Doing business remains tough in India: World Bank

Ranks 132 among 185 countries, position for 2013 unchanged from 2012

 India and China were the only two countries in BRIC members to rank in the top 50 improvers since 2005.

“Both implemented regulatory reforms particularly in the early years covered by Doing Business”.

After establishing its first credit bureau in 2004, India focused mostly on simplifying and reducing the cost of regulatory processes in such areas as starting a business, paying taxes and trading across borders, said Augusto Lopez-Claros, Director, Global Indicators and Analysis, World Bank Group.

The report noted that India reduced the time required to obtain a building permit from 227 days in 2012 report to 196 days in the latest report. The report attributed this to establishing strict time limits for pre-construction approvals by India.

“India implemented strict time limits at the municipality for processing building permits”, the report said.

However, India’s ranking declined one notch to 182 in ‘Dealing with construction permits’ in the latest report from 181 in the Doing Business 2012 report.

It takes 67 days in getting electricity in India, said the report, and India ranks 105 in getting electricity, which involves 7 procedures. In terms of dealing with construction permits, India is ranked 182 and it takes 196 days for that, involving 34 procedures. However the report also named India among countries that reduced time for processing permits in 2011-12.

India was the second most difficult country to enforce contracts. Ranked 184, India takes 1,420 days to enforce contracts.

Report cited a study which said simpler entry regulation and labour market flexibility leads to better growth in Indian states. The number of companies in the informal or unorganized sector decreased and real output grew in states compared to the ones with less flexible regulations.

Another study was referred to conclude that in India the establishment of specialized debt recovery tribunals had a range of positive effects, including speeding up the resolution of debt recovery claims, allowing lenders to seize more collateral on defaulting loans, increasing the probability of repayment by 28% and reducing interest rates on loans by 1–2 percentage points.

Doing Business analyzes regulations that apply to an economy’s businesses during their life cycle, including start-up and operations, trading across borders, paying taxes, and protecting investors. The aggregate ease of doing business rankings are based on 10 indicators and cover 185 economies.