Ease of Doing Business: India
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Barriers to ease of doing business
According to NCAER State Investment Potential Index 2017, entrepreneurs say corruption is still the biggest hurdle in doing business, followed by getting approvals
Entrepreneurs faced the most corruption in West Bengal with 52.9 per cent of them list it as a foremost issue
India climbed 30 places to make it to the top 100 for ‘ease of doing business’ in the World Bank’s 2018 report. While the government has been gung-ho over this achievement, ground realities tell a different story. According to NCAER State Investment Potential Index 2017, entrepreneurs say corruption is still the biggest hurdle in doing business, followed by getting approvals. They did, however, say that it’s now easier to get electricity, water and internet connectivity.
Only 43.5 per cent of entrepreneurs face no problem relating to corruption in their states, while 30.8 per cent consider it to be moderate and the rest say it is very serious.
STATES CONSIDERED MOST CORRUPT
Entrepreneurs faced the most corruption in West Bengal with 52.9 per cent of them list it as a foremost issue, followed by Tamil Nadu and Rajasthan.
STATES CONSIDERED LESS CORRUPT
Gujarat emerges as the most corruption free state in eyes of industrialists, followed by Himachal Pradesh and Andhra Pradesh
Changes in laws
Ambitious sweep of new laws reveals govt's priorities
In its three years in office, the Modi government has scrapped more than a thou sand laws, some dating to the Raj that detailed rules for killing elephants and how to deal with spy pigeons. But the several laws that have been amended and the fresh ones that have been passed reflect the government's intent to quicken the pace of economic change and extend its political constituency to the underprivileged apart from the country's middle classes.
The list is formidable: from GST and the Real Estate Regulation Act, to Benami Transactions Prohibition Act and Undisclosed Foreign Income and Assets Act, to new laws for recovery of debt, insolvency and bankruptcy . These are not laws that merely tinker with the status quo; their impact is expected to be game-changing.
Initially, law-making proved more difficult than may have been anticipated after PM Narendra Modi led the NDA to 336 seats in the Lok Sabha. An unlikely opposition coalition of the Congress, Trinamool, Left, SP and BSP used BJP's lack of majority in the upper House to ensure bills passed by LS were referred to select committees. Important reform legislation like GST marked time.
It took months of hard bargaining and resorting to parliamentary stratagem of terming certain legislations -example, Aadhaar -as money bills, before law-making began to gather pace.
By and by , laws that are expected to significantly alter how business is conducted and politics is practised were passed as BJP consolidated its dominance in state elections after setbacks in Delhi and Bihar in 2015.
With an eye to the political imperative of social equity , the government moved on economic legislation linked to its stated objectives to speed up business. The sweep of legislations has been ambitious, looking to alter both social and economic behaviour. Besides the high-profile new laws mentioned earlier, there have been several others -such as the ones for setting up dedicated commercial benches in court and making the auction of coal and minerals mandatory. The rights of persons with disabilities is now law while the maternity benefits bill is pending approval as is the legislation to grant constitutional status to the national commission for backward classes.
BJP's three-fourth majority in UP and Uttarakhand besides stealing a win from Congress in Manipur and Goa smoothened the passage of four GST-related bills in Parliament's Budget session, after the Rajya Sabha had passed the GST constitutional amendment Bill last August, over two years after the Modi government assumed office.
The laws prioritised by NDA reveal its priorities. Early in its tenure, the government altered the Juvenile Justice Act to provide for teens in the 16-18 age group to be treated as adults in heinous offenses. This was in response to a public outcry over an underage offender in the Nirbhaya gangrape-murder case being given a mild sentence.The government also brought in the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Amendment Act to provide tougher punishment.
If changes in juvenile law point to a tougher line on crime, amendments to the SC and ST act incorporate specific humiliations such as forced tonsuring and denial to water resources. The decision is consistent with BJP's determination to make a mark with Dalit voters and counter the criticism of being a `manuvadi' party . The BJP's Dalit project was hurt by the Rohith Vemula suicide and the Una violence but the party managed to trump its caste-centric opponents in the crucial UP election.
Expansion of the definition of disabilities and the increase in paid maternity leave to 26 weeks from 12 weeks are interventions that will likely force even the private sector to extend similar benefits to their workforce.
Changes in the law allowing women to work in night shifts was another important pro-women step signalling a commitment to a more gender-friendly work regime.
Contracts, enforcement of
Need to amend Commercial Courts Act/ Arbitration, Conciliation Act
Filing a Rs 3-lakh claim in city civil court in Mumbai, time taken, cost and quality of judicial process index, Source-World Bank
The poor track record on enforcement of contracts haunts businesses, with India faring poorly . But the law department is seen to be moving slowly to fix the problem that spans from an agreement to bundle a mobile handset with a tariff plan to contracts between a multinational and a domestic company .
On the World Bank's Ease of Doing Business (EoDB) rankings, where India was ranked a low 130th among 190 countries, it was ranked 170th when it came to enforcing contracts, raising demands for the government to quickly address the concern.
The absence of progress on this front is seen to be detrimental not to the EoDB rankings, due to be released next month, but more importantly to the investment climate as foreign investors often shy away from India, citing the weak legal framework on the issue. After all, to get a verdict of a Rs 3lakh contractual dispute can take almost four years in a civil court in Mumbai. And, if the case goes to higher courts, the wait can be a few years more and by then the cost can be more than the amount involved. It's been months since the task force finalised the report which, among a host of issues, made a case for e-filing and esummons in district courts and ensuring that the number of adjournments are limited so that the number of pending cases comes down. In fact, the large number of adjournments -against the ideal situation of three -is being cited as a major problem area, something that the judiciary has to tackle, sources said.
What is held up due by the law department are amendments to the Commercial Courts Act to explicitly provide for setting up of courts at the district level, which will deal with cases up to Rs 1crore. The government plans to designate five district and city civil courts in Delhi and Mumbai as “commercial courts“ to tackle the problem of cases getting clogged in high courts.
In addition, the government is contemplating either enacting a new law or amending the Arbitration and Conciliation (Amendment) Act, 2015 to provide legal backing to pre-litigation mediation and reduce the number of cases coming to the courts. The view in the task force is that this can done through incentives such as refund of court fee or even some tax rebates, as is the practice in Singapore. The government has also requested high courts in Delhi and Mumbai to implement pre-litigation voluntary mediation for the time being. Sources said the Delhi government's experience has been very favourable as of the 47,000 petty cases, such as disputes involving neighbours and family members, 17,000 cases had been sorted out through this process.
World Bank Report on Doing Business-2017: Enforcing Contracts
The World Bank has been publishing its 'Doing Business Reports' every year since 2002. The Report seeks to measure regulations that enhance business activity and those that constrain it. In the 2017 Report of the World Bank, published in October 2016, India's overall rank has improved marginally from 131 in 2016 to 130 in 2017. The economies have been ranked on 10 broad measurable performance indicators such as time taken to start a business, time taken to get construction permits, paying taxes and enforcement of contracts. BruneiDarussalam, Kazakhstan, Kenya, Belarus, Indonesia, Serbia, Georgia, Pakistan the United Arab Emirates, and Bahrain were the most improved economies in 2015/16 in areas tracked by Doing Business.
The following table depicts the change in India's ranking across the different indicators specified in the Report:
DB 2017 Rank
DB 2016 Rank
Change in Rank
Starting a business
Protecting Minority Investors
Trading across Borders
• As can be seen from the table, the biggest improvement in the ranking has been in the 'Getting Electricity' indicator; there has been a 25 points change in the rank, from 51 in 2016 to 26 in 2017.
