India has for the first time broken into the club of the 100 nations easiest to conduct business in, driven by ease of paying taxes, resolving the insolvency
problem, access to credit, and protection of minority investors.
The World Bank’s ‘Doing Business 2018: Reforming to Create Jobs’ report, released on Tuesday, showed India's rank in ease of doing business
jumped 30 places to 100 among 190 countries. India’s rank was 130 a year ago. India has also been adjudged the fifth best-performing nation globally in reforming the business environment.
The country improved its rankings in six of the 10 sub-categories used by the World Bank to judge the climate of business.
The report, covering the period from June 2 last year to June 1 this year, ranked India top among the South Asian nations. India's distance to frontier ratio, which tells how similar a country's economic practices are to global best practices, has improved in nine out of 10 categories. Also, it is now among the top 30 nations in three categories — getting electricity, securing credit and protecting minority investors.
However, the World Bank noted that India lagged in areas such as starting a business, enforcing contracts, and dealing with construction permits.
"The systematic reforms by the country in a persistent manner have paid off," said Annette Dixon, vice-president for the South Asian region, World Bank.
The multilateral agency has recognised reforms by the government
in eight sub-categories. It said the country had adopted 37 reforms since 2003. "Nearly half of these reforms have been implemented in the last four years," it said. The Narendra Modi government
has been in power for the past three and a half years.
The World Bank did not specifically ask respondents about the implications of the GST.
It said the tax was not an issue mentioned by a majority of the respondents but added that it would have a significant bearing on India’s rankings over the next few years.
In the protecting minority investors, India is now the fourth best country in the world, a jump from the 13th place last year.
The passage and implementation of the Insolvency
Code (IBC) as well as setting up of sectoral regulators saw India climb 33 notches in the parameter for resolving insolvency.
In access to credit, the country improved its ranking
by 15 places to 29. Here, too, the insolvency
process played a key role.
However, despite hoping to bag a better rank in the securing construction permits category, India only improved to 181 from 184.
The report has not taken into account the government's demonetisation
drive, which has led to widespread disruption in business and has also pulled down economic growth. It didn’t consider the goods and services tax either. Junaid Ahmad, country director of the World Bank, said they were not factored in because the report only took into account comparable factors across the world.
Vedanta Group Chairman Anil Agarwal said the robust rise showed the reforms by the government
were finally bearing fruit, making India one of the most compelling investment destinations globally.