Ease of doing business: Will India crack the club of top 50 nations?

India’s rank inched up by just one position to 130 in last year’s Doing Business Survey by the World Bank.

Days before the World Bank is set to bring out its flagship report assessing ease of doing business, government officials pinned their hopes on reforms in securing construction permits, starting a business and resolving insolvency, to push India’s rank higher.

However, senior voices in the government as well as policy experts are divided over whether the country can finally crack the club of top 50 nations by 2018, which has remained Prime Minister Narendra Modi’s aim.

The World Bank is set to bring out the Doing Business Survey 2018 on October 31.

On Thursday, the Department of Industrial Policy and Promotion (DIPP) secretary Ramesh Abhishek said that India’s position is bound to improve, owing to the significant number of steps taken by the government over the past year.

India’s rank inched up by just one position to 130 in last year’s Doing Business Survey by the World Bank.

This is the same as the year before, but qualifies for a single upward movement in rank as India’s position in 2016 has been revised to 131 by the World Bank.

Therefore, India will have to improve its position by a whopping 80 places to meet the Prime Minister’s target in just one year.

Last year, the government had argued that a series of reforms went unnoticed since those reforms only instituted till June 1, 2016, were taken into account by the World Bank.

It had also pointed out that the multilateral body bases its report on feedback from users of government services such as traders, industrialists and the general public, who were unaware of these reforms.

Since then, the DIPP has upgraded awareness campaigns about reforms implemented.

“The same may happen this year as well. There is logically no way that we will be able to see such as significant jump in rankings, no matter the spectrum of reforms instituted by us,” a senior government official said.

He alluded to the enterprise survey on ease of doing business, conducted by the NITI Aayog and Mumbai-based IDFC Institute, which was released in August and showed that it still takes 118 days on an average to set up a business in India.

The findings of the Enterprise Survey were at sharp variance with the World Bank report, which showed that it took just 26 days to set up a business in India in 2016.

“While the World Bank report takes into account only the metropolises of Mumbai and Delhi, the Aayog report mapped the whole country, the sharp difference across the country show that the overall pace of business reforms are slowing down,” said the above mentioned official.

The Enterprise Survey also showed that it took 118 days on an average to start a business in the country with wide interstate differences.

Tamil Nadu, the best-performing state, managed to do this in 63 days.

However, this year, the government has been pushing reforms taken to improve the efficiency in granting construction permits, starting a business and resolving insolvency.

It is also banking on reforms in trade infrastructure such as the introduction import data processing and monitoring system becoming active since then will help, a senior official said on condition of anonymity.

Previous commerce and industry minister Nirmala Sitharaman had said the government had taken about 7,000 different measures to boost the ease of doing business.

After cutting the number of action points to less than 300, the DIPP introduced sub-points, taking the total to nearly 680 reforms.

In contrast, in 2016, states had to implement 340 reforms and the rankings were based on the outcome achieved.

Apart from this, the government, in 2017, has drawn focus on specific sectoral reforms at the state level in areas such as transport, state excise, licences for health, drug, pharma, and fertiliser.

The World Bank ranks countries on 10 specific parameters.

Among these, India’s position had deteriorated in 2016 on all counts, 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 51 last year to 26 in the latest report.

However, the two other parameters recording positive movement - enforcing contracts and registering property - still place India at 172 and 138 places, respectively, among all nations.

Photograph: Danish Siddiqui/Reuters