India’s Doing Business rank takes another big leap
Petroleum minister Dharmendra Pradhan tweeted, “India’s further jump on World Bank Ease of Doing Business rankings is reflective of bold reforms undertaken by the government under the leadership of Hon. PM Shri @narendramodi. We have truly moved from red tape to red carpet!” Sitharaman said efforts will be made to further simplify Goods and Services Tax, and expressed hope that it will help in further improving India’s ranking in the World Bank’s ease of doing business index. “In GST, it is an ongoing process to understand where the difficulties are... We are also looking at what were the glitches in using online filing of returns. So, GST is an ongoing process in improving. Even now for the next meeting, as and when it happens, we want to make sure that several steps are taken to simplify compliance,” she said.
So, what’s worked for India and what hasn’t?
Since there are 10 parameters in the rankings, and all parameters (and sub-parameters within the parameters) have equal weightage, it is easy to pick the ones where India fares well, and the ones where it does not.
India’s move up the rankings was aided by significant improvements in “Dealing With Construction Permits”, “Trading Across Borders”, and a huge improvement in “Resolving Insolvencies”. On the last parameter, India’s score increased by 21.2 points. The recovery rate of 71.6 cents to the dollar compares with the Organisation for Economic
Co-operation and Development’s (OECD) 70.2, as does the time of 1.6 years compared to the OECD’S 1.7. And it costs 9% (of the estate) as compared to 9.3% in OECD countries. But there are lots of parameters where India can improve — PM Modi has talked of improving India’s position in the ranking to within the top 50. India still ranks at 136 in “Starting a Business”; 154 in “Registering Property”; 115 in ‘Paying Taxes” and 163 in “Enforcing Contracts”. Apart from these, the only others on which it ranks lower than its overall rank is “Trading across Borders” (68).
It still takes 10 procedures to start a business in India (according to the report) as compared to 7.1 in South Asia and 4.9 in OECD countries (the numbers in other regions is an average because, obviously, there cannot be fractional procedures). And it takes 18 days to do so, compared to 14.5 and 9.2. India has made only a marginal improvement in scores on this parameter — from 81 in DB 2019 to 81.6 in DB 2020.
Registering properties also appears to be difficult.
It takes nine procedures and 68 days to do this in India as compared to 4.7 and 23.6 in OECD countries. To be sure, it takes 6.9 procedures and 107.8 days to do so across South Asia.
These numbers (in this and all other parameters) refer to Mumbai. Delhi (the only other cities for which sub-parameters are available) doesn’t fare particularly better — nine procedures and 49 days. India’s score has fallen marginally on this parameter — from 47.9 in DB 2019 to 47.6 in DB 2020. On the tax front, India will definitely register a huge improvement next year (DB 2021) because of the cut in corporate taxes.
According to DB 2020, though, a business taxpayer makes 12 tax payments a year and spends 254 hours a year doing so. South Asia is actually worse (26.7 payments and 273.5 hours). The total tax contribution rate (direct and indirect) is 49.7% of profit in India compared to 43.9 in South Asia.
OECD economies obviously do better — 10.3 payments, 158.8 days and 39.9%. India has actually improved its score by 2.2 on this parameter. Finally, as expected, India does very poorly on contract enforcement.
It takes 1,445 days to do so, compared to 1,101.5 in South Asia and 589.6 in OECD countries. And the cost (as a proportion of claim value) is 31% compared to 29.9% and 21.5% respectively. India’s score is pretty much unchanged on this parameter — and it will take significant judicial reform to increase it.
How important are the rankings: apart from the bragging rights they bring, they do influence the global flow of capital, and also help shape business and investor sentiment. rating air quality,” said Prashant Gargava, member secretary of CPCB, who headed the task-force meeting.
By 7pm on Thursday, the concentration of PM10 (the coarser dust particles) was already three times the permissible limit of 100ug/m3. The concentration of PM2.5 – ultra fine particles that can reach deep within lungs – was more than twice the safe limits of 60ug/m3.
The minimum temperature, which was hovering at 17.7°C on Thursday, is predicted to drop to around 15°C on Diwali and postdiwali day. The maximum temperature on Thursday was 32.1 degrees Celsius.