Ease of Doing Business: Moving Ahead Steadily

The recent release of the World Bank’s Ease of Doing Business Report saw India’s ranking improve by one position to 130 from last year. The marginal improvement in ranking led to disappointment among the policy circles as government was hopeful of a major leap in the rankings owing to the impressive list of reforms implemented in the past one year. Moreover,such a concerted and coordinated effort across all ministries and state governments has not been made ever before in India’s industrial history. The Government is to be commended for addressing the hurdle sand fast-tracking administrative processes in such a comprehensive manner. In this context, it is encouraging to note that India’s absolute score improved from53.93 to 55.27, which is the first time in history when its absolute score has improved in two consecutive years.

The World Bank Report lays emphasis on the administrative procedures and time taken for ten defined parameters of the business cycle from starting a business to obtaining credit and exiting through insolvency. Notably, India registered an improvement in ranking on 2key indicators out of the 10 Doing Business indicators,which are ‘getting electricity’ (ranking improved by 44places) and ‘enforcing contracts’ (ranking improved by6 places). In ‘paying taxes’, we came in at the same rank as last year, while in the remaining five fields, the ranking shave tumbled.

CII has been working very closely over the last several years on the ease of doing business process. The implementation of reforms have never been faster, with the government implementing widespread reforms across a number of areas including company incorporation,tax procedures and dispute resolution, land allocation,environmental and forest clearances, and getting public utility connections, apart from many others. Further,there are several areas like the opening of FDI across sectors, labour reforms, etc. which have contributed to the improvement in the overall investment climate apart from procedural issues. State governments too have identified land banks for the setting up of industrial parks and are taking rapid strides on hand holding investor sand expediting processes through single window systems and online interface. Additionally, many states are also holding mega investor meetings for showcasing their achievements in order to attract investment.

Nonetheless, several key reforms have been recognized by the Report where it has noted improvements.Examples include online filing and payment of return sunder ESIC, ICEGATE for import clearances, etc. However several reforms which have taken place since the last World Bank report have not been incorporated as they came after the deadline of June 1, for instance,legislation of the transformation Goods and Services Tax (GST), the institution of the Insolvency and Bankruptcy Code, rapid introduction of INC-29 for company incorporation by the Ministry of Corporate Affairs etc.Moreover, the report currently looks at reforms in just two cities of Delhi and Mumbai. These two cities have been making progress, but it is not sufficient to capture the entire status of the country.

It is pertinent to mention here that aside from the World Bank’s report, India has moved up the rankings of the recently released Global Competitiveness Report of the World Economic Forum by 16 positions this year and leaped 19 slots in the World Bank’s Logistics Performance Index. CII has been working with DIPP and the World Bank on ranking of 29 states and 7 UTs on a real time basis for 340 parameters. These rankings are quite an unprecedented and innovative reform measure by itself and have been taken up for the first time. This year, with the expansion of parameters, we have seen tremendous improvement. As many as ten states have implemented over 90 per cent of the reform measure sand 17 states have achieved success in over 75 per cent of the parameters. This is indeed a remarkable achievement in less than one year. The spirit of competitive federalism to attract FDI has also been seen in roadshows,investor meets and investor facilitation undertaken by state governments, both in India and overseas. Some of the key reforms undertaken by the state governments include electronic registrations, online payment of taxes,easier electricity connections, and simpler regimes for inspections by labour and pollution inspectors.

At the ground level, domestic and overseas industry has undoubtedly experienced improvement in the investment climate. CII is and will continue to work in tandem with World Bank, DIPP, industry and other stakeholder son improving the business environment further.Going forward, with the participation of all players, we are confident that the Doing Business report will recognize the many achievements taking place in the Indian economy. Ease of Doing Business is an ongoing effort,and there will always be work to be done. Suffice it to say that the journey has begun on a good note and the government has shown resolve, dedication and commitment to the effort of taking India’s ranking to within50. This may take some more time than anticipated, but we are sure to get there. In this month’s Focus of the Month, we provide an analysis of the three Ease of Doing Business Surveys released by various multilateral agencies, in addition to experts providing their insights into the various sub-components of the these surveys.

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