India moves up by just one notch on World Bank's 'ease of doing business' index

Latest rankings put in jeopardy PM's plan to push the country among the top 50 nations by 2018

After pinning its hopes on a significant improvement in World Bank’s Ease of Doing Business Index, India has managed to move up by only one rank in the Doing Business Report 2017. India’s position on seven out of 10 parameters also went down, compared to the previous year's rankings.

The government said the ranking failed to take into account the various reform initiatives undertaken by it.

India remains at the 130th position out of 190 countries globally, it was revealed on Tuesday. This is the same as last year, but it qualifies for a single upward movement in rank as India’s position in 2016 has been revised to 131 by the World Bank. There were a total of 189 countries in the 2016 report when India’s position was only four places higher than 134 in the 2015 report.

The rankings come in the backdrop of senior government officials repeatedly saying India’s ranking would be impressive in the 2017 report. It also makes Prime Minister Narendra Modi’s aim of pushing India among the top 50 nations by the time the 2018 report comes, a bit doubtful. India will have to improve its position by a whopping 80 places to meet the Prime Minister's target in just one year.

The latest rankings do not recognise several reform measures taken by the government to implement ease of doing business in the country and the government will engage with the World Bank on these issues, Department of Industrial Policy and Promotion (DIPP) Secretary Ramesh Abhishek told reporters.

The report takes into account reforms implemented only up to June 1, while several measures taken by the government came into effect after that, Abhishek added.

The World Bank ranks countries on 10 parameters – starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority shareholders, paying taxes, enforcing contracts, trading across borders, and resolving insolvency.

Among the 10 parameters, India’s position deteriorated on all, barring the categories of getting electricity, enforcing contracts and registering property. The country continued to improve the most in getting electricity connection, with its ranking soaring from 51st last year to 26th in the latest report. However, the two other parameters recording positive movement – enforcing contracts and registering property – still place India at 172nd and 138th places, respectively, among all nations.

India’s ranking continued to weaken in areas of strength such as protecting minority investors (from 10th position to 13th position) and getting credit (from 42nd position to 44th).

New Zealand bagged the top spot in the rankings followed by Singapore, Denmark, Hong Kong and South Korea.

While China’s ranking improved by six notches from 84th to 78th, Pakistan fell an equal number of positions to reach 144th position from 138th earlier. Every other country in the BRICS (Brazil, Russia, India, China and South Africa) grouping had a higher ranking than India in the 2017 report.

For India, the ranking covers data from Delhi and Mumbai, with weights of 53 per cent and 47 per cent, respectively. The World Bank sources feedback from users of government services, who had not been aware of various reforms being implemented, Abhishek said. DIPP will engage much more with users and make changes to the feedback system, he added.

Important reforms by the government not considered by the World Bank include enactment of the insolvency and bankruptcy code and introduction of the online single-window system for building approvals in both Delhi and Mumbai. India’s position on construction permit approval remains dismal, having fallen to 185 from 184.

In terms of starting a business, India’s ranking went down to 155th position from 151st last year. This was also true for registering a property. On resolving insolvency, the country’s position slid a single rank to 136 from 135 last year.

Confederation of Indian Industry director-general Chandrajit Banerjee said the government has undertaken a strategic and comprehensive reform package over the past two-and-a-half years, which has greatly contributed to strengthening investor confidence.

The establishment of commercial divisions in the high courts of Delhi and Mumbai to deal with commercial cases above Rs 1 crore has helped raise the rank in ‘enforcing contracts’. It has become faster and cheaper to obtain electricity connection in these two cities, which have contributed to a jump in the rank on ‘getting electricity’ by as much as 111 positions in two years.