Complex rules limit progress in India’s Doing Biz ranking

NEW DELHI: Complex rules at the municipal level in Delhi and Mumbai on parameters such as starting a business, dealing with construction permits and registering property continue to dog India’s Doing Business rankings.

This, despite India jumping 30 positions to 100th place among 190 countries in the latest edition of the rankings released on Tuesday by the World Bank, based on field surveys and interviews with corporate lawyers and company executives in Delhi and Mumbai.

With a weightage of 53% and 47% respectively, the bank takes these two cities to be representative samples for India. Hence, easier business rules in the two municipalities will further boost India’s ranking.

For example, the bank notes that though India has reduced the time needed to register a new business to 30 days now, from 127 days 15 years ago, the number of procedures is still cumbersome for local entrepreneurs who need to go through 12 to start a business in Mumbai against 11 in New Delhi. This is considerably higher than high-income countries where it takes five procedures on average. Though central regulations such as the Companies Act, 2013, play a major role in starting a business, state and local level regulations have played a role in India’s dip in rankings in this parameter to 156.

Though India’s ranking in dealing with construction permits improved by four positions to 181, the parameter remained the country’s Achilles heel.

Finance minister Arun Jaitley while briefing reporters on Tuesday said the central government has been nudging state governments to move all construction permit applications online. “This reduces cost and eliminates corruption. In many cases in Delhi, it has been done,” he added.

Though in getting an electricity connection, India has a decent rank of 29 even after a drop from last year’s ranking of 26, there is a significant difference in cost of getting a connection between Delhi and Mumbai with scope for further improvement. Measured as a percentage of per capita income, cost of getting an electricity connection in Mumbai is 18.7% while in Delhi it is 165.8% against an average of 63% in most developed countries.