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Ease of Doing Business in India

The ease of doing business index is an index created by the World Bank Group. Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.

Following four standard measures indicate India’s progress which is both qualitative and measurable

  • Openness to Trade – India’s trade-to-GDP ratio has been rising very sharply and has now surpassed China despite having a large internal market of its own
  • Despite significant capital controls India’s net FDI inflows are at par with other emerging economies & has risen sharply over time & most in recent years
  • Despite not been much exit of PSUs, India has seen increasing share of private sector in recent times
  • Government expenditure against per capita GDP is at par given its level of development

 

Measures to facilitate ease of doing business
  • Online application for Industrial License via e-Biz website 24×7 for entrepreneurs
  • Limiting & digitalization of the documents required for export and import
  • Government has liberalized FDI policy in sectors like defence, railway infra, construction, pharmaceuticals, etc.
  • Setting up of Investor Facilitation Cell under Invest India – to guide, assist and handheld investors during the entire lifecycle of the business

 


World Bank Ease of Doing Business Ranking 

  • 2017 – India has moved one rank up to the 130th position
  • Much damage has been done to India’s ranking by three factors i.e. dealing with construction permits, enforcing contracts & paying taxes where India ranks under five from the bottom
  • Report praises the various reforms taken by the present Indian government esp. significant reductions in time and cost to provide electricity connections to businesses.

India has taken a number of economic reforms in the past year like bankruptcy code, GST, Introduction of single window system for building plan approvals, Digitalization of license process etc. Thus, a better ranking was expected.

Further, the present government aims to bring India in the top 50 economies in the Ease of Doing Business by 2018. The target seems extremely challenging now. However, the report does not truly represent the status of economic reforms taken by India –

  • Rankings cover only two cities of Delhi & Mumbai. However, reforms are being carried on all across India
  • There is increasing competition from other countries who are trying to improve their rankings as well

 


Ease of Doing Business among States by DIPP

  • Reordering of the ranking signals that competitive federalism is rapidly taking root
  • Rankings show greater acceptance of reform measures and seriousness about it among the states
  • Highlights the weakness in the World Bank’s methodology of measurement of Ease of Doing Business Index which is concentrated only on two cities- Delhi and Mumbai
NoteWorld Bank Ease of Doing Business Ranking 2018,India has moved 30 rank up to the 100th position, this shows that effects are taking place as discussed above.

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