India has jumped 30 places to rank 100th in the World Bank's 'ease of doing business' ranking, helped by a slew of reforms in taxation, licensing, investor protection and bankruptcy resolution.
The ranking comes as a shot in the arm for the Narendra Modi government amid dissenting voices in certain quarters about the negatives of the Goods and Services Tax (GST) and demonetisation. In its annual report 'Doing Business 2018: Reforming to Create Jobs', the World Bank said that India's ranking reflects nearly half of the 37 reforms, adopted since 2003, implemented in the last four years.
The ranking, however, does not take into account business environment post implementation of GST, which weaved the country of 1.3 billion into one market with one tax and removed inter-state barriers for trade. India, which was ranked 130th among the 190 nations, is "one of the top 10 improvers in this year's assessment, having implemented reforms in 8 out of 10 'doing business' indicators," it said. This is the first time India has secured a position in the top 100 nations.
India is the only large country this year to have achieved such a significant shift. The parameters that witnessed improvement in 2016-17 were in making it faster for startups to do business, reduction in procedures and time required to obtain building permit, easier access to credit, protecting minority investors, ease of paying taxes, trading across borders, enforcing contracts and making resolving insolvency easier, the World Bank said.
However, it still lags in areas such as starting a business, enforcing contracts and dealing with construction permits. It now takes 30 days to register a new business, down from 127 days 15 years ago, but "the number of procedures is still cumbersome for local entrepreneurs who still need to go through 12 procedures", it said.
"This is a major jump," Rita Ramalho, Acting Director for World Bank's Global Indicators Group, told PTI in Washington, attributing the climb of 30 places to the series of reforms undertaken by the Modi government since 2014. The GST, which was implemented from July 1, will get reflected only in next year's 'ease of doing business' report.
"GST reforms have not been counted this year. It would come into play for the report next year," Ramalho said, adding that demonetisation was not covered. India was ranked 130th for last two years. In 2014, it managed to get 142nd spot. According to the World Bank, New Zealand is the easiest place on the planet to do business, followed by Singapore, Denmark, South Korea and Hong Kong. The US and the UK are ranked 6th and 7th on the list. Among BRICS countries, Russia tops the list with 35th position, followed by China which has retained its ranking at the 78th place for the second consecutive year. The biggest surprise of this year, the authors of the report said, is India, which jumped 30 spots in one year by improving its score by 4.71 to 60.76 points.
"India has improved a lot (this year), but there's still room for improvement, So, I wouldn't necessarily classify it as a nice place to do business yet, but definitely is in the right direction to become a nice place. It is much easier than it was two years ago," Ramalho said. Santiago Croci Downes, Acting Manager, Doing Business Unit at World Bank, said that in the 15 years' history of this annual report, there have been only five countries like Georgia and Rwanda which made a massive jump in one year. But none of them were as big an economy as India. Noting that India made a very big effort in the past two years, the World Bank said the results now reflect those initiatives.
"This is a continuous effort of two or three years. But there's still a long way to go," she said. India used to be in the bottom quarter of the distribution, now it's in the middle which is a big improvement.
"It (India) is still a place where there is room for improvement in making the life of entrepreneurs, less bureaucratic, making transactions simpler and more efficient and less costly. So, there's still significant room for improvement. But it was a very significant change and even not just in relative but also in absolute terms," she said. For entrepreneurs in India, doing business is simpler now, she argued. Referring to the series of reforms being carried out by India, Downs said there is a willingness to improve the private sector and prioritise these.
"If you're asking me would India be 50 next year, I would say that's very very unlikely. But if you could tell me you would be 50 in five years, I will say may be," she said. There are a few areas where there is much room for improvement such as enforcing contracts, which on an average in India is 1,445 days, besides the court system in India is very slow, she said.
"That's one of the areas where India really lags behind compared to other countries," she said, adding that easing property registration and property transactions is another area where things are not very efficient.