Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Politics / Policy/  India unlikely to see significant rise in Doing Business ranking
BackBack

India unlikely to see significant rise in Doing Business ranking

Steps taken by centre will not reflect in this year's list, as it takes 6 months for users to get familiar with them

Prime Minister Narendra Modi has set a target of moving India to the top 50 countries in the World Bank’s Doing Business rankings within three years. Photo: ReutersPremium
Prime Minister Narendra Modi has set a target of moving India to the top 50 countries in the World Bank’s Doing Business rankings within three years. Photo: Reuters

New Delhi: India is unlikely to see a significant improvement in its ranking in the upcoming Doing Business Report, to be released by the World Bank next month, from its abysmally low level of 142 despite taking a slew of measures, a senior government official said.

“The World Bank does the ranking based on actual usage of the measures taken by a country. Since it takes a minimum of six months for users to get familiar with the steps taken by the government, we think our actions may not get reflected in this year’s ranking," the official said, speaking on condition of anonymity.

Prime Minister Narendra Modi has set a target of moving India to the top 50 countries in the World Bank’s Doing Business rankings within three years.

The National Democratic Alliance government, since coming to power in May 2014, has taken a slew of measures to attract foreign investment and push manufacturing growth through its Make in India programme with an emphasis on simplification and rationalization of existing rules and introduction of information technology to make governance more efficient and effective.

Specific measures taken include removing minimum paid-up capital for companies, single-step incorporation of companies, reducing documents to only three for exports and imports, among others.

Department of Industrial Policy and Promotion (DIPP) secretary Amitabh Kant, in a recent interview to CNBC-TV18, said moving up the rankings to the top 50 is doable. “Next year, yes, and then you will have to have insolvency laws, you will have to have easy entry and exit. You will have to have better enforcement of contracts, but moving up to 50 in three years is doable, very doable," he said.

Doing Business 2015 measured regulations affecting 10 areas of business such as starting one, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

Starting last year, the methodology for ranking countries was changed to the distance to frontier score rather than the percentile score. The distance to frontier score benchmarks economies with respect to a measure of regulatory best practice—showing the gap between each economy’s performance and the best possible performance on each indicator even if no country achieves it.

Last year’s report also broadened the scope of indicator sets for getting credit, protecting minority investors, resolving insolvency. The bank has said in the Doing Business Report, 2016, it plans to broaden update indicator sets such as registering property, dealing with construction permits, getting electricity, paying taxes and enforcing contracts.

“While the Doing Business (2015) report has introduced changes in methodology... Doing Business 2016 is implementing more substantive improvements. Most were inspired by recommendations of the Independent Panel on Doing Business," the World Bank said.

The Indian government has been at odds with the methodology followed by the World Bank in ranking countries. In July last year, finance minister Arun Jaitley informed Parliament that the report ranks countries according to the regulations in place only for small and medium enterprises “but which, owing to its name, often gets mistaken to refer to general business environment".

“The government has indicated its concerns about the indicators used, methodology, sample size, use of ranking, neglect of qualitative and country-specific business environment to the World Bank. The report does not set any measurable targets for improving the ranking of the country," Jaitley said.

A two-member mission of the World Bank Group visited India to collect data and information for the Doing Business Report, 2016 in June. The finance ministry and DIPP briefed the mission about reforms carried out by the government.

Arindam Guha, senior director at Deloitte Touche Tohmatsu India Pvt. Ltd, said though the steps taken by the government are in the right direction, it needs to focus more on dealing with construction permits and enforcing contracts where India’s rank is a dismal 184 and 186, respectively.

“Construction permits fall in the jurisdiction of municipal corporations and urban local bodies and it is challenging for reforms to penetrate to that level. Enforcing contracts depends on processes in the judicial system and the massive number of pending cases has dragged down India’s ranking. There is a bill pending in Parliament, passage of which will help set up special tribunals within courts for fast-tracking commercial disputes," he added.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Politics News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 17 Sep 2015, 07:39 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App