Tax reforms such as abolition of fringe benefit tax and enhancing electronic tax filing to increase compliance have helped India climb a notch up to the 134th rank in ease of doing business among 183 countries.
However, India still has a long way to traverse, as it ranks one of the lowest — sixth among South Asian countries, with only Bhutan and Afghanistan ranked lower — according to the Doing Business 2011 Report released by the International Finance Corporation today. Among the BRICK peers, which includes Brazil, Russia, India, China and South Korea, India was ranked the lowest (see table).
However, on the positive side, India is among the top 40 nations to have carried out the highest number of business regulation reforms in the last five years, most of these related to introduction of technology to ease business operations.
“India has really stood out in embracing technology which has improved the regulatory ease and has helped in providing opportunities equally to many people. So, we expect further improvement in Indian rankings in the coming years,” said Dahlia Khalifa, author of the report.
| IFC DOING BUSINESS RANKING 2011 | ||
| Country | Rank | |
| 2010 | 2011 | |
| Singapore | 1 | 1 |
| Hong Kong | 2 | 2 |
| New Zealand | 3 | 3 |
| UK | 4 | 4 |
| United States | 5 | 5 |
| South Korea | 15 | 16 |
| Malaysia | 23 | 21 |
| China | 78 | 79 |
| Pakistan | 75 | 83 |
| Sri Lanka | 102 | 102 |
| Bangladesh | 111 | 107 |
| Indonesia | 115 | 121 |
| Russia | 116 | 123 |
| Brazil | 124 | 127 |
| India | 135 | 134 |
“Technology makes compliance easier, less costly and more transparent,” she added.
Singapore has retained the top slot for being the economy with the most regulatory ease of doing business, followed by Hong Kong and New Zealand. The global financial crisis has acted as a catalyst for governments to introduce regulatory reforms during the past year and make starting businesses for small and medium entrepreneurs easier.
In South Asia, Pakistan is the highest-ranking economy, with a global ranking of 83 on the grounds that it has reduced the time for exporting by improving communication between its ports and private terminals in the past year.
In India, the cost to start a business at 56.5 per cent of the income per capita and minimum capital required to start a business at 188.8 per cent of income per capita is the highest among South Asian countries.
India also ranks lowest in South Asia in the fewest procedures required to start business, ranking 12th globally. India also ranks 29th in the time required to start business on a global scale while being fifth in this category among eight South Asian countries.
Between June 2009 and May 2010, governments in 117 economies implemented 216 business regulation reforms, making it easier to start and operate a business, strengthening transparency and property rights and improving the efficiency of commercial dispute resolution and bankruptcy procedures. Around 50 per cent of these policy changes have eased start-up trade and tax payment options, while two-thirds of these reforms have been carried out in emerging economies, including India.
Sixteen economies, mostly in eastern Europe, central Asia and the OECD high-income-group countries, have reformed their insolvency regimes. These include Belgium, the Czech Republic, Hungary, Japan, Korea, and the United Kingdom.
“These reforms throughout the world are increasingly benefitting small and medium entrepreneurs and that is very good for prospects of job creation,” Khalifa added.
