New Delhi: In what came as shot in the arm for the Narendra Modi government, India on Wednesday leaped 23 places to 77th position on the World Bank’s ‘ease of doing business’ index riding on business-friendly economic reforms like the GST, the Insolvency and Bankruptcy Code and tax reforms. Also Read - Prepare to Boost Economy With These Reforms in Coal, Mine Sectors: PM Modi Tells Officials
This was India’s second consecutive jump in ‘ease of doing business’ raking. Last year, India had jumped 30 places to stand at 100th place and was one of the 10 countries that had shown improvement in eight out of 10 indicators for “Doing Business”. Also Read - ‘Don’t Charge Any GST on Equipment Linked to Management of COVID-19,’ Rahul Urges Centre
When the Narendra Modi government came to power in 2014, the country stood at 142nd spot among 190 nations. At that time, the country was battling perceptions of excess red-tape and policy paralysis. Also Read - GST Collections in March Dip Below Rs 1 Lakh-cr Mark to Rs 97,597 cr
Since then, India has improved its position on the global index by 65 positions and by 53 positions in the last two years.
Four years of reform pushed up India’s rank to 100th in World Bank’s ‘Doing Business’ 2018 report. It was 130th in 2017 when it was ranked lower than Iran and Uganda.
The World Bank ranks 190 countries based on 10 parameters, including starting a business, construction permits, getting electricity, getting credit, paying taxes, trade across borders, enforcing contracts, and resolving insolvency.
This year too, World Bank put India among the top 10 economies to make the most improvements, saying it focused on streamlining business processes.
In its annual ‘Doing Business’ 2019 report, the World Bank said India improved its rank on six out of the 10 parameters relating to starting and doing business in a country. Grant of a construction permit, trading across the borders, starting a business, getting credit, getting electricity and enforcing contracts showed improvement.
India, it said, made starting a business easier by integrating multiple application forms into a general incorporation form. “India also replaced the value-added tax with the GST (Goods and Services Tax) for which the registration process is faster,” it said.
Also, “India made paying taxes easier by replacing many indirect taxes with a single indirect tax, the GST, for the entire country. India also made paying taxes less costly by reducing the corporate income tax rate and the employees’ provident funds scheme rate paid by the employer,” the World Bank said.
As per this year’s ranking, India’s position has declined in four parameters — protecting minority rights (7), paying taxes (121), registering property (166), and resolving insolvency (108).
The ranking comes as a shot in the arm for the Narendra Modi government which faces strong dissenting voices from opposition parties ahead of the general elections next year.
New Zealand tops the list of 190 countries in ease of doing business, followed by Singapore, Denmark, and Hong Kong. The United States is placed eight and China has been ranked 46th. Neighbouring Pakistan is placed at 136.
PM Modi Says Govt Committed to Economic Reforms
Elated over the country’s rise in ‘ease of doing business’ ranking, Prime Minister Narendra Modi said the government is committed to economic reforms to ensure an environment that fosters investments.
“Delighted at yet another rise in India’s ‘Ease of Doing Business’ rank. We are unwavering in our commitment towards economic reforms, which will ensure an environment that fosters industry, investment and opportunities,” the prime minister tweeted.
Govt Hopeful of Entering the Top-50 Club
Finance Minister Arun Jaitley exuded confidence that India can now hope to achieve the target of breaking into top 50 rank – a target set by the Modi government – in the coming years.
The target points for improvement are registering property, starting a business, Insolvency, taxation and enforcement of contract, he said.
“Legislation is already in place with regard to Enforcement of Contract, Taxation and Insolvency…Starting business, central government and state governments have to work together…
“If we work in focussed manner in these areas, then coming below the 50th rank target is not out of reach. Therefore, it can be achieved. Ultimately, Ease of Doing Business is to maximise the governance with minimum government and procedure,” Jaitley said.
The impact of this would be visible on investment environment in the long term, he added.
The BJP-led government, since coming to the power, has reduced red-tape and corruption, and its reforms have ensured India jumps ranks from 142 to 77, the minister said.
Expressing hope of further improvement Commerce and Industry Minister Suresh Prabhu said: “We will continue to improve more. The structural reforms which have not yet captured fully will be reflected. There are many other measures which will result into improvement of rank…You will see gain in 2019 and ultimate objective is to go into the top bracket within top 50”.
Entering Top-50 Bracket Tough Nut to Crack: Officials
World Bank officials said that while India has emerged as one of the top reformers, entering the top 50 bracket is tough as the next set of reforms is difficult.
In the coming years, India could very well improve its ranking further given that the impact of some of the ongoing reforms has not been fully realised or captured yet, they said.
At the same time, they cautioned that entering the top 50 bracket – a goal set by Prime Minister Narendra Modi in 2014 – is a tough nut to crack, even though at this point of time, it no longer seems to be impossible for India.
Shanta Devarajan, the World Bank’s Senior Director for Development Economics and Acting Chief Economist, praised Prime Minister Modi for taking personal interest in undertaking reforms and initiating measures aimed at improving the ease of doing business in India.