Ease of Doing Business (EoDB) – Registering Property
The Ease of Doing Business (EoDB) index is a ranking system established by the World Bank Group. In the EODB index, ‘higher rankings’ (a lower numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
The research presents data for 190 economies and aggregates information from 10 areas of business regulation:
1. Starting a Business
2. Dealing with Construction Permits
3. Getting Electricity
4. Registering Property
5. Getting Credit
6. Protecting Minority Investors
7. Paying Taxes
8. Trading across Borders
9. Enforcing Contracts
10. Resolving Insolvency
INDIA – EASE OF DOING BUSINESS RANKING
Among the chosen 190 countries2, India ranked 63rd in Doing Business 2020: World Bank Report. In 2014, the Government of India launched an ambitious program of regulatory reforms aimed at making it easier to do business in India. The program represents a great deal of effort to create a more business-friendly environment.
India has jumped 14 places to rank 63rd out of 190 countries in the World Bank’s Doing Business 2020 report on account of the significant improvement in resolving insolvency and obtaining construction permits.
Rankings and weights on each of the mentioned parameters are used to develop an overall EoDB ranking. A high EoDB ranking means the regulatory environment is more conducive for starting and operating businesses. The Department for Promotion of Industry and Internal Trade (DPIIT), under the ministry, is also following reform activities in Kolkata and Bengaluru as these two cities are included by the World Bank this year besides Delhi and Mumbai for preparing the ease of doing business report, with a view to providing a holistic picture of the business environment in India, the official said.
The bank has added a new parameter of government contracting, taking the total area of the Business number of criteria to 11.
The six parameters where the department is focusing are: enforcing contracts (163rd), resolving insolvency (52nd), starting a business (136th), registering property (154th), paying taxes (115th) and trading across borders (68th).
The efforts have yielded substantial results with India jumping 79 places in the Doing Business rankings since 2014.
Similarly, India still scores very low when it comes to registering property. The figure has barely improved to 154th, which is nothing to write home about. High stamp duty rates seem a perverse incentive to undervalue and underreport real estate transactions. There remains a host of rigidities in housing and real estate that need to be reformed to promptly do away with extensive opacity
Positive changes have led to this impressive improvement in India’s ranking in the EoDB index.
Registering Property in Ease of Doing Business (EoDB)
Doing Business records the full sequence of procedures necessary for a business (the buyer) to purchase a property from another business (the seller) and to transfer the property title to the buyer’s name so that the buyer can use the property as collateral in taking new loans to expand its business or, if necessary, sell the property to another business. It also measures the time and cost to complete each of these procedures. Doing Business also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions:
Registered property rights are necessary to support investment, productivity and growth. Surveys, together with land registries, are tools used around the world to map, prove and secure property and use rights. These institutions are part of the land information system of an economy. With land and buildings accounting for between half and three-quarters of the wealth in most economies, having an up-to-date land information system clearly matters. Evidence from economies around the world suggests that property owners with registered titles are more likely to invest. They also have a better chance of getting credit when using their property as collateral
The benefits of land registration go beyond the private sector. For governments, having reliable, up-to-date information in cadastres and land registries is essential to correctly assess and collect tax revenue
To overcome this situation India’s major achievement in Registering Property for EoDB is summarized here:
Under the ‘registering property’ criterion, the focus would be on land titling legislation by all the four cities, land records to reflect actual ownership and timely disposal of property disputes.
♦ Introducing time limits
Time limits give the reference for how much time a procedure will take at most. If the procedure is not completed within that time limit then it creates hindrances and by considering this the Government of India comes up with the timeline for the different procedure involving
♦ Setting low fixed fees
Property transfer taxes are an important source of revenue for many governments. But when transfer fees and taxes are too burdensome, even registered property might quickly become informal if subsequent transactions are not registered. This not only weakens the protection of property rights. It also reduces potential revenue from property taxes.
♦ Streamlining procedures
Thirty-two economies streamlined procedures and linked or improved agencies’ systems to simplify property registration in the past 7 years. These measures reduced interactions between entrepreneurs and agencies—saving between 1 and 2 procedures on average—while maintaining security and controls
♦ Going electronic
In 60% of economies, the property registries have electronic files.15 Digital records have advantages over paper records. They take less space, and backup copies ensure that property records will not be compromised in the event of natural disasters or civil wars. Electronic systems also make errors and overlapping titles easier to spot. But this does not mean that paper registries cannot be efficient. Thailand had a very efficient manual system before going electronic. And having digital records is no assurance that an economy has a good system in place to manage this information.
1. All sub-registrar offices have been digitized and its records have been integrated with the Land Records Department, in both Delhi and Mumbai.
2. In Mumbai, all property tax records have been digitized. Property is mutated at automatically after registration. The digitization of property records ensures transparency and allows citizens to ascertain the history of transactions in digital mode.
3. Online service for charges search at Registrar of Companies reduces the time taken for this procedure significantly.
4. Statistics regarding the number of land disputes at Revenue Courts are available online in both Delhi and Mumbai.
♦ DATA NOTES ON REGISTERING PROPERTY
Doing Business records the full sequence of procedures necessary for business (buyer) to purchase a property from another business (seller) and to transfer the property title to the buyer’s name so that the buyer can use the property for expanding its business, use the property as collateral in taking new loans or, if necessary, sell the property to another business. The process starts with obtaining the necessary documents, such as a copy of the seller’s title if necessary, and conducting due diligence if required. The transaction is considered complete when it is opposable to third parties and when the buyer can use the property, use it as collateral for a bank loan or resell it
♦ Speedy Disposal of Land Dispute
♦ MEASURES UNDERWAY
The idea is to digitise and integrate all records relating to titles or encumbrances and make data available on a single portal in all over India. “As part of the exercise to reduce the number of procedures and time required, Officials are also working to create digitized land records, cadastral maps, municipal records and utility bills.”
There is a plan to register and map all privately held land plots and define timelines for changes in cadastral maps and obtain a record of rights under Public Service Delivery Guarantee Act to make it easier to register the property in the two cities, the official said.
To make it easier to register property, and the land resources department is in talks for complete cadastral mapping of all plots, timely disposal of property disputes, and making statistics of land disputes public. An integrated portal for verification of title and encumbrances and a simultaneous action plan to enact Land Titling Bills for all the four cities of Mumbai, Delhi, Kolkata and Bangalore, are also being considered.
This is part of the government’s action plan to make India break into top 50 in the World Bank’s annual Ease of Doing Business ranking, which ranks countries on the business environment based on ten parameters.
The CS profession led by ICSI has a major task ahead of it in the rise of the Ease of Doing Business and the transformation that is happening. The right approach would be a leader in its domain area of governance, which not only lead the response to the transformations happening in the field of Ease of Doing Business but also shape the economic transformations in such a way that all the stakeholders benefit positively.
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Disclaimer: This article is based on the relevant information available in the above-mentioned websites and as per the information existing at the time of the preparation. This is only a knowledge sharing initiative and views, thoughts, opinion expressed are of my own. In no event, I should be held liable for any direct or indirect result from this article.