India takes a giant leap in ease of doing business rankings of World Bank

India’s ranking in the World Bank Doing Business report 2018 climbed 30 steps to 100 as the policy and regulatory reforms put in place by the Central and State government has started to deliver results on the ease of doing business front. India has jumped 30 stops to 100 in a ranking which is driven by power supplies, banking reforms and the protection of minority investors. 

The Government which has been seeking an improvement in the country’s ranking to attract higher foreign investment has set more ambitious targets. According to an output outcome framework prepared by the government, the country is seeking to reach the 90th rank in 2017-18 and 30th by 2020. Last year, India’s ranking improved by just one notch to 130. The report bases the rankings on the surveys and interviews with company executives and corporate lawyers in Mumbai and Delhi, which was also recognized as one of the top five reformers in the year’s assessment. The country showed an improvement in the ranking in six out of 10 parameters used to judge ease of doing business and became the only large economy to achieve this in the year. Based on the 10 parameters, India got the highest ranking in protection of minority investors by rising to the fourth position globally from 13th last year. This was due to the recognition of the country’s corporate law and securities regulations as highly advanced. The country’s worst performance was noted in dealing with construction permits despite the improvement in ranking from 185 to 181 this year.

On a metric that measures the absolute improvement in the performance of a country against the relative performance measures by the ranking, India stood at a score of 60.76 as against 56.05 last year. This shows that the company is continuing a steady shift to the best practice in business regulation. The report has also taken note of the Insolvency and Bankruptcy code in order to ensure time bound settlement of insolvency; the implementation of GST has not been included in the review process.

The huge leap this year is a result of the government’s efforts over the past few years after having started off on a strong reform agenda. This indicates India’s endeavor to strengthen its position as a preferred place to do business globally. The “paying taxes” regulations is a parameter on which the ranking of India improved to 119 from 172 last year. This was due to the Employees’ Provident Fund being paid electronically and the introduction of administrative measures which make it easier to comply with the tax regulations.

There was a drop in ranking in “getting electricity connections” from 26 last year to 29 this year. The time to obtain an electricity connection in Delhi has dropped to 45 days from 138 days four years back and almost 20 days less than the average time taken in other developed countries. Despite the progress, India still lags in areas such as starting a business (156), dealing with construction permits (181) and enforcing contracts (164). The time taken for the enforcement of a contract is much longer today than it was 15 years ago. India has reduced the time needed to register a business to 30 days from 127 days 15 years ago. However, Indians need to follow a cumbersome procedure of going through 12 processes to start a business which is much lesser in high income economies.