World Bank’s ease of doing business rankings: Suspense begins for NDA
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New Delhi: With Tuesday’s cut-off date for the World Bank’s ease of doing business rankings for 2017, the National Democratic Alliance (NDA) will be eager to see the impact its policies have had on India’s rankings.
Mint looks at some of the parameters that are part of the ease of doing business index and the steps taken by the Indian government over the past one year to improve its performance on the same.
The Indian government is hoping to see a drastic improvement in its ranking this year as compared with last year. India was ranked 130 among 189 countries in the World Bank’s ease of doing business rankings 2016, an improvement of four spots from the previous year’s rankings.
1) Starting a business: The government has launched an e-biz portal aimed at providing companies a one-stop shop for receiving all clearances. While a number of central government agencies are a part of the portal, very few state government entities are part of it. India is currently ranked 155 in this sub index as it took almost 29 days to start a business in India till last year.
2) Construction permits: This is still a work in progress with the government launching online construction permits in Mumbai and Delhi (the two cities evaluated for the index). However, this will go completely online only by October 2016. This is expected to cut red tape and corruption as there will be no human contact. Till last year, it took almost eight months to get a construction permit in Delhi and five months in Mumbai. India was ranked 183 out of 189 countries in this sub-index.
3) Resolving insolvency: India enacted the insolvency and bankruptcy code this month to make it easier for investors to exit businesses as well as help engineer a fast turnaround of businesses. However, the supporting infrastructure needed to successfully implement this law such as insolvency professionals and company law tribunals are not yet in place. It remains to be seen if India will move up from its current ranking of 136 in this parameter, with the enactment of the code alone. At present, it takes more than four years to resolve an insolvency issue in India and the bankruptcy code proposes to bring it down to less than a year.
4) Paying taxes: Though most of the tax payments have been moved to the online payment platform, the multiple number of indirect taxes remains a hindrance. Only the implementation of goods and services tax is likely to result in a sharp improvement in India’s ranking on this parameter which is at 157.
5) Enforcing contracts: India has brought in amendments to the Arbitration and Conciliation Act as well as Commercial Courts, Commercial Division and Commercial Appellate Division of the High Courts Act, 2015 to ensure faster settlement of commercial disputes and reduce litigation. The latter Act seeks to set up commercial courts to exclusively handle such disputes, thereby aiming to fast-track the whole process. India was ranked 178 in this sub-index in the 2016 rankings as it took almost four years for enforcing a contract in Mumbai and Delhi using the available legal recourse.
6) Trading across borders: The Central Board of Excise and Customs has announced a number of steps over the last one year to reduce the time taken at ports and airports for necessary clearances for importers and exporters. As per the ease of doing business rankings, it took almost five days to receive a clearance from authorities in ports and borders for exporting goods and almost 11 days for importing goods into the country. India was ranked 133 in this sub-index in the 2016 rankings and will hope to improve its ranking this year.