India on Tuesday made the highest jump ever by any nation in the World Bank’s “Ease of Doing Business” and broke into the top 100 slot. The leap of 30 places up to the 100th rank in a year follows various reforms which have made it easier to pay taxes online, get credit and moves to protect minority investors interest.
The happy jump in India’s business-friendly rating has come as a shot in the arm of the BJP-led government which has been battling criticism from the Opposition over alleged mismanagement of the Indian economy by a hasty GST roll-out at a time when the country was still reeling under the impact of demonetisation.
During the 2014 Lok Sabha election campaign, ease of doing business in the country was one of Narendra Modi’s key promises and, since taking charge, his government has been keen to improve its rating in this regard. The improvement in ranking will also give a boost to the BJP’s image and, perhaps, improve its prospects in the coming state elections, especially Gujarat.
Commenting on India’s performance, Union finance minister Arun Jaitley said that it is possible for India to achieve the target set by Prime Minister Modi to rank in the top 50 countries on the World Bank’s “Ease of Doing Business” list.
“I believe this is doable,” he said and added that various reforms which the government initiated — in areas of “starting a new business” and “enforcement of contracts” — have not been factored in by the World Bank, and there are some areas in which work is in progress. This, he said, raised the possibility of India further improving its ranking in the next few years.
“In 3 years, from 142 we have come to 100. And I think in those areas where we are still lagging behind, there is sufficient amount of work in progress. There is, thus, reason to believe that we have the capacity to further significantly improve our position,” the finance minister said.
Raining on the BJP’s parade, the Congress’ communication chief Randeep Singh Surjewala said “Make in India” is floundering, exports are plunging, credit growth is at a 63-year-old low and inequality is highest in 100 years. “Crores of job losses in the informal sector have resulted in a ‘Cease of Doing Small Businesses’.”
The World Bank’s report doesn’t take into consideration the impact of GST, which was rolled out on July 1 as its cut-off date is June 1. The report is based on survey done by the World Bank in Delhi and Mumbai.
India was the only major economy to be named by the World Bank to have taken significant structural reforms.
India, which was ranked 130th among 190 nations last year, is “one of the top 10 improves in this year’s assessment, having implemented reforms in 8 out of 10 ‘doing business’ indicators,” said the report.
The biggest jump is in the Paying Taxes indicator, where the country has jumped 53 places to rank at 119th position from 172 last year. This follows the government’s decision to move payment and assessment of taxes on-line and making electronic payment of EPF mandatory.
India now ranks at the 4th position as far as protecting minority interest is concerned, up nine rungs from 13th position last year. This is the first time India has figured in the top five nations in any of the parameters for determining “Ease of Doing Business”.
World Bank said that India strengthened minority investor protection by increasing the remedies available in cases of prejudicial transactions between interested parties. On the parameter of getting credit, India is up at the 29th position from 44th last year.
The country’s ranking on ease of getting electricity, however, deteriorated from 26 last year to 29 this year.
Mr Jaitley said that as far as enforcing contracts is considered — India ranks at 164th position — the World Bank has not taken into consideration steps taken, including start of commercial courts and amendment in arbitration act, and there is a possibility of upward revision in future. Also, on starting new business parameter, where India is at the 156th position, Mr Jaitley said that the World Bank did not take into account the fact that now it takes only one day for businesses to select a name and get it registered.
As far as construction permit is concerned, India ranked poorly at 181 among 190 nations. On trading across border, India ranked at 146 position, and at the 154th position on registering property.
New Zealand (1st position), Singapore (2nd position) and Denmark (3rd position) are the top three countries on the World Bank’s Ease of Doing Business list.
The Congress termed the jubilation of the BJP-led NDA government over the World Bank ranking as an attempt to seek “manufactured relevance”.
In a statement, Mr Surjewala said, “It is important to note that these ‘Ease of Doing Business’ rankings do not take into account the utterly flawed implementation of the GST. The cut-off date for implementing any reforms for the said study was June 1 while the GST was imposed on July 1. Numerous slabs and complex filing requirements meant that GST remained far from the advertised good and simple tax and has turned into a Gabbar Singh Tax”.
In the last couple of months the Congress has accused the government of not being in touch with the reality on ground. Cutting through the government’s rhetoric, the party has repeatedly asked who is responsible for 680 Start Ups shutting down in past two years.