EASE OF DOING BUSINESS
(Read Once atleast)
The World Bank’s Doing Business Report
2018 ranked India 77th out of the 190
countries surveyed.
This is attributed to the success of the
government’s resolve to make difficult
decisions that have translated into remarkable
progress. India is one of the top five reformers,
improving its score in six out of ten criteria
used by the World Bank for measuring the
ease of doing business.
The Doing Business Report 2018 credited the
government for taking several measures to
boost its ranking. One such step was
recapitalizing the public sector banks with an
infusion of $32 billion. This includes 1.35 trillion
rupees through recapitalization bonds and 760
billion rupees via budgetary support. The easy
credit will spur investment in critical
infrastructural and power projects. The
government had also introduced 37 reforms
in areas such as insolvency resolution,
protecting the interest of minority
shareholders, and simplifying the process of
taxes. These measures, as the World Bank
report states, led to India’s boosted ranking.
Reforms to ensure the faster resolution of
commercial disputes could further improve
India’s ranking in future surveys.
Another major step taken by the government
was the introduction of the Bankruptcy and
Insolvency code (Amendment) Bill 2017. The
act makes it easier to exit or attempt a revival
of a business, thereby improving the
nonperforming assets (NPAs) dilemma for the
financial services sector. The country’s Gross
Domestic Product (GDP) growth rate has
plunged from a high of 9.2 percent in the third
quarter of 2016 to 5.7 percent in the third
quarter of 2017. Economists attribute this
mainly to the government’s demonetization
drive and poor implementation of the new
Goods and Service Tax (GST).
As the GST and the Banking and Insolvency
Act were introduced after the coverage period
for this year’s Doing Business Report, their
impact will be felt in the 2019 report.
There is one major caveat: the WB based its
report by talking to stakeholders only in two
cities: Mumbai and Delhi. If one were to also
factor the difficulties in starting a business in
India’s most populous state, Uttar Pradesh,
or other states like Bihar, Madhya Pradesh,
and Rajasthan, India’s ranking would take a
big hit. To plug the lacunae in the WB report,
the Department of Industrial Policy and
Promotion (DIPP) is undertaking its own much
wider evaluation across the country to find out
where real work is to be done.
Despite India’s phenomenal progress, its
ranking comes below most of its fellow BRICS
countries. Russia topped the BRICS with a
ranking of 35 in 2018, followed by China (78)
and South Africa (82). Of the BRICS, only
Brazil (125) was ranked lower than India.
However, India has shown more improvement
over the past four years than the other BRICS
members.
Meanwhile, India was outranked by a host of
Northeast and Southeast Asian economies.
South Korea (4), Hong Kong (5), Taiwan (15),
Thailand (26), and Japan (34) all figure in the
top 50 spots. Other Asian countries like
Mongolia (62), Vietnam (68), and Indonesia
(72) also outranked India.
If India wants to achieve the goal of a top 50
ranking by 2022, the government has to
introduce big ticket reforms in land ownership,
labour law, and the judicial process.
One area that continually frustrates foreign
investors is the complex procedure for getting
a construction permit. India has made dealing
with construction permits less cumbersome
by implementing an online system to
streamline the process in the municipalities
of New Delhi and Greater Mumbai. The online
system has reduced the number of steps and
overall time required to obtain a building permit
in India. However, a lot needs to be done to
make it easier to acquire both land and the
permits necessary to build on that land.
Another area of concern is labour law. The
government has been silent on this issue
because of pressure from trade unions; many
of the unions are affiliated with the ruling BJP.
The government is loath to displease this
strong and reliable constituency. However, the
Govt. needs to realize that it can encourage
foreign investment only if it musters the
courage to overhaul labor laws, which, in the
present form, make firing an employee very
complicated.
Another aspect where both the central and
state governments need to act immediately
is to cut the bureaucratic delays and resulting
corruption in granting permission to start abusiness. At every stage of the clearance
process — getting clearance to purchase land,
registering property, hooking up electricity and
water connections, getting environmental
clearance, obtaining permission from the
factory inspectorate and pollution control
boards, etc — nothing moves unless the
businessman or company pays a bribe. In one
classic case, a well-known automobile giant
decided not to set up a manufacturing facility
in the state of Tamil Nadu, because the
authorities wanted a fee amounting to 10
percent of the total project cost for facilitating
the process of approval for the plant. The
government should professionalize the
bureaucracy to avoid this.
India has already undertaken several
measures in this direction. With e-governance,
a single window concept can be introduced
where companies can file their application
online for all permissions. This will go a long
way toward eliminating bureaucratic hurdles
and corruption.
The Government of India is already working
in this direction, but only by taking bold steps
in pushing reforms and simplifying the
clearance processes will India be able to
realize the dream of being among the top 50
economies of the world.
