Doing Business: Measuring Regulatory Quality and Efficiency Report by world bank

• World Bank group has been mapping the theme of doing business for the last 13 years. “Doing Business: Measuring Regulatory Quality and Efficiency”, the annual report of the Bank, evaluates regulations that enhance business activity and those that constrain it.
• This report studies 11 areas of the life of a business. These cover the spectrum from starting a business, obtaining necessary permissions, getting credit, protecting minority investors and taxes to enforcing contracts and resolving insolvency.
• Presenting these indicators in quantitative terms, it compares and ranks 189 economies from one to 189. A high ease-of-doing-business ranking implies that the regulatory environment, relative to other countries, is conducive to the starting and operation of a local firm.
• India is one of the fastest growing economies in the world. The high potential driven by a robust middle class, cost competitiveness and a large talent pool makes it one of the most attractive destinations. Yet, according to the World Bank’s report for 2015, it was ranked 142 out of 189 countries in the overall ease of doing business index. This put India lower than the other BRICS and substantially lower than China.

Analysis:

• India has changed a lot in term of its perception toward ease of doing business after economic reforms in 1991.
• India has become more market centric economy; there is a high degree of openness to foreign investment; business decisions are taken mainly on commercial considerations and the ability to compete in the marketplace; capital and technology move globally in search of friendly and salubrious environments. Inevitably, the ease of doing business becomes an important consideration for those looking for investment opportunities.
• India is aggressively focusing on this aspect, with a view to re-energising the economic engine. As a result, the index ranked India 130 — up 12 places — in the 2016 annual report.
• To further improve ease of doing business , there should be a collaborative partnership between the states and the Centre.
• Also Government should focus on resolving thorny issues through legislation.
• In areas such as contract enforcement, payment of taxes and handling insolvency, the government is rightly pursuing legislative changes to improve the playing field.
• The unusually high ranking that India gets for investor protection (8th ) is evidence of the robust regulatory architecture and maturity of the Securities and Exchange Board of India.

What more can be done:

• First, the binding constraints seem to be land, taxation, contract enforcement and resolving insolvency. The Union government is already focusing on policy and legislative changes in each of these areas. However, what remains to be seen is the implementation of the good intentions of the government.
• Second, the government needs to genuinely partner with the states — or, at least, some of the key ones — to deliver last-mile connectivity to facilitate operations on the ground. The hackneyed idea of a “single window” may still be worth re-visiting.
• Third, the interface with government needs to be reduced or minimized. More importantly, it should be through an electronic format, which would make it more transparent and less burdensome in terms of time and money.
• Last, the staff and officers who handle these initiatives need to be chosen with care and given the right orientation. Needless to say, the front office of any organization forms the first and most lasting impression on the minds of those at the window.
   

By: Vishal