• There has been improvement in the 'Enforcing Contracts' indicator; i.e. the ranking has improved by 6 points, from 178 in 2016 to 172 in 2017. However, as is evident there is still considerable scope for improvement in the ranking.
• The other two main indicators where there is major scope for improvement is 'paying taxes' and 'construction permits'.
Enforcing Contract indicator
As per the World Bank, the enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court (competent court), and the quality of judicial processes index, evaluating whether the country has adopted a series of good practices that promote quality and efficiency in the court system. The Report highlights some of the major reforms initiated by different countries to make enforcement of contracts easier and more feasible. Some of the reforms mentioned in the Report are:
• Low-income and middle-income economies, predominantly in Sub-Saharan Africa and East Asia, focused their reform efforts on strengthening judicial infrastructures. Cote d'lvoire and Indonesia, for example, introduced dedicated simplified procedures for the resolution of small claims.
• Brunei Darussalam, Hungary, Norway and Spain introduced an electronic system to file initial complaints with the competent court.
• Rwanda implemented the Integrated Electronic Case Management System, a web- based application that integrates five main institutions of the justice sector throughout the courts. Among other features, the system allows for an automatic registration of lawsuits, electronic organization and scheduling of cases and automated claims processing.
• Many economies have concentrated their reform efforts on making complex revisions of their civil procedure laws. Nearly a third of reforms in 2015/16 entailed approvals of entirely new codes of civil procedures. Bolivia, Brazil, Ecuador, Kazakhstan, Niger and the Syrian Arab Republic are among the economies that implemented such reforms.
To assess the enforcement of contract indicator, the World Bank circulated a questionnaire on the basis of a standardised case study. As per the said case study, a seller delivers custom- made goods (the value of the goods is Rs. 3,06,959) to a buyer who refuses delivery, alleging that the goods are of inadequate quality. To enforce the sales agreement, the seller files a claim with a local court, which hears arguments on the merits of the case and the court decides in favour of the seller, and orders the buyer to pay the contract price. For the purpose of the questionnaire, the competent court means the court in Delhi and Mumbai with jurisdiction over commercial disputes similar to the one described in the case study. The questionnaire was circulated to a large number of stakeholders to elicit their views on the different questions primarily relating to the quality of judicial processes.
The quality of judicial processes index covers a set of good practices across four areas, corresponding to the four components of the index: court structure and proceedings, case management, court automation and alternative dispute resolution. The index ranges from 0 to 18, with higher values indicating better and more efficient judicial processes. In the 2016 Report, India's Quality of Judicial Process had an overall score of 7.5 out of 18. In the 2017 Report, the score has improved to 9 out of 18. The following table provides the points assigned to the competent court in Delhi and Mumbai for each of the four components of the Quality of Judicial Process.
Quality of Judicial Process (0-18)
Existing (Delhi and Mumbai (9/18)
Court structure and proceedings (0-5)
Case Management (0-6)
Court automation (0-4)
Alternative Dispute Resolution (0-3)
• As can be seen from the above table, the case management process has scored the least number of points.
• The increase in the points from 7.5 to 9 has primarily been due to the improved scoring in the court structure and proceedings index. Points have been given for the enactment of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 and for the amendment to the Arbitration and Conciliation Act, 1996.
World Bank Observations and Present Status
A. Competent Court and Case Management
The case study provided by the World Bank was for an amount of Rs. 3,06,959 which would fal! within the jurisdiction of the Delhi/Mumbai District Court and not the respective High Courts. Therefore, the measures introduced to streamline commercial disputes under the Commercial Courts Act has had no impact on the indicator's data.
As Delhi and Mumbai High Courts have original jurisdiction, commercial courts have not been established at the district level, rather commercial divisions of the High Courts have been established. In this regard, the High Courts of Delhi and Mumbai are being consulted and inputs from the Department of Legal Affairs has been sought. In this regard, the task force may consider and deliberate upon the following legislative measures.
(a) Amendments to the Code of Civil Procedure, 1908
• The Commercial Courts Act has by virtue of Section 16 read with Schedule 1 of the Act made amendments to the CPC for the purpose of purpose of proceeding with cases falling within the jurisdiction of the Act. These amendments make substantial changes to the CPC such as imposition of costs, disclosure and inspection norms, case management hearing, summary judgement and other provisions for time bound disposal of commercial cases.
• The CPC may be amended to extend the amendments specified in Schedule 1 of the Commercial Courts Act, to the extent necessary and feasible to all civil/commercial litigation in the country irrespective of the value of the dispute. This was also recommended by the Law Commission in its 253th Report on 'Commercial Division and Commercial Appellate Division of High Courts and Commercial Courts Bill, 2015'
(b) Amendment to the High Court Rules/Power of the High Court to notify commercial courts at district level for cases below Rs 1 crore
• Section 122 of the CPC empowers the High Courts to frame rules for civil courts. The High Court may designate/notify certain district courts as commercial courts for the purpose of disposal of commercial cases below the value of Rs. 1 crore.
• The High Court may in this regard frame rules of procedure for adjudication of such commercial cases by the district court. The Department Related Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice in its 78th Report had recommended the High Courts. should be responsible for laying down its own procedures of case and cost management.
(c) Amendment to the Commercial Court Act to revise the specified value
• Currently, the Commercial Court Act is only applicable to cases amounting to Rs. 1 crore and above. The Act may be amended to revise the amount of specified value.
B. ADR Mechanism
The Enforcing Contract indicator looks at voluntary mediation/conciliation, i.e. in which the parties have an active role and voluntarily decide to initiate mediation. Mandatory mediation as covered Section 89 is not covered by the ADR sub-index of the quality of judicial processes index. Section 89 CPC deals with court referred ADR and the parties have a passive role rather than the active role.
In this regard, the task force may consider whether a standalone law on mediation to give statutory backing to voluntary mediation is required. Case Management and court automation
The World Bank only acknowledges the availability of reports/publications when it can be generated specifically for each court. These reports pertain to (a) age of pending cases report; (b) clearance rate report; (c) time to disposition of a case; and (d) single case progress report. Out of these 4 reports, two reports namely, the age of pending cases report and the single case progress report are available for each court.
The World Bank also observed that though there is a law specifying the maximum number of adjournments that can be granted, the law/rule is respected in less than 50% of the cases. Further, the adjournments are not limited to unforeseen and exceptional circumstances. In this regard, advisory have been issued to the Chief Justices of all High Courts to seek strict enforcement of Order XVII Rule 1 of CPC (which limits the number of adjournments to 3).
The World Bank further observed that there is no electronic case management system for lawyers and judges in the competent court (i.e. the Delhi/Mumbai District Court) and that there is no provision for pre-trial conference. In addition, as the complaints cannot be filed electronically before the competent court and the documents cannot be served electronically, we were not given any points on that front.
As can be seen a majority of the reforms pertain to electronic case management and therefore, successful implementation of these measures will help in improving our rankings.
The Department of Justice has been appointed as the nodal department for the 'Enforcing Contract' parameter. The DoJ is expected to ensure that all necessary reforms are undertaken to ensure that India's ranking in this parameter comes within the top 50 by next year.
