India has jumped 30 spots to number 100 in the World Bank's latest Ease of Doing Business report, which ranks New Zealand, Singapore and Denmark as the easiest countries in the world to do business in.
This year's ranking gives a thumps up for the sweeping economic reforms undertaken by the Modi government. "India stands out this year as one of the 10 economies that improved the most in the areas measured by Doing Business," the report said.
The report ranks China at 78, which is 22 spots above India. But China's rank did not improve, even though its Distance to Frontier (DTF) score increased by 0.40 points. India's DTF score is at 60.76, a mega jump of 4.71 points from last year, when the World Bank ranked India at 130th position.
"A study on India, for example, shows that inefficient licensing and size restrictions cause misallocation of resources, reducing total factor productivity by preventing efficient firms from achieving their optimal scale and allowing inefficient firms to remain in the market. The study by the World Bank showed that removing these restrictions would boost total factor productivity by an estimated 40-60 per cent," the report said.
"India also streamlined the business incorporation process by introducing the SPICe form (INC-32), which combined the application for the Permanent Account Number (PAN)," the report said.
The World Bank report also appreciated India's new insolvency law. "India also strengthened access to credit by amending the rules on priority of secured creditors outside reorganization proceedings and adopting a new insolvency and bankruptcy code that introduced a reorganization procedure for corporate debtors," the report said.
The report also noted the Modi government's resolve to clear the mess that banks are in with the pile of non-performing assets. "In India the establishment of debt recovery tribunals reduced non-performing loans by 28% and lowered interest rates on larger loans, suggesting that faster processing of debt recovery cases cut the cost of credit.
The World Bank also had a word of praise for the introduction of the Goods and Services Tax nationwide following the demonetisation of Rs500 and Rs1,000 notes last year.
The World Bank also complimented India for easing tax compliance on businesses by implementing an online platform for the electronic payment of the Employee Provident Fund and introducing administrative measures to ease income tax compliance.
Governments in 119 economies carried out 264 business reforms in the past year to attract investment and become more competitive, says the World Bank Group's latest Doing Business 2018.
Marking its 15th anniversary, the report notes that 3,188 business reforms have been carried out since it began monitoring the ease of doing business for domestic small and medium enterprises around the world.
Developing countries carried out 206 reforms, accounting for 78 per cent of the total reforms, with Sub-Saharan Africa implementing 83 reforms, a record for a second consecutive year for the region, and South Asia implementing a record 20 reforms. A large number of reforms centered on improving access to credit and registering a new business, with 38 reforms each, as well as facilitating cross border trade, with 33 reforms.
In its annual ease of doing business rankings, New Zealand, Singapore and Denmark retained their first, second and third spots, respectively, followed by Republic of Korea; Hong Kong SAR, China; United States; United Kingdom; Norway; Georgia; and Sweden.
This year's top 10 improvers, based on reforms undertaken, are Brunei Darussalam (for a second consecutive year); Thailand; Malawi; Kosovo; India; Uzbekistan; Zambia; Nigeria; Djibouti; and El Salvador. For the first time, the group of top 10 improvers includes economies of all income levels and sizes, with half being top improvers for the first time – El Salvador, India, Malawi, Nigeria, and Thailand.