improvement makes India the one of world’s top 10 most improved countries for the third consecutive time.
- The report called India’s reform efforts “particularly commendable” given the country’s size.
- The report noted that the ‘Make in India’ programme and the government’s attention to the Ease of Doing Business indicator were a means to demonstrate ‘tangible progress’.
India has made it easier to do business in four areas:
- Starting a business
- Resolving insolvency
- India saw the biggest jump in ranking in “resolving insolvency” category, to 52nd rank from 108th, on the back of implementation of the Insolvency and Bankruptcy Code.
- Trading across borders
- Imports and exports became easier with a single electronic platform for trade stakeholders, improved electronic submission methods for documents and upgrades to port infrastructure.
- Construction permits
- Authorities enhanced building quality control by strengthening professional certification requirements.
- Obtaining all permits and authorizations costs lesser now. For example, to build a warehouse now costs 4% of the warehouse value, down from 5.7% the previous year.
India worsened in two areas:
- Compared with last year, India’s ranking deteriorated on two parameters:
- Protecting minority investors (from 7th to 13th position)
- Getting electricity” (from 22nd to 25th)
Remains poor in “enforcing contracts”:
- India’s rank remains unchanged in “enforcing contracts” at 163rd.