DOING BUSINESS IN INDIA, EASIER BUT NOT AS EASY

DOING BUSINESS IN INDIA MAY BE EASIER BUT NOT AS EASY AS IT SHOULD BE The chest thumping that accompanied the Modi government’s celebration of India having moved up 30 positions on the World Bank’s Doing Business 2018 rankings was understandable because it came as a silver lining to what has generally been dismal economic news—a slowdown, sluggish job creation and dwindling investment, particularly in manufacturing. Then there were the controversies surrounding a hasty demonetisation policy and the introduction of a new bug-ridden goods and services tax system. In the context of these depressants, a 30-position gain on a survey as credible as World Bank’s may provide good reason for elation. It is also good reason to feel quite chuffed about. But India’s position on the ranking of 190 countries has to be viewed in another context—that of relativity. Its rank on that list does not owe only to how it fared on the 10 parameters or topics that World Bank employs to arrive at its rankings but equally on how others fared on them. World Bank’s Doing Business 2018 rankings are its 15th annual survey and is based on surveys of entrepreneurs in each country to gauge their assessment on aspects that include the ease with which one can start a business, get credit, register property, pay taxes, enforce contracts, and so on. Most of these are affected by reforms and changes in rules and law that governments introduce and it is to India’s credit that some of the changes brought about by Prime Minister Narendra Modi’s government have had their impact on how India has fared in the survey. Programmes such as the Make In India campaign to encourage foreign and domestic investment in manufacturing by simplifying processes, StartupIndia to help facilitate setting up of small businesses, or even Skill India, which aims at equipping India’s vast population of youth with employable skills, are some initiatives that may have had an impact on how India fared on the World Bank rankings. However, India’s performance in the survey has to be viewed in a context that is relative to other economies. At No. 100, India is a market where it is easier to do business than it is in tiny countries such as Fiji and Haiti, less developed countries such as Namibia, Nigeria, Nepal, or Sri Lanka, and obviously risky destinations such as the West Bank & Gaza, Iran and Iraq. India could perhaps take credit for the fact that the ranking places it higher than it does Brazil, which at 125 is, like India, a part of the BRICS set of emerging economies, or that its neighbour and adversary, Pakistan, lags behind at 145 but the facts are that it is still way behind China (No. 78), with which it sometimes tries to benchmark itself, and that even Colombia, Indonesia, Chile and Turkey are places where it is easier to do business than it is in India. The point is that there is a long way to go. A close scrutiny of the World Bank survey shows that on some parameters India still languishes towards the bottom. Its system for granting permissions is still quite forbidding. On the ease of dealing with construction permits, it is ranked at 181 among the 190 countries covered. On the ease of property registration, which often involves myriad paperwork, it ranks 154. But perhaps most alarming is how entrepreneurs perceive the enforcement of contracts in India. The rule of law is often taken for granted in business-friendly economies but in India it can still pose a serious risk. On the World Bank’s ranking, India comes in at a low 164 rank on that parameter, certainly not a position that would enamour it to potential investors, particularly those who may have a choice of going elsewhere where contracts are enforced better. It is worth noting that the World Bank’s Ease of Doing Business rankings come with some other sorts of surprises. A deep dive into the data reveals how on certain parameters, conventional beliefs get upturned. Take enforcement of contracts, for example. Among the 17 Indian cities covered by the survey, Hyderabad, Patna, Ludhiana and Guwahati rank higher than Mumbai, Delhi, Gurgaon, and Bangalore. And while it is easiest to start a business in Delhi (it ranks No. 1 among the 17 Indian cities ranked), Bangalore is No. 17, Mumbai 12 and Ahmedabad 14. Data can be sliced, diced and analysed ad infinitum but these two examples could point to the lack of uniformity across India: there are places in India where some aspects of doing business might be easier but other aspects might not. There is also the matter of perception. Well-packaged programmes that the Modi government has launched (viz. Make In India, Startup India, Skill India, etc.) also create hype and influence the perception of entrepreneurs who are respondents in surveys such as World Bank’s but in the end it is what changes actually happen in practice that matters. Anyone diving deep into the data behind the Doing Business 2018 report can see that the average time and cost it takes to negotiate the procedures, obtain permissions and licences can still weigh down entrepreneurial efforts in India. All of this implies that it may be early to celebrate India’s “business friendliness”. But it definitely marks the beginning of a journey. Once it is glitch-free, the new uniform nationwide tax system for goods and services ought to make it easier for businesses to grow; the move towards cashless transactions, which was triggered by demonetisation, will have benefits for trade and commerce in general; and a government that kick starts investment which, in turn, has a multiplier effect on the rest of the economy, would be a facilitator for business. The most important signal from India’s better showing on these rankings is an endorsement that things may have begun improving. For the government and its policy makers what that means is not just that India is on the right path to reform but that it must keep on following it. // ]]>

Rahul brings Ghalib into economy debate

Congress vice-president Rahul Gandhi’s sharp criticismof the government—including a Ghalib spoof— over a World Bank report on ease of doing business and the state of economy on Wednesday triggered a bitter war of words between him and the BJP.

