India Jumps to 77th Position in World Bank Ease of Doing Business Rankings 2019

Impact: Positive (Business Sentiment)

Brief: India's position in the global Ease of Doing Business ranking has further improved by 23 positions and the country is currently ranked at 77th. The main factors that helped in this leapfrogging are 'getting electricity', 'credit' and 'protecting minority investors'. Expansion in electricity network through 'Electricity for All' scheme has helped the industrial sector as well especially the vulnerable SME sector. Furthermore, introducing electronic application system in various activities has improved transparency and reduced time requirements.

India's position in the global Ease of Doing Business ranking has further improved by 23 positions and the country is currently ranked at 77th. The rankings come from the World Bank's DB survey, conducted as an annual survey to assess a country's orientation and sensitivity towards business. In other words, the survey assesses the preparedness of an entire eco-system built to nurture commercial activities.

India and China are the two only major economies in top 10 improvers. This indicates these two major economies successfully initiated an aggressive reform agenda to make business environment more investor friendly. It is known that in the last two years, India particularly improved 52 ranks in the said survey.

The main factors that helped in this leapfrogging are 'getting electricity', 'credit' and 'protecting minority investors'. Expansion in electricity network through 'Electricity for All' scheme has helped the industrial sector as well especially the vulnerable SME sector. Furthermore, introducing electronic application system in various activities has improved transparency and reduced time requirements. This can be explained by the introduction of the online application system in getting construction permits and consequently sharp improvement has been noticed in the 'Dealing with Construction Permits' category.

Similarly, 19-point improvement has been observed in 'Trading Across the Border' category. This sharp improvement is a result of bringing down the documentary completion time to less than 100 hours in FY18; this requirement was 250 hours a year earlier. The materialistic improvements have encouraged foreign entities to do business with India.

Since Indian government is aiming to be within the top 50 countries in the short term, there is a need to work on the shortcomings such as Starting a Business, Registering Property, Enforcing Contracts, and Paying Tax. A further simplifying of the process for initiating a business will help the startup entities as well. The inefficiency in licensing is another factor noticed by the World Bank as this is leading to an unproductive allocation of resources. This is because the situation results in a fall in total factor productivity.

Topics DB 2019 Rank DB 2019 Score DB 2018 Score % Point Change
Overall 77 67.23 60.6 6.63
Starting a Business 137 80.96 73.9 7.06
Dealing with Construction Permits 52 73.81 39.69 34.12
Getting Electricity 24 89.15 88.64 0.51
Registering Property 166 43.55 43.09 0.46
Getting Credit 22 80 75 5.00
Protecting Minority Investors 7 80 80 0
Paying Taxes 121 65.36 65.23 0.13
Trading across Borders 80 77.46 58.56 18.90
Enforcing Contracts 163 41.19 41.19 0
Resolving Insolvency 108 40.84 40.75 0.09

Source: World Bank

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