Ease of business
May 25 2015
Tedious legal process top hurdle to ease of doing biz
The Narendra Modi administration's focus on ease of doing business is expected to help India report significant gains when the new rankings are released but enforcing contracts is one area where the government seems to have run up against legal hurdles, resulting in fewerthan-expected moves to simplify the cumbersome process. When it comes to enforcing contracts, India ranked a lowly 186th among 189 countries, with only Angola, Bangladesh and Timor-Leste placed lower.While officials say that the attitudes have a major role to play , experts reckon that the Indian legal process is long and cumbersome. World Bank arm International Finance Corp's Doing Business report measures the efficiency of the judicial system in resolving commercial disputes based on the time taken, the procedures involved and the cost incurred. On an average, it costs almost 40% of the claim, involves some 46 procedures and takes almost four years, 1,420 days to be precise, in Mumbai or Delhi. What's more, the Doing Business report has not recorded a single reform move in India for the last eight years.
As a result, when the government prepared a detailed blueprint for all parameters, eight steps were planned, beginning with commercial courts in Delhi and Mumbai two centres which are studied by IFC team. But apart from the commercial courts and the recent Supreme Court order paving the way for the establishment of the National Company Law Tribunal, things have moved rather slowly . The moves to be initiated include enabling district courts to completely switch over to e-management of commercial cases, which includes e-filing of complaints, e-service of summons and availability of digitally signed judgments on the web. The plan also included sensitizing district courts about exploring mediation, arbitration and conciliation under section 89 of the Code of Civil Procedure.
Similarly , there should be a limited number of adjournments so that cases are decided in a shorter span of time.
Sources in the government acknowledge that there has been little progress on several of the proposals that have been discussed over the past year to improve India's ranking on enforcing contracts. And, it is unlikely that the IFC team misses that, making it tougher for India to make significant gains in the Ease of Doing Business Rankings, sources acknowledged.
2013-18: rapid improvement
The government is banking on gains from goods and services tax (GST) and higher recovery from bad debt that is now subject to insolvency resolution to move up the World Bank’s Ease of Doing Business rankings.
Officials from the department for promotion of industry and internal trade (DPIIT) have made a detailed presentation to World Bank officials in Washington to argue India’s case and currently a team is visiting the country to assess the impact of the changes that have been highlighted by the government.
The focus is on six of the 10 parameters where DPIIT believes significant improvement has taken place during the last 12 months (see graphic). But steps have been initiated on all other aspects too, although results may not be fully visible yet as in the case with improvement in the functioning of commercial courts that will enable better enforcement of contracts, sources said.
There are areas, such as protection of minority shareholders’ rights, where India is already ranked seventh, and the government believes that it is on a strong footing. “But we cannot afford to be complacent as all the countries are trying to improve their processes and move up the rankings. So, there is a need for continuous reforms,” said an officer. For instance, South Africa slipped from a peak of 35 to 82, while Saudi Arabia is down from the 12th position seven years ago to 92 now.
Government officials said maximum gains are expected to accrue on the paying taxes front where the impact of GST, which was rolled out in July 2017, was not fully factored in last time since the cut-off for assessment was December. Over the last 12-15 months, several steps, including lowering of rates and a simplified process for filing returns have been initiated, while the indirect tax regime has overcome teething issues. The government has argued that the return filing time has been reduced substantially, while the previous report suggested that there was an increase.
2014:India Ranks 142 in the world
Jan 17 2015
Ranks 142 on bank's ease of doing business list
Large pendency of cases in Indian courts and non-implementation of judicial reforms have been cited by the World Bank as one of the key reasons for India's low rank on the Bank's Index of `Ease of Doing Business'.India was ranked 142 among 189 countries last year. In a memorandum to the department of industrial policy and promotion (DIPP) under the commerce ministry, the World Bank suggested linking judges' appraisal with reduction of pendency in courts.Sources said the matter was discussed at a meeting organized by the DIPP recently to refine the performance evaluation system of judges to link their performance to the resolution of specific bottlenecks as suggested by the World Bank.
The DIPP is also coordinating implementation of the `Make in India' campaign of the Modi government.
Interestingly, the World Bank suggested that there was an urgent need for reforms in the system of performance appraisal of judicial officers in the country to bring about uniformity and infuse objectivity and standardization.
The Bank cited an example from Malaysia where implementation of a reform index for judges improved case disposal rates and reduced backlog by 50% in less than three years. Another exam ple was cited from the United Arab Emirates, where rewards were instituted for the best performers.
According to the memorandum, the liberal grant of adjournments was an often cited reason for delays in court proceedings in India. It recommended monitoring the number of times judges granted adjournments and the reasons for granting them. “This can be done through case management systems and linked to performance management evaluations,“ it said.
It asked the government to ensure that adjournments were not indefinite by setting a time limit.
The Modi government had written to chief justices of all 24 high courts to ensure speedier settlement of commercial and other disputes for creating a conducive investment climate and success of `Make in India' campaign.
2014> 18, from no.142 to 77; no.1 in S.Asia
Ease of doing business- India versus BRICS countries, 2014-18
Ease of doing business- India, Improvement across parameters, 2014-18
2015: India jumps 12 places
The Times of India, Oct 29 2015
India jumps 12 places in ease of biz
Turns around many years of decline in World Bank's ranking on reforms
India has jumped 12 places in the World Bank's Ease of Doing Business index on the back of reforms undertaken by the government to improve the investment climate. The country ranks 130 out of 189 economies in the world in this year's (2016) report (ranked 142 in Doing Business 2015), marking a significant shift in the trend after several years of decline in ranking. Under the new methodology , its rank has moved to 130 from 134 in the previous year. The Doing Business 2016: Measuring Regulatory Quality and Efficiency , released on Tuesday , captures reforms implemented in 189 countries between June 2, 2014 and June 1, 2015.
In the global ranking stakes, Singapore retains its top spot. Joining it on the list of the top 10 economies with the most business-friendly regulatory environments are New Zealand, in second place; Denmark (3rd), Republic of Korea, Hong Kong SAR, China, UK, US, Sweden, Norway , and Finland. The report comes as a shot in the arm for the government battling to revive growth, attract investment and remove the regulatory and bureaucratic hurdles to business.
The report highlights two reforms that India has imple mented during the past year. It was able to amend the Companies Act in just under six months and made starting a business easier by eliminating the minimum capital requirement and the need to obtain a certificate to commence business operations, saving entrepreneurs an unnecessary procedure and five days' wait time, the World Bank said.
In both Delhi and Mumbai, the process for getting an elec tricity connection was made simpler and faster. “This year's improvement in ranking marks a significant shift in trend after several years of decline. With sustained reforms, India can make signi ficant improvements in its rankings in the next few years,“ said Onno Ruhl, World Bank country director in India.
The report also highlights a number of reforms already underway in India, which were not fully felt by the majority of businesses by June 1, 2015 but will help India further improve its rank in the coming years. In particular, it notes India's efforts to streamline the process of obtaining a construction permit in Mumbai, and new systems for e-filing and e-payment of taxes.
Ongoing efforts to introduce and enact the bankruptcy Code, movement on operationalizing commercial benches and courts in Delhi and Mumbai, efforts to introduce automation in judicial processes in courts, further digitization of land records, and integration of registration and mutation processes, and introduction and launch of National Single Window for trade may also help India improve its rank in future.
2016-17/ India rises 1 place, to 130; trails Nepal, Sri Lanka
Ease of business 2016-17 Despite govt's efforts, India still not an easy place for biz Oct 26 2016 : The Times of India
Ranked 130th By IFC, Far Below Top-50 Target
India moved up only one position in the International Finance Corporation's (IFC) ease of doing business rankings, triggering a strong reaction from the government which said the string of reform initiatives undertaken by it in the last one year had not been factored in by the World Bank arm.
