What is the ease of doing business.
A Relative Term which has meaning only when comparison made between two countries.
1) To start an enterprise in a country?
2) Access to credit for business purpose?
3) To get environmental clearance for a project?
4) To obtain project approvals from government?
5) TO get a commercial disputes resolved?
6) To enforce contractual obligation in a country?
7) To get an electricity connection for industrial and commercial purpose?
8) To make tax payments?
9) How simpler are the direct taxation norms( less red tapeism)?
10) Property registration norms?
It also has other coupled indicators like:
11) what is the extent of tax incentives?
12) GST regime
13) What are the bankcruptcy laws
14)how efficiently are these cases handled and what is the extent of recovery. This is very important to restore confidence of Investors.
15) Good IPR regime
Ease of doing business index is created by World Bank. It is a comparison among the several countries about how easier that country can provide an environment for successful business operation and conduction. World Bank then gives ranking to these countries in this index according to the performance of their respective economies by considering some parameters .
The World Bank report for 2018 in this index is very crucial for India. India made improvement of 30 places and ranked at number 100 among all countries.
The remedial policies of Indian economic system made the positive impact on the world forum. World Bank analyses the economic system of 190 countries and this time India got featured at 100th places among all 190 countries.
There was a time when India used to preserve the last place amongst all the BRICS Nation but this time India overcome Brazil
There are some parameters are fixed to analyze a country’s performance which is following:
Starting a business: Procedures, time, cost and minimum capital to open a new business
Dealing with construction permits:Procedures, time and cost to build a warehouse
Electricity:procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse
Registering property: Procedures, time and cost to register commercial real estate
Getting credit: Strength of legal rights index, depth of credit information index
Protecting investors:Indices on the extent of disclosure, extent of director liability and ease of shareholder suits
Paying taxes:Number of taxes paid, hours per year spent preparing tax returns and total tax payable as share of gross profit
Trading across borders: Number of documents, cost and time necessary to export and import
Enforcing contracts:Procedures, time and cost to enforce a debt contract
Resolving insolvency:The time, cost and recovery rate (%) under bankruptcy proceeding
The report for 2018 New Zealand get the first rank among all the countries
The country which has a high ease of doing business ranking means the regulatory environment of that country is more conducive and productive to the successful operation of a firm.
- This index does not measure all aspects of the business environment that matter to investors, such as the macroeconomic conditions, or the level of employment, corruption, stability or poverty, in every country.
- This index does not consider the strengths and weakness neither of the global financial system nor the financial system of every country. It also doesn’t consider the state of the finances of the government of every country.
- Ease of doing business does not cover all the regulation or all the regulatory requirements. Other types of regulation such as financial market, environment, or intellectual property regulations that are relevant to the private sector are not considered.
A countries ease of doing business depends literally on how easy it is to set up an enterprise in the said country. The World Bank has a list, and the higher up a country is, the less amount of time it takes to set up shop there; red tape, getting funds, buying property and many other factors you can attribute to opening up a business is used when deciding a countries Ease of doing business.
Top 15 countries name year wise in ease of doing business.
India jumps 30 position up in ease of doing business in 2018 from 2017 .
What does it means for India?
The recent jump will send a positive signal to the investor community. The Insolvency and Bankruptcy code was one of the major concerns and India has improved a lot in this direction. Full impact of the code will be seen in next few years when some major issues and cases are solved under that act. Further, out of the stream of reforms initiated, the World Bank has not recognized 122 reforms and the rank would improve as they are recognized in future. Similarly, as of now, GST is also having mixed response. The full impact of GST will be see in next years’ rankings.