WASHINGTON, October 25, 2016 – India has accelerated its efforts to improve the business climate and has initiated transformational reforms in its local regulatory framework over the past one year, finds the World Bank Group’s new annual ease of doing business report. Wider adoption of these new reforms, according to the report, could lead to significant improvements in its business environment in the next few years.
Doing Business 2017: Equal Opportunity for All, released today, captures reforms implemented in 190 economies in the year ending June 1, 2016.
While India is ranks at 130 in this year’s report (131 last year after making methodological adjustments to the Doing Business 2016 data), importantly its distance-to-frontier score has gone up from 53.93 in Doing Business 2016 to 55.27 in Doing Business 2017. Distance-to-frontier score is the absolute measure of a country’s progress towards best practice in business regulation. A higher score indicates a more efficient business environment and stronger legal institutions.
Compared to two indicators last year, this year the report recognizes India for reforms on four indicators –Getting Electricity, Paying Taxes, Trading Across Borders and Enforcing Contracts. In fact, India’s rank has improved dramatically in the Getting Electricity indicator, from 137 in Doing Business 2015 to 26 in Doing Business 2017 – a 111 rank improvement in just two years. Last year India was recognized for reforms in Starting a Business and Getting Electricity.
India currently ranks in the top 50 economies in the world on three of the ten indicators – Getting Credit, Protecting Minority Investors and Getting Electricity.
“The Government of India has undertaken significant steps to improve the ease of doing business. Effective implementation of some of the deeper and more medium-to-long term reforms will lay the groundwork for a better business climate in future,” said Rita Ramalho, Manager of the Doing Business project. “These reforms have not found due reflection in this year’s report as such complex reforms take time to be adopted in full measure. The report’s cut-off date of May 31 also meant that the impact of some of these reforms were yet to be fully felt by the majority of businesses,” said Ramalho.
Elaborating on the reforms for which India was recognized this year, the report highlights that India made getting electricity faster and cheaper by streamlining the process of getting a new commercial electricity connection. It has made paying taxes easier by introducing an electronic system for paying employee state insurance contributions. It has made exporting and importing easier by launching the Customs Electronic Commerce Interchange Gateway (ICEGATE) portal for electronic e-filing and simplifying border and documentary procedures and has made enforcing contracts easier by creating dedicated divisions to resolve commercial cases.
This year’s report also shows that in the area of Protecting Minority Investors, India is one of only six economies in the world that earn the highest possible score on the extent of shareholder rights index, which measures shareholders’ rights in corporate governance. India continues to perform well on this indicator set, with a global rank of 13.
Although India has made improvements, challenges remain in certain areas such as Paying Taxes, Enforcing Contracts, Dealing with Construction Permits, and Starting a Business. For instance, it takes a business almost one year longer in India to resolve a commercial dispute through a local first-instance court than it does in the rest of the region.
For the first time, Doing Business 2017 includes a gender dimension in three indicators: Starting a Business, Registering Property and Enforcing Contracts. India performs well on these new measures and the report finds no gender-related barriers in the economy.
The Paying Taxes indicator has been expanded to cover post-filing processes, such as tax audits and VAT refund. These new measures reveal space for improvement in India. For example, it takes 54 hours to comply with a corporate income tax audit in India, compared to the global average of 17 hours.