PM Narendra Modi has set a target of reaching the top 50 by 2017, a government official told TOI.
The Doing Business 2017 report released on Tuesday showed that India was placed 130th among 190 countries that had been surveyed for the annual rankings, with Russia, Bhutan, South Africa, China, Nepal, Sri Lanka and Brazil ranking higher. New Zealand replaced Singapore as the easiest place for doing business.
While the Centre's focus on improving India's ranking and overhauling the Companies Act was lauded in the report, labour laws were flagged for creating economic distortions even as IFC took note of the plan to overhaul the regime. India's overall score improved marginally to 55.27. India's overall score im proved marginally to 55.27 as it climbed up the rankings for providing electricity connections, enforcing contracts through commercial divisions in Bombay and Delhi High Courts, easier rules for trading across borders and making Employee's Social Insurance Corporation's payments. Improving India's ranking in the ease of doing business survey has been identified as a key priority by the Modi government. The government is keen to improve attractiveness as an investment destination and has undertaken several measures to make it easier to do business in the country.
But it slipped on various other parameters and the government said that at least a dozen steps initiated by it were not recognised by IFC this year, prompting it to put in place a strategy to focus on several reform initiatives in the coming coming year. For instance, the enactment of the Insolvency and Bankruptcy Code was not factored in as the IFC team argued that the law had not been implemented, something that the government now intends to do by December-end. Similarly , it is hoping that GST implementation from April will boost India's ranking at least when it comes to ease of starting business.
“There were several areas where the World Bank team decided to go by feedback it had received although we presented detailed logs to argue that reforms had been implemented... We will continue to engage with the World Bank and address its concerns to include these reforms in next year's report. We will also engage more with stakeholders to get their feedback on the steps we take,“ industrial policy and promotion secretary Ramesh Abhishek said.
For instance, the government said the new process to get a name for incorporating a company took1.86 days but the IFC's feedback showed that it took two-seven days, Abhishek said.
A caveat: Is India's investment climate truly improving?
Is India's investment climate truly improving? The `Doing Business 2017' report of the World Bank shows India improving only marginally from 131st to 130th position among surveyed countries. Meanwhile Assessment of State Imthe industry ministry's ` plementation of Business Reforms 2015-16' claims that implementation of a 340-point reform programme by the states has improved to 48.9% from just 32% the previous year.
Which version should readers believe? Neither.Both reports describe changes in rules rather in practice. The reports cannot capture the role of money and influence to get clearances. Enormous hurdles can vanish with a bribe or telephone call.
The Doing Business report shows India is a difficult place for honest, rule-bound business.But it's not bad at all for businesses that can handle the system. That's why billions of dollars of foreign investment are pouring in even as World Bank ratings show countries like India and China in a poor light.
Critics have long pilloried the shortcomings of the Doing Business report. Yet it has become popular, warts and all, because it captures at least the formal hurdles facing honest business, and promotes competition between countries.
The most devastating expose of its shortcomings came in a World Bank study by HallwardDriemeier and Lant Pritchett. They compared data for a large group of countries from the Doing Business survey with that from a separate Business Enterprise survey, also done by the Bank. They examined three indicators -the time taken for obtaining construction permits, starting a business or operating licence, and the delay in importing goods. They found the average time taken for all three was far less in the Enterprise surveys.
Why? For many technical reasons, but mainly because the Enterprise surveys got data from businessmen across a country , whereas the Doing Business surveys got data from a single city , from lawyers and technocrats familiar with changing rules.So, the Enterprise surveys captured the reality inclusive of bribes and influence, whereas the Doing Business surveys captured changes in rules that would benefit honest, but possibly non-existent, businesses. In India, even reputable firms hire “consultants“ to handle speed money .
The Doing Business report gives a single number for the time taken in clearances. But Hallward-Driemeier and Pritchett found huge variations for different firms: it mattered greatly who your contacts were. The investment climate is not the same for everybody: some can control it, others cannot. The biggest, best-connected firms have a big advantage.
In practice, clearances are faster than rules suggest. The time taken for construction permits in 80 countries was only one-sixth as much in the Enterprise surveys as in the Doing Business surveys.
So, should we ignore surveys on rules and focus only on “realities“? Sorry , but businessmen don't tell the full truth to surveyors about “realities“ either. Still, Enterprise surveys carry more credibility than the Doing Business report.
With the caveats already expressed, the industry ministry's survey of states deserves attention for what it reveals in trends, even if its figures need a generous pinch of salt. This survey looks at 340 changes in laws and rules agreed upon to improve the investment climate. These are more relevant for honest than dishonest business. That does not make them irrelevant. Rules must be changed to make honest business easier. This may not have a revolutionary short-term impact, but is essential for the long term. We need to shift from an influence-based to a rule-based system.
Modi has cut big corruption in New Delhi but it continues at the state level. The survey shows that NDA-ruled states are far more reformist than others, occupying most top rankings. This drives home Modi's strategy to get re-elected by job creation in a vibrant economy , not through giveaways or Hindutva.
The BIMAROU states, once the pits, now figure high in the rankings. This includes BJP-ruled states (Rajasthan, MP , Chhattisgarh, Jharkhand) and nonBJP ones (Bihar, Odisha, UP). Although placed 14th and 16th, UP fulfilled 84.5% and Bihar 75.8% of promised reforms. West Bengal, another laggard, fulfilled 84.2%. It remains to be seen how far changed rules translate into reality . Huge gaps can be expected. Nobody should believe that the states have improved the investment climate fabulously , or that climate control by influential firms has disappeared. Yet the direction of change is positive.
Harvard prof. on what remains to be done/ 2017
There Is Not Enough Credit In Order To Provide Capital To Good Businesses, Says Faculty At Harvard Business School
M ichael Porter, who is an economist, resear cher, author, advisor, speaker and faculty at Harvard Business School, has brought economic theory and strategy concepts to bear on many of the most challenging problems facing corporations, economies and societies. His work has also achieved remarkable acceptance among practitioners across multiple fields. ET NOW's Sonali Krishna caught up with Porter to discuss some of the challenges the world is currently grappling with. Excerpts:
Would you say that the world economy has recovered from the 2008 financial crisis or are we yet to fully recover and are still reeling in the aftermath?
By and large, it wasn't the problem of the economy , it was really the misalignment and overheating of the financial markets and that took a real toll on everybody . The US got really pounded and indeed alot of that uneasiness has led to Donald Trump getting elected. Trump's presidency really dates back to that financial crisis. People were angry , frustrated and scared and Trump was elected because people didn't think that the existing system was working for them.Ifeel today that financially the US is in a sound position, our banks have record amounts of capital, the financial markets now are working quite efficiently , the borrowing in American households is now a lot more moderated, people are not doing everything on credit anymore, so America is in a different place now.
The concerns now are more ephemeral. There is a lot of fear about globalisation. I don't think there is anything to fear about globalisation but there is a political discourse that's got people upset. I think the biggest problem in America now is Education. We have 20-25% of our people who do not have enough skills for this economy . We have very high unemployment and underemployment in America and that's causing a lot of angst in America as they just don't see any opportunity right now.
On the other hand, in India, the business environment is still very inefficient and cumbersome. There is a financial system in India today where state-owned banks have massive bad loans and there is not enough credit in order to provide capital to the good businesses. So, there's a whole series of weaknesses in the business environment that's holding back the country. The government is trying very hard to whack away at them, they don't have the answers or the whole strategy . The biggest problem we have with America is that we have this political system and a president who is dividing the country . I think in India the greatest problem is that it's going to take decades to clear away all the built-up inefficiency and ineffectiveness and it's going to take a huge effort to invest in the citizens -their education, skills, inclusion, their ability to have a good life.
