Why India Lags Behind in Ease of Doing Business

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According to the World Bank, it would take you 14 procedures and a month in Mumbai to start a new company. The World Bank’s latest report on ease of doing business has ranked India at 130 out of 190 countries, a jump of only one spot from the previous year. This, despite numerous efforts taken by the Modi government to improve upcoming businesses through schemes and projects like Make in India, MUDRA, etc.

After the reports came out, on Wednesday, PM Modi asked secretaries at the Centre and Chief secretaries in the state to analyse the World Bank’s Ease of Doing Business Report and suggest areas of improvement.

He demanded a report from all the concerned departments within a month and also asked the cabinet secretary to review the same.

The situation raises a serious question on Modi, who is seen as a leader with politico-economic image with the capacity to fasten development. Why is then India still laggin behind?

The PM in Washington DC during his bilateral visit to America claimed, “We have taken major steps to increase the ‘Ease of Doing Business’ and have already begun climbing steeply in the global rankings.”

 

Still, due to even-larger improvements in other economies, India’s ranking in several areas fell this year. On the ease of starting a business, it slipped to 155th from 151st. On dealing with construction permits, it stumbled to 185th from 184th. On paying taxes, it held steady at 172nd.

The World Bank report’s authors acknowledge that the ranking doesn’t reflect all the progress India has made recently in improving the business environment.

India has taken up upgradation in infrastructure, raised its foreign investment limits and has also uplifted digitized approvals and registrations. On the other hand, a sales tax revamp has been laid this summer, but hasn’t been implemented yet.

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“The country has embarked on a fast-paced reform path, and the Doing Business 2017 report acknowledges a number of substantial improvements,” the bank said in its report. It also said that a record 137 countries have adopted various key reforms that have helped small and medium sized businesses to start and operate feasibly.

India improved in its ranking for getting electricity by moving to 26th spot from 70th last year, but the country fell several ranks in parameters of tax payment, border trade and contract enforcement.

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