Indian business is sure to get a big boost if the plans of the department of industrial policy and promotion (DIPP) to improve India’s ranking in the World Bank’s ease of doing business index to among the top 50 countries comes anywhere close to the target.
Though it might not apparently seem an easy task, given that India rank has remained below 130 in recent years, the target is still achievable with a little bit of grit and hardwork.
This is because many developing countries with much lower capabilities than India have gone up the rungs to the top 50 nations. And they include countries as disparate as Manutius, Lithuania, Thailand, Estonia, UAE, Saudi Arabia, Rwanda, Slovenia, Chile, Israel, Armenia, Cyprus, Puerto Rico, South Africa, Peru, Bahrain, Poland, Oman, Qatar and the Slovak Republic.
The list makes it amply clear that improving India’s ease of doing business ranking in not an insurmountable task as it is often made out to be. However, things cannot be taken for granted either given that a global economic power like China has been stuck at the 96 position in the most recent ease of doing business ranking.
Another reason for optimism on why the DIPP’s efforts are sure to make a substantial difference is that many of the factors that pull down India’s ranking fall well within the purview of the central government. These include important segments like that of enforcing contracts, starting a business, paying taxes, trading across borders and resolving insolvency.
However, it might sometimes need new legislation or large allocation of additional funds to ensure that India’s standing in some of these crucial areas is improved immediately. Though the ease of enforcing contracts may be improved by changes in rules and regulations, which need only executive action, that of resolving insolvency, which has to go though quasi judicial processes may require a change in laws.
However, it will be much easier for the central government to push through measures easing procedures in other crucial areas like paying taxes and trading across borders.
Concerted action by the ministries of finance and that of commerce and industry can ensure remarkable improvements on both these fronts. Similarly the central government can also easily tweak the rules and regulations that deal with protecting investors where India is already ranked at a fairly high level. However, the central government would have to secure active cooperation of the states if it is secure any progress in reducing hurdles to business in other equally crucial areas like dealing with construction permits, getting electricity connections and registering property. All these subjects come mostly under the jurisdiction of the states. Any major progress son these fronts will require the central government to dole out new incentive to motivate the states to roll out the needed changes.
So it is certainly the right time now for the central government to strike a good deal with the states and improve India’s global ranking in the ease of doing business.