Ease of Doing the Business: India’s World Bank Ranking Improves, Singapore Tops the List

Ease of Doing Business Index is an index created by the World Bank to measure regulations directly affecting businesses. Higher rankings i.e. a low numerical value indicates better, simpler regulations for businesses. India has moved up by 12 points from 142 to 130 in the latest ranking compiled by the World Bank among 189 economies in the World Bank’s ‘Doing Business 2016’ report. The cutoff date for ranking was June 1 2015. In 2015 ranking, India stood at rank 142.It is welcome that India’s ranking has improved by several notches but much remains to be done.

Government of India has taken lot of steps in last one year for the improvement of economy as a whole. The biggest improvement has been in ‘Getting electricity’ factor as the utility in Delhi and Mumbai which helped in faster process of getting an electricity connection for business by reducing the procedures and time required connecting electricity. In 2014, regulatory reforms such as new labour reforms, inspection scheme, and easier provident fund facility were launched which aimed at making it easier to do business. Also starting a business has been made easier by eliminating the minimum capital requirements and the need to obtain a certificate to commence business operations. There has been implementation of single window clearance systems and registration process that has facilitated in obtaining approvals and clearances easily.

For investor friendly business environment we need new policies and reforms that could be affected into the system so that ease of doing business in the country can be improved.

What’s required is that Income Tax Act should be made simpler so that tax rates are reduced, and there is reduction in no. of taxes. We do need a modern goods and service tax (GST) regime to boost transparency and efficiency in taxation. Committee has also been set up in order to remove complications in the Companies Act so that registeration and licensing processes can be sorted in an effective manner. We have been successful in getting an ordinance for a fast-track arbitration procedure so that easier adjudication of disputes can be carried out. Govt. has started working on establishing a commercial court in each High Court of the country so that the judgement can be carried out in faster mode and costs such as engaging and retaining lawyers can be reduced.

We are also aiming at Bankruptcy Law for which Bill has been introduced in the Parliament recently on 21 December 2015; it has still not been passed. It is being promoted as the next biggest reform after the proposed goods and service tax as this law will help in protecting the rights of borrowers and lenders, help in clarifying the risk associated with lending which would further help in facilitating credit and thus a higher flow of capital in the economy. Ease of Govt. clearances for the startups will provide for free business environment to work in, further helping in the growth of the country.

India has done better in the rankings but also one should know that the World Bank has given ranking on the basis of surveys done in just two cities – Delhi and Mumbai, which does not mean that most people will be setting up businesses in these two cities only.

India is still last among BRICS in ease of doing business. Also, China has stepped up in ranking by 6 points from 90 to 84. It is good that we have improved our GDP as compared to the neighbouring nation China, but the fact remains that China is far ahead of us if we compare their ranking with ours in context of ease of doing business, so we need to look at how much more we need to catch up.


This blog is written by Alisha Jhalani, MBA-FP 2015-2017 batch, ICoFP Delhi Campus

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