Let's look at world trends -Brexit, the US Elections or be it the growing populism in several parts of the world. The growing sense of nationalism and jingoism is quite rampant in India as well. What do you think the world is going through where the insecurities of being inclusive seem to be at a record-high and a polarised world seems to be the new normal?
I think we are all feeling that and for a variety of reasons. Fears of trade and the fears of not having any hope in the system in America is causing people to feel intolerant towards immigrants. It's the after-effects of the great recession and it's played itself out and we have never really recovered completely from it. So, people believe that they don't have opportunities and so that's when president Trump started talking about building the walls of Mexico; all that tapped into a very committed group of people who felt that the system wasn't working for them and they were looking for excuses and demons. The truth, however, is that trade is great for America. It provides more jobs, wages in industries that are indulging in trade are much higher than the average industry norm. All the evidence and every economist on the face of the earth will tell you that trade is good and yet people had a sense of insecurity . Britain is another interes ting example. The whole Brexit thing was all about two issues: one is immigrants and the belief that immigrants were coming in and taking their jobs. The other theme of Brexit was that they were getting told what to do by the EU and the guys in Brussels didn't know what Britain nee ded to run their country . The whole thing was complete hogwash! The evidence is very clear -immigrants coming into Britain were not taking jobs of the British people, they are actually creating new jobs. They were entrepreneurs allowing the UK to be competitive in areas that were powering growth in the economy . The places that voted pro-Brexit were in the north but interestingly immigrants don't go in the north they go to the south. Frankly , Brexit was all about lies and what we are seeing in more and more countries is that democracies and political systems have become much more polarised and politicians have tapped into the fear of some people and even framed that fear. Political processes have tapped into the insecurities of nations. It happened in Britain, in America, it's happened elsewhere and so I think that this is a dark period in global economy and in global relations.
2017/ Lack of judicial reforms pulls down India's ranking
A World Bank assessment on the performance of India on ease of doing business shows the largest democracy lags behind many of the sub-Saharan African countries and the east Asian nations in `enforcement of contract' largely due to the inefficient judicial system which has failed to keep up with the technological revolution that has changed the pace of the justice delivery across the world.
Giving the example of Rwanda, it says the African country has implemented the integrated electronic case management system across all courts which allows for an automatic registration of lawsuits, electronic organisation and scheduling of cases and automated claims processing. Many of the sub-Saharan African countries have done better than India, which has failed to implement crucial judicial reforms when it comes to implementing the electronic case management system. Some of the basic services such as summons are still being served using the antiquated practice. The law on adjournments is not followed in 50% of cases across courts while there is hardly any adherence to the timeline fixed for resolution of disputes, as per the findings.
An evaluation of the court structure and proceedings by the World Bank, while ranking countries on ease of doing business in its 2017 report, has painted a very grim picture for India compared to many of the sub-Saharan African countries that have done better by adopting a set of good practices, including case management, court automation and alternative dispute resolution--some of the parameters which resulted in India being ranked overall 130 among 190 countries.
The report refers to lack of electronic case management system for lawyers and judges in the courts dealing with commercial disputes in Delhi and Mumbai. There is no provision for pre-trial conference in these courts. “In addition, as the complaints cannot be filed electronically be fore the competent court and the documents cannot be served electronically , we were not given any points on that front,“ a government task force has observed on why India has been ranked so low in the World Bank's ease of doing business. In India, as far as commercial disputes are concerned, the complaint cannot be filed electronically in the absence of a platform within the competent court.It is not even possible to carry out service of process electronically for claims filed before the court. Only the court fees can be paid electronically and the judgments can be accessed online.
Though there are laws setting time limits for key court events in a civil case but these time standards are seldom followed (not even in 50% of the cases), according to the report of the task force that has analysed the World Bank's assessment.
The low rating of the Indian judicial system is also on account of the unlimited adjournments granted by courts and non-adherence of the prescribed laws by the judiciary itself. There is a law that regulates adjournments where the maximum number that can be granted is limited to three. But the rules of adjournments are followed in less than 50% of the cases, the report said.
The World Bank has rated countries on the judicial indicators with a score ranging between 0 and 18, higher the score better and more efficient the judicial process and system. In the Bank's 2016 report, India had scored an overall of 7.5 out of 18 on its quality of judicial process. This improved marginally to 9 out of 18 in 2017 but that was primarily because of scoring high in `court structure' where it scored 4.5 out of 5. The other indicators such as in the `case management' category , India scored 0.5 out of 6; court automation 2 out of 4 and in the alternate dispute resolution category it scored 2 out of 3.
2017: some improvements, some setbacks
A task force entrusted with improving India's ranking in the World Bank's ease of doing business index is not very optimistic of any drastic change in 2018.
India failed to improve its ranking in the last two years and was placed 130 out of 190 economies surveyed by the Bank in 2017. Starting a business in India is still not an easy proposition. Between 2016 and 2017, India slipped below four countries in the index on the parameter of `starting a business': from 151, it went down to 155 in 2017.Its record worsened in `protecting minority investors' where it was downgraded from the top 10 to 13 in 2017. In `resolving insolvency' category, the country went down a notch, from 135 to 136. The only improvement was on getting electricity connections where India jumped 25 places -from 51in 2016 to 26 in 2017. There was not much change in the ranking on `paying taxes' and in getting `construction permits', according to the report.
The scenario is not very encouraging, according to a preliminary assessment by the task force constituted on the recommendation of a committee of secretaries in December last year to bring the country among the top 50 nations.
The task force, which has held two meetings so far, comprises officials from the department of industrial policy and promotion, law ministry and the registrars of Delhi and Mumbai HCs besides the law secretaries of Delhi and Mumbai. The high-level panel has emphasised on setting up district level commercial courts where disputes of less than Rs 1 crore can be handled. Currently , commercial disputes are only handled by Delhi and Mumbai HCs and the law bars setting up commercial courts at district level.
The panel observed that to “operationalise dedicated commercial benches in Delhi district court and Mumbai city civil court, the proviso to Section 3 (1) of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 needs to be deleted“.
The World Bank had found India lacking in enforcing contracts, and reducing time and cost involved in resolving commercial disputes through local courts. The quality of judicial processes and efficiency of court systems were some of the reasons responsible for India's dismal ranking on the ease of doing business index.
2017: NITI pinpoints progress yet to be made
A survey on ease of doing business conducted by NITI Aayog and the IDFC Institute, which was released, created a flutter as the results showed that it took companies 118 days to start a business and highlighted other difficulties faced by companies.
The government issued a statement on Tuesday , saying the report itself states that it is meant to be a research document and its contents do not represent views of the government and NITI Aayog.
The survey results varied from the findings of the World Bank's ease of doing business report, which has seen India gradually improve its ran kings. The statement said the survey was conducted between April 2015 and April 2016 and does not reflect any changes in the ease of doing business since then.
In recent years, there has been tremendous progress in easing various processes related to doing business.
This has been verified by the World Bank. It is important to note that the enterprise responses are based on their past experiences and perceptions on doing business, dating as far back as 10 years or more. Reforms such as singlewindow clearance systems would not be applicable to ma ny firms covered in the survey .
