Govt points out errors in World Bank's 2016 ease of doing business report

World Bank team is set to visit India in late July to prepare this year's rankings

Barely a month before a World Bank team is set to visit India to assess ease of doing business in the country, the government reminded it of the reforms not considered in 2016's report.

The Department of Industrial Policy and Promotion (DIPP), in the past week, pointed out to the World Bank the changes to the legal framework regarding a number of reforms undertaken by it, which had not been considered in the 2016's report.

The regular communication takes into account reforms in enforcing contracts and easing arbitration.

After pinning its hopes on a significant improvement in World Bank’s Ease of Doing Business Index, India has managed to move up by only one rank in the Doing Business Report 2017. It had moved up by only one rank, to 130th in 2016.

The 2016 ranking that had made Prime Minister Narendra Modi’s aim of pushing India among the top 50 nations by 2018 is a bit doubtful. India will have to improve its position by a whopping 80 places to meet the prime minister’s target, in one year.

Back then as well, the government argued that important reforms by it had not been considered by the World Bank, including enactment of the insolvency and bankruptcy code and introduction of the online single-window system for building approvals in both Delhi and Mumbai.

The rankings do not recognise several reform measures taken by the government to implement ease of doing business in the country and these will be taken up with the World Bank subsequently, DIPP Secretary Ramesh Abhishek had said back then.

The report takes into account reforms implemented only up to June 1, while several measures taken by the government came into effect after that, Abhishek had added.

On the other hand, more reforms went unnoticed since the multilateral body bases its report on feedback from users of government services such as traders, industrialists and the general public, who were unaware of these. Since then, the DIPP has upgraded awareness campaigns about reforms implemented.

The multilateral body ranks countries on 10 parameters. These include rules for starting a business, dealing with construction permits, getting electricity and registering property, among others. 

India’s position deteriorated on five parameters, with improvement in four and no change on ‘paying taxes’, something on which the nation has one of the lowest international scores among major economies.

In 2017, India is banking on reforms in trade infrastructure to jump to a higher ranking this year. Sectoral changes such as the Import Data Processing and Monitoring System (IDPMS) becoming active since then will help, a senior official said on condition of anonymity. 

Over the past year, single-window clearance for traders at major ports was implemented, apart from logistics data tracking at the country’s largest port, JNPT in Navi Mumbai.

The system, rolled out by the Reserve Bank of India, is aimed at facilitating faster and efficient data processing for import payment. All an importer has to do for releasing payment to a seller abroad is to quote the IDPMS number. 

In the past, importers had to send physical copies of all import documents, said Ajay Sahai, director-general of the Federation of Indian Export Organisations.

“Important reforms by the government not considered last time such as the enactment of the insolvency and bankruptcy code and the introduction of the online single-window system for building approvals in both Delhi and Mumbai will be included this time,” said the official mentioned earlier. 

Recently, Commerce and Industry Minister Nirmala Sitharaman said the government had taken about 7,000 different measures to boost the ease of doing business.

After cutting the number of action points to less than 300, the department introduced sub-points, taking the total to nearly 680 reforms. In contrast, in 2016, states had to implement 340 reforms and the rankings were based on the outcome achieved.

Apart from this, the government, in 2017, has drawn focus on specific sectoral reforms at the state level in areas such as transport, state excise, licences for health, drug, pharma and fertiliser.