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Read Current Affairs Topic: Ease of Doing Business Rankings A Boost for India
Traditionally, India is being considered as one of the toughest place to do business because of several factors like red tapism, licenceraj, policy and regulatory hurdles and the historical inclination towards socialism among others. Because of all these factors, India had consistently remained among the laggards in the ‘Ease of Doing Business’ index prepared by the World Bank. When the new government formed under the stewardship of the Prime Minister set the target to break into top 50 in three years i.e. in 2017. In the year 2014, India’s rank was 142. Though, India was unable to barge into top 50 club but inclusion in top 100 is also a commendable achievement. In 2017, India’s rank was improved to 100 from 130 in 2016, an unprecedented jump of 30. As the GST was not included in this year’s ‘ease of doing business’ rank, India may further climb the rankings in next year when the biggest tax reforms would be considered in the index.
Of the 10 indicators of ‘Ease of Doing Business’ considered, India has improved on eight including paying taxes (to 118 from 172 last year), getting credit (to 29 from 44) and bankruptcy proceedings (to 103 from 136).
The ‘Ease of Doing Business’ rankings is also one of the factor considered by foreign investors while choosing destinations for their finds. According to the head of the US India Business Council, "This is a significant movement and a very important barometer of India moving the right direction and in creating the kind of channels that will attract (foreign direct) investment". Not just foreign investment, improvement in ranking shows that the climate for domestic businesses is also improving in the country. If the government aspires to create 20 million jobs per year, as it promised in its election campaign, it had to promote the businesses and induce investment in the economy. The current level of private and public investment in the economy is not sufficient to generate promised employment.
‘Make in India’ was another flagship programme through which government aspired to make India a manufacturing hub of the world. But with so many procedural hurdles, this programme is also expected to meet the fate of various other former programmes of the government. The new rankings of ‘Ease of Doing Business’ will certainly help in making ‘Make in India’ a reality. The improvement in rankings was also reflected in the stock market movement.
The new rankings are indeed a boost for the economy, but much more is needed to be done on the ground. For example, when it comes to starting business, the ranking has slipped by one notch to 156 from 155 from 2016. In this field, government needs to do much more if its wants ‘Start Up’ India programme to succeed. India also fared lower in the areas of registration of properties and enforcing of contracts. It reflects slow progress in land and labour reforms. Thus, the new rankings may give a motivational cheer to the government but it still had to move miles ahead for full-fledged celebrations.
Moreover, these rankings considered only two cities of Mumbai and Delhi and if more locations would have been considered, India could have fared lower. In order to improve the business climate in not just political and financial capitals, but across the country, each and every state government is required to work in a mission mode to make their respective state business friendly.
In December 2018, the central government will release its own ‘Ease of Doing Business’ index which will rank all the states of the country. This index will present a cross-sectional view of the business environment of India and the loopholes present in each and every state. This index will be much more helpful in creating an ecosystem where it would be much easier to establish and flourish a business.
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