Other nations move faster on reforms than India, says IFC and World Bank report.
India has slipped two notches to 122 in a global list that ranks the ease of doing business in 181 economies. This, however, has more to do with newer countries being added to the list and performing better on some fronts in comparison with Asia’s third-largest economy.
The sixth ‘Doing Business Report 2009’, prepared by the International Finance Corporation and the World Bank, places Nepal and Pakistan above India despite these two countries undertaking no major reform in the last year.
Globally, Singapore retains its number one position, but the real surprise is the central Asian republic of Azerbaijan, which improved its ranking by a whopping 64 places and is this year’s top reformer. The report is released every September and carries the next calendar year in its title. The 2009 report is a review of the 12 months up to June 2008.
The report’s co-author and World Bank official Sabine Hertveldt said India’s performance did not imply that doing business here had become more difficult. It meant that other countries on the list performed better in comparison, he said.
“Over the past four years, India has improved 10 slots in the aggregate rankings and that is a positive thing. It is things like the efficiency of the legal system that are dragging it down,” she said.
Another reason for India’s decline is the addition of three more countries to the list this year. “A country like India will be assessed in the context of whether other countries have reformed at a faster pace on the 10 parameters that are used to evaluate the ease of doing business,” said Minakshi Seth, of the International Finance Corporation.
In 2007, India had moved to 120, up 12 notches from the previous year. This followed a concerted effort by the government to remove the bottlenecks related to rules and regulations.
HOW INDIA SCORES IN 2009 REPORT
10 parameters used to evaluate economies
Ranking(out of 181 countries)
Starting a business 121
Dealing with construction permits 136
Employing workers 89
Registering property 105
Getting credit 28
Protecting investors 38
Paying taxes 169
Trading across borders 90
Enforcing contracts 180
Closing a business 140
INDIA IMPROVED 16 PLACES OVER FOUR YEARS
Source: World Bank-IFC Doing Business Reports
The exercise to improve the perception about the business climate in India has continued since then, with the most recent being a move to usher in a separate law for faster enforcement of high-value business contracts.
At the same time, Indian government departments had pointed out that the findings of the 2007 report were based on just one sample — that of a warehousing facility in Mumbai. The latest report is based on a sample from India’s financial capital, a city bedevilled with infrastructure woes.
In fact, the latest report recognises that regulatory reforms in South Asia continued this year, with four of the region’s countries – Bangladesh, Bhutan, India and Sri Lanka, easing regulatory burdens between June 2007 and June 2008.
“The Indian government has been taking excellent steps on this front. The point is that it takes a while for the changes to have impact,” said Seth.