“The survey indicates that the government's efforts to improve business environment are showing results on the ground. The experiences of startups, or enterprises started during or after 2014, suggest a significant improvement in doing business over time. Newer and younger firms take less time in obtaining approvals, highlighting a favourable business environment. Young firms report that most regulatory processes do not constitute a major obstacle to their doing business,“ the statement said.
NITI Aayog sources said the survey results showed that in several areas the experience of companies is better than the World Bank survey
2017: The Times of India’s assessment
See graphic, ' The Times of India’s assessment of whether or not the Ease of Doing Business in India had improved by 2017, and what remained to be done'
2018 (World Bank nomenclature) / "Doing Business report": India's expected rank 100
It will occupy the 100th position in World Bank assessment of 190 nations
India will leapfrog 30 places to the 100th position out of 190 countries in the World Bank's Doing Business Report, high-level sources have confirmed to The Hindu.
According to a source involved in the exercise — the report is expected to be released on October 31 — “India will hit a century.” This huge jump in the country's ranking is thanks to reforms in areas such as ‘starting a business’, ‘dealing with construction permits’, and ‘resolving insolvency’, where it was placed a lowly 155, 185 and 136 respectively last year. The source said, “The low rank last year galvanised India to act. There was an explicit order from the PM (Narendra Modi) to ensure faster reforms to improve India’s rankings.”
India was ranked a poor 130 overall last year, up by just one place from 131 the previous year.
On the future prospects for India, the source said, “If India maintains this momentum, it can jump to a rank in double digits next year,” adding that Mumbai and Delhi — the two cities covered in the Report — had responded well to the government’s call for improvement. The Department of Industrial Policy and Promotion systematically worked with the line ministries and State governments to “get things done on the ground”, the source said.
The DIPP also had the Prime Minister's support to coordinate across Ministries, the source said. “That was critical. For a federal democracy with messy coordination, as opposed to China or Russia, this coordination was quite a feat. Comparison with these two will be interesting.” Official sources told The Hindu that “We are optimistic (about a huge jump in rankings).”
The development will be a shot in the arm for the NDA government that has been facing a barrage of criticism due to its sudden demonetisation exercise and the ‘hurried’ implementation of the Goods and Services Tax regime that made it difficult for firms, particularly the small and medium ones, to do business. After taking charge as the Prime Minister in 2014, Narendra Modi was keen to ensure that India finds a place in the top 50 ranks, and had soon after made this a priority.
Speculation has been rife about a significant improvement in India’s rankings following top government officials including Commerce and Industry Minister Suresh Prabhu recently hinting at some “good news” on the ease of doing business front, and the DIPP secretary Ramesh Abhishek expressing optimism about a noteworthy performance this time due to the “hard work” done by the government.
The Hindu had reported in June quoting a government official that “This time, the (government’s) strategy was to carry out major reforms in areas such as ‘starting a business’ and ‘dealing with construction permits’ where we were down in the list.” The official, who didn’t wish to be named, had said, “We expect India’s ranking to vastly improve, mainly due to reforms in these areas and to a certain extent in other parameters including ‘resolving insolvency’.”
The World Bank’s ‘distance to frontier’ score — which “measures the distance of each economy to the ‘frontier’ that represents the best performance observed on each of the indicators across all economies in the Doing Business sample since 2005 – showed that India’s score gradually improved from 48.77 in 2010 to 55.27 in 2017.
2017: India jumps 30 ranks to reach no. 100
The government has been making efforts to further improve ease of doing business
The ranking of the 190 economies are assessed on 10 parameters
Bringing in more reason to cheer, India's ranking in the World Bank's ease of doing business index+ showed a significant improvement driven by reforms in access to credit, power supplies and protection of minority investors. As per the latest report released, India has moved to 100th spot from 130th position.
Addressing a press conference after the report was released, Finance Minister Arun Jaitley said that "this is the highest jump any country has made in the doing business rankings." In "resolving insolvency" parameters, India has jumped 33 places and is now ranked 103, he added.
With implementation of a series of reforms including enactment of Insolvency and Bankruptcy Code (IBC), India has climbed to 4th position in protecting interest of minority investors, according to the report. This is the first time that India has figured in the top five nations in one of the parameters for determining "ease of doing business". On paying taxes India has jumped 53 places , from 172 to 119. On getting credit India has jumped 15 places from 44 to 29.
Speaking on the development, Prime Minister Narendra Modi tweeted: "Historic jump in 'Ease of Doing Business' rankings is the outcome of the all-round & multi-sectoral reform push of Team India."
In its annual report "Doing Business 2018: Reforming to Create Jobs", the World Bank said that India's ranking reflects nearly half of the 37 reforms, adopted since 2003, implemented in the last four years.
The ranking, however, does not take into account business environment post implementation of GST, which weaved the country of 1.3 billion into one market with one tax and removed inter-state barriers for trade.
"India has improved a lot (this year), but there's still room for improvement, So, I wouldn't necessarily classify it as a nice place to do business yet, but definitely is in the right direction to become a nice place. It is much easier than it was two years ago," said Rita Ramalho, acting Director for World Bank's Global Indicators Group.
In the last report,+ India ranked at 130 out of the 190 countries evaluated, advancing just one spot from the previous year's 131. The rankings are determined on 10 parameters. Besides implementation of the roll-out of the big-bang Goods and Services Tax (GST) from July 1 this year, the government has considerably eased procedures for setting up businesses in the country.
The insolvency and bankruptcy law too has been operationalised, which paved way for speedier exit of failed businesses.
The government has been making efforts to further improve+ ease of doing business and aims to bring the country in the top 50.
How India rose 30 ranks in one year
A Well-Planned Exercise Helped Govt Achieve The Goal
India's fastest single-year jump in the World Bank's Ease of Doing Business ranking has been a meticulously planned exercise. It began with the World Bank agreeing with the government that the survey (that underlies the ranking) should be conducted in two cities (Mumbai and Delhi) unlike the pre-2016 methodology of ranking reflecting the perception of business in Mumbai alone.
But that was only the start.A bigger battle awaited the department of industrial policy and promotion (DIPP), which has been driving the process of easing business regulation in India. Three years ago, when PM Narendra Modi made a pitch for India to move into the league of Top 50 countries in the World Bank's ranking in three years, Amitabh Kant, who was then DIPP secretary , got down to work out a checklist. He found that changes were possible within the legal framework on most issues.
His successor Ramesh Abhishek took the process forward, often working with muni cipal bodies and utilities in Mumbai and Delhi. It took a while for him and Kant to get the Mumbai and Delhi power distributors to move to an online system for applying for connection and collecting payments. When it did happen, India's rank on the parameter of `Getting Electricity' shot up from 170 in 2015 to 26 in 2017. Delhi Jal Board was persuaded to lower the fee, something that the World Bank has not acknowledged as yet.
Getting various approvals from local bodies were not easy too, but an online system of deemed approvals if an agency doesn't respond in the stipulated time has eased the process. The National Monuments Authority was prodded into colour coding of areas where its approval was needed. This made it easier to get clearances that had to come within a specified period.
At the Centre, several departments -from commerce to customs and corporate affairs -were nudged into reworking processes to reduce the number of forms that are required and significantly cut down the time needed for clearance. For instance, an entrepreneur can now select a name and register a firm within a few hours -something that took up to three weeks earlier. Approvals now come with PAN and TAN.
Initially, switching to an online system didn't always work. “We found that some departments were still insisting on printouts. We discontinued that,“ says Abhishek.
