Given the government’s focus on running businesses easy and simple, India has jumped 65 positions in the World Bank’s ease of doing business rankings. Placed at 77th in the world now, India is within touching distance of being in the top 50. By being among the top 10 gainers for two years in a row, India has shown not just the willingness to reform, but the initiatives over the past four years are ensuring exponential growth, beyond merely the 65-place improvement in rankings since 2014. This is just the beginning. The best is yet to come.
The immediate target is to ensure India reaches the top 50 in the Doing Business 2020 report and, for that, many of the aspects are already in place. The 2019 report mentioned India’s improved rank on six out of the 10 parameters pertaining to commencing and doing business within its borders. One of the main catalysts for this improvement was the rollout and streamlining of the goods and services tax (GST). GST has been an unqualified success, with a faster registration process than its predecessor, and making tax payment easier. With GST implementation issues having been addressed, one can expect this unprecedented reform to showcase efficiency across the country. India has also made paying taxes less costly by both reducing corporate income tax rate as well as the employees’ provident fund scheme rate. These reforms will push India’s ranking up in this indicator in time for the next report.
Laudable work has been done over the past four years to bring India to its current position. Now, in the remaining indicators, we must improve like we did this past year in “trading across borders”, where we improved from 146 to 80, and “dealing with construction permits”, where we improved from 181 in the 2018 report to 52. The enforcement of contracts and concerns with pendency is one area that continues to be a concern.
One aspect that could help alleviate concerns with commercial contracts, as well as help reduce the burden on the courts and consequently pendency, is through the Alternative Dispute Resolution (ADR). Institutional arbitration, for example, could greatly help in loosening the stranglehold that pendency has on enforcement of contracts and other legal delays. The government of India has made major strides in greater efficiency and efficacy in resolving commercial disputes, including major legislative measures on promoting ADR.
With top class arbitration as an alternative, many of the concerns regarding enforcement and delays in the courts could dissipate. In addition to this, the broad use and implementation of the Insolvency and Bankruptcy Code (IBC), will help greatly in resolving insolvency.
Another concern remains in registering property, an indicator where India’s position needs to improve. Some state governments, such as Maharashtra, have invested heavily in digitizing land records and building online solutions for registration and mutation. But these are just the first steps.
It takes several weeks to conduct title search on property and to mutate the property in the name of the new owner. The time taken to complete these formalities must be reduced, and technology can play a critical and significant role in reducing the time requirement—digitizing land records can help improve public access, but they are not effective in isolation. A land buyer must seek information that is held in different agencies, at differing stages of digitizing. This data must instead be integrated into a useable, searchable format that allows users to quickly and effectively identify encumbrances through a single interface. Reducing the search time will require massive digitization at various offices and linking records together using a unique ID.
Another focus area where we need to improve is in starting businesses. Despite important reforms in starting a business, India needs to improve its position since other countries appear to have also reformed rapidly.
In India, transformative change has been made possible. Not only have we escalated our ranking by 65 positions, but have also fostered a competitive spirit among states by ranking them. The journey to the top 50 has already begun. All systems are firing, and the transformation is there for the world to see. India’s ambition to become the easiest and simplest place for investors to do business in is 65 places closer to where it aims to be. Once we reach the top 50 next year, we can target the ultimate goal for 2022—to focus on reaching the top 25. Given the political commitment and administrative will, this is both doable and feasible.
Amitabh Kant is CEO, NITI Aayog. Views are personal