EASE OF DOING BUISNESS

Subject: Economy

Context : The World Bank has corrected two of its recent ease of doing business rankings, adjusting the scores for China and three other nations based on an internal audit after staffers’ claimed of “undue pressure” by management to alter ratings.

Concept:

• Ease of doing business’ refers to the regulatory environment in a country to set up and operate a business.
• The ease of doing business index is an index created by the World Bank Group. Economies are ranked on their ease of doing business, from 1–190. A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm.

A nation’s ranking on the index is based on the average of 10 sub-indices:

• 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
• Getting 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 Doing Business project also offers information on following datasets:
• Distance to frontier – Shows the distance of each economy to the “frontier,” which represents the highest performance observed on each of the indicators across all economies included since each indicator was included in Doing Business
• Entrepreneurship – Measures entrepreneurial activity. The data is collected directly from 130 company registrars on the number of newly registered firms over the past seven years
• Good practices – Provide insights into how governments have improved the regulatory environment in the past in the areas measured by Doing Business
• Transparency in business regulation – Data on the accessibility of regulatory information measures how easy it is to access fee schedules for 4 regulatory processes in the largest business city of an economy

India’s Performance

• In India, these rankings are based on the business environment in Mumbai and Delhi. A lower rank indicates better performance on that parameter, whereas a higher rank indicates worse performance on the indicator.
• India jumped 30 spots to secure a place among the top-100 countries on World Bank’s ease of doing business ranking list in 2018. With this year’s performance, India became the first ever country to record highest jump in World Bank’s ease of doing business ranking.