'EASE OF DOING BUSINESS' RANKING - INDIA HAS A LOOOOOONG WAY TO GO

By Ruma Dubey

The ease of doing business in India. Ease and India. Do they go together?

Try setting up even a handcart for selling fruits on your own street. One would think it would be the easiest thing to do. But the nightmare which one would have to endure could put you off fruits for the rest of your life!  So can you imagine setting up an industry? Ask Posco and Vedanta. They will let you know who easy it is to set up an industry here.

Every year, the World Bank Group releases a ranking, “The ease of doing business index” and all countries which attract foreign investment are covered. This report compared business regulations for domestic firms in 185 economies.   

A quick look at the findings:

• Poland improved the most in the Doing Business measures in 2011/12
• Singapore maintains its top spot in the overall ranking, followed by Hong Kong, New Zealand, USA, Denmark, Norway, UK, Korea, Georgia and Australia – the top ten.
• India ranks at 132, much lower than Sri Lanka which came in at 81, Indonesia at 128, Brazil at 130 and much lower than even Pakistan at 107 and even Nepal at 108. Now that will hurt the most!
• Right at the bottom of the list, at 185^th is Central African Republic.
• Europe which went through turbulent times and put in place various measures, as per the report seems to be getting back on the track with Greece being among the 10 economies that improved the most in the Doing Business measures in the past year.
• The best news which emerged - every economy covered by Doing Business has narrowed the gap in business regulatory practice with the top global performance in the areas measured by the indicators.
• Among the 50 economies East Asia and the Pacifi c as the world’s second most business-friendly region according to Doing Business indicators.
• OECD high-income economies continue to have the most business-friendly environment.
• Of the 201 regulatory reforms recorded in the past year, 44% focused on 3 policy areas alone - making it easier to start a new business, increasing the effi ciency  of tax administration and facilitating trade across international borders.

So what are the points considered to arrive at this ranking? It is mainly reforms making it easier to do business and under this there are 10 categories:

1: Starting a business

2: Dealing with construction permits

3: Getting electricity

4: Registering Property

5: Getting Credit

6: Protecting investors

7: Paying taxes

8: Trading across borders

9: Enforcing contracts

10: Resolving insolvency

Not surprisingly, India ranks right amongst the bottom, 182^nd rank when it comes to dealing with construction permits. A company, to set up business, needs to complete 34 procedures or permits  while Hong Kong needs only 6. And in terms of days taken to get the permits, Singapore scores the best at 26 days while Haiti comes at the bottom at 1129 days.  But the good news here is that India reduced the time required to obtain a building permit by establishing strict time limits for preconstruction approvals and now it stands at 196 days.

In terms of getting electricity, Iceland is the easiest  and most difficult in Bangladesh. In India, there are 7 procedures to deal with and takes 67 days. For registering property, India has 5 procedures and takes 44 days. For ease of paying taxes, there are 33 payments per year, taking 243 hours per year and the total tax rate comes in at 61.8% of the profit earned. India’s worst performance is in terms of enforcing contracts, where a company has to comply with 46 procedures and it takes 1420 days.

One can sit and wonder the need to have this index. But in today’s time where Govt is banking its entire economy on FDI, this index and India’s ranking on this index holds immense significance. This index is like a mirror, showing the Govt its own face, where improvement is needed and where a complete makeover is required.

Such an Index is required to get India to introspect. Hope the politicians, who are currently getting personal and indulging in petty politics, maybe get to reading this document and chalk out a road map for improvement. Now that would be constructive politics but do our politicians even know about this?

For more details, one can read through the entire report for more insight: http://www.doingbusiness.org/~/media/GIAWB/Doing%20Business/Documents/Annual-Reports/English/DB13-full-report.pdf