While Gandhi rejected India’s improved rank in the latest World Bank report on ease of doing business, asserting the government’s demonetisation and GST decisions wreaked havoc with the economy, the BJP hit back, saying the Congress leader was clueless on the subject. Addressing a public meeting in poll-bound Gujarat, Gandhi said: “Jaitleyji sits in his office and listens to outsiders. I would request him to visit small traders or mid-sized business persons and ask them whether ease of doing business has improved for them or not. “The entire country will scream in unison that there is no ease of doing business. Your demonetization and GST have hit us hard,” he told the gathering of mostly farmers and small traders in Jambusar town of Bharuch, the home district of Congress chief Sonia Gandhi’s political secretary Ahmed Patel. “What is spoken abroad is truth for this government but what the poor say in India is farce,” he said, referring to the World Bank’s Ease of Doing Business report released on Tuesday that saw India jump 30 ranks to number 100. He said no section of the society in Gujarat and elsewhere was happy with the Modi government’s sudden note ban last year and tardy implementation of the Goods and Services Tax (GST). “They have destroyed the economy by demonetization and have ensured that the GDP fell by 2 per cent. But he (Prime Minister) did not stop at that. He introduced GST with multiple tax slabs and a high rate of 28 per cent in one go. “I have given GST a new name. Gabbar Singh Tax. It means that poor who sweats it out sees his money snatched away from him,” the Congress leader said. Jaitley shot back at Rahul’s tweet, pointing out the difference between the Congress-led UPA and BJP-led NDA governments. “The difference between the UPA and NDA — the ease of doing corruption has been replaced by the ease of doing business,” the Finance Minister tweeted. Replying to Gandhi’s charges, the BJP in Delhi said the Congress leader was exposing his lack of knowledge on economy with his “shallow statements”. “Should I presume that he has absolutely no knowledge about what world organisations like the World Bank have to say about India’s economy,” said Union IT and Law Minister Ravishankar Prasad. Prasad said Gandhi ought to know that India had been in the range of 130-140 previosly. “In the last two years, we made it to 131 and 130 spot. This year, we have jumped 30 points to 100. Does he know that this is the highest jump any country has made in World Bank’s ease of doing business ranking? He doesn’t do any home work, anyway. Those who do it for him also don’t have their facts correct,” the minister said. He also mocked at Gandhi’s likely elevation to head the Congress, saying he owed this to “the family he belongs to”. (IANS) // ]]>

India in top 100 of 'Ease of Doing Business' ranks

It has never been easier to do business in India. India welcomes the world to explore economic opportunities our nation has to offer!

— Narendra Modi (@narendramodi) October 31, 2017 “India has moved to 100th rank as a result of a number of reforms by the government. India is moving ahead in absolute ranking as well,” Annette Dixon, Vice President, South Asia region, told reporters earlier in the day. It will be only over a period of 1-3 years that the full impact of GST reform on ease of doing business can be assessed, she added. The report captures reforms implemented in 190 countries between the period June 2, 2016 to June 1, 2017.

