Modi on the right track as India jumps in World Bank ranking
It’s getting easier to do business in India. That’s not a boast by the Modi government, but something “confirmed” by the World Bank’s latest global survey on Doing Business.
Informal reports over recent weeks had suggested India would score a better grade than the 142nd ranking the country got in the DB report in 2015, the cut-off date for which was June 1, 2014 – just a week after Narendra Modi took over as prime minister.
In just three years India has jumped a massive 42 ranks higher, into the top 100 countries out of the 190 ranked by the World Bank. Modi has publicly stated that he would like to see India break into the top 50 countries in the rankings by 2020. And there’s a chance that could happen.
The rankings did not consider the Goods and Services Tax (GST) that was implemented after the cut-off date for this year’s report. That means there could be a further significant jump again next year.
Critics will complain that only two cities – Mumbai and Delhi – are covered in the business rankings, but it’s worth noting that from 2004 to 2013 the ‘country reports’ covered only one city: Mumbai. Delhi was only added from the 2014 report.
And while the WB report only considers data from two cities, the Indian government has embarked on a significant countrywide ranking of each state on ‘Ease of Doing Business’ (EODB). That is carried out in a transparent manner, with all states tracked on reforms that are enacted, with rankings given and the percentage of completion for each move, on a government website. All states are ranked and a business reform action plan for improvement for the next year is shared by the Ministry of Commerce.
The report for 2018 shows that India was one of 10 economies that improved the most in the areas measured throughout the 190 countries. The 10 economies which showed the most improvement in the Doing Business indicators in 2016-17 were Brunei Darussalam, Thailand, Malawi, Kosovo, India, Uzbekistan, Zambia, Nigeria, Djibouti and El Salvador. The authors used 11 indicators to measure the ease of doing business and India showed significant improvement in six of them.
The important highlights of India’s performance were:
- Resolving Insolvency – an Insolvency & Bankruptcy code created by the national government for efficient handling of restructuring and insolvency proceedings helped lift India’s ranking in that category from 136 to 103.
- Paying Taxes – the country’s ranking jumped from 172 to 119 thanks to steps taken to reduce the time required to do this, from 241 hours to 214 hours, and reducing the number of payments from 25 to 13 in a year; as well as enabling electronic registrations, plus returns and payment of Employee State Insurance matters, and Employee Provident fund contributions.
- Getting Credit – the ranking improved from 44 to 29, as credit bureau coverage increased from 21.4% to 43.5% of adults. Increased coverage of security interest registration and securing of creditors prioritized over government dues for purposes of recovery also helped to boost the result for this category.
- Enforcing Contracts – the rank for this category rose from 172 to 164 thanks to the establishment of dedicated commercial courts, improvement in the quality-of-judicial-processes index from 9 to 10.3, plus the creation of the National Judicial Data Grid to monitor and manage court cases in India.
- Protecting Minority Investors – Greater transparency requirements for interested parties transactions and shareholder protection through action against directors and claims for damages helped lift India’s ranking from 13 to 4.
- Construction Permits – Reducing the procedures for obtaining construction permits from 35.1 to 30.1 and cutting the time from 190 to 143.9 days, plus reducing the cost of warehouse value from 25.9% to 23.2% helped lift the country’s rank from 185 to 181.
Interestingly, India had better rankings than China in three categories and was also ranked in the top 30 in these areas.
Though rankings are relative and measured each year by the World Bank, it is important that India keeps following the Modi mantra – “Reform, Perform, Transform” to break into the Top 50 nations for ease of doing business by 2020.
Clearly, as this report shows, India is well on the way to doing that.