Understanding the Ease of Doing Business Index: India's Ascend to 77th Rank
India saw a significant jump from the 63rd to the 77th place in the World Bank's Ease of Doing Business index in 2019. This upward movement of 14 places highlighted the significant strides taken in various economic reforms by the BJP government. This article delves into the parameters of the Ease of Doing Business index and explores which specific reforms contributed to India's improved ranking. Additionally, it scrutinizes whether India's status as the least corrupt nation has further propelled the country's ranking.
The Parameters of the Ease of Doing Business Index
The Ease of Doing Business index, published annually by the World Bank, evaluates 190 economies based on 11 criteria. These criteria include starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency, and resolving disputes through the courts. Each economy is evaluated based on 32 sub-indices, measuring the time, cost, and availability of necessary resources.
Reforms That Improved India's Ranking
The 2019 reforms under the BJP government have been instrumental in India's ascension in the Ease of Doing Business index. Specific key areas of improvement are:
Starting a Business
In India, the process of starting a business has become significantly easier. The government has streamlined the registration procedures, reduced formalities, and minimized the need for legal consultation. This has been achieved through the implementation of digital tools and processes such as one-window clearance and single window systems.
Dealing with Construction Permits
The reduction in permits required and the simplification of the construction permit process have significantly improved India's standing. The government has introduced measures such as the 'Annual Maintenance Charge' (AMC) for real estate projects and the 'per zone' concept for building approvals. These measures have significantly shortened the time taken to secure permits and made the process more transparent.
Trading Across Borders
Streamlining customs procedures and simplifying trade regulations have enhanced India's regulatory environment for businesses. The introduction of the Single Window System (SWS) and the implementation of the Global Trading Corporation (GTC) have facilitated smoother imports and exports. These initiatives have reduced the time taken for clearance and lowered the administrative burden on businesses.
Comparing India's Corruptness with Other Rankings
Despite the marked improvements, India's progress has not met all expectations. The country was once criticized for being one of the most corrupt nations, but recent measures have significantly improved this perception. With a significant drop in corruption, many argue that India's ranking would have improved even further if not for other factors.
The Corruption Perceptions Index (CPI) published by Transparency International has placed India around the 78th to 80th position, indicating a considerable decline in perceived corruption over the years. However, the 77th rank in the Ease of Doing Business index suggests that improvements in judicial and regulatory efficiency outweigh the perception of corruption.
Key Areas of Success
Availability of electricity and bank credit are two critical areas where India has been within the top 25. This is a significant achievement given the historical challenges faced by businesses in accessing both essential services. India's focus on infrastructure development and reforms in the banking sector have made these resources more accessible to businesses, thereby improving the overall business environment.
Conclusion
In conclusion, the 2019 improvements in Starting a Business, Dealing with Construction Permits, Trading Across Borders, Resolving Insolvency, and the overall regulatory environment have propelled India to the 77th place in the Ease of Doing Business index. While challenges remain, the government's efforts in reducing corruption and improving accessibility to necessary services have significantly contributed to this progress. Future reforms need to focus on further streamlining the business environment and addressing the remaining areas of weakness.
Key Takeaways:
The Ease of Doing Business index evaluates 11 criteria across 190 economies. Reforms in starting a business, dealing with construction permits, and trading across borders have been pivotal. India's perceived corruption level as per the CPI indicates a significant decline in corruption. Improvements in electricity and bank credit availability have also positively impacted the ranking.