India continues to rank low at 130th position in terms of ease of doing business, with the country seeing little or no improvement in dealing with construction permits, getting credit and other parameters.

The list of countries in the Doing Business 2017 is topped by New Zealand while Singapore is ranked second. It is followed by Denmark, Hong Kong, South Korea, Norway, the UK, the US, Sweden and former Yugoslav Republic of Macedonia.

Expressing disappointment over no change in India’s ranking in the World Bank’s index on ease of doing business, the government regretted that the report did not take into consideration 12 key reforms undertaken by it.

In the World Bank’s latest ‘Doing Business’ report, India’s place remained unchanged from last year’s original ranking of 130 among the 190 economies that were assessed on various parameters. However, the last year’s ranking has been now revised to 131 from which the country has improved its place by one spot.

Explaining as to why India’s reform efforts is not being reflected in the ease of doing business report, Global Indicators Group Director Augusto Lopez-Claros said it very often takes some time for the reforms implemented by governments about the regulatory environment to be felt on the ground by the business community.

Secretary in the Department of Industrial Policy and Promotion (DIPP) Ramesh Abhishek said a dozen of important reforms like enactment of bankruptcy code, GST, introduction of single window system for building plan approvals and online ESIC and EPFO registrations were not “recognised by the World Bankthis year”. The DIPP, he said, will appoint external agencies “to help departments carry forward reforms, hold stakeholders consultations, and monitor implementation of reforms”.

He also said departments involved in the implementation of reforms have been asked to appoint observers who will seek feedback from the business and industry and ensure that the impact of reforms are being felt on the ground. “The observers will play a critical role in ensuring that reforms are functioning as intended and that any road blocks along the way are being addressed in a timely manner,” he told reporters here. India will continue engagement with the World Bank and address their concerns to include these (12) reforms in the next year’s report”.

Explaining about one of the 12 reforms about elimination of requirement of a company seal, he said: “we are disappointed that this has not been recognised by them”. The DIPP said in a statement said over the past two years, the government has implemented a host of reforms to make it easier for businesses to start, operate and exit. “It is therefore disappointing that these achievements are not covered by the report due to methodological issues,” it said.

Further the DIPP secretary said user feedback is very critical and the DIPP is going to develop an online system to get the feedback from users as it will help in doing and implementing the reforms.

Another official said the World Bank are going on the perceptions and are not paying heed to the “voluminous papers” sent by the DIPP. The department has already listed out steps which it will take to implement for further reforms with an eye on next year’s report.

The DIPP said government will implement the Insolvency and Bankruptcy Code by notifying regulations, instituionalising proceedings at the National Company Law Tribunal; implementing GST nationwide by April 1, 2017; implementing a single form for company incorporation, name availability and director’s identification number. The other reforms for next year include merging registries of charges at MCA and CERSAI into a single registry to build a unified online data base of security interest over movable assets; further streamlining processes related to customs clearances to bring about faster and cheaper processing time.

India’s ranking with respect to starting a business slipped four places to 155th spot and in the case of dealing with construction permits by one rank to 185th. As per the report, India’s ranking in terms of protecting minority investors dropped to 13th place from 10th position last year. With regard to getting credit, the ranking has fallen by two places to 44.

The rankings are based on ten parameters — 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.

According to Lopez-Claros, Prime Minister Narendra Modi’s ambition of bringing India within first 50 ranking in the ease of doing business is achievable.

“It is achievable. I do not think that it is unreasonable. We can talk about the time frame, but if you ask me does the government have the technical capacity the ability to implement and conceptualise reforms that could in the medium-term lead to substantial improvement in ranking, my answer is yes. I have full confidence. The effort has to be sustained. That’s all I am saying,” he said.

While noting that moving from 130 to less than 50 is not going to happen in 12 months, Lopez-Claros said what is important is direction of change.

Source: Firstpost & Business Standard