Challenges Persist for Local Entrepreneurs, Despite India's Efforts to make Reform Improvements, Finds World Bank Group Report

October 29, 2014

New Delhi, October 29, 2014—A new World Bank Group report (June ’13- May ’14) finds that India is among the 20 economies worldwide improving the quality of their business regulatory environment the most in the past year. India implemented regulatory reforms in three areas measured by the report, yet challenges persist for small and medium entrepreneurs.

Released today, Doing Business 2015: Going Beyond Efficiency (June ’13- May ’14) states that India made starting a business easier in the past year by considerably reducing the registration fees. In addition, it made obtaining a new electricity connection less costly by reducing the security deposit. The government also strengthened minority investor protections, by requiring greater disclosure by board members and introducing additional safeguards for shareholders of privately held companies.

As India continues to improve its regulatory practices, areas that need attention are the time taken to enforce contracts and the cost of obtaining construction permits. Both will benefit local entrepreneurs and make it easier to open and operate businesses in India.

The report records reforms implemented by the government from June 2013 through May 2014. Reforms implemented after May 31, 2014, will be reflected in next year’s edition. The annual flagship report measures the ease of doing business in 189 economies around the world. This year’s report made notable changes to several indicator sets and its ranking system. For the first time in the 12 years since the publication was introduced, it collected data for a second city in the 11 economies with populations of more than 100 million. In India, the report now analyzes business regulations in Delhi and Mumbai. Read India summary:

“The new government is strongly committed to improving India’s investment climate and implementing reforms that will lighten the burden of cumbersome regulations on the private sector,” said Augusto Lopez-Claros, Director, Global Indicators Group, Development Economics, World Bank Group. “Because the cut-off date for data collection was May 31, the full impact of reforms now under way will not be reflected in the Doing Business report until next year. The current direction of change is positive, however, and this is encouraging.”

Since 2005, the Doing Business project shows, India has implemented 20 reforms improving business regulations, more than any other economy in South Asia. Further,  India stands out for its transparent systems for secured transactions, credit reporting, and  the strength of its legal framework for protecting minority investors—areas where it is among the world’s top-performing economies.

The report this year expands the data for three of the 10 topics covered, and there are plans to do so for five more topics next year. In addition, the ease of doing business ranking is now based on the distance to frontier score. This measures how close each economy is to global best practices in business regulation. A higher score indicates a more efficient business environment and stronger legal institutions.

According to the report, Singapore tops the global ranking on the ease of doing business. Joining it on the list of the top 10 economies with the most business-friendly regulatory environments are New Zealand; Hong Kong SAR, China; Denmark; the Republic of Korea; Norway; the United States; the United Kingdom; Finland; and Australia.

About the Doing Business report series

The annual World Bank Group flagship Doing Business report analyzes regulations that apply to an economy’s businesses during their life cycles, including start-up and operations, trading across borders, paying taxes, and resolving insolvency. The aggregate ease of doing business rankings are based on the distance to frontier scores for 10 topics and cover 189 economies. Doing Business does not measure all aspects of the business environment that matter to firms and investors. For example, it does not measure the quality of fiscal management, other aspects of macroeconomic stability, the level of skills in the labor force, or the resilience of financial systems. Its findings have stimulated policy debates worldwide and enabled a growing body of research on how firm-level regulation relates to economic outcomes across economies. Each year the report team works to improve the methodology and to enhance their data collection, analysis, and output. The project has benefited from feedback from many stakeholders over the years. With a key goal to provide an objective basis for understanding and improving the local regulatory environment for business around the world, the project goes through rigorous reviews to ensure its quality and effectiveness. This year’s report marks the 12th edition of the global Doing Business report series.  

About the World Bank Group

The World Bank Group plays a key role in the global effort to end extreme poverty and boost shared prosperity. It consists of five institutions: the World Bank, including the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA); the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Working together in more than 100 countries, these institutions provide financing, advice, and other solutions that enable countries to address the most urgent challenges of development. 

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