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India slips two slots in World Bank’s Ease of Doing Business report to 142

By PTI
29 October, 2014

India ranked 142 among the 189 countries surveyed for the latest World Bank’s “Ease of Doing Business” report released today, a drop by two places from the last year’s ranking, as Singapore topped the list.

The fall in India’s ranking from the last year’s 140 is mainly because other nations performed much better, Bank officials said.

In the 2014 report, India had 52.78 points and this year it scored 53.97 points.

The latest ranking, however, does not take into account a slew of measures taken by the Modi Government to make India a business friendly destination.

“We do not want to send the impression that the drop in India’s ranking is connected in any way with the current political situation (government),” said Augusto Lopez-Claros, Director, Global Indicators Group, Development Economics of the World Bank Group.

“It is absolutely true that the new government of Mr Modi has made it very clear that they see the creation of a better investment climate and a more business friendly environment in India a top priority. However, it is important to remember that the new Government did not come into office until the second half of May,” he said.

Noting that the cut-off of ease of doing business is May 31st, Lopez said whatever the government would do and whatever is in the pipeline is going to have an impact on these indicators only next year.

Appreciative of the steps taken by the new Indian Government, World Bank officials said that there was a very high likelihood of India significantly jumping up the ladder in the next report.

Singapore with 88.27 points occupies the top position in the ease of doing business followed by New Zealand, Hong Kong, Denmark and South Korea respectively.

Among other major countries, the US has been ranked seventh, Britain (eight), China (90), Sri Lanka (99), Nepal (108), Maldives (116), Bhutan (125), and Pakistan (128).

When asked about the ambition of the new Indian Government to move up the ladder and gain a ranking within top 50 countries, Lopez said: “There is no reason, why not?”.

“Absolutely, it can be done. There are many examples of countries who through focused efforts, through intelligently designed reforms have managed to make very substantial improvement,” he said.

Though India did drop a little bit in terms of its ranking, the ease of doing business has improved over the last 12 months, he said.

Rita Ramalho, lead author of the Doing Business report, said India’s ranking dropped, despite improvement in its business environment, because other countries improved.

“There is a continuous improvement across the world. India improved, but others improved at a faster pace,” Ramalho said.

While India’s rank for ‘ease of doing business’ has worsened to 142nd position globally, it fares much better in terms of protection of minority investors and credit availability at 7th and 36th places, respectively.

These are the only two categories (out of total ten considered by World Bank Group) where India is ranked among top-50 countries — a target set by Prime Minister Narendra Modi for the overall ranking.

Meanwhile, the country’s spot last year has been revised to 140 after making adjustments and reflect data corrections, whereas it was at 134th position when the rankings were published last year.

Modi, in September, had said that India’s ranking could be improved to the 50th position by making government regulations easier.

India is ranked 36th with respect to ‘getting credit’ category while the country is placed at 7th spot when it comes to ‘protecting minority investors’.

In last year’s ranking, India was at 28th place in ‘getting credit’ category and 34th with regard to ‘protecting investors’.

“India strengthened minority investor protections by requiring greater disclosure of conflicts of interest by board members, increasing the remedies available in case of prejudicial related party transactions and introducing additional safeguards for shareholders of privately held companies,” the report titled ‘Doing Business 2015: Going Beyond Efficiency’ said.

On ease of getting credit in India, the World Bank report said, “… in India a little over a decade ago, an entrepreneur seeking a loan to grow his business would have had little luck because financial institutions lacked access to information systems to assess creditworthiness.

“Today, thanks to the creation and expansion of a national credit bureau offering credit scores and coverage on par with those in some high-income economies, a small business in India with a good financial history is more likely to get credit and hire more workers,” it said.

The report covers 189 countries.

The overall ranking is based on ten factors including ‘starting a business’ (158th rank), ‘dealing with construction permits’ (184), ‘getting electricity’ (137)’registering property’ (121), ‘enforcing contracts’ (186), ‘trading across borders’ (126), ‘paying taxes’ (156) and ‘resolving insolvency’ (137).

In South Asia region, the report said India implemented the “largest number of regulatory reforms in that period (June 2013 to June 2014), with 20, followed by Sri Lanka with 16”.

This year, for the first time, the World Bank Group collected data for a second city in economies with a population of more than 100 million. In India, the report has considered both Delhi and Mumbai.

In a release, the World Bank Group said that India set the pace for regulatory reform in the region in 2013/14.

“It made starting a business easier by reducing registration fees and strengthened minority investor protections. And the electricity utility in Mumbai made getting a new connection less costly by reducing the security deposit,” the release noted.

Even though India made starting a business easier by considerably reducing the registration fees, the report said the country made it “more difficult by introducing a requirement to file a declaration before the commencement of business operations”.


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India slips two slots in World Bank’s Ease of Doing Business report to 142

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