Ease Of Doing Business: India Jumps 23 Positions To Rank At 77
India has jumped 23 positions to rank 77 on the World Bank’s Doing Business index 2019. The Goods and Services Tax, insolvency framework and tax reforms are some of the key reasons that have made the country more investor-friendly, making India one of the top 10 economies to make the most improvements.
From 142nd position among 190 nations in 2014, the country reached the 100th spot in the 2018 report.
The many reasons
According to the 2019 report, India improved its rank on six out of the 10 parameters relating to starting and doing business in a country. One of the strongest movement was seen in granting of the construction permit. While the country ranked 181 for granting construction permits in the 2018 report, in 2019 rankings the country has reached the 52nd spot, a rise of 129 positions. Other parameters where India improved include trading across the borders, starting a business, getting credit, getting electricity and enforcing contracts.
Also, "India made paying taxes easier by replacing many indirect taxes with a single indirect tax, the GST, for the entire country. India also made paying taxes less costly by reducing the corporate income tax rate and the employees' provident funds scheme rate paid by the employer," the World Bank said.
A well-designed insolvency framework, according to the report, is a vital determinant of debt recovery, it said the establishment of debt recovery tribunals in India "reduced non-performing loans by 28 per cent and lowered interest rates on larger loans, suggesting that faster processing of debt recovery cases cut the cost of credit."
However, this time again, India's ranking in registering property has witnessed a fall. From its 154th rank in 2018, India has dropped 12 places to stand at 166 in 2019 report.
Target top 50
Now, the country aims to enter the top-50 club in the next year. According to Finance Minister Arun Jaitley, the country can break into the top 50 if it made it easier to start a business and improved on contract enforcement. “The obvious area and target for improvement are registering property, starting a business, insolvency, and taxation and the fifth one is enforcement of the contract,” Jaitley said. “Legislation is already in place with regard to enforcement of contract, taxation, and insolvency...starting a business central government and state governments have to work together...”, he added.
New Zealand topped the 2019 ranking, followed by Singapore, Denmark and Hong Kong. The United States took the eight position while China ranked at 46th. Neighbouring Pakistan is placed at 136.