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How India fares news

14 September 2005

According to the World Bank's 2006 Ease of Doing Business survey released yesterday, India ranks 116th among 155 countries (incidentally, far behind neighbours Pakistan and Bangladesh, not to speak of China) in terms of the ease of doing business in the countrybased on 10 business parameters.

The 10 parameters are: starting a business, dealing with licenses, hiring and firing workers, registering property, getting property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business, and reflects the position as it obtained in January this year.

Highlights of doing business in India:

India
Income category: Low income
GNI per capita: $620
Informal economy (% GNI, 2003): 23.

Ease of...	Economy rank	Best performer	Worst performer
Doing business	116	New Zealand	Congo, Dem. Rep.
Starting a business	90	Canada	Angola
Dealing with Licenses	124	Palau	Tanzania
Hiring and firing	116	Palau	Burkina Faso
Registering property	101	New Zealand	Nigeria
Getting credit	84	United Kingdom	Cambodia
Protecting investors	29	New Zealand	Afghanistan
Paying taxes	103	Maldives	Belarus
Trading across borders	130	Denmark	Iraq
Enforcing contracts	138	Norway	Timor-Leste
Closing a business	118	Japan	West Bank and Gaza

Starting a business:
The challenges of launching a business in India requires
entrepreneurs to go through 11 steps to launch a business over 71 days on an average, at a cost equal to 61.7 per cent of gross national income (GNI) per capita. There is no minimum deposit requirement to obtain a business registration number.

Indicator	India	Region	OECD
Procedures (number)	11	7	6
Time (days)	71	35	19
Cost (% of income per capita)	61.7	39.7	6.5
Min. capital (% of income per capita)	0.0	0.8	28.9

Dealing with licenses:
It takes 20 steps and 270 days to complete the process, and costs 678.5 per cent of income per capita to comply with licensing and permit requirements for ongoing operations in India:

Indicator	India	Region	OECD
Procedures (number)	20	15	14
Time (days)	270	195	150
Cost (% of income per capita)	678.5	385.9	68.0

Hiring and firing workers:
The difficulties that employers in India face in hiring and firing workers are shown below. Each index assigns values between 0 and 100, with higher values representing more rigid regulations. The rigidity of employment index is an average of the three indices. For India, the overall index is 62.

Indicator	India	Region	OECD
Difficulty of Hiring Index	56	37.6	29.5
Rigidity of Hours Index	40	35.0	50.0
Difficulty of Firing Index	90	42.5	27.3
Rigidity of Employment Index	62	38.5	35.7
Hiring cost (% of salary)	12.3	5.1	20.8
Firing costs (weeks of wages)	79.0	75.0	32.6

Registering property:
In India, it takes 6 steps and 67 days to register property. The cost to register property there is 8.9 per cent of overall property value.

Indicator	India	Region	OECD
Procedures (number)	6	6	4
Time (days)	67	124	33
Cost (% of property value)	8.9	6.4	4.7

Getting credit:
Measures on credit information sharing and the legal rights of borrowers and lenders in India are shown below. The legal rights index ranges from 0-10, with higher scores indicating that those laws are better designed to expand access to credit. The credit information index measures the scope, access and quality of credit information available through public registries or private bureaus. It ranges from 0-6, with higher values indicating that more credit information is available from a public registry or private bureau.

Indicator	India	Region	OECD
Legal rights index	5	3.8	6.3
Credit Information Index	2	1.8	5.0
Public registry coverage (% adults)	0	0.1	7.8
Private bureau coverage (% adults)	1.7	0.6	58.0

Protecting investors:
The indicators below describe three dimensions of investor protection: transparency of transactions (extent of disclosure index), liability for self-dealing (extent of director liability index), shareholders' ability to sue officers and directors for misconduct (ease of shareholder suits index) and strength of investor protection index. The indexes vary between 0 and 10, with higher values indicating greater disclosure, greater liability of directors, greater powers of shareholders to challenge the transaction, and better investor protection.

Indicator	India	Region	OECD
Disclosure index	7	4.1	6.0
Director liability index	4	4.6	5.3
Shareholder suits index	7	6.4	6.7
Investor protection index	6.0	5.0	6.0

Paying taxes:
The effective tax that a medium size company in India must pay or withhold within a year requires entrepreneurs to make 59 payments, spend 264 hours, and pay 43.2 per cent of gross profit in taxes.

Indicator	India	Region	OECD
Payments (number)	59	25	16
Time (hours)	264	331	192
Total tax payable (% gross profit)	43.2	35.3	46.1

Trading across borders:
The costs and procedures involved in importing and exporting a standardised shipment of goods in India are recorded – starting from the final contractual agreement between the two parties, and ending with the delivery of the goods.

Indicator	India	Region	OECD
Documents for export (number)	10	8	5
Signatures for export (number)	22	12	3
Time for export (days)	36	33	12
Documents for import (number)	15	12	6
Signatures for import (number)	27	24	3
Time for import (days)	43	46	14

Enforcing contracts:
It takes 40 steps and 425 days to enforce contracts in India. The cost of enforcing contracts is 43.1 per cent of debt.

Indicator	India	Region	OECD
Procedures (number)	40	29	19
Time (days)	425	385	232
Cost (% of debt)	43.1	36.7	10.9

Closing a business:
In India, the process, time and cost required to resolve bankruptcies takes 10.0 years and costs 9 per cent of the estate value. The recovery rate, expressed in terms of how many cents on the dollar claimants recover from the insolvent firm, is 12.82.

Indicator	India	Region	OECD
Time (years)	10.0	4.2	1.5
Cost (% of estate)	9	7.3	7.6
Recovery rate (cents on the dollar)	12.8	19.7	73.5

also see : Global business survey 2006
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