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Last updated: 29 Oct, 2019  

Ease.Of.Doing.Business.9.Thmb.jpg Ease of doing business: Welcome rise but not enough

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Bikky Khosla | 28 Oct, 2019

It 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.

The 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.

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