CONCEPT – EASE OF DOING BUSINESS - WORLD BANK

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 CONCEPT – EASE OF DOING BUSINESS - WORLD BANK

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• EODB of WB : By documenting changes in regulation in 12 areas of business activity in 190 economies, "Doing Business" analyzes regulation that encourages efficiency and supports freedom to do business.
• Three questions : The data collected by Doing Business address three questions about government. First, when do governments change regulation with a view to develop their private sector? Second, what are the characteristics of reformist governments? Third, what are the effects of regulatory change on different aspects of economic or investment activity? Answering these questions adds to our knowledge of development.
• GDP and economic freedom : Research demonstrates a causal relationship between economic freedom and gross domestic product (GDP) growth, where freedom regarding wages and prices, property rights, and licensing requirements leads to economic development.
• 2019-2020 rankings : India climbed 14 rungs in the World Bank’s Ease of Doing Business 2020 survey to stand at 63, among 190 countries, making it the one of world’s top 10 most improved countries for the third consecutive time.
• Reforms and rank : The sharp rise in the ranking shows the reformis by National Democratic Alliance (NDA) government have worked in some areas, and it may help the country lure multinational companies, looking at alternatives to China for investment amid Beijing’s trade war with the US. In 2018, India jumped 23 places to reach 77th position. In five years of the Modi government, India’s ranking has improved 79 places - to 63 in 2019 from 142 in 2014 - a record for a major economy.
• Four major reforms : As per the World Bank. India conducted four reforms in the 12-month period to May 1.

1. It made the process of obtaining a building permit more efficient. Obtaining all permits and authorizations to build a warehouse now costs 4% of the warehouse value, down from 5.7% the previous year.
2. Authorities enhanced building quality control in Delhi by strengthening professional certification requirements.
3. Importing and exporting became easier for companies with the creation of a single electronic platform for trade stakeholders, upgrades to port infrastructure and improvements to electronic submission of documents.
4. India saw the biggest jump in ranking in “resolving insolvency" category, to 52nd rank from 108th, on the back of implementation of the Insolvency and Bankruptcy Code, while its ranking improved substantially in Dealing withConstruction Permits (to 27th from 52nd) and “Trading across Borders" (to 68th from 80th). Reorganization has become the most likely procedure for viable companies as measured by Doing Business, increasing the overall recovery rate from 27 to 72 cents on the dollar.

• Not so good : India’s ranking deteriorated on two parameters -- “protecting minority investors" (from 7th to 13th position) and “getting electricity" (from 22nd to 25th) -- and remained unchanged in “enforcing contracts" at 163rd. In all the three parameters, India’s score remained unchanged indicating no reforms were recorded by the World Bank. India’s ranking improved in “Registering Property" to 154th rank from 166th despite a drop in score.
• Global Competitiveness Index, 2019 : This index by the World Economic Forum (WEF) in Oct. 2019 showed that India slipped a sharp 10 notches to 68. India’s score fell in eight of 12 parameters while other countries improved their domestic business environment faster than India. Iran (99) was the only other country of the 141 countries surveyed whose ranking also fell by 10 positions.

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