World Bank's ease of doing business report today; will India leapfrog after disruptive GST, note ban?

A jump in ease doing business will be ironic at a time when small and medium businesses are reeling under the impact of two disruptive steps - GST and demonetisation

FP Staff October 31, 2017 16:18:52 IST
World Bank's ease of doing business report today; will India leapfrog after disruptive GST, note ban?

Will the World Bank's ease of doing business ranking give the Narendra Modi government a reason to cheer?

If media reports are to be believed, it will. Recent reports, citing sources, have said the country has jumped 30 spots to 100th position in the ranking of 190 countries.

A report in The Hindu newspaper on Saturday said the the rise in the ranking is due to the changes in areas such as ‘starting a business’, ‘dealing with construction permits’, and ‘resolving insolvency’. Last year, when India moved just one notch up, the ranking in these areas were 155, 185 and 136.

World Banks ease of doing business report today will India leapfrog after disruptive GST note ban

A file photo of Prime Minister Narendra Modi

The World Bank will release the report on Tuesday evening. Finance minister Arun Jaitley will hold a press conference after the release of the ranking.

DIPP (Department of Industrial Policy & Promotion) Secretary Ramesh Abhishek had recently told PTI that the country's ranking may improve significantly in the report on the back of reforms initiated by the government.

"We have worked very hard so we are definitely expecting," Abhishek was quoted as saying in a report.

"The World Bank's Doing Business report is going to come out on 31 October and we hope to see a significant improvement because of the large number of work that we have done," Abhishek said.

Commerce and Industry Minister Suresh Prabhu had recently hinted about the same, saying the country would soon hear "good news" on the ease of doing business front.

The government's optimism regarding the improvement in India's rank comes on the back of reforms taken to improve the efficiency in granting construction permits, starting a business and resolving insolvency.

The ease of doing business ranking is taken seriously by participating countries as they believe it plays a key role in helping foreign investors decide where to invest.

In the last three-and-a-half years, India has received foreign direct investment (FDI) of above $170 billion, the DIPP secretary pointed out.

India's rank inched up by just one place to 130 in the last year's survey that measures the ease of doing business in various countries.

Coming at a time when the small and medium enterprises are reeling under the twin blow of demonetisation and hasty rollout of goods and services tax (GST), any improvement in the ranking will look ironic. Earlier reports had even said many small and medium enteprises (SMEs) had shut down after the ban of the Rs 500 and Rs 1,000 notes on 8 November, 2016 crippled their businesses.

The two back-to-back disruptive steps had pulled down the economic growth to a three-year low of 5.7 percent. The NDA government had to face criticism from with the BJP and outside for messing up the economy. However, the government will strive to make the most of a move upwards in the ranking.

The news also comes at an opportune time as the BJP is fighting crucial state elections, one in its strong hold Gujarat where small businesses have suffered majorly due to both GST and note ban.

However, ground reality is definitely a far cry from whatever the ranking reflects.

Sunil Mittal, the head of the largest telecom operator Bharti Airtel, recently had said at a panel discussion that ease of doing business still remains a "major concern" in India and urged the government to do more.

"The ease of doing business remains a major concern. I know government is very focused on this, the PM wants our ranking to go up. You come out with fantastic policies," Mittal said.

Describing how he was stunned to get approvals for a merger in Ghana in flat three days despite the holding companies were based in The Netherlands, Mittal rued that it still takes much longer for such processes in our country.

"We can't get to three days. But can we get to 30, may be 60 days? We really need such a framework," Mittal told a panel discussion where Union minister Arun Jaitley, who handles the finance and corporate affairs portfolios, was the chief guest.

He cited the case of the merger of a 100 percent subsidiary with the parent, saying it takes up to five months to get the requisite approvals in India.

Mittal said the government has de-clogged the courts to have the National Company Law Tribunals, a special forum for clearing mergers and acquisitions, but termed the progress on this as "slow" as they are taking "time to stabilise".

As a solution, he suggested having an inter-ministerial panel or a committee that may look into the industry's suggestions and implement them.

"My appeal to the government is to create an inter- ministerial framework, a committee may be, where we can present with logic as to what needs to be changed and you will either reject the logic or buy it. Then government must take a position as quickly as possible," he said.

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