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What is behind India's 30 step jump in ease of doing business- What does it means to Indians?
India is one of the fastest growing economies in the world in the twenty first century. Being the world's largest democracy.
It is too cumbersome to realise a reform in general. But the recent trends in the growth trajectory of India are evident to prove the above statement incorrect.
The much sought-after business friendly environment is growing at a faster pace these days. Despite some of the largest scale reforms like introduction of historic GST and demonetisation especially causing a havoc in this year's GDP, the World Bank report on Ease of Doing Business has confirmed a hope of positive impact of these reforms.
The potential of India is huge and the government is just excavating it. The highest improvement of 30 places in the EODB rankings is truly an attribute to India's immense opportunities in ease of doing business in India.
This report takes into account a cumulative effect of several factors. Among 189 countries, India has been ranked 100th this year. If we look at the rankings of past 3 years, India seemingly has not dealt a great extent till last year. The rampant growth in 2017 is a matter of great pride for us. The following are the factors considered for this report:
- Starting a Business
- Dealing with construction permits
- Getting electricity
- Registering property
- Getting credit
- Protecting minority investors
- Paying taxes
- Trading across borders
- Enforcing contracts
- Resolving Insolvency
Higher ranking indicates better, usually simpler regulations for businesses and stronger protection of property rights and indicates that the regulatory environment is more conducive for starting and operating of businesses.
India has done very well in eight areas of the ten.
- India has jumped 53 places from 172 to 119 on ease of paying taxes.
- India has leapt over to 4 th rank on protecting minority investors
- India has moved 15 places from 44 to 29 on ease of businesses getting credit.
This has been possible due to the latest stringent all-round and multi-sectoral reform push given by the government. The major concerns have been laid upon facilitating entrepreneurs and MSMEs.
Some of the measures taken by the central government which are responsible for this achievement are as follows:
Starting a Business:
- The requirement of Common company seal is eliminated.
- 2. Introduction of form -29 by MCA. With this form three processes such as Name Availability, Director Identification Number and Incorporation of Company are clubbed into one. The company can be registered within 1-2 working days in India.
Dealing with construction permits:
- Municipal Corporations of Delhi as well as Municipal Corporation of Greater Mumbai have introduced fast track approval system for issuing building permits with features such as Common application form, provision of using digital signature and online scrutiny of building plans.
- Delhi has a uniform building bye laws, 2016 which allows for risk-based classification regimes for different building types. The uniform building bye laws have provision of deemed approval of sanctioning building plans within 30 days.
Trading Across Borders:
- The Central Board of Excise and Customs (CBEC) has implemented 'Indian Customs Single Window Project' to facilitate trade. Now importers and exporters can electronically lodge their customs clearance documents at a single point only with the customs.
- The number of mandatory documents required by customs for import and export of goods have been reduced to three viz. Bill of Lading, Invoice cum Packing List and Import Declaration.
- The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 has been enacted. The Commercial Courts and Appellate Divisions have already been established in Delhi and Bombay High Court.
- In both Delhi and Mumbai, the distribution companies have stipulated that electricity connections will be provided in 15 days and the number of documents required to obtain an electricity connection have been reduced to only 2. Online application for connections above 100 KVA have been made mandatory in Delhi and Mumbai. This will reduce procedures, cost and time taken to obtain an electricity connection significantly.
- The trends in the rank of getting electricity have been 99 in 2015 to 70 in 2016. The number of days taken to get a permanent electricity connection for a business is just 53 days which is less than the time taken in South East Asian and OECD member countries.
- In Delhi, all sub-registrar offices have been digitized and sub-registrars' records have been integrated with the Land Records Department and in Maharashtra all property tax records have been digitized. The digitization of property records will overcome the cumbersome and time consuming paperwork for registering properties. It will ensure transparency and allow citizens to ascertain history of transactions in digital mode.
- The Insolvency and Bankruptcy Code, 2016 is expected to introduce new dimensions in Resolving Insolvency in India. This is India's first comprehensive legislation in the area of corporate insolvency.
- The ESIC has developed a fully online module for electronic return filing with online payment. This has greatly reduced the time to prepare and file returns.
- With introduction of e-Verification system, there remains no physical touch point for document submission to Income tax authorities.
Some of the drawbacks include the following: India has fallen sixteen places on ease of registering property, slid slightly on trading across the borders and slid one rank from 155 to 156 on ease of starting business.
India has been taking great measures to alleviate any drawbacks and improvise globalization through liberalization. Investor-friendly opportunities are made available to investors and the complexities have been simplified significantly. It is good to notice that the states are also doing their best to improvise the situation.
The ease of doing business in India has been simplified extensively and investments are expected to flow into India. Several international summits are going to be hosted in India and the imminent technological development is going to ensure high economic growth of India. India has become one of the world's attractive investment destinations. India's GDP is expected to have a great leap in the time to come. In the sidelines of this achievement Annette Dixon, World Bank's Vice President for South Asia said 'This result is a very clear signal from India to the rest of the world that not only has the country been ready and open for business, as it had been for many decades, it is now competing as te preffered place to do business globally'. This tremendous leap in EODB ranking has given a boost to Indian Government which has immediately set up an agendum to be among the top 50 countries in the list in the years to come. India has apparently reached close to the position of China which is at 78th position right now. Let us be optimistic of the positive impact of the reforms on our economic development.
-Anji Naik Mudavath