In many cases, the online to ols did not work due to lack of sufficient bandwidth or inadequate hardware. Most of these issues have been resolved. Wiser from 2016 experience when India's rank barely moved (131 to 130), and under instructions from PM, ministries were asked to implement changes well ahead of the deadline. If the deadli ne for the World Bank team's assessment was December, the process needed to be completed earlier so that companies being surveyed by the Bank had the time to assess the change and build that into their feedback.
A lot of work was done to communicate changes. All reforms undertaken in a department were mentioned clearly in one place and a special drive was undertaken to remove all old information. Workshops were organised to explain the changes to specific industries.Perhaps the biggest and hardest change has been in the mindset.“Agencies like MCD now have WhatsApp groups to address user concerns. The mindset is changing and that is a very important achievement,“ Abhishek said.
Small steps led to big gains in biz ranking
In 2017, the department of industrial policy and promotion (DIPP), which was largely an agency dealing with foreign direct investment (FDI) in the past, received feedback that those setting up offices in South Delhi were unable to get noobjection certificates online from the fire department. A closer scrutiny revealed that the municipal corporation had not changed the rules, prompting the Centre’s intervention for tweaking the regulation.
Similarly, those setting up factories would often have to wait for days to get a water pipeline, which could only be laid by agencies designated by the municipal bodies. But that’s no longer the case if the pipeline is more than five metres. There were several instances, where some of the government agencies were not granting online approvals unless the applicant met officials. Through aids such as WhatsApp group comprising architects, the government managed to set the house in order.
Steps like this helped India climb 23 spots to be ranked 77th in the World Bank’s Doing Business report, released on Wednesday, which finance minister Arun Jaitley said was possible as DIPP looked at minute details and finalised sub-steps. “You literally have to crack the code,” he said. These small steps came along with government's major reforms such as Insolvency and Bankruptcy Code (IBC) and GST.
There was interaction at multiple levels over the last two years, when India jumped 53 places. “A lot of times our interaction and training of front-line staff has helped us in finding solutions to change rules and make life easier for businesses,” DIPP secretary Ramesh Abhishek told.
There were back room parleys too with users — from exporters, architects and developers to company secretaries, involved with setting up of companies, and chartered accountants, who help in filing returns and paying taxes. Feedback was received at multiple levels, analysed and acted upon. Three rounds of interaction with World Bank (WB) teams in the US too helped as the government sought to set its house in order. But there are areas such as registering property, where India ranks poorly despite a major push from the Centre. Jaitley suggested that to address these concerns, the government may have to go for business process re-engineering with online solutions that can help you transfer property sitting at home.
2018: India ranks 77
India has leapfrogged 23 places to 77th rank in the World Bank’s global Ease of Doing Business rankings, a feat which is likely to boost the government’s reform credentials and raise the country’s attractiveness for investors.
The report released lists India and China as the two large economies which are among the 10 biggest reformers among 190 countries. New Zealand, Singapore and Denmark were on top of the list. Among the BRICS countries, Russia and China were ranked higher. The sharp jump in India’s ranking is largely driven by feedback from stakeholders who say it is now significantly simpler to get construction permits and ship goods across the country’s borders as well as reforms in other regulatory and process approvals.
The latest rankings will bolster the BJP government’s reform record and comes at a time when the government has been battling criticism on the economic front amidst a weak currency, widening current account deficit and choppy financial markets. “We are unwavering in our commitment towards economic reforms, which will ensure an environment that fosters industry, investment and opportunities,” Prime Minister Narendra Modi tweeted. India improved its ranking on six of the 10 parameters and has jumped 53 places in two years.
At a press conference, finance minister Arun Jaitley identified property registration and starting businesses, where India is still ranked low, as focus areas in coming years. He said that steps such as the launch of GST , the new insolvency law and setting up of commercial courts would help India move up further.
“If we do focused improvement, breaking into the top 50 is not out of reach,” the minister said.
Retail index, Global
2017: India overtakes China to reach no.1
India has surpassed China to secure the top position among 30 developing countries on ease of doing business
Expanding economy, easing of FDI rules and consumption boom are the main reasons
India's retail sector has been growing at an annual rate of 20 per cent
India has surpassed China to secure the top position among 30 developing countries on ease of doing business, according to a study that cited India's rapidly expanding economy, relaxation of FDI rules and a consumption boom as the key drivers.
The 2017 Global Retail Development Index (GRDI), now in its 16th edition, ranks the top 30 developing countries for retail investment worldwide and analyses 25 macroeconomic and retail-specific variables.
India's rapidly expanding economy, easing of foreign direct investment (FDI) rules and a consumption boom are the key drivers for India's top ranking in the GRDI.
The GRDI, titled 'The Age of Focus', ranks China in second place. Despite its slower overall economic growth, the market's size and the continued evolution of retail still make China one of the most attractive markets for retail investment.
"The study is unique in that it not only identifies the markets that are most attractive today, but also those that offer future potential," said the management consulting firm A T Kearney in a statement.
India's retail sector has been growing at an annual rate of 20 per cent. Total sales surpassed the $ 1 trillion-mark last year and the sector is expected to double in size by 2020. Rapid urbanisation and a growing middle class with higher income levels is driving up consumption across the country, the consultancy group said. The government's continued support to relax FDI regulations in key areas of the retail sector have provided further boost to its growth, it noted. In the past year, the government has allowed 100 per cent foreign ownership in B2B e-commerce businesses and for retailers that sell food products. India's retail sector has also benefited from the rapid growth in e-commerce.
Retailers have been quick to seize the opportunity with 86 per cent of e-commerce dominated by pure-play online retailers in 2016.
The Indian government's effort to boost cashless payments (witnessed in the recent nationwide demonetisation exercise) and reform indirect taxation with a nationwide goods and services tax (GST) are also expected to accelerate adoption of formal retail. "India's top ranking is a clear vote of confidence in its retail market and vast growth potential," said Debashish Mukherjee, Partner with A T Kearney and Head of the Consumer Industries & Retail Products Practice for India.
States and the ease of doing business
2013: Easiest to start business in Delhi, close in Hyderabad: World Bank
PTI | Oct 30, 2013 
In the 'Ease of Doing Business' ranking of 189 economies, India has dropped from 131 spot to 134 position, while Singapore continues to remain at the top.
WASHINGTON: It is easiest to start a business in New Delhi within India, while Hyderabad is the fastest for closing an enterprise, says a World Bank study.
On the other hand, Kolkata is the toughest place for closing a business among 17 cities, while Bengaluru requires the maximum efforts to start a company, it says.
The city-wise details are part of separate 216-page report by World Bank and International Finance Corporation (IFC) on doing business in India, which was on Tuesday ranked 134th globally in terms of ease of doing business.
According to the report, it requires 32 days for starting a business in New Delhi, while it takes 40 days to register a company in Bengaluru. Besides, a total of 11 procedures (any interaction of the company founders with external parties such as government agencies, lawyers and auditors) is required to register a firm in New Delhi, while 13 procedures need to be followed in case of Bengaluru, the study said.
In terms of ease of doing business within India, New Delhi is followed by Patna, Jaipur, Hyderabad and Bhubaneshwar. When it comes to closing a business, Hyderabad is best place as it takes an average of seven years to wind up an enterprise, while Kolkata is the toughest place for closing a firm by taking an average of 10.8 years.
Among other top five cities, where closing a business is easy are Ludhiana, Mumbai, Ahmedabad and Bhubaneshwar.
In the 'Ease of Doing Business' ranking of 189 economies, India has dropped from 131 spot to 134 position, while Singapore continues to remain at the top.
