NDA govt tells World Bank it has done enough in the past one year to move the country up the rankings
New Delhi: Will India succeed in improving its ranking in the next edition of the Doing Business report published by the World Bank?
The National Democratic Alliance (NDA) believes it has done enough in the past one year to move the country up in the rankings, but not enough to make it to the desired Top 50 countries in the world in terms of doing business. The Union government made its case before a mission from the World Bank on Monday.
The World Bank’s Ease of Doing Business Index 2015 ranked India at 142, after it slipped two places, among 189 countries measured.
If India succeeds in improving its rankings, the NDA will claim that this is the result of the structural reforms it has pursued in incremental fashion since taking charge of the country in May last year.
Making a case for a better regulatory environment in India, the government pitched reforms such as doing away with the minimum paid-up capital for companies, single-step incorporation of companies, and reduced documentation for exports and imports, to a two-member team from the World bank collecting data for the Doing Business Report, 2016.
The World Bank defines ease of doing business around the rules and regulations that assist in creating a “dynamic private sector".
“Doing Business promotes rules that establish and clarify property rights, minimize the cost of resolving disputes, increase the predictability of economic interactions and provide contractual partners with core protections against abuse," the Bank said in its 2015 report.
Prime Minister Narendra Modi has set his government the challenging task of improving India’s rank to the Top 50 by 2017 to attract investors. Accordingly, the NDA has since launched a drive to improve the country’s business environment, unveiling several labour reforms, swifter approvals for businesses to boost manufacturing and job creation and efforts to bring transparency and stability in tax rates.
The reforms the government mentioned to the World Bank team include doing away with the requirement of having a seal and filing a declaration of commencement for companies, facilitating loans or guarantee to a fully owned subsidiary company, simplified processes to approve related-party transactions, taking board resolutions off the list of mandatory disclosure requirements, facilitating revival and rehabilitation of small and medium-sized businesses, and constituting Customs Clearance Facilitation Committees at ports to facilitate expeditious clearance of goods.
Officials from the department of economic affairs, department of industrial policy and promotion (DIPP), ministry of corporate affairs and the central board of direct taxes met the delegation from the World Bank on Monday.
The government said in a statement that the team “appreciated the efforts made by the government and promised to take note of initiatives taken..."
The Doing Business rankings are based on consultations by the World Bank with legal and accounting professionals, government officials and business practitioners, across countries.
Onno Ruhl, the World Bank’s country director for India, observed at the release of last year’s ranking that though India was carrying out reforms and improving its position on various indices, it needed to outperform its peers for a better rank.
D.K. Srivastava, chief policy advisor at consulting firm EY, said, “For the ease of doing business rankings, the World Bank utilizes about 10 indices. The government has so far only attended to entry-related issues that are likely to be facilitated and might improve India’s ranking this time even though not very significantly. For other indicators, little action has been taken so far. So achieving a ranking in the Top 50 is likely to take longer than two years. It is an uphill and time-consuming task that will require more effort from the government."
DIPP also issued a framework for assessing state-level reforms to enable ease of doing business on Monday, coinciding with the visit of the World Bank team. DIPP is looking to rank all state governments as the business environments in states is seen as an important factor in attracting investments.
The department also set up a panel in April to recommend a simpler mechanism to replace the myriad permissions currently required to start a business and has integrated 14 central government services on the eBiz platform that aims to provide a single-window clearance mechanism for businesses so that they can apply for all required approvals at one place online to cut red tape and improve transparency.