Economies are ranked on their ease of doing business, from 1–190. A high ease of doing business ranking means the regulatory environment is more conduzcive to the starting and operation of a local firm. The rankings are therefore determined by sorting the aggregate distance to frontier scores on 10 topics, each consisting of several indicators, giving equal weight to each topic. The rankings for all economies are bench marked to June 2017. The good news is that India improved its Ease of doing business ranking from 138 to 100. And it also gets a recognition as one of the most improved economies in 2016/2017 along with other 9 countries which together implemented 53 regulatory reforms making it easier to do business. The following article takes its basis from World Bank web site as per the details given below.
http://www.doingbusiness.org/reports/global-reports/doing-business-2018
One can read the full report containing information about 190 countries on the following topics:
“Dealing with construction permits; getting electricity; registering a property; getting credit; protecting minority investors; paying taxes; trading across borders; enforcing contracts; resolving insolvency with an optional labor market regulation which was not included in this year rankings. Major findings are reproduced from the report:”
“Major Findings”
“Doing Business 2018: Reforming to Create Jobs finds that entrepreneurs in 119 economies saw improvements in their local regulatory framework last year. Between June 2016 and June 2017, the report, which measures 190 economies worldwide, documented 264 business reforms. Reforms reducing the complexity and cost of regulatory processes in the area of starting a business and getting credit were the most common in 2016/17. The next most common reforms were in the area of trading across borders. Read about business reforms.
- Brunei Darussalam, Thailand, Malawi, Kosovo, India, Uzbekistan, Zambia, Nigeria, Djiboutiand El Salvador were the most improved economies in 2016/17 in areas tracked by Doing Business. Together, these 10 top improvers implemented 53 regulatory reforms making it easier to do business.
- Economies in all regions are implementing reforms easing the process of doing business, but Europe and Central Asia continues to be the region with the highest share of economies implementing at least one reform—79% of economies in the region have implemented at least one business regulatory reform, followed by South Asia and Sub-Saharan Africa.
- The report features four case studies in the areas of starting a business, dealing with construction permits, registering property and resolving insolvency, as well as an annex on labor market regulation. See all case studies.”
My intention is to give maximum information related to India which should enlighten our hearts and motivate us to improve the ranking at least within 50 though my heart will swell with happiness and dance if we reach the top 10 within a period of 5 years. Yes, definitely within next 5 years only.
What improvements were noted in case of India?
INDIA South Asia GNI per capita (US$) 1,680
Ease of doing business rank (1–190) 100 Overall distance to frontier (DTF) score (0–100) 60.76 Population 1,324,171,354
✔ Trading across borders (rank) 146
DTF score for trading across borders (0–100) 58.56
Time to export, Documentary compliance (hours) 38.4
Border compliance (hours) 106.1
Cost to export Documentary compliance (US$) 91.9
Border compliance (US$) 382.4
Time to import Documentary compliance (hours) 61.3
Border compliance (hours) 264.5
Cost to import documentary compliance(US$) 134.
Border compliance(US$) 543.2
Ease of doing business rank (1–190) 100
✔ Starting a business (rank) 156
DTF score for starting a business (0–100) 75.40
Procedures (number) 11.5
Time (days) 29.8
Cost (% of income per capita) 14.8
Minimum capital (% of income per capita) 0.0
✔ Dealing with construction permits (rank) 181 ✔
DTF score for dealing with construction permits (0–100) 38.80
Procedures (number) 30.
Time (days) 143.9
Cost (% of warehouse value) 23.2
Building quality control index (0–15) 11.5
Overall distance to frontier (DTF) score (0–100) 60.76
INDIA South Asia GNI per capita (US$) 1,680
Ease of doing business rank (1–190) 100 Overall distance to frontier (DTF) score (0–100) 60.76 Population 1,324,171,354
✔ Trading across borders (rank) 146
DTF score for trading across borders (0–100) 58.56
Time to export, Documentary compliance (hours) 38.4
Border compliance (hours) 106.1
Cost to export Documentary compliance (US$) 91.9
Border compliance (US$) 382.4
Time to import Documentary compliance (hours) 61.3
Border compliance (hours) 264.5
Cost to import documentary compliance(US$) 134.
Border compliance(US$) 543.2
Ease of doing business rank (1–190) 100
✔ Starting a business (rank) 156
DTF score for starting a business (0–100) 75.40
Procedures (number) 11.5
Time (days) 29.8
Cost (% of income per capita) 14.8
Minimum capital (% of income per capita) 0.0
✔ Dealing with construction permits (rank) 181 ✔
DTF score for dealing with construction permits (0–100) 38.80
Procedures (number) 30.
