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Uphill climb but surmountable: World Bank

Shares India's optimism to break into the top 100; Centre hopes to touch 50 in the next two years

BS Reporter  |  New Delhi 

Uphill climb but surmountable: World Bank

The World Bank on Wednesday shared India's optimism to improve its ranking to be in top 100 countries in terms of ease of doing business, on the back of planned measures such as introduction of goods and services tax (GST). The Bank, however, said it is a difficult task.

India's position had stood at 130 in World Bank's Doing Business 2016 report. India's rank was at 142 in Doing Business 2015, which was revised to 134 due to a changed methodology.

Finance Minister Arun Jaitley said the improvement in ranking did not fully reflect the reforms initiated and the position will improve further next year. "I am grateful that the World Bank has recognised that India is now becoming an easier place to do business," he said.

CONSTRUCTION PERMITS
  • India: 191.5 days to complete 34 procedures
  • South Asia: 195 days to complete 15 procedures
ELECTRICITY
  • India: 90 days to complete 5 procedures
  • South Asia: 142 days to cover 5.5 procedures
TAXES
  • India: 243 hours a year to pay taxes, involving 33 payments per annum
  • South Asia: 299 hours to pay taxes
SETTING UP BUSINESS
  • India: 29 days to complete 13 procedures
  • South Asia: 15 days to complete procedures

It should be noted that the World Bank rankings took into account measures taken by countries till May 31. In India's case, it meant a shade over a year of the Narendra Modi government.

On Monday, Industry Secretary Amitabh Kant had told Business Standard that India's rankings would improve by 30-40 places next year. The government also hopes the country's rankings would improve to 50th place in the next two years.

World Bank's Senior Vice-President and Chief Economist Kaushik Basu had said on Wednesday it was not impossible for India to be among the top 100 countries in ease of doing business next year, if it continued with its set of planned economic reforms, including the crucial GST, and cut down on bureaucratic cost.

"If the changes that we saw thus far can be kept up and strengthened a little, it is not impossible for India to be in top 100 by next year," Basu was quoted as saying by PTI from Washington.

Basu, who served as the economic advisor during the previous Manmohan Singh government, described this as a "remarkable achievement" for a country of the size of Indian economy and that too in the first year of reform.

Responding to a question, Basu said there are three areas where India needs reforms and initiatives. "First, India needs to cut down transactions costs and bureaucratic hurdles it places on individuals and small enterprises. Second, India needs better infrastructure - roads, railways, ports."

The third area, according to him, is inclusiveness: "Done well, it can yield rich dividends for the economy."

World Bank country director Onno Ruhl said in Delhi that Russia took four years to get to 30 from 182. "In case of India, it is doable, based on efforts that are currently underway."

India's two worst performance parameters, according to him, are getting construction permits and enforcing contracts.

He cited the instance of online single window system for construction permits in Delhi and Mumbai to say that the World Bank expects improvement next year in these two parameters.

On enforcing contracts, Ruhl said, "This is notoriously difficult because it deals with the judicial system."

He cited the example of establishment of commercial benches in courts in Maharashtra and Delhi, to buttress his point that the country is moving on these two parameters as well.

The World Bank Ease of Doing Business report is based on Mumbai and Delhi business scenarios. Ruhl said there are no plans to expand it beyond these two cities.

India moves up four places to 130
India, which has jumped four places from 134 to 130 on the latest World Bank Ease of Doing Business rankings, fares better on some indicators than other countries in South Asia.

It takes 191.5 days to complete the 34-odd procedures covering construction permits in India. In Mumbai, though, it takes 147 days compared to 231 days in Delhi. By comparison, it takes 195 days to complete the 15 procedures on average in South Asia. Similarly, it takes 90 days to complete five procedures to get electricity in India. For Mumbai, it is lower at 53 days while for Delhi, it is 123 days. In contrast, it takes 142 days to cover on average 5.5 procedures to get electricity in South Asia.

India fares better on ease of paying taxes, too. It takes 243 hours a year to pay taxes in India, involving 33 payments a year. In contrast, it takes 299 hours to pay taxes in South Asia. Similarly, it takes fewer days to register a property in India (47 days) compared to south Asia (98). On the number of days it takes to start a business, India fares poorly despite jumping nine ranks to 155 from 164 in the previous year. It takes 29 days to complete the 13 procedures to start a business. In comparison, it takes 15 days to complete the procedures to set up a business in South Asia. On enforcing contracts, too, India ranks lower than South Asia. It takes 1,420 days to enforce contacts in India, which the World Bank estimates costs roughly 40 per cent of the total claim. In comparison, it takes 1,076 days to enforce contracts in South Asia, which costs 30 per cent of the total claim. Similarly, it takes more time to resolve insolvency in India. The entire process takes 4.3 years, costing nine per cent of the total estate cost, with a recovery rate of 25.7 per cent. In contrast, in South Asia, it takes 2.6 years or 10 per cent of the cost of estate.

First Published: Thu, October 29 2015. 00:23 IST
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