India Jumps 12 Spots in World Bank’s Ease of Doing Business Rankings

Almost every nation covets a higher spot on the World Bank’s ease of doing business list. Higher ratings represent the capacity to attract and maintain foreign investors and the resulting economic boost they bring with them. This year, India has done the nearly unthinkable, jumping 12 spots up the rankings from 189 to 130.

Almost every nation covets a higher spot on the World Bank’s ease of doing business list. Higher ratings represent the capacity to attract and maintain foreign investors and the resulting economic boost they bring with them. This year, India has done the nearly unthinkable, jumping 12 spots up the rankings from 189 to 130.

According to NDTV, the World Bank’s Chief Economist Kaushik Basu said of the jump, “A forward movement of 12 spots in the ease of doing business by an economy of the size of India is a ‘remarkable achievement…For any big economy, a rank improvement of 12 is a remarkable achievement. Going from 142 in the world to 130, as India has done, is very good sign. It gives a good signal about the way things are moving in India.”

India’s remarkable improvement in the rankings is due to the implementation of two reforms in the past year. These reforms eliminated investment and certification requirements to start a business, streamlining the process considerably. Representatives from the World Bank indicated that these changes appear to be part of a much larger, very ambitious reform process that, if it continues, will lead to even further improvement.

Indian authorities have indicated plans to design a modest and investor-friendly fiscal policy that should attract more foreign funds. The results of these plans are already evident. For example, in 2004 it would have taken a business 127 days to open its doors. As of 2015, this has dropped to a mere 29 days.

Research suggests that India still needs to make a significant overhaul of its tax system if it truly wishes to attract more foreign business. Some changes have already taken place, such as the replacement of physical VAT tax stamps with an online version, but much more is still needed.

Areas where India still needs to improve significantly include obtaining construction permits and registering property. According to the World Bank, India ranks 183rd in the world for dealing with construction permits, and 138th for registering property. India also ranks 133rd in trading across borders, and 136th in resolving insolvency. It is also 157th in paying taxes and 178th for enforcing contracts.

On the other hand, India ranked 70th for setting up electricity, 8th in protecting minority investors, and 42nd in obtaining credit. Lopez Claros, Director of the Global Indicators Group World Bank said of India’s progress “the improvement that you have seen in India’s Doing Business ranking this year is kind of an early recognition of [its reform] efforts, but more is coming.”