Ease of Doing Business Ranking of India: Will the Improvement in Position really help?

Improving its position by 23 ranking positions, in the latest ‘Ease of Doing Business’ Rankings 2018 awarded to 190 countries across the Globe, India has moved to 77 position from 100th place last year, reflecting a business friendly environment in the country. World Bank annually awards these ratings based on various parameters in regard to business regulatory structures. Better rankings are awarded to the countries where the constraints are minimum to enable the entrepreneurs to transform their ideas into viable businesses.  The average ranking position of India on ‘Ease of Doing Business’ has remained at 124.82 since 2008. It was awarded the all time worst position in 2010 at 139th place which has substantially improved to 77 position in 2018.  

Releasing the Ease of Doing Business Report for 190 countries, Kristalina Georgieva Chief Executive Officer of The World Bank, said “For eight of the 11 Doing Business indicator sets, the report’s traditional focus on efficiency—defined as the time, cost and number of interactions necessary to incorporate a new business or connect a warehouse to the electrical grid—has been complemented with a new focus on regulatory quality. Doing Business data shows that efficiency and quality go hand in hand, reinforcing each other.”

 

Back Ground

  • Doing Business Survey by World Bank Group is based on various Government regulations which become contraints for the starting and operating Business in the country
  • World Bank has been publishing the ‘Ease of Doing Business Report’ for the last 14 years. The first report was measured in September 2003
  • Rankings 2018 is the 15th edition of the Ease of Doing Business Report
  • The first Ease of Doing Business Ranking report consisted 145 economies which has expanded to 190 economies in 2018 across the world
  • More aspects that are relevant to the daily operations of domestic small and medium-size firms to measure the rankings have been included
  • Role of Private sector is recognized in arriving at the rankings as it provides an estimated 90% of employment in developing economies

Ease of Doing Business Ranking 2018: Key Facts

  • Rankings are based on 11 indicator sets to measure aspects of business regulation that matter for entrepreneurship
  • South Asia is the only region not represented in the top 50 ranking for ease of doing business
  • India stands out in Rankings 2018 as one of the 10 economies that improved the most in the areas measured by Doing Business
  • The regions with the highest share of reforming economies in Doing Business 2018 are Europe and Central Asia, South Asia and Sub-Saharan Africa
  • Sub-Saharan Africa has the widest variation in performance among the areas measured by Doing Business Rankings. While Mauritius stands at 25th place, Somalia is at 190th place in the ranking

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How the Doing Business Rankings Measured? Key Parameters

  • Doing Business Ranking measures aspects of business regulation and their implications for firm establishment and operations
  • It does not include all the issues that are relevant for businesses’ decisions, but it covers important areas that are under the control of policy makers
  • Governments worldwide recognize the economic and political benefits of improved business regulation
  • 119 of the 190 economies measured by Doing Business 2018 enacted at least one business regulation reform in 2016/17. Of these, 79.8% implemented at least one reform for a second consecutive year and 64.7% for a third
  • The eleven parameters that formed the basis of Ease of Doing Business Ranking 2018 are in 5 broad areas namely – Starting the Business; Getting a location; Accessing finance; Dealing with day-to-day operations; Operating in a secure business environment.
  • 11 Ranking parameters are - Starting a Business; Labor market regulation; Dealing with construction permits; Getting electricity; Registering property; Getting credit; Protecting minority investors; Trading across borders; Paying taxes; Enforcing contracts; Resolving insolvency

 

India’s Ranking Positions
India has improved from 132 position in Doing Business Ranking in 2008 to 77 position in 2018. The Ranking positions during the period is shared below:

Ranking Improvement: Boost to Indian Business Environment

  • The Doing Business Ranking improvement indicates the effectiveness and quality of business regulation.
  • Research findings substantiate the economic relevance of the aspects of business regulation measured by Doing Business. Recent research, for example, examines the impact of improving business regulation. One study finds that high start-up costs can result in lower overall productivity
  • Improvement in Ease of Doing Business position by 23 places will boost the country’s image and will attract more foreign investments
  • The Ranking improvement will attract more entrepreneurs to set up business driving more projects in ‘Start Up India’ and ‘Make in India’.
  • Doing Business Ranking focuses to improve the key areas of interaction between the government and entrepreneurs, where policy makers and regulators can directly influence procedures to facilitate these interactions

