Sustained business reforms over the past several years helped India jump 23 places to move to 77th position in this year’s global ease of Doing Business rankings. India carried out six business reforms during the past year, earning the credentials of being a top global improver for a second consecutive year, says the World Bank Group’s Doing Business 2019: Training for Reform report, released today. Last year India was ranked at 100.
The latest reforms were in the Doing Business areas of Starting a Business, Dealing with Construction Permits, Getting Electricity, Getting Credit, Paying Taxes, and Trading Across Borders. On the measure of absolute progress towards best practice, India significantly improved its Doing Business score to 67.23, from 60.76 last year.
This is the second consecutive year that India has been recognized as a top improver. India is the only South Asian country to achieve this distinction two years in a row, and only nine other countries have accomplished this since 2011.
“India’s strong reform agenda to improve the business climate for small and medium enterprises is bearing fruit. It is also reflected in the government’s strong commitment to broaden the business reforms agenda at the state and now even at the district level,” said Junaid Ahmad, World Bank Country Director in India. “Going forward, a continuation of this effort will help India maintain its goal of strong and sustained economic growth and we look forward to recording these successes in the years ahead,” he added.
During the past year, India made Starting a Business easier by fully integrating multiple application forms into a general incorporation form. India also replaced the value added tax with the Goods and Services Tax (GST) for which the registration process is faster in both Delhi and Mumbai, the two cities measured by the Doing Business report. In addition, Mumbai abolished the practice of site inspections for registering companies under the Shops and Establishments Act. As a result, the time to start a business has been halved to 16 days, from 30 days.
With streamlining of processes, India made it faster and less expensive to obtain a construction permit. It also improved building quality control by introducing decennial liability and insurance. The cost for completing all procedures to build a warehouse has been slashed to 5.4 percent of the warehouse value, from 23.2 percent earlier, while the total time needed for obtaining a permit has been reduced to 95 days, from 144 days. India’s continued effort to make Dealing with Construction Permits easier has this year catapulted the country to a global rank of 52, from 181 last year.
While there has been substantial progress, India still lags in areas such as Enforcing Contracts (ranked 163 globally) and Registering Property (166). It takes 69 days and costs about 8 percent of the property value to register a property, compared to 20 days and 4.2 percent among high income OECD economies. And, it takes 1,445 for a company to resolve a commercial dispute through a local first-instance court, almost 3 times more than the 582 days needed in high income OECD economies.
Getting Electricity was made cheaper and faster in Delhi with the cost for low voltage connections reduced by more than 30 percent of the income per capita, while the time needed was reduced to 31 days, from 39 days.
India made Paying Taxes easier by merging diverse sales taxes into a single General Sales Tax (GST). This is another area in which reforms have been carried out for a third consecutive year.
And, importing and exporting was made more efficient for a third consecutive year. The latest reform initiatives included electronic submission of documents and upgrading of port infrastructure. As a result, the time needed for exporters to comply with documentation requirements was reduced to 14 hours, from 38 hours.
India performs well in the area of Getting Credit. This year, the country further strengthened access to credit by amending its insolvency law to give secured creditors absolute priority over other claims in insolvency proceedings. The country’s global rank in getting Credit improved to 22 this year.
India also performs particularly well in the area of Protecting Minority Investors, with a global rank of 7, and scoring a perfect 10 in the index measuring shareholders’ rights and role in major corporate decisions.
This year, Doing Business collected data training of customs clearance officials and brokers and finds that training results in lower border and documentary compliance times, easing the movement of goods across borders. The report notes that India has supported its ambitious reform agenda by providing regular training to both customs officials and private sector agents, as well as by establishing Customs Clearance Facilitation Committees which bring together actors involved in international trade at regular meetings.>