New Delhi: India has moved up 14 notches to the 63rd spot in the World Bank’s ease-of-doing-business global rankings 2019, released on Thursday. India figured among the world’s top 10 most improved countries for the third consecutive year on the back of faster bankruptcy resolution and issuance of construction permits.
The improved rankings are expected to facilitate higher foreign investment into the country to pace up growth at a time when the Reserve Bank of India, International Monetary Fund and the World Bank have slashed India’s economic growth forecast for 2019-20.
India also ranked Number One in South Asia. India went up ahead by 23 and 30 places, respectively, in the past two years.
Finance Minister Nirmala Sitharaman said that besides implementation of Insolvency and Bankruptcy Code, efforts would be made to simplify Goods and Services Tax for further improving India’s ranking in the index. “In the next ranking, the World Bank will include the business climate in Kolkata and Bengaluru as well. Currently, it takes into account only Delhi and Mumbai,” she said.
The report, however, said the challenges India is facing would continue. “The country needed to do more in areas such as enforcing contracts and registering property where India ranks a dismal 163rd and 154th globally. Also, in the most fundamental of them all--ease of starting a business–India’s rank rose by just a single place in the latest report,” the World Bank noted.
Industry bodies said the jump in India’s ranking is a testimony to the remarkable improvement in the country's business climate owing to the series of reforms undertaken by the Narendra Modi-led government.
The report said India had broken into the club of 100 easiest nations to conduct business two years ago when it managed to jump 30 spots from the 130th position. “The World Bank has named India as one of the economies with the most notable improvement for the third year in a row, along with Saudi Arabia, Bahrain, Kuwait, and neighboring Pakistan and China,” it said.
As far as resolving insolvency is concerned, the country had the best performance in ‘Resolving Insolvency’ where it jumped by 56 places to become the 52nd easiest place in addressing bankruptcy. Streamlined procedures allowed by the implementation of the IBC are largely to thank for this.
“Since its implementation, more than 2,000 companies have used the new law. Of these, about 470 have commenced liquidation and more than 120 have approved reorganization plans, with the remaining cases still pending,” it said.
The report quotes studies that have found that restrictive labour regulation in India is associated with a 35 per cent increase in firms’ unit labour costs while a 10 per cent increase in judicial quality increases firm sales by 1-2 per cent.
Welcoming the WB rankings, CII president Vikram Kirloskar said, “India achieved another significant millstone in the area of ‘trading across borders, where we now stand at 68th rank, up from 146th in 2018. Procedures, time and cost for export and imports have been coming down sharply with continuous introduction of trade facilitation reforms.”
“We have a long way to go in several other indicators of ‘doing business’ report, including enforcing contracts, registering property, and starting a business. With continuing reform momentum and government-industry partnership, I am confident of excelling in these areas as well,” Kirloskar added.
