Growing positivity of doing business in India

World Bank’s “Ease of Doing Business 2020” results (pertaining to the year 2019) show that India has continued to improve on the ease of doing business metric – jumping 14 places from the previous rank of 77 in 2018. It has been a remarkable progress for India which was ranked 142nd in 2014 – a jump of 79 places in 5 years. India is also among the top 10 most improved nations for the 3rd consecutive year. Although, this rise hasn’t met the Government of India’s target to be among Top 50 nations by 2020 – India is the only large economy to have registered such a sharp rise in the last 1 year.

With the US / China trade war ongoing, the above is a potentially positive indicator of greater prospects of foreign investment coming into India. The report stated that India showed an improvement in 7 out of the 10 individual parameters. The biggest jump was observed in “resolving insolvency” – thanks to the implementation of the Insolvency and Bankruptcy Code (IBC) – rising from 108 to 52 in a year. The implementation of the IBC has made re-organization the most likely procedure for viable companies, increasing the recovery rate from 27 to 72 cents on the dollar.

India’s position also improved strongly on “Dealing with construction permits” (from 52nd to 27th) and on “Trading across borders” (from 80th to 68th). India’s ranking also improved on “Registering property” (from 166th to 154th) although the overall standing on this aspect remains low. Two aspects where India’s standing declined from 2018 are “Protecting minority investors” (from 7th to 13th) and “Getting electricity” (from 22nd to 25th) while it remained unchanged in “Enforcing contracts” (at 163rd). One discouraging aspect was the standing on “Ease of starting a new business” – where India’s rank improved by a single place to be at 136.

New Zealand continues to top the global rankings again with Singapore and Hong Kong following. The United States ranked 6th while China was ranked at 31st position.

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