Ranking Improvement: No Ground for Business

  • Doing Business Ranking Survey by the World Bank is termed as a controversial study by critics. It may not reflect the true picture of Ease of Doing Business
  • The ranking improvement does not reflect ground image. The indicators and measures are referred to the costs, requirements and fees of doing business in the country's largest business city; thus conditions elsewhere within the country may differ.
  • Some of the Independent Evaluation Group members of the world bank have questioned the reliability and objectivity of its measurements
  • Many critics doubt the relevance of the issues it addresses
  • Many others fear that the ranking parameters may unduly dominate countries reform agendas at the expense of more crucial development objectives
  • Attention given to the parameters may indicate that the World Bank values less burdensome business regulations more highly than its other strategies for poverty elimination and sustainable development
  • Satisfying regulatory requirements will take longer if the business lacks information or is unable to follow up promptly. It may not understand "work-arounds", "facilitating fees", and "learning time" that speed or delay approvals and causes variation costs.
  • A study commissioned by the Norwegian government alleges methodological weaknesses, an uncertainty in the ability of the indicators to capture the underlying business climate, and a general worry that many countries may find it easier to change their ranking in Doing Business than to change the underlying business environment

Doing Business: Ranking Positions 2018
World Bank has awarded first place to Newzealand followed by Singapore in Ease of Doing Business Rankings. The Ranking places awarded by World Bank in Doing Business Survey 2018 are as below:

Rank 2018
Country
Rank
2018
Country
Rank 2018
Country
1
New Zealand
65
Albania
129
St. Vincent and the Grenadines
2
Singapore
66
Bahrain
130
Palau
3
Denmark
67
Greece
131
Nicaragua
4
Korea, Rep
68
Vietnam
132
Barbados
5
Hong Kong SAR, China
69
Morocco
133
Lebanon
6
United States
70
Jamaica
134
St. Kitts and Nevis
7
United Kingdom
71
Oman
135
Cambodia
8
Norway
72
Indonesia
136
Maldives
9
Georgia
73
El Salvador
137
Tanzania
10
Sweden
74
Uzbekistan
138
Mozambique
11
Macedonia, FYR
75
Bhutan
139
Côte d'Ivoire
12
Estonia
76
Ukraine
140
Senegal
13
Finland
77
Kyrgyz Republic
141
Lao PDR
14
Australia
78
China
142
Grenada
15
Taiwan, China
79
Panama
143
Mali
16
Lithuania
80
Kenya
144
Niger
17
Ireland
81
Botswana
145
Nigeria
18
Canada
82
South Africa
146
Gambia, The
19
Latvia
83
Qatar
147
Pakistan
20
Germany
84
Malta
148
Burkina Faso
21
United Arab Emirates
85
Zambia
149
Marshall Islands
22
Austria
86
Bosnia and Herzegovina
150
Mauritania
23
Iceland
87
Samoa
151
Benin
24
Malaysia
88
Tunisia
152
Bolivia
25
Mauritius
89
Tonga
153
Guinea
26
Thailand
90
Vanuatu
154
Djibouti
27
Poland
91
St. Lucia
155
Micronesia, Fed. Sts
28
Spain
92
Saudi Arabia
156
Togo
29
Portugal
93
San Marino
157
Kiribati
30
Czech Republic
94
Uruguay
158
Comoros
31
France
95
Seychelles
159
Zimbabwe
32
Netherlands
96
Kuwait
160
Sierra Leone
33
Switzerland
97
Guatemala
161
Ethiopia
34
Japan
98
Dominica
162
Madagascar
35
Russian Federation
99
Dominican Republic
163
Cameroon
36
Kazakhstan
100
India
164
Burundi
37
Slovenia
101
Fiji
165
Suriname
38
Belarus
102
Trinidad and Tobago
166
Algeria
39
Slovak Republic
103
Jordan
167
Gabon
40
Kosovo
104
Lesotho
168
Iraq
41
Rwanda
105
Nepal
169
São Tomé and Príncipe
42
Montenegro
106
Namibia
170
Sudan
43
Serbia
107
Antigua and Barbuda
171
Myanmar
44
Moldova
108
Paraguay
172
Liberia
45
Romania
109
Papua New Guinea
173
Equatorial Guinea
46
Italy
110
Malawi
174
Syrian Arab Republic
47
Armenia
111
Sri Lanka
175
Angola
48
Hungary
112
Swaziland
176
Guinea-Bissau
49
Mexico
113
Philippines
177
Bangladesh
50
Bulgaria
114
West Bank and Gaza
178
Timor-Leste
51
Croatia
115
Honduras
179
Congo, Rep
52
Belgium
116
Solomon Islands
180
Chad
53
Cyprus
117
Argentina
181
Haiti
54
Israel
118
Ecuador
182
Congo, Dem. Rep
55
Chile
119
Bahamas, The
183
Afghanistan
56
Brunei Darussalam
120
Ghana
184
Central African Republic
57
Azerbaijan
121
Belize
185
Libya
58
Peru
122
Uganda
186
Yemen, Rep
59
Colombia
123
Tajikistan
187
South Sudan
60
Turkey
124
Iran, Islamic Rep
188
Venezuela, RB
61
Costa Rica
125
Brazil
189
Eritrea
62
Mongolia
126
Guyana
190
Somalia
63
Luxembourg
127
Cabo Verde
 
 
64
Puerto Rico (U.S.)
128
Egypt, Arab Rep.
 
 

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