India Ranks 130 in Ease of Doing Business

2019 ias preliminary exam test series

India is now ranked by the World Bank at 130 of 189 countries on “Ease of Doing Business.” That is up 12 places from its original ranking last year and four places from its rank on a revised list.

List is topped by Singapore, followed by New Zealand, Denmark, South Korea, Hong Kong, Britain and the US.

China is ranked 84 and Pakistan is at 138th place. Pakistan in fact has slipped 10 spots from 128 last year while China has moved six spots in a year from 90 since the last report.

Doing Business 2016: Measuring Regulatory Quality and Efficiency, a World Bank Group flagship publication, is the 13th in a series of annual reports measuring the regulations that enhance business activity and those that constrain it.

Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 189 economies—from Afghanistan to Zimbabwe—and over time.

Doing Business measures regulations affecting 11 areas of the life of a business. Ten of these areas are included in this year’s ranking on the ease of doing business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures labor market regulation, which is not included in this year’s ranking.

Read Full Report Here

currentAccording to the new report, it takes 29 days to start a business in India now; it took 127 days in 2004. In May 2015, the government eliminated the minimum capital requirement to start a business and also ended the requirement to obtain a certificate to commence business operations, which helped it improve its rankings.

The biggest improvement was seen in the area of providing power to businesses, where India’s ranking improved from 99 in 2015 to 70 in 2016. Now companies can get connected to the grid, and get on with their business, 14 days sooner than before.

The World Bank noted that India recorded the biggest increase in the distance to frontier (a measure of a country’s absolute performance) score in South Asia since 2004.

India is ranked 8th in terms of protecting minority investors, 42nd in getting credit, 70th in getting electricity, but scores poorly in dealing with construction permit with a rank of 183 out of 189 countries. Enforcing contract (rank 178), paying taxes (rank 157), resolving insolvency (rank 136) are other areas where India ranks poorly.

Research also shows that a badly designed tax system can be a big deterrent for businesses. In 2010, India established an online system for value added tax registration and replaced the physical stamp previously required with an online version.

The report said in dealing with construction permits, India ranks 183 and in registering property it ranks 138. But in getting electricity India is now ranked at the 70th spot.

In protecting minority investors, India now ranks eight and in getting credit it is now placed at the 42nd spot. In paying taxes and enforcing contracts India is now ranked at 157th and 178th spots respectively.

In trading across borders, India ranks 133rd and in resolving insolvency, it ranks 136th, the report said.

The Doing Business report records 22 economies worldwide with resolution times above 1,000 days and four of them are in the South Asia region, namely Afghanistan, Bangladesh, India, and Sri Lanka.

Furthermore, it takes entrepreneurs in the region an average 98 days to register property, which is more than twice the global average.

However, India’s rank has dropped on two fronts — getting credit and paying taxes. With respect to getting credit, the country’s position has declined to 42 from 36 last year while it has declined to 157 from 156 in terms of paying taxes.

2016 RANKINGS

1 Singapore
2 New Zealand
3 Denmark
4 South Korea
5 Hong Kong
6 United Kingdom
7 United States
8 Sweden
9 Norway
10 Finland

Current Affairs for IAS Exam