Ease of doing biz: Govt confident India will rank in 80s

World Bank likely to take GST, Insolvency and Bankruptcy Code roll-out into account but traders complain about unpaid tax credit

The government is confident that India would rank in the late 80s in the World Bank’s annual ease of doing business report — up from 100 last year — on account of implementation of the goods and services tax (GST) and the Insolvency and Bankruptcy Code (IBC).

But, traders, whose voices will be reflected in the rankings slated to be released on October 31, claim the government’s optimism does not reveal ~80-100 billion Integrated GST refunds they are yet to get.

Last year, India had improved its position by 30 spots. This year, the World Bank will consider reforms introduced till May 1.

“The time taken to file and pay the four taxes subsumed by the GST has gone down from 105 hours to 36 hours,” said a senior Department of Industrial Policy and Promotion (DIPP) official, adding: “We expect a much better performance this year, in the category of paying taxes, besides on such parameters as trading across borders and resolving insolvency.”

Commerce and Industry Minister Suresh Prabhu had last week also hinted the government was expecting a better ranking.

Not everyone shares the government’s optimism.

The Federation of Indian Export Organisations (FIEO) has pointed out that states continue to refuse payment of input tax credit, which has climbed up to ~150 billion.

The FIEO has blamed pending GST returns leading to a lack of working capital, as the primary reason exporters cannot take the benefit of a weaker rupee.

Getting states to pay up has been difficult.

Andhra Pradesh, Uttar Pradesh, Bihar, and Chhattisgarh have said they are out of funds, FIEO

The Federation of Indian Export Organisations has pointed out that states continue to refuse payment of input tax credit, which has climbed up to ~150 billion

President Ganesh Kumar Gupta said.

This continues to affect small, medium and micro traders, who are still overlooked by banks while providing trade credit.

On resolving insolvencies, the government is set to claim the IBC procedure as a major hit among companies stuck in gridlock of the earlier liquidation process. It estimates that claimants have realised almost 59 per cent of claims.

However, a report by Debtwire Asia has pointed out that on average, it took 275 days to approve a resolution plan from the time the corporate debtor was admitted under the Corporate Insolvency Resolution Process of the IBC. The government’s times of ships. estimate is 233 India also lagged in areas days. such as starting a business,

On trading across borders, enforcing contracts, and dealing India’s rank had taken a hit with construction permits. last year. This year, the government While India’s rank in plans to showcase dealing with construction round-the-clock operations of permits was a low 181 among major ports, inauguration of a nations, it ranked 164 in single-window interface for enforcing contracts. exports, and direct port delivery Last year’s report had not services to reduce turnaround taken into account demonetisation, which led to widespread disruption in business and also pulled down economic growth. It did not consider the GST either.

Junaid Ahmad, country director of the World Bank, had said they were not factored in because the report only took into account comparable factors across the world.