Bikky Khosla | 28 Oct, 2019
is impressive that India secured 63rd position in the World Bank's
Ease of Doing Business 2020 index. The country jumped 14 places to 63rd among
190 economies, and according to the annual report, India is
among the top 10 improvers. The report stated that given the size of India's
economy, the government’s reform efforts are particularly commendable. It added
that the 'Make in India' campaign has help enhance the country's overall
competitiveness. Sounds encouraging.
report shows that India has improved its rank in 7 out of 10 indicators: 56
places in Resolving Insolvency, 25 places in Construction Permits, 12 places
both in Trading
Across Borders and Registering Property, 6 places in Paying Taxes, 2 places in
Getting Electricity and 1 place in Starting a Business. The readings look pretty
good, particularly recovery rate under resolving insolvency has improved
significantly, and the time taken for resolving insolvency has also come down
significantly from 4.3 years to 1.6 years.
The latest improvement has come on the back of the implementation of the
Insolvency and Bankruptcy Code. The World Bank report also gives thumbs up to
this reform measure, adding that before implementation of IBC it was very
burdensome for secured creditors to seize companies in default of their loans. It
views that companies now have effective tools to restore financial viability,
and creditors have access to better tools to successfully negotiate.
No doubt, the latest improvement is encouraging, particularly at a time when
the economy is starving of good news. But it must be noted that these rankings
are based on results from two main business centres, Mumbai and Delhi, and
therefore they may not reflect the big-picture. Most importantly, we must
realize that complacency can be dangerous at this juncture, and the improvement must
not divert attention of the Centre from further reforms.
I invite your opinions.