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Ease Of Doing Business: Here Is What More Modi Could Do

India jumping 30 notches to get to the 100th spot in the World Bank’s Ease of Doing Business rankings is a big achievement.

The government set its goal very clear and worked hard to push through the changes required, the Insolvency and Bankruptcy Code (IBC) being one example of this. One factor on which India has scored is in protecting minority interests—it moved up from 13th to fourth position over the last year as a result of the new Companies Act in which small shareholders now have more redressal mechanisms to deal with transactions between interested parties.

Ease Of Doing Business

The IBC, a unprecedented legislation that will make it easier for companies to exit businesses and free up capital, helped raise India’s score in resolving insolvency from 136th to 103rd over the year; indeed, IBC has helped push up the score for getting credit from 44th to 29th. The reforms on EPF (where electronic payments are mandatory) has been another big positive, and with the World Bank going to take into account India’s GST, the overall ranking should improve further next year.

What more could be done?

In order to improve further, it is important to focus on areas where India’s score remains quite low, and has even slipped. In the key parameter of commencing a business, India’s rank has fallen a notch to 156, and that’s when the World Bank measures progress in the most efficient parts of the country, Delhi and Mumbai.

Moreover, even in terms of registering a property, India has slipped to 154 from 138 a year ago; there is little progress in titling and digitizing land records, property documents remain complicated and applicants are still running. India’s rank on getting construction permits is up a bit, but it is still a dismal 181st and it is 164th when it comes to enforcing contracts.

Conducive business environment is more than just a rank on an index since it considers the size of the market, the opportunities and government policy.

Though it can be argued that Nokia leaving the country—(even though India is the fastest-growth market for mobiles)—due to tax complications is a thing of the past, surely the same cannot be said of what Vodafone and Cairn continue to face; even after the improvement in ranking from 172nd last year, India is still a poor 119th on paying taxes.

Businesses also consider whether government policy is getting more restrictive, as it is in the pharmaceuticals and medical devices sector; and the sad experience of Monsanto and DoCoMo only add to this.

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