Ease of Doing Business

Welcome to our presentation about the Ease of Doing Business. Explore the factors,
benefits, and challenges related to this important global indicator.

by SUHAN JUNEJA
What is ease of doing business
Ease of doing business is an index published by the World Bank. It is an
aggregate figure that includes different parameters which define the
ease of doing business in a country.

The World Bank used to publish this report annually. The index had been
created to evaluate the impact of the economic policies/reforms
implemented by the government in the respective countries to promote
and make it easier to do business
Why to calculate EoDB
EoDB has several benefits which are as follows:-

1. The image of the country in the global market improves. GoI has
implemented as many as 37 reforms in the reference period and
wants to evaluate the effectiveness of these reforms
2. EoBD index changes the image of the country in the eyes of the
global market into a favourable country to conduct business in.
3. The rankings are expected to act as a guide to investors to make
decisions. Hence better the ranking in the report more the
4. favourability.
Helps in future plans for development.
5. Growth of Industries in countries at higher ranks.
Parameters while
calculating EoDB

1. Starting a business The ease of the procedures to start a new venture along with
the time, cost and minimum capital required are also considered

2. Dealing with construction permits How easy is it to get permission to build a warehouse

3. Getting electricity The ease of obtaining a permanent connection for electricity in a

newly constructed warehouse.
4. Registering property How easy and uncomplicated is the process of registering commercial real estate

5. Getting credit The depth of credit information index, as well as strength of legal rights index, is studied

6. Protecting investors Various indices on the extent of disclosure and ease of

shareholder suits are taken into consideration

7. Paying taxes Studies the number of taxes paid, hours per annum spent on filing tax
returns and the total tax payable as a share of gross profit

8. Trading across borders Includes the process of export and import of products are in the country.

9. Enforcing contracts It involves studying the time, cost and effort required to enforce a debt contract

10. Resolving insolvency Checks the time, cost and percentage recovery rate under a bankruptcy proceeding
India's EoDB : a rollercoaster ride
As claimed in the infographic, India’s
rank improved significantly from 142 in
2015 to 100 in 2018, a jump of 42 ranks.
Though there was no significant
improvement in India’s rank in both 2016
& 2017, the year 2018 saw an
improvement of 30 ranks. Factly had also
reported earlier that India’s jump of 30
ranks is the best ever in the EoDB

The World Bank's much awaited "Doing Business 2017' report provides
some insights on doing business in India. The "distance to frontier"
(DTF) score used by the World Bank to measure the distance between
each economy and the best performance in that category has improved
for seven of those 10 headers. The report especially lauds India for
achieving significant reductions in time and cost to provide electricity
connections to businesses. But for all of this, India has moved up just
one notch from 131 to 130-in the overall rankings. One particular
change in the ranking methodology seems to have done considerable
damage to India's improvement prospects. The World Bank has included
a new criterion "post-filing index" under the header "paying taxes".
Used in the report to measure the efficiency of "processes that occur
after a firm complies with its regular tax obligations", the post-filing
New Zealand topping the EoDB
and how!
New Zealand ranks as one of the easiest countries in which to set up a
business. This combined with a stable business environment makes it
attractive to foreign investors. New companies are required to apply for
registration online with the NZ Companies Office as well as for IRD
(Inland Revenue) and GST (goods and services tax) registration. At least
one director must be a resident of New Zealand.
New Zealand exceled in all the aforementioned parameters and
clinched the top spot for the consecutive 12th time.

NZ provide tactical support and scored very high in starting a business,

getting credit, registering property and protecting minority investors.
The Govt. regulates the business systems to create a platform for
supporting small businesses and market to grow mutually. Last year,
more than 54,000 new companies were registered on the Companies
Registration of New Zealand. Along with providing the necessary help
and support to start a business, the Govt. also strike a right balance
between advocating the businesses about their obligations and
enforcement of regulations.
Can the government make a move?
Starting a Business Dealing with Construction
Permits
Permanent Account Number (PAN), Tax
Deduction & Collection Account Municipal Corporations of Delhi, as
Number (TAN), Director Identification well as Municipal Corporation of
Number (DIN) have now been merged Greater Mumbai, have introduced fast
into a single form (SPICe) for company track approval system for issuing
incorporation.8 Elimination of building permits with features such as
incorporation fee for companies with Common Application Form (CAF),
an authorized capital of up to Rs. 15 provision of using digital signature and
Lakh. online scrutiny of building plans.

Trading Across Borders Enforcing Contracts

The Central Board of Excise and The Commercial Courts and Appellate
Customs (CBEC) has implemented the Division of High Courts have been
‘Indian Customs Single Window established in Mumbai and Delhi.
Project’ to facilitate trade. Importers National Judicial Data Grid (NJDG),
and exporters can electronically lodge provides case data including case
their Customs clearance documents at registration, cause list, case status and
a single point. The government has orders/ judgements of courts district-
launched ‘PCS1x’ which intends to wise across the country. NJDG is open
integrate 27 maritime stakeholders at to the public since 2015.
one platform.
Getting Credit Getting Electricity
Central Registry of Securitization Asset Electricity connection is provided
Reconstruction and Security Interest within 7 days if no Right of Way (RoW)
(CERSAI) is a geographically unified is required and within 15 days where
electronic registry that provides for RoW is required. Service line cum
registration by asset type. Since 2017, Development charges are now capped
CERSAI also provides search through at USD 339.84 in Delhi.
debtor's name.

Registering Property Resolving Insolvency Paying Taxes

All sub-registrar offices The Insolvency and Reduction of corporate
have been digitized Bankruptcy Code of tax from 30% to 25%
and its records have 2016 has introduced for mid-sized
been integrated with new dimensions in companies.35 Domestic
the Land Records resolving insolvency in companies can opt for
Department, in both India. It is India’s first concessional tax
Delhi and Mumbai comprehensive regime @ 22%
legislation on (effective tax rate:
corporate insolvency. 25.17% inclusive of
surcharge and cess).
Such a company cannot
claim any income tax
incentive or exemption.
Such companies are
not liable to pay the
Currently India's EoDB
Index
India is now one of the most alluring locations for
investments and conducting business. India moves
up 79 spots in the World Bank's 2020 Ease of
Doing Business Ranking, from 142nd in 2014 to
63rd in 2019. This striking improvement in India's
ranking in the EoDB index results from positive
developments.
It is an initiative launched by Prime Minister
Narendra Modi on 25 September 2014 to
encourage national, as well as multi-national
companies to manufacture their products in India.
The main aim is to raise the contribution of the
manufacturing sector by 25% of the GDP by the
Challenges in India's EoDB!
The limitations of the Ease of Doing Business report were discontinued
because of the following reasons:

1. The rankings were facing credibility issues.

2. The politicisation of doing business: Due to the politicisation of doing business, the
10 indicators involved were criticised.

3. Lack of clarity on paperwork issues and the rankings were demanded to be provided online.

4. After the Coronavirus pandemic outbreak, business was done online and on mobile
phones, also which hinders the overall ranking framework. Flaws in Ranking
methodology: It took time to distinguish between the essential red tape, such as
obtaining yet another stamped and notarized copy of a document, and beneficial
5. practices,
Small andsuch as ensuring
mid-size compliance
companies with environmental
and proprietary regulations.
and partnership firms are not covered.

6. The large unorganised sector needed to capture the real cost of doing business.
Conclusion and Key
Takeaways
Understanding the importance of the Ease of Doing Business
index and its impact on economic growth is crucial for countries
aiming to attract investments and foster a business-friendly
environment. By addressing challenges and implementing
reforms, countries can unlock their potential for sustainable
development and prosperity.