India ranks 132 on business-friendly reforms: World Bank report

Even as the U.S. has continued to press India to undertake more investor-friendly reforms under the bilateral Strategic Dialogue, the World Bank on Thursday virtually congratulated India and 29 other countries for significant strides in making their regulatory environments more business-friendly.

In a report titled Doing Business 2012: Doing Business in a More Transparent World the World Bank and the International Finance Corporation said that between June 2010 and May 2011, there were 245 business regulatory reforms worldwide, which was 13 per cent more reforms than in the previous year.

Among these “China, India, and the Russian Federation are among the 30 economies that improved the most over time,” the report said, adding that Singapore led on the overall ease of doing business, followed by Hong Kong, New Zealand, the U.S. and Denmark. The Republic of Korea was said to be a new entrant to the top ten.

However, India still ranks low overall in the Doing Business assessment, with its rank improving marginally from 139 to 132 between the 2011 and 2012 reports. On the reform undertaken in India, the 2012 report said, “When India dismantled a strict licensing regime controlling business entry and production the benefits were greater in states that had more flexible labour regulations”.

Specifically the report noted that the progressive elimination of the “licence raj” led to a 6 per cent increase in new firm registrations in India, and highly productive firms entering the market saw larger increases in real output than less productive firms.

Yet a country such as Nigeria appeared to have made more progress towards the frontier of maximum business-friendly reforms than India has between 2005 and 2011, according to data in the 2012 report. “At a time when persistent unemployment and the need for job creation are in the headlines, governments around the world continue to seek ways to improve the regulatory climate for domestic business. Small and medium businesses that benefit most from these improvements are the key engines for job creation in many parts of the world,” said Augusto Lopez-Claros, Director, Global Indicators and Analysis, World Bank Group.

As a key development in an increasingly networked economy the Bank report also noted that e-government initiatives were on the rise. “More than 100 economies use electronic systems for services ranging from business registration to customs clearance to court filings,” said Sylvia Solf, lead author of the report, adding, “This saves time and money for business and government alike. It also provides new opportunities for increasing transparency”.