Why is India slipping in ease of doing business rankings?

Even after two decades of economic reforms, India continues to falter on various Ease of Doing Business sub-indices such as starting a business, dealing with construction permits, getting electricity, registering property, paying taxes, trading across border, enforcing contracts or resolving insolvency. This year's annual study of the regulatory environment for small and medium-sized businesses from 189 countries, by the World Bank Group, is no different.

India figures at the bottom of the pile in most indicators. Its overall rank in Ease of Doing Business has dropped from 131st position in 2013 to 134th in 2014 (to some extent on account of expansion in a number of countries under study). Against the key parameter of starting a business, India is worst off among the BRIC economies. It is in 179th position, while Russia is at 88th, Brazil at 123rd and China at 158th. In terms of the number of procedures and time required to start a business, India is below average among South Asian economies (eight countries).

The average number of procedures for starting a business is seven among South Asian economies, it is 12 for India. The average time taken to start a business in South Asia is 16.4 days, while it is 27 days for India. An entrepreneur in India has to deal with 35 procedures to get a construction permit, while in South Asia its less than half fat 16. An SME businessman in India would take 1,420 days to enforce a contract. The South Asia average is 1,075 days.

Even though several countries, including India and China, have expressed concerns about the country ranking in the report, an independent review panel appointed by the World Bank has suggested changes in the methodology adopted.

Nevertheless, faced with criticism, Indian government has appointed a committee - headed by former Sebi Chairman M Damodaran - to suggest regulatory measures to ease the regulatory environment.