India drops to dismal 142nd in ‘ease of doing business’ rankings

India has dropped down two places to stand at 142nd out of 189 countries ranked by the World Bank for ease of doing business, underscoring the tough task that lies ahead of the Narendra Modi government, which has said it wants to make India a business-friendly country.

In the ten metrics used to measure ease of doing business in the Bank’s 2015 report, which covers the period from June 2013 to May 2014 (when the UPA was in power), India came close to the bottom in two categories. It stood a wretched 184th in the category “Dealing with Construction Permits,” and 186th in “Enforcing Contracts.”

On the bright side, India stood 7th, an improvement of 14 places, when it came to “Protecting Minority Investors.” It is the only category in which India has shown an improvement from 2013, when it was ranked 21 in this category and 140 in the overall ease of doing business.

Ranking in other eight categories are: Starting a business (158th), Getting electricity (137), Registering property (121) , Getting credit (36th – down from 30th place), Paying taxes (156), Trading across borders (126), and Resolving insolvency (137).

Getting construction permits in India involved an average of 25 procedures that took 186 days, and cost 28 per cent of the warehouse value. Enforcing contracts took 46 procedures and 1420 days — nearly four years. Getting electricity took 106 days and registering a property took 47 days.

Indicators measured in Mumbai, India’s business epicenter, showed that it required 13 procedures to start a business, and it took 30 days to accomplish this, compared to an average of 4.8 procedures and 9.2 days in advanced economies.

The Modi government, which aggressively made ease of doing business part of its agenda and has already initiated some steps, has plenty to chew on in the report that chronicles how enervating it is to start a business in India. For instance, it takes five days to pay stamp duties online, file all incorporation forms and documents online and obtain the certificate of incorporation and five days to request and obtain Certificate to Commence Operations.

It takes between a week and 12 days for each of the following procedures: Obtain a Permanent Account Number (PAN) from an authorized franchise or agent appointed by National Securities Depository Services Limited (NSDL) or Unit Trust of India (UTI) — 7 days; Register with Employees’ Provident Fund Organization — 12 days, simultaneous with previous procedure: Register for VAT online — 10 days, simultaneous with previous procedure; Register for medical insurance (ESIC) — 9 days, simultaneous with previous procedure; Obtain a tax account number for income taxes deducted at source from the Assessing Office in the Mumbai Income Tax Department — 7 days.

All of India’s neighbors except for Bangladesh (173) and Afghanistan (193) were ranked higher. China topped the neighborhood at 90, followed by Sri Lanka at 99, Nepal at 108, Bhutan at 125 and Pakistan at 128. Singapore stood first overall for the ninth year in succession, and is followed by New Zealand, Hong Kong, Denmark, and South Korea.

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