India has moved up 30 places from the World Bank’s last year’s ease of doing business rankings.
Starting a business in India is now faster, says the World Bank report.
This jump is “a very clear signal from India to the rest of the world that not only has the country been ready and open for business, as it has been for many decades, it is now competing as the preferred place to do business globally,” Annette Dixon, World Bank’s vice president for South Asia said on Tuesday in New Delhi.
The report lauds India for boosting access to credit system and making it easier to secure to procure construction permits.
However, a majority of economists forecast a broad and marked slowdown expected in economic activity in India.
A currency ban last year and the new goods and services tax (GST) have disrupted India’s business activity and dampened consumer demand. The World Bank report said it has excluded the impact of both these measures.
The Indian economy grew at 5.7 percent annually in the April-June quarter, its lowest level in more than three years.
Out of the 10 parameters, India got its highest ranking in “protecting minority investors” parameter by rising to the fourth position globally from 13th last year as the country’s corporate law and securities regulations were recognized to be highly advanced. Its worst performance came in “dealing with construction permits” despite improving its ranking to 181 from 185th position last year.
On the “distance to frontier” metric, which measures the absolute improvement in the performance of a country against the relative performance measures by the ranking, India scored 60.76 against 56.05 last year, indicating that “the country is continuing its steady shift towards best practice in business regulation”.
While the report this year takes note of the Insolvency and Bankruptcy Code to ensure time-bound settlement of insolvency, the implementation of the goods and services tax (GST) is not part of the review process as it came after the 1 June deadline for the World Bank survey.
World Bank country director in India Junaid Ahmad said effective implementation of both the reform measures may improve India’s ranking significantly over the coming years.
The significant jump this year is a result of the Indian government’s efforts over the past few years after having embarked on a strong reform agenda, said Annette Dixon, the World Bank’s vice president for the South Asia region. “It indicates India’s endeavour to further strengthen its position as a preferred place to do business globally,” she added.
The World Bank praised India’s effort to ease “paying taxes” regulations, a parameter on which it improved its ranking to 119 from 172 a year ago. It cited payments to the Employees’ Provident Fund being made electronically and introduction of administrative measures that make it easier to comply with corporate and income tax regulations.
Despite a drop in ranking in “getting electricity connections” to 29 from 26 last year, the World Bank said the time to obtain an electricity connection in Delhi had dropped to 45 days from 138 days four years ago, almost 20 days less than the average time taken in developed countries.
The World Bank said while there has been substantial progress, India still lags in areas such as starting a business (156), enforcing contracts (164) and dealing with construction permits (181). “The time taken to enforce contract is longer today at 1,445 days than it was 15 years ago (1,420 days). In 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 in Mubai, which is considerably more than in high-income economies, where it takes five procedures on average,” it said.