Time (days) 143.9
Cost (% of warehouse value) 23.2
Building quality control index (0–15) 11.5
Overall distance to frontier (DTF) score (0–100) 60.76
Getting credit (rank) 29 ✔
DTF score for getting credit (0–100) 75.00
Strength of legal rights index (0–12) 8
Depth of credit information index (0–8) 7
Credit bureau coverage (% of adults) 43.5
Credit registry coverage (% of adults) 0.0
✔Protecting minority investors (rank) 4
DTF score for protecting minority investors (0–100) 80.00
Extent of disclosure index (0–10) 8
Extent of director liability index (0–10) 7
Ease of shareholder suits index (0–10) 7
Extent of shareholder rights index (0–10) 10
Extent of ownership and control index (0–10) 8
Extent of corporate transparency index (0–10) 8
✔ Enforcing contracts (rank) 164
DTF score for enforcing contracts (0–100) 40.76
Time (days) 1,445
Cost (% of claim) 31.0
Quality of judicial processes index (0–18) 10.3
Getting electricity (rank) 29
DTF score for getting electricity (0–100) 85.21
Procedures (number) 5
Time (days) 45.9
DTF score for paying taxes (0–100) 66.06 Time (days) 1,445
Cost (% of income per capita) 96.7
Reliability of supply and transparency of tariffs index (0–8) 7
Registering property (rank) 154
DTF score for registering property (0–100) 47.08
Procedures (number) 8
Time (days) 53
Cost (% of property value) 8.4
Quality of land administration index (0–30) 8.2
✔Resolving insolvency (rank) 103
DTF score for resolving insolvency (0–100) 40.75
Procedures (number) 8 Time (years) 4.3
Cost (% of estate) 9.0
Recovery rate (cents on the dollar) 26.4
Strength of insolvency framework index (0–16) 8.5
✔ Paying taxes (rank) 119
DTF score for paying taxes (0–100) 66.06
Payments (number per year) 13
Time (hours per year) 214
Total tax and contribution rate (% of profit) 55.3
Post filing index (0–100) 49.31 ✔
Getting credit (rank) 29 ✔
DTF score for getting credit (0–100) 75.00
Strength of legal rights index (0–12) 8
Depth of credit information index (0–8) 7
Credit bureau coverage (% of adults) 43.5
Credit registry coverage (% of adults) 0.0
✔Protecting minority investors (rank) 4
DTF score for protecting minority investors (0–100) 80.00
Extent of disclosure index (0–10) 8
Extent of director liability index (0–10) 7
Ease of shareholder suits index (0–10) 7
Extent of shareholder rights index (0–10) 10
Extent of ownership and control index (0–10) 8
Extent of corporate transparency index (0–10) 8
✔ Enforcing contracts (rank) 164
DTF score for enforcing contracts (0–100) 40.76
Time (days) 1,445
Cost (% of claim) 31.0
Quality of judicial processes index (0–18) 10.3
Getting electricity (rank) 29
DTF score for getting electricity (0–100) 85.21
Procedures (number) 5
Time (days) 45.9
DTF score for paying taxes (0–100) 66.06 Time (days) 1,445
Cost (% of income per capita) 96.7
Reliability of supply and transparency of tariffs index (0–8) 7
Registering property (rank) 154
DTF score for registering property (0–100) 47.08
Procedures (number) 8
Time (days) 53
Cost (% of property value) 8.4
Quality of land administration index (0–30) 8.2
✔Resolving insolvency (rank) 103
DTF score for resolving insolvency (0–100) 40.75
Procedures (number) 8 Time (years) 4.3
Cost (% of estate) 9.0
Recovery rate (cents on the dollar) 26.4
Strength of insolvency framework index (0–16) 8.5
✔ Paying taxes (rank) 119
DTF score for paying taxes (0–100) 66.06
Payments (number per year) 13
Time (hours per year) 214
Total tax and contribution rate (% of profit) 55.3
Post filing index (0–100) 49.31 ✔
World Bank considered India to have performed exceptionally well under the areas ✔ Starting a business (rank) 156, ✔ Dealing with construction permits (rank) 181 ✔, Getting credit (rank) 29, ✔Protecting minority investors (rank) 4, ✔ Paying taxes (rank) 119, ✔ Trading across borders (rank) 146, ✔ Enforcing contracts (rank) 164, and ✔Resolving insolvency (rank) 103 to earn a better ranking.
Let us look at least some information about Mumbai which was used as a basis for compiling the above information:
Complete information on Mumbai along with comparison for others is available at the following web site:
http://www.doingbusiness.org/data/exploreeconomies/india#getting-credit
Since being a former banker, I am interested to give the following information on credit though one can refer to above web site for full information on other 9 areas which are used for judging the nations’ ratings.
| Depth of credit information index (0-8) |
| Are data on both firms and individuals distributed? Yes |
| Are both positive and negative credit data distributed? yes |
| Are data from retailers or utility companies – in addition to data from banks and financial institutions – distributed? No |
| Are at least 2 years of historical data distributed? (Credit bureaus and registries that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Yes |
| Are data on loan amounts below 1% of income per capita distributed? Yes |
| By law, do borrowers have the right to access their data in the credit bureau or credit registry? Yes |
| Can banks and financial institutions access borrowers’ credit information online (for example, through an online
platform, a system-to-system connection or both)? Yes |
| Are bureau or registry credit scores offered as a value-added service to help banks and financial institutions assess
the creditworthiness of borrowers? Yes |
- Note: An economy receives a score of 1 if there is a “yes” to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0.
| Coverage | Credit bureau | Credit registry |
| Number of individuals | 366,121,346 | 0 |
| Number of firms | 13,539,401 | 0 |
| Total | 379,660,747 | 0 |
| Percentage of adult population | 43.5 | 0.0 |
Conclusion
The purpose of this article to give some glimpse of the world bank study of 190 nations about the Ease of Doing Business. The discussion in economic news papers to include GDP as the driving force to arrive at the ratings created my study of above report. Yes, the World Bank has been doing the study for quite some time and we never showed any inclination to show some improvements which required economic reforms. Recent steps by the central government/state governments have shown the seriousness of India to grow not only economically but also to improve its ranking among the nations.
The present government has shown its willingness to reach at least within the top 50 ranks. But I feel that our nation is capable of reaching any figure within the top 10 if not number 1.
World bank websites:
http://www.doingbusiness.org/reports/global-reports/doing-business-2018
http://www.doingbusiness.org/data/exploreeconomies/india#getting-credit
A reader needs to show patience and compassion in understanding World Bank study which required Himalayan efforts on the part of various world class experts to compile them.
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