India Jumped into Top 100 in Ease of Doing Business | 2018

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The biggest leap the country has ever seen in the history of World Bank’s ease of doing business is the big jump in rankings. India jumped 30 spots to secure a place among the top 100 countries in 2018.

With such a sudden increase, India becomes the first country to record such an enormous growth regarding ease of doing business. “Evaluation for the ease of doing business ranking is very tough. The ranking does not reflect the reform measures unless the outcome is visible on the ground,” finance minister Arun Jaitley told journalists.

Though the former Indian chief statistician Pronab Sen said that “This report takes into account only Delhi and Mumbai. To get a true picture of doing business in India, manufacturing hubs such as Tamil Nadu and Gujarat should have been looked at. Also, the report only looks at processes and not at numbers, so disruptions such as demonetization go unnoticed.”

The opposition party, Congress doesn’t seem to be much impressed. A statement by one of the Congress chief spokesperson was that “Ease of doing business has become cease of doing business for MSMEs under Modi government,” referring to small and medium businesses that hurt from last year’s demonetization and a new goods and services tax rolled out in July.

On what parameters ranking is decided?

There are 10 basic parameters, carrying equal weight under which the rankings for the ease of doing business is decided. India has improved its standing in 6 out of these ten indicators. The indicators are listed below:

  1. Starting a business
  2. Dealing with construction permits
  3. Getting electricity
  4. Registering property
  5. Getting credit
  6. Protecting minority investors
  7. Paying taxes
  8. Trading across borders
  9. Enforcing contracts
  10. Resolving insolvency

Digitalisation and Business

How India becoming digital is affecting the rankings? The main impact of digitalisation is seen on starting a business. With digitalisation, a lot of new start-ups have emerged in India. One of the prime reasons for the increase in ranking is the introduction of the online application system. The merger of pleas for profession tax (PT) and value-added tax (VAT) in Mumbai and the merging of applications for PAN and Tax Account Number (TAN) has significantly helped cut down the time taken to start a business by entrepreneurs.

India ranks 181 in Construction Permits and 29th in providing credit which is a clear indication of improvement in providing access to credit. These changes include amendments in policies for relief to the automatic stay for secured creditors during reorganization procedures, changes in rules on the priority of secured creditors outside reorganization proceedings and adopting a new insolvency and bankruptcy code as mentioned above.

Other than this, the biggest gap is covered in the taxation records. India has moved up 53 places to rank 119th. The Taxpayer-friendly corporate income tax regulations and electronic payments to Employees Provident Fund electronically have helped in the rankings.

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