The World Bank has published its 17th annual report on ‘Ease of Doing Business ‘ for the year 2020. Under this ease of doing business index, 190 countries are being compared and judged based on their business regulations. India is ranked at 63rd position compared to 142nd position in the year 2014.
“Simplifying 44 labour laws with 1458 into 4 codes with 480 sections is one of our many investment-friendly reforms. For the third time in a row, India has been acknowledged among the top 10 improvers in the 2020 edition of the World Bank report on the ease of doing business.” Health Minister Dr Harsh Vardhan said in a tweet on Wednesday.
India has identified 6,000 burdensome compliances, both at the central and states levels, that would be eased as part of the government’s plan to make it easier to do business towards ‘Ease of doing business in India’. “A systematic exercise across the Centre and states is being undertaken to eliminate or reduce compliances which have an adverse impact on the time and cost of businesses,” Guruprasad Mohapatra, secretary at the Department for Promotion of Industry and Internal Trade, said earlier.
*What is the ease of doing business index?*
Ease of doing business is an index issued by the World Bank. It is an aggregate value that involves different parameters which define the ease of doing business in a country.
*Ease of doing business score*
The World bank’s report showcased India at 63rd position with a 71.0 score, while New Zealand topped with a 86.8 score, followed by Singapore with 86.2, and 3rd position according to the report was Hong Kong by achieving a score of 85.3. With a score of 20.0, Somalia remains at the bottom of the index.
*Parameters of ease of doing business index*
The index measures the performance of 190 countries across 10 different parameters, which include:
Starting a Business,
Dealing with Construction permits,
Protecting minority Investors,
Trading across borders,
Contracts enforcement, and
It also focuses on three case studies, mainly business regulatory reforms such as starting a business, paying taxes, getting credit, and resolving insolvency; contracting with the government, and employing workers.
*Top countries with most notable improvement in 2020*
The most notable improvement in the report of Ease of Doing Business for the year 2020 was evident in the economies of India, Saudia Arabia, China, Jordan, Togo, Tajikistan and Bahrain.
However, in the 17th report of Ease of Doing Business 2020, Only two African economies have made it to the top 50 while no Latin American economies ranked in the said group.
*Reasons for the improvement in India*
*Make in India*
Prime Minister Narendra Modi’s Make in India campaign, proved fruitful in attracting Foreign Investment, demonstrated a hike in manufacturing, boosting the private sector, and eventually led to the growth of the economy. And thus, India has ascended the 17 notches and was able to mark its stance at 63rd position.
*Companies Act decriminalised to promote greater ease of doing*
– 48 sections of the Companies Act dealing with minor, procedural and technical offences decriminalised
– 23 of the remaining 66 compoundable offences can be dealt with by the company itself through in house adjudicating mechanism
– This promotes greater compliance and greater ease of doing business
*Freeing up locked up capital for lending passed*
– The passing of the bilateral netting of Financial Contracts Act enables locked up capital in financial institutions to be opened for lending
– Helps financial institutions to evaluate financial risks on a more real-time basis and release large amounts of locked-up capital for onward lending
*Labour reforms promoting both labour rights and investment*
– Labour law simplified from 44 laws with 1,458 sections into 4 codes with just 480 sections
– Greater ease of compliance and lesser ‘inspector raj’ due to labour reforms
– India among the few countries in the world to bring in social security net for gig workers
– New labour codes both labour friendly as well as investment-friendly