In what the government of India claimed as the biggest leap the country has ever seen in the World Bank’s ease of doing business ranking list, India jumped 30 spots to secure a place among the top-100 countries in 2018.
This increase has made India the first country to record such an enormous growth regarding ease of doing business, Finance Minister Arun Jaitley expressed in a press conference announcing the development.
The World Bank report on the ease of doing business titled Doing Business Report 2018 was made public at 7:30 pm IST.
Under the index, The World Bank ranks countries on ten indicators which carry equal weight. Including:
- Starting a business
- Dealing with construction permits
- Getting electricity
- Registering property
- Getting credit
- Protecting minority investors
- Paying taxes
- Trading across borders
- Enforcing contracts
- Resolving insolvency
India has improved its standing in 6 out of these ten indicators, which helped paved the way for its historical leap and placement among the top 100 countries include:
Access to electricity
The average time to obtain an electricity connection in Delhi dropped from 138 days four years ago to 45 days now, almost 20 days less than the 78 days average in Organisation for Economic Co-operation and Development (OECD) high-income economies.
Easing the process of starting a business through digitisation
India ranks 156 in starting a business. The report mentions how India’s going digital is having an impact on starting a business. One of the prime reasons for the increase in ranking is the introduction of the online application system.
The merger of pleas for profession tax (PT) and value-added tax (VAT) in Mumbai and the merging of applications for PAN and Tax Account Number (TAN) has significantly helped cut down the time taken to start a business by entrepreneurs.
But one of its criticisms of the system by the World bank is the requirement to file a declaration before the commencement of business operations, needs to be amended.
Simpler business incorporation
The country helped streamline the process of business incorporation by introducing the SPICe form (INC-32), which combined the application for the Permanent Account Number (PAN) and the Tax Account Number (TAN) into a single submission.
Reforms introduced to make insolvency resolutions easier.
Indian economy has improved its standing to 103 regarding resolving insolvency from a previous ranking of 136 jumped 33 positions. The new insolvency and bankruptcy code introduced by the government was lauded by the World Bank. It feels the new code has helped reorganise procedure for corporate debtors and facilitated the continuation of the debtor’s business during insolvency proceedings made insolvency resolution easier.
Access to credit
India currently ranks 29th in providing credit thus showing a clear improvement in providing access to credit. These changes include amendments in policies for relief to the automatic stay for secured creditors during reorganization procedures, changes in rules on the priority of secured creditors outside reorganization proceedings and adopting a new insolvency and bankruptcy code as mentioned above.
Construction permits issues
India ranks 181 in Construction Permits. Introduction of the new online system has streamlined the process at the Municipality level and helped reduce time and number of procedures to obtain a building permit. The process has been made faster through the online Single Window System for the approval of building plans; thus allowing submission and approval of building plans before requesting the building permit.
Minority investor’s protection
India has leapt five positions from its previous ranking of 9 to number 4 in protecting minority shareholders. The credit goes to the number of reforms introduced by Securities and Exchange Board of India (SEBI) Protection mechanism for minority investors, which allows a system of addressing grievances and seeking remedy in cases of prejudicial transactions.
The biggest jump India has made is currently in taxation reforms. It has moved up 53 places to rank 119th. Taxpayer-friendly corporate income tax regulations and electronic payments to Employees Provident Fund electronically have helped the leap.
Trading across borders
Trading across borders has become relatively easy. With an increased use of electronic and mobile platforms, importers under the Authorized Economic Operator (AEO) program have been able to clear cargo faster through simplified customs procedures. Export and import border compliance costs were also reduced in both Delhi and Mumbai after merchant overtime fees were abolished, reports India Today.
The introduction of the National Judicial Data Grid which allows case management reports on local courts to be generated has facilitated the process of enforcing contracts easier.
The introduction of over eight reforms to ease doing business in 2016-17, has made India the only South Asian economy to join the list of the 10 top improvers.