Even as ranking India 130th in the ease of doing business among 189 countries, up from 134th a year ago, the latest World Bank report, “Doing Business 2016: Measuring Regulatory Quality and Efficiency” has quietly suggested that all’s not well on the social front in India. It has pointed towards “unreliable electricity supply”, which has adverse “consequences for a society’s well-being and living conditions.”
Comparing India with Kenya, the report states, “25% of health facilities in Kenya can count on a reliable power supply” , and suggests India not far behind (page 72 of the 338-page report.
“In India nearly half of health facilities have no access to electricity at all”, the report insists, adding, “Most public services are compromised when power shuts down. And outages can pose a threat to personal safety—such as by putting out streetlights and traffic lights and by disabling burglar alarms in homes.”
Interestingly, the World Bank remark has been made alongside its effort to highlight how India has done considerably well in the category Getting Electricity in the overall performance of ease of doing business. In fact, in the category Getting Electricity, India has been found to have jumped by a whopping 29 points from 99th to 70th.
The other important category in which India has registered a jump is Starting a Business – from 164th to 155th position, by nine points.
Measuring 10 categories, in rest of the eight categories measured for ease of doing business, the report either there finds stagnation or deceleration.
Thus, in the category Dealing with Construction Permits, India improves by just one point, from 184th to 183rd, remaining one of the worst in the world. And, in Registering Properties, India’s ranking has been found to have dropped from 36th to 42nd, a fall of six points. In yet another category, in Paying Taxes, India’s ranking dropped by point by a point, from 156th to 157th which is again one of the worst in the world.
Interestingly, in half of the 10 categories analyzed – Registering Property (rank 138th), Protecting Minority Investors (eighth), Trading Across Borders (133rd), Enforcing Contracts (178th), and Resolving Solvency (136th) – the report has found that there is no change in a year.
Even then, singling out India’s reform measures as “exemplary”, the report states, “Just as Georgia stands out in Europe and Central Asia for having made big strides toward better and more efficient business regulation, at least one economy stands out in every other region for its improvement in the areas measured by Doing Business: Rwanda in Sub-Saharan Africa; Colombia in Latin America and the Caribbean; the Arab Republic of Egypt in the Middle East and North Africa; China in East Asia and the Pacific; India in South Asia; and Poland in the OECD high-income group.”
“Still”, the report warns, “While reforming in the areas measured by Doing Business is important, doing so is not enough to guarantee sound economic policies or to ensure economic growth or development.”
Praising the Modi government, which came to power in May 2014, the report states, “In 2014 the government of India launched an ambitious program of regulatory reform aimed at making it easier to do business. Spanning a range of areas measured by Doing Business, the programme represents a great deal of effort to create a more business-friendly environment.”
“One important focus is to make starting a business easier”, the report states, adding, “In May 2015 the government adopted amendments to the Companies Act that eliminated the minimum capital requirement. Now Indian entrepreneurs no longer need to deposit 100,000 Indian rupees ($1,629)—equivalent to 111% of income per capita—in order to start a local limited liability company.”
“The amendments also ended the requirement to obtain a certificate to commence business operations, saving business founders an unnecessary step and five days”, it says.
Other reform measures the report notes include developing a single application form for new firms and introducing online registration for tax identification numbers, the process for getting a new electricity connection simpler and faster, a single-window system for processing building permit applications, and fostering an environment more supportive of private sector activity.
“If the efforts are sustained over the next several years, they could lead to substantial benefits for Indian entrepreneurs—along with potential gains in economic growth and job creation”, the report says.
“Still”, the report warns, “While reforming in the areas measured by Doing Business is important, doing so is not enough to guarantee sound economic policies or to ensure economic growth or development.”
Praising the Modi government, which came to power in May 2014, the report states, “In 2014 the government of India launched an ambitious program of regulatory reform aimed at making it easier to do business. Spanning a range of areas measured by Doing Business, the programme represents a great deal of effort to create a more business-friendly environment.”
“One important focus is to make starting a business easier”, the report states, adding, “In May 2015 the government adopted amendments to the Companies Act that eliminated the minimum capital requirement. Now Indian entrepreneurs no longer need to deposit 100,000 Indian rupees ($1,629)—equivalent to 111% of income per capita—in order to start a local limited liability company.”
“The amendments also ended the requirement to obtain a certificate to commence business operations, saving business founders an unnecessary step and five days”, it says.
Other reform measures the report notes include developing a single application form for new firms and introducing online registration for tax identification numbers, the process for getting a new electricity connection simpler and faster, a single-window system for processing building permit applications, and fostering an environment more supportive of private sector activity.
“If the efforts are sustained over the next several years, they could lead to substantial benefits for Indian entrepreneurs—along with potential gains in economic growth and job creation”, the report says.
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