India is in the middle of what appears to be an ambitious process of reforms.
It gives a good signal about the way things are moving in India.
New Delhi/ Nagpur: For a good news to all countrymen, the NDA government, which has of late drawn flak for slow-paced reforms, takes India jumping up 4 spots to reach 130 in the ranking of countries based on ease of doing business. Last year, the rank stood at 142, which has been adjusted this year to 134, said media reports.
The much-awaited World Bank ranking, which was released yesterday, has made some positive remarks about the initiatives undertaken by the NDA government in the last one year to ease up the processes of doing business.
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Sat 21 Dec. 2024
This comes as a major relief for Prime Minister Narendra Modi and Finance Minister Arun Jaitley, who have been battling a lot of criticism on the reforms front.
Moreover, the jump comes after the consistent slide the country has witnessed in the the World Bank ranking.
Though the rank is nowhere near PM Modi’s target of 50, the improvement shows that his efforts are getting paid off well.
According to media reports, World Bank’s chief economist and senior vice-president Kaushik Basu commented that the 12 spots jump by an economy of the size of India is a “remarkable achievement”.
“It gives a good signal about the way things are moving in India,” he has been quoted as saying in the report.
Here are the key takeaways from the World Bank report:
India scores in protection of minority investors: The World Bank has measured 10 parameteres to arrive at the ranking. Here is how India ranks in each of these: a) starting a business (India at 155); b) dealing with construction premits (183); c) getting electricity (70); d) registering property (138); e) getting credit (42); f) protecting minority investors (8); g) paying taxes (157); h) trading actross borders (133); i) enforcing contracts (178); and j) resolving insolvency (136). As is evident, India’s ranking is the best in protecting minority investors. The other better ones in getting credit and getting electricity.
Days to start up down to just 29: According to the report, India stands out in South Asia in taking steps to put in place better and more efficient business regulation. Over the period of 11 years from 2004 to 2015, the country has reduced the days to start a business from 127 to just 29.
The report notes that in 2004, the country cut the time for obtaining a permanent account number for companies; in 2006, it sped up the process for obtaining a tax registration number; in 2010, it established an online system for value added tax registration and replaced the physical stamp previously required with an online version.
The NDA-2 steps: The biggest improvement in the processes happened in the past year. The report notes that India eliminated the paid-in minimum capital requirement to start a business and also streamlined the processes to start up.
The regulatory reform launched in 2014, aimed at making it easier to do business, “represents a great deal of effort to create a more business-friendly environment, particularly in Delhi and Mumbai,” the report has said.
It makes a special mention of the amendments made to the Companies Act in May 2015 that eliminated the minimum capital requirement. “Now Indian entrepreneurs no longer need to deposit 100,000 Indian rupees ($1,629) — equivalent to 111 percent of income per capita — in order to start a local limited liability company,” the report says.
The changes to the Act also ended the requirement to obtain a certificate to commence business operations, saving business founders an unnecessary step and five days, says the report.
Faster electricity connection: The government has also taken steps to make the process for getting a new electricity connection simpler and faster. “Toward that end the utility in Delhi eliminated an internal wiring inspection by the Electrical Inspectorate — and now instead of two inspections for the same purpose, there is only one. The utility also combined the external connection works and the final switching on of electricity in one procedure,” it said.
The improvement in Mumbai seems to be more noteworthy than Delhi’s. According to the report, the Mumbai SEB combined many procedures to cut the time taken to get an electricity connection for a business.
“The utility in Mumbai reduced the procedures and time for connecting to electricity by improving internal work processes and coordination. It combined several steps into one procedure — the inspection and installation of the meter, the external connection works and the final connection. Now companies can get connected to the grid, and get on with their business, 14 days sooner than before,” the report has said.
Pre-registration processes simpler: The country also figures among those that simplified preregistration and registration formalities such as publication, notarization, inspection and other requirements.
More key reforms under way: Apart from these steps taken there are more reform in the pipeline. The government is developing a single application form for new companies and introducing online registration for tax identification numbers.
In the key area of construction permits too, the government has initiated reforms by starting work on setting up a single-window system in Mumbai. Once implemented, this is expected to reduce the bureaucratic burden.
Moreover, online systems for filing and paying taxes are being further improved to simplify tax compliance, the report notes.
As Lopez Claros, director of the Global Indicators Group World Bank, said This comes as a major relief for Prime Minister Narendra Modi and Finance Minister Arun Jaitley, who have been battling a lot of criticism on the reforms front.
Moreover, the jump comes after the consistent slide the country has witnessed in the the World Bank ranking.
Though the rank is nowhere near PM Modi’s target of 50, the improvement shows that his efforts are getting paid off well.
According to media reports, World Bank’s chief economist and senior vice-president Kaushik Basu commented that the 12 spots jump by an economy of the size of India is a “remarkable achievement”.
“It gives a good signal about the way things are moving in India,” he has been quoted as saying in the report.
Moreover, online systems for filing and paying taxes are being further improved to simplify tax compliance, the report notes.
As Lopez Claros, director of the Global Indicators Group World Bank, said India is in the middle of what appears to be an ambitious process of reforms.
