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Economic Bytes: India climbs Business Ranking

India climbs 14 notches in ease of doing business ranking

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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.

India climbs Business Ranking
Government Infographics

News Summary:

  • 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:

  1. The commonalities among economies that ranked highest included the widespread use of electronic systems and online platforms for facilitating regulatory requirements.
  2. 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.
  3. 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:
    1. Starting 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
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:
  1. Starting a business
  2. 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.
  3. 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.
  4. 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:
    1. Protecting minority investors (from 7th to 13th position)
    2. Getting electricity” (from 22nd to 25th)

Remains poor in “enforcing contracts”:

  • India’s rank remains unchanged in “enforcing contracts” at 163rd.

Also Read: Governance Bytes: National e-Assessment Centre

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