In the 2020 report released by World Bank, India has been placed in 63rd position on the World Bank’s ease of doing business index. India was 77th among 190 countries in the previous ranking, which was a year before. Although the jump in the latest ranking is big, it was not enough to meet PM Modi’s target of bringing India into the top 50 bracket.
Saying that India has conducted a remarkable reform effort, the World Bank said that India has joined the list of top 10 improvers for the third year in a row, which it said was commendable given the size of the economy.
Praising the Narendra Modi government’s ‘Make in India’ scheme, the report by World Bank said that it has helped attract foreign investment, boost the private sector and enhance the country’s overall competitiveness.
Simeon Djankov, Director of Development Economics at the World bank told PTI in an interview that “This is the third year in a row that India makes to top 10 in Doing Business, which is a success which very few countries have done over the 20 years of the project, Without exception, the other countries that have done this are very small, population-wise, and homogeneous,”
The Ease of Doing Business measures the impact of government regulations on starting and operating a business. Like the number of steps that are required to launch or to shut down a business, to deal with construction permits, or to obtain electricity.
The World Bank has named India as ‘one of the economies with the most notable improvement’ for the third year in a row, along with Saudi Arabia, Bahrain, Kuwait, and neighbouring Pakistan and China.
The Doing Business methodology of the World Bank focuses on the regulatory experience of SMEs, and so the improvement in ranking indicates that the time and cost burdens faced by SMEs to comply with government regulations has gone down over the past four years due to a large number of reforms implemented by the central government and governments of Maharashtra and Delhi.
When the Modi-led government came to power in 2014, India was ranked as the 142nd-most competitive economy in the world by the World Bank. However, reforms such as the extending the validity of industrial licenses, as well as enacting the Goods and Services Tax (GST) and the Insolvency and Bankruptcy Code (IBC), helped India’s ranking rise 65 places over the last four years. Today, India ranks as the easiest place to do business.
Various steps were taken by PM Modi to ensure ‘Ease of Doing Business’ which includes reduction of corporate tax and labour reforms.
PM Modi in his speech on Monday said that the target of the government is to ensure ‘Ease of Living’ and the unique strength of India is the availability of three Ds – democracy, demography and ‘dimaag’ (brains).
According to the sources, India recorded a capital and financial account surplus of 17.43 USD Million in the second quarter of 2018, which is above the average of 8.13 USD Million for the period 2010-2018.
As rightly said by Vijay Govindarajan Coxe, Distinguished Professor at the Tuck School of Business at Dartmouth the reason behind the enormous rise in the ease of doing business rank of India is that the BJP took power from Congress four years ago resulting in the change of perception of India as BJP’s agenda is economic growth whereas Congress was all about populism. Also, BJP relaxed rules and regulations and made it easier to do business and now that China and the US have two formidable rival blocs, India has emerged as the largest economy for foreign companies seeking growth.
Well, according to IMF World Economic Outlook, India’s economy will grow at 7.3% in 2018 and 7.4% in 2019 up from 6.7% in 2017 ahead of China’s.
Although India has a long way to go, PM Modi will continue to accelerate the economic reforms and take India to a whole new level.