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 took 1.86 days but the IFC’s feedback showed that it took two-seven days, Abhishek said.
Credits ET Realty