(Read Once atleast)
The World Bank’s Doing Business Report
2018 ranked India 77th out of the 190
countries surveyed.
This is attributed to the success of the
government’s resolve to make difficult
decisions that have translated into remarkable
progress. India is one of the top five reformers,
improving its score in six out of ten criteria
used by the World Bank for measuring the
ease of doing business.
The Doing Business Report 2018 credited the
government for taking several measures to
boost its ranking. One such step was
recapitalizing the public sector banks with an
infusion of $32 billion. This includes 1.35 trillion
rupees through recapitalization bonds and 760
billion rupees via budgetary support. The easy
credit will spur investment in critical
infrastructural and power projects. The
government had also introduced 37 reforms
in areas such as insolvency resolution,
protecting the interest of minority
shareholders, and simplifying the process of
taxes. These measures, as the World Bank
report states, led to India’s boosted ranking.
Reforms to ensure the faster resolution of
commercial disputes could further improve
India’s ranking in future surveys.
Another major step taken by the government
was the introduction of the Bankruptcy and
Insolvency code (Amendment) Bill 2017. The
act makes it easier to exit or attempt a revival
of a business, thereby improving the
nonperforming assets (NPAs) dilemma for the
financial services sector. The country’s Gross
Domestic Product (GDP) growth rate has
plunged from a high of 9.2 percent in the third
quarter of 2016 to 5.7 percent in the third
quarter of 2017. Economists attribute this
mainly to the government’s demonetization
drive and poor implementation of the new
Goods and Service Tax (GST).
As the GST and the Banking and Insolvency
Act were introduced after the coverage period
for this year’s Doing Business Report, their
impact will be felt in the 2019 report.
There is one major caveat: the WB based its
report by talking to stakeholders only in two
cities: Mumbai and Delhi. If one were to also
factor the difficulties in starting a business in
India’s most populous state, Uttar Pradesh,
or other states like Bihar, Madhya Pradesh,
and Rajasthan, India’s ranking would take a
big hit. To plug the lacunae in the WB report,
the Department of Industrial Policy and
Promotion (DIPP) is undertaking its own much
wider evaluation across the country to find out
where real work is to be done.
Despite India’s phenomenal progress, its
ranking comes below most of its fellow BRICS
countries. Russia topped the BRICS with a
ranking of 35 in 2018, followed by China (78)
and South Africa (82). Of the BRICS, only
Brazil (125) was ranked lower than India.
However, India has shown more improvement
over the past four years than the other BRICS
members.
Meanwhile, India was outranked by a host of
Northeast and Southeast Asian economies.
South Korea (4), Hong Kong (5), Taiwan (15),
Thailand (26), and Japan (34) all figure in the
top 50 spots. Other Asian countries like
Mongolia (62), Vietnam (68), and Indonesia
(72) also outranked India.
If India wants to achieve the goal of a top 50
ranking by 2022, the government has to
introduce big ticket reforms in land ownership,
labour law, and the judicial process.
One area that continually frustrates foreign
investors is the complex procedure for getting
a construction permit. India has made dealing
with construction permits less cumbersome
by implementing an online system to
streamline the process in the municipalities
of New Delhi and Greater Mumbai. The online
system has reduced the number of steps and
overall time required to obtain a building permit
in India. However, a lot needs to be done to
make it easier to acquire both land and the
permits necessary to build on that land.
Another area of concern is labour law. The
government has been silent on this issue
because of pressure from trade unions; many
of the unions are affiliated with the ruling BJP.
The government is loath to displease this
strong and reliable constituency. However, the
Govt. needs to realize that it can encourage
foreign investment only if it musters the
courage to overhaul labor laws, which, in the
present form, make firing an employee very
complicated.
Another aspect where both the central and
state governments need to act immediately
is to cut the bureaucratic delays and resulting
corruption in granting permission to start abusiness. At every stage of the clearance
process — getting clearance to purchase land,
registering property, hooking up electricity and
water connections, getting environmental
clearance, obtaining permission from the
factory inspectorate and pollution control
boards, etc — nothing moves unless the
businessman or company pays a bribe. In one
classic case, a well-known automobile giant
decided not to set up a manufacturing facility
in the state of Tamil Nadu, because the
authorities wanted a fee amounting to 10
percent of the total project cost for facilitating
the process of approval for the plant. The
government should professionalize the
bureaucracy to avoid this.
India has already undertaken several
measures in this direction. With e-governance,
a single window concept can be introduced
where companies can file their application
online for all permissions. This will go a long
way toward eliminating bureaucratic hurdles
and corruption.
The Government of India is already working
in this direction, but only by taking bold steps
in pushing reforms and simplifying the
clearance processes will India be able to
realize the dream of being among the top 50
economies of the world.
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