Getting into Top 50 within reach: Jaitley

Getting into the top 50 countries is a distinct possibility over the short term, Finance Minister Arun Jaitley said on Tuesday. “We jumped over 30 places in three years, and as Prime Minister Narendra Modi had said about setting a target to get among the top 50… I believe it is eminently doable,” Jaitley told reporters here following the release of World Bank Group’s latest report ‘Doing Business 2018: Reforming to Create Jobs’. “In 2014, we were ranked 142, and in the last two years India has gone from 131 to 130,” he said. “This is the highest jump any country has made in the ease of doing business rankings and is significant for India for our efforts on the 10 rankings’ criteria,” Jaitley said. “These 10 parameters are so tough that you don’t get credit for the reforms introduced till you actually see their results on the ground,” he said, adding that the World Bank’s cut-off date for considering performance is June of every year. Listing the areas which had boosted India’s ranking, Jaitley said that on “protection of minority investors” India had come up to fourth place on account of reforms like bringing in the Companies Act and setting up of the National Company Law Tribunal (NCLT).  The report recognises India as one of the top 10 improvers in this year’s assessment, though the report does not take into account the Goods and Services Tax (GST) rolled out on July 1. “The biggest jump comes in the area of taxation reforms where we were ranked 172 last year and have moved up 53 places to be at 119 this year,” Jaitley said, adding that India can hope to get credit for GST in the rankings for “subsequent years”. “India made paying of taxes easier by requiring that payments are made electronically to the Employees Provident Fund and introducing a set of administrative measures for easing compliance with corporate income tax,” the report said. “India, with eight reforms, was one of this year’s top 10 improvers worldwide and the leading regional performer. This is the first year that India is in the top 100 economies globally,” it added. The Finance Minister noted that both on “ease of getting credit” and “electricity connections” India has come up to the 29th position this year. “On resolving insolvency, we were 136… then we brought in the Bankruptcy Code and now we have climbed 33 places to 103rd position,” he said.
“India has moved to 100th position as a result of a number of reforms by the government. India is moving ahead in absolute ranking as well,” Annette Dixon, Vice President, South Asia region, World Bank, told reporters earlier in the day. “India made paying taxes easier by requiring that payments are made electronically to the Employees Provident Fund and introducing a set of administrative measures easing compliance with corporate income tax,” the report stated. The report noted that India has adopted 37 reforms since 2003 with nearly half of these reforms having been implemented in the last four years. “India, with eight reforms, was one of this year’s top ten improvers worldwide and the leading regional performer. This is the first year that India is in the top 100 economies globally,” it said. “India is the only large country this year to have achieved such a significant shift. India’s score went from 56.05 in doing business to 60.76. This means last year India improved its business regulations in absolute terms – indicating that the country is continuing its steady shift towards best practice in business regulation,” the World Bank said in a statement. Dixon said, “Having embarked on a strong reform agenda to improve the business improvement, the significant jump this year is a result of the Indian government’s consistent efforts over the past few years. It indicates India’s endeavour to further strengthen its position as a preferred place to do business globally.” This year, the indicators on which reforms were implemented in Delhi and Mumbai, the two cities covered by the report are: starting business, dealing with construction permits, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. “India performs well in the areas of protecting minority investors, getting credit and getting electricity. The country’s corporate law and securities regulations have been recognised as highly advanced, placing India in 4th place in the global ranking on protecting minority investors,” it said. The time to obtain an electricity connection in Delhi has dropped from 138 days four years ago to 45 days now, almost 20 days less than the 78 days average in Organisation for Economic Co-operation and Development (OECD) high-income economies. While there has been substantial progress, India still lags in areas such as starting a business, enforcing contracts and dealing with construction permits, the report notes. The time taken to enforce a contract is longer at 1,445 days than it was 15 years ago. In starting a business, India has reduced the time needed to register a new business to 30 days now, from 127 days 15 years ago. However, the number of procedures is still cumbersome for local entrepreneurs who still need to go through 12 procedures to start a business in Mumbai. “Tackling these challenging reforms will be the key to India sustaining the momentum towards a higher ranking. To secure changes in the remaining areas will require not just new laws and online systems but deepening the ongoing investment in the capacity of states and their institutions to implement change and transform the framework of incentives and regulation facing the private sector,” Junaid Ahmand, Country Director India, World Bank said. Commenting on the World Bank’s report, Chandrajit Banerjee, Director General, Confederation of Indian Industry (CII), said, “The huge improvement in ranking and score will immediately boost investor sentiments. The latest report validates the commitment of the government to fast-tracking economic reforms, addressing red tapism and facilitating business. The surge in ranking by as much as 30 places is an outcome of key reforms including digitisation of processes, enhancing tax payment and access to credit. “It is a matter of great pride that India has been named as among the top ten reforming economies in 2016-17 with as many as eight reform areas out of ten. In fact, India is well on its way to emerge as a global leader in protecting minority interests and is currently ranked 4th in the world.” Banerjee, however, rued that one of the most important reforms — GST — has not been considered in this year’s report owing to cut off date. “CII is confident that on the back of GST and other reforms that are planned, India would see an equally impressive improvement next year. It is not too distant in the future that India would break into the league of top 50 countries,” he added. (IANS) // ]]>