Ease of Doing Business- 2020 | 25 Oct 2019

The World Bank recently released its Ease of Doing Business Report, 2020. The indicator measures the performance of countries across 10 different dimensions in the 12-month period ending May 1, 2019.

  • According to the report, New Zealand retained its 1st position whereas Somalia was ranked at 190th spot.
  • India was placed at 63rd position this time (2019) out of 190 countries marking an improvement of 14 places from its 77th position in 2018.
    • India’s score improved from 67.23 in the previous year to 71.0 this year.
    • India for the third consecutive year was present in the list of 10 economies where the business climate has improved the most.
  • The essential features of India's performance this year are:
    • India’s ranking improved basically on four parameters:
      • Starting a Business- India made starting a business easier by fully integrating multiple application forms into a general incorporation form,
      • Dealing with Construction Permits- For example, building a warehouse cost around 4% of the warehouse value as compared to 5.7% in the previous year,
      • Trading across Borders- with a single electronic platform- improved electronic submission methods for documents and upgrades to port infrastructure, import and export process became easier, and
      • Resolving Insolvency- Recovery rate under resolving insolvency has improved significantly from 26.5% to 71.6%. Also, the time taken for resolving insolvency has also come down significantly from 4.3 years to 1.6 years.
    • India continues to maintain its first position among South Asian countries. It was 6th (in 2014).
    • The World Bank will now include Kolkata and Bengaluru, besides Delhi and Mumbai, for preparing ease of doing business report, in order to provide a holistic picture of the business environment of the country.

Ease of Doing Business Report

  • The report was introduced in 2003 to provide an assessment of objective measures of business regulations and their enforcement across 190 economies on ten parameters affecting a business through its life cycle.
  • The report measures the performance of countries across 10 different parameters namely-
    • Starting a Business,
    • Dealing with Construction permits,
    • Electricity availability,
    • Property registration,
    • Credit availability,
    • Protecting minority Investors,
    • Paying Taxes,
    • Trading across borders,
    • Contracts enforcement, and
    • Resolving Insolvency.
    • This time two more parameters were considered namely, employing workers and contracting with the government but these are not included in the score and rankings.
  • It ranks countries on the basis of Distance to Frontier (DTF) score that highