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India ranks 132 on ‘Doing Business Index’, gains 7 places!

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The economic health of any country is hugely dependent on the ease of starting / doing a business in it. In other words, countries which offer a conducive environment for business end up attracting more businesses resulting in a flourishing economy.

DoingBusiness has been publishing its ‘Doing Business’ index for a few years now and the report serves the exact same purpose – How business friendly a country is! It is one of the most exhaustive report with 183 countries and uses a large number of factors to rate a country’s potential to attract and retain businesses.

Doing-Business-India

Based on the latest Doing Business report, India’s ranking has improved by 7 places to 132 from the earlier 139.

A lower rank is a sign of improvement meaning that the overall business environment has improved in India. However, it is disheartening to see that even with the improved rank India is behind most of its South-Asian counterparts when it comes to ease of doing business, infact India’s rank is higher than the South-Asian average of 117

Ease of Doing Business Comparison

ease doing business

They say "Devil is in the details"! It comes out in full-light when you see India fare on various factors that comprise the overall doing business rank.

Starting a Business in India – Rankings of Various Factors

db parameters

Not a lot to talk about here, is there! The diagram shows India faring poorly across all major factors except for one and too. A top level analysis of some of these factors throws light on things that are probably wrong and right when it comes to India’s business environment

Fair Financial Environment

Indian ranks fairly well for access to capital and such as evident from Getting Credit (40), Protecting Investors (46). This suggests that the overall policies governing access to capital and other regulatory policies are favorable.

However, India fares very badly in Paying Taxes (147) but it has shown improvement from last year (165) signifying that the taxation policies in India have improved marginally

Starting A Business Continues To Be A Painful Ordeal

The poor ranking in factors like Starting A Business, Dealing with Construction Permits etc. does hint at poor policies governing the registration and initiation of a new business. Delving deep into the sub-factors, even as the cost of starting a business in India has gone down from last year, the procedures and the time taken for completing those procedures still remains high. One wonders if too much bureaucratic processes hinder the same

International Trade Logistics Have Worsened

This I found really surprising. Even as the time to export documents has decreased by a day as compared to last year, the cost to export as well as import documents has increased.

Overall, there are definite signs of improvement when it comes to Doing Business in India but I personally think that the policy side of things needs to improve drastically. Things like days to register a business and getting construction contracts should definitely improve if the country needs to grow its economy.
 
After all, the earlier a business starts the earlier it can start generating revenue and employment among other things.
 
What are your thoughts on India’s marginal improvement in the Doing Business Rank? Also, do you think the ground reality is any different than what the report suggests?
  1. Dayashankar Ojha says

    well in future there are chances of improving the rank:-)

  2. Altaf Rahman says

    Ankit !! The following is just trying to be funny. May be a little bit sarcastic. Dont take it seriously.

    I try to visualize what is the answer if you pose the question to some people :

    Ask Mittal : He will probably rate India as the last country in the list :) He is still trying to realize his 12 million MTPA steel plant in Orissa and Jharkhand after 6 years.

    Ask Cairn : They will rate India as No. 1 (until they sell their stake to Vedanta) then after that if you ask them in their offices in ireland, they will rate India as the last on the list (they hate the decison of courts for allowing royalties and taxes as cost recoverables in Rajasthan fields but in their desperation to pull out of India quickly, they agreed to those conditions. They know that if they object, which they can do legally, the sale proceedings will be delayed)

    Ask Vedanta group : They will say India is No. 1 as they are getting permits / licences / etc at lightening speed even for controvercial projects (Other people should learn from Vedanta on how to “Apply” for permits and all )

    Ask Hutch : They will rate India as the last country in the list. (They ran away from India with out paying taxes and now Essar is caught in the mud. IT is running after Essar to pay the taxes)

    As I said above its only funny. No debates please :)

    1. Ankit says

      Altaf, this is hilarious and insightful at the same time. But its true that these rankings can only serve as a pointer and the ground realities could be vastly different as you rightly highlighted :D

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