The World Bank publishes global racking report in relation to ease of doing business every year. In the ranking last year, India jumped 23 places to 77th. It is trying to get into the top 50 countries this year. Hon’ble Prime Minister Narendra Modi also wants India to join this year in top 50 countries.
The government has done more than 35 reforms in the last 12 months. By the help of this, the government is expecting to reduce the time, cost, the process of documentation involved in starting the new business. In order to facilitate the speedy filing of returns for goods and services tax (GST) returns, to reduce the incurring fee for small traders, to increase the pace of loan disbursement, increase the recovery speed under the Bankruptcy Code 2016 (IBC), etc., the government is taking various initiatives on continues basis. For examples, Department of Industrial and Internal Business Policy (DPIIT), Department of Revenue, Jawaharlal Nehru Port Trust (JNPT), Ministry of Housing and Urban Development, Delhi Municipal Corporation, etc. are working with the World Bank’s representatives for taking the benefits of reforms.
Significantly, in the last few years, India has made significant improvements in its position in the context of ease of doing business. For instance, in the case of obtaining permission for construction, during the last 4 years, India reached the 52nd rank whereas it was on the 132nd rank in the year 2018. In terms of giving power connections, India is at number 24, while in 2014 it was at 137th place. In terms of cross border business, India is at number 80, while in 2014 it was 126th place.
In case of cross border business, Central indirect taxes and customs boards have implemented a few reforms through which every port are monitored on a real-time basis with the help of dashboard. According to the time taken in the approval of the transmitted goods, it is classified in red, amber and green so that the border officers are able to mark the goods being sent. The Customs department has started the facility of providing round-the-clock service at JNPT, which works like a single window in the matter of sanctioning the transmitted goods. According to the recently launched scanner service, 100 containers can be scanned per hour, while 8 to 10 containers can be tested per hour through the mobile scanner. Corrective steps are being taken in the context of the time-consuming goods.
Tax payments under GST have also become easy. Now, those who pay GST have to file 2 tax returns instead of 3. The positive impact of GST reforms last year was not fully reflected. Apart from this, several important improvements have been made. The Ministry of Company Affairs has terminated the Incorporation fee for companies having authorised capital up to Rs 5 lakhs. The Department of Revenue has eliminated the need to give details of bank account for GST registration. Due to improvements in construction rules, the cost of carrying luggage in the warehouse in Delhi and Mumbai has decreased. The permit fee for the use of the building for the use of the warehouse in Delhi has been reduced from Rs 10 per square meter to Rs 2 per square meter. The government has done 13 reforms last year, which had not been considered by the World Bank while releasing the ranking list, due to which the benefits of reforms, India could not take, but in this year, the world bank can be considered earlier done reforms, because, its positive impact is now visible.
In the case of ease of doing business, the government is coming out soon with a comprehensive policy to bring improvement in India’s ranking. It is believed that through the proposed policy, the rule of obtaining license related to starting a new business will be abolished. It seems that due to the compulsion of obtaining a license in India, businessmen are not starting a new business and existing businessmen are also facing many difficulties while dealing with government officials. By simplifying rules, Foreign Direct Investment is expected to accelerate and trade relations with other countries will also become better.
In order to implement the strategy that simplifies the business, the Industry Promotion and Internal Business Department has sent a draft Cabinet note to various ministries, so that all the departments should be taken together and the proposed policy is implemented in time. In such a scenario, the business environment in the country is expected to be strong by the proposed policy.
Foreign Direct Investment equity inflows in India have declined by one percentage point in the fiscal year 2018-19, which has reached the level of $ 44.4 billion. However, for the first time in the last six years, it has declined, but it is not good for the health of the economy. Therefore, the proposed policy proposes to eliminate the need for licensing. After the implementation of the proposed policy, the traders will have to register only to start the business. The renewal process will also be terminated for industries in which licenses will be required. In the proposed policy, it is also proposed that the burden of compliance will not exceed one hour per month to speed up the development process of startup companies. This will help startup companies to move forward.
It is worth mentioning that the World Bank has been issuing a list of countries with accessibility for the past 15 years. In the latest report of the World Bank, all the 190 countries have 10 sectors of regulation, such as starting a business, obtaining permission for construction, process of giving electricity connection and the time it takes, registration of property, time to get the loan, minority Investors’ safety, payment of taxes, implementation of the agreement and settlement of bankruptcy Ranking, etc.
Last year, India had made improvements in 6 norms out of 10 parameters that the World Bank had set for improving the business environment. These strictures include the introduction of a business, construction permit, and acquisition of electricity, obtaining loans, payment of taxes, cross border trade, implementation of contracts and dealing with the bankruptcy process. Under the ease of doing business, the time it takes to starting a new business, the time it takes to make warehouses, the time consume in the electricity connection for a company, guarantee of the investors’ money, the level of tax structure, the type of tax, the time taken to deposit tax, the time required for documentation, the process of contracts between the two companies etc. determine the ease of doing business ranking.
This report of the World Bank is important in many ways because this report increases the trust of the investors towards any country and the credibility of the said country at the global level also increases. This year, India has done more than 35 reforms, in which simplifying the most important GST process and accelerating the recovery rate under IBC. In addition, India has implemented 13 other reforms this year, which was not taken in the cognizance by the World Bank in the last year’s ranking.
Seeing the affirmative effect of reforms and considering the positive impact of a proposed comprehensive policy, it is being said that India can be included in the list of top 50 countries in upcoming World Bank’s ease of doing business ranking.
By Suneel Kumar Pandey
Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of AFTERNOON VOICE and AFTERNOON VOICE does not assume any responsibility or liability for the same.