The rankings are based on various parameters including starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.
Overall, India's business environment has come for criticism on various issues in the past including in Vodafone tax dispute.
2016: Telangana replaces Andhra at no. 1
After Bihar & U'khand, Now Telangana At No. 1, Replaces Andhra
The race to decide the easiest state for doing business in India has gone down to the wire.
If the year began with Bihar in the lead, it was Uttarakhand that led the race for the past few months. Now, Telangana is on top, dethroning arch rival Andhra Pradesh. The gap between the two is just one hundredth of a percentage point. On Sunday evening, India's youngest state, Telangana, had a score of 96.98% compared to Andhra's 96.97%.
And last year's winner Gujarat, which dropped to the sixth position just 10 days ago, is now placed third with a score of 94.99% as a World Bank team goes through the last 100 steps taken by Indian states before releasing the rankings. When the rankings were released for the first time last year, states were gauged on 98 parameters for improving the regulatory framework for business. This year, they are being graded on the basis of their performance on 340 parameters -so far the most detailed exercise of its kind.
States were asked to submit the steps they had taken on performance indicators such as ushering in transparency , sing le-window clearances, availability of land, construction permit enablers and environmental registration enablers. Their submissions are still being validated and marks assigned.
“We are taking a little time in releasing the rankings because we want to be sure that the steps that states are claiming to have initiated are properly verified,“ said an officer.
The idea of releasing the rankings -which are dyna mic and available online -is to prod states to move ahead with improving business processes, often a crucial factor in investors choosing where to invest.
States have taken it very seriously , with some hiring consultants to ensure that the steps that are taken do not go waste.
Data shows that Telangana has a positive response on 321 parameters, one more than Andhra but less than Gujarat's 322. In all cases, the maximum number of reform initiatives has come on environment registration enablers. Environment and forest-related clearances were seen as the biggest stumbling block for investors, especially at the state level.
Telangana has taken 27 steps each on easing construction permit related regulations and setting up systems for single-window clearances.
Oct 2016: AP, Telangana top-- DIPP, World Bank
- Andhra Pradesh and Telangana emerged as joint toppers
- Gujarat lost its top slot and was placed third
- Himachal, Tamil Nadu and Delhi were identified as states where acceleration is required.
Andhra, Telangana easiest states to do business
NEW DELHI: Andhra Pradesh and Telangana emerged as joint toppers in the ease of doing business, according to the rankings for states released by the government on Monday, while Gujarat lost its top slot and was placed third.
Telangana and Andhra ended the closely-contested contest with a score of 98.78 per cent on the 340 parameters that states were ranked on.
Chattisgarh retained its fourth position and was followed by Madhya Pradesh, Haryana, Jharkhand, Rajasthan, Uttarakhand and Maharashtra. They were classified as leaders in the rankings by the department if industrial policy and promotion along with the World Bank.
Karnataka, Uttar Pradesh, West Bengal and Bihar were classified as "aspiring leaders", while Himachal, Tamil Nadu and Delhi were identified as states where acceleration is required.
Ease Of Doing Business ranks
(Department of Industrial Police and Promotion and World Bank Report)
1. Andhra Pradesh and Telangana
5. Madhya Pradesh
Pairing high- and low- performing states
No. 1 Andhra Pradesh Will Work With Left-Ruled Kerala
The government is trying a new model of handholding, where a state with a higher rank for ease of doing business is partnering with one that is ranked lower, in its latest attempt to ease bureaucratic red tape across states and Union territories (UTs).
So, last year's top-ranked state Telangana has been asked to work with Tripura, which was ranked 26th among the 32 states and UTs. Similarly , Andhra Pradesh -Telangana's closest competitor and joint leader last year -is advising Kerala, another Left-ruled state to improve policy . Thirdranked Gujarat that topped the first round of rankings in 2015 has been tasked with mentoring Dadra & Nagar Haveli and Andaman & Nicobar Islands.
The innovation is part of this year's efforts to improve the overall environment. “We are promoting hand-holding of states where one helps out another and the feedback is very positive,“ said Ramesh Abhishek, secretary , department of industrial policy and promotion (DIPP), the agency responsible for making life simpler for businesses.
Officers in the industry department said they were pleasantly surprised with the cooperation being extended by the better placed one to the laggards. “The better placed state had actually sent three reminders to its partner state,“ said an officer, recollecting one incident.
The move comes amid intense competition from the states to improve their rankings in the latest round for which the process of making changes to rules is currently under way . Unlike the last two rounds, this time DIPP is moving to a feedback-based ranking system, where stakeholder response to the changes will play a crucial role.
The Centre is pushing hard to drive changes in the states and some part of reforms for India to break into the top-50 club has to come from them.For instance, registration of property or dealing with construction permits are issues that have to be dealt with at the local level. Similarly, when it comes to starting a business, there are several problems that only states can address. While the government's focus for the World Bank's ease of doing business rankings has been on reforming and improving processes in Mumbai and Delhi, the idea is to broad-base it to all the states and UTs.
Andhra Pradesh, with a score of 98.42 per cent, topped the 'ease of doing business' ranking among states prepared by the World Bank and the Department of Industrial Policy and Promotion (DIPP), on Tuesday.
In 2017, Andhra Pradesh and Telangana had jointly topped the chart. This year, Telangana has slipped to the second spot with a score of 98.33 per cent.
Haryana came third with 98.07 per cent.
Here is the complete list of all states and union territories:
TOP ACHIEVERS (ABOVE 95%)
ACHIEVERS (90 - 95%)
FAST MOVERS (80 - 90%)
ASPIRERS (BELOW 80%)
|22||JAMMU & KASHMIR||33.05|
|24||DAMAN & DIU||28.69|
|26||DADRA & NAGAR HAVELI||21.88|
|31||ANDAMAN & NICOBAR ISLANDS||1.24|
The government floated the move to rank states last year with the aim of triggering competition among states to attract investments and improve business climate.
The parameters include areas such as construction permit, labour regulation, environmental registration, access to information, land availability, and single window system.
Others in the top ten are Jharkhand (4), Gujarat (5), Chhattisgarh (6), Madhya Pradesh (7), Karnataka (8), Rajasthan (9) and West Bengal (10).
Meghalaya was ranked last at 36th position.
DIPP in collaboration with the World Bank conducts an annual reform exercise for all States/UTs under the Business Reform Action Plan (BRAP).
"A large number of states have made significant progress in reforms suggested in BRAP 2017," it said.
The assessment under the BRAP 2017 is based on a combined score consisting of reform evidence score that is based on evidence uploaded by States/UTs and feedback score that is based on response garnered from the actual users of the services provided to the businesses.
DIPP said 17 states have achieved a reform evidence score of more than 90 per cent and 15 have achieved a combined score of 90 per cent and more.
"The states which have achieved 80 per cent or more reforms evidence score represent 84 per cent of the country's area, 90 per cent of the country's population and 79 per cent of India's GDP," it said.
Number of reform actions implemented under BRAP 2017 increased to 7,758 from 2,532 in 2015.
Financial transparency ratings
The Times of India, Nov 04 2015
India betters financial transparency ratings
Jumps 13 spots in 2 years, now at 45th
India has made significant progress in the past two years in financial transparency . According to the global financial secrecy index (FSI) report released by Tax Justice Network (TJN), India ranked 45 in the list of 92 countries in 2015 in comparison to 32 in 2013, which is seen as a big jump. The ranking takes into account the processes put in place to bring transparency and reduce secrecy around financial dealings.