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India’s Ease Of Doing Business Rank Doesn’t Fully Reflect Changes On Ground: Industry

New Delhi: India being ranked 130 by the World Bank’s latest ‘Doing Business’ report does not fully reflect the significant transformation in the overall business environment following government reforms, industry bodies said on Wednesday.

They observed however that the position may improve significantly with the proposed rollout of the Goods and Services Tax (GST) from next April as well as the Insolvency and Bankruptcy Code, likely to be implemented by coming December.

“The World Bank’s Ease of Doing Business rankings are incompletely reflective of the significant transformation in the overall business environment in key areas such as openness to FDI, online procedures, MSME facilitation and so on,” CII director general Chandrajit Banerjee said.

The Narendra Modi government, he said, has undertaken a strategic and comprehensive reform package over the last two and a half years which has greatly contributed to strengthening investor confidence.

“Certain reforms such as legislation of the GST, the Insolvency and Bankruptcy Code, and others may not have come within the World Bank’s deadline of June 1. I am sure that the EODB rankings will align with the actual simplification and changes on the ground from next year onwards,” Mr Banerjee said.

In the World Bank’s latest ‘Doing Business’ 2017 report, India’s place remained unchanged from last year’s original ranking of 130 among the 190 economies that were assessed on various parameters. But the last year’s ranking has been revised to 131 from which the country has improved its place by one spot.

“Though the government has made several path breaking changes in legal framework and policy prescriptions like Goods and Services Tax, changes in insolvency law, liberalisation of FDI limits and rules in a host of sectors, the impact on the ground is generally visible after a lag,” said Assocham president Sunil Kanoria.

“Going forward, as these measures along with fast movement towards electronic governance kick in, India should be a far better place for the global investors to do business,” he added.

He pointed out that while the indices are important, the ultimate test lies with the investors, both domestic and international, suggesting that the Centre along with states should continue to further remove the bottlenecks in the business environment.

The rankings are based on ten parameters – starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

Earlier in the day, expressing disappointment at India’s rank remaining low in terms of ease of doing business, Union Minister Nirmala Sitharaman said the efforts and reforms undertaken by the Centre and states have not been adequately captured in the ranking released by the World Bank.

“Wide ranging reforms have been undertaken in the last few months, that have led to improved investment climate as is evident from increased FDI inflows,” said industry body Ficci.

“Ease of doing business is key to competitiveness of a business and the approach adopted by the Government is in the right direction,” Ficci president Harshavardhan Neotia said.

“States need to deepen the reforms in specific areas for improving the rankings further,” he added.

Grant Thornton said the country’s ranking has improved “only marginally in spite of the big ticket reforms” and the government’s intentions “indicating clearly” that the impact of these is yet to be felt at the operating level.

“What is of concern is the drop in India’s best ranking which was protecting investors. It has seen a drop from 7 and 8 in the past 2 years to 13 indicating other countries have improved,” said Harish HV, partner-India leadership team at Grant Thornton India LLP.

PTI