India improved its position to 130 in the World Bank Ease of Doing Business 2017 report.
Improving India’s ranking in the report has been a key target of the government headed by Prime Minister Narendra Modi. India which had been ranked 130 in the 2016 report, was placed at 131 according to the revised rankings for last year released on Tuesday, thus reflecting a marginal improvement.
India could not improve its ranking better despite reform measures that have been lauded in the report because other countries around it in the ranking list also did well last year, World Bank officials who oversaw the report said.
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Augusto Lopez-Claros, Director, Global Indicators Group at the WB, praised the government for the reforms it undertook last year and noted that India had made a noticeable improvement in the distance to frontier (DTF) score — an absolute measure of progress towards best practices.
“While ranking is relative, DTF score is an absolute figure,” he said. India was 35th in DTF improvement last year. “It is pretty impressive,” he said. India has improved and is at 55.27 compared with last year’s 53.93, while the perfect score is 100. New Zealand that is ranked first has a DTF score of 87.01.
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Word Bank Doing Business reports, introduced in 2004, review business regulations and their enforcement across countries —190 this year. The latest edition takes into account developments in one year up until June 1, 2016.
India is one of the few economies that was discussed separately for its reform measures in the report. Four reform measures undertaken by India during the year helped the country improve its DTF score, said the World Bank.
Getting electricity, paying taxes, trading across borders and enforcing contracts have become easier in India in the year, the report found. These findings are based on experiences in Delhi and Mumbai. The impact of local factors is limited, but it is relevant, said Rita Ramalho, Manager, Doing Business project at WB.
“India made getting electricity faster and cheaper by streamlining the process of getting a new commercial electricity connection. This reform impacts Delhi,” according to the report.
Paying taxes is easier after the introduction of an electronic system for paying employee state insurance contributions, a reform that applies to both Mumbai and Delhi.
Exporting and importing is easier because of the intorduction of ICEGATE portal and simplification of border and documentary procedures. “ India made enforcing contracts easier by creating dedicated divisions to resolve commercial cases,” the report said.
Reform growth
The report said that the Government has “embarked on a fast-paced reform path.” It scored well on protecting minority investors and is one of only six economies in the world that earn the highest possible score on the extent of shareholder rights index, which measures shareholders’ rights in corporate governance.
The overhaul of the Companies Act has brought Indian “companies in line with global standards, particularly regarding accountability and corporate governance practices,” according to the report.
“As of June 2016, 282 of the 470 total sections (of the new Act) were notified and eight provisions of the 1956 Act remain applicable. Despite this piecemeal introduction, it has paid off both in economic terms and in India’s performance in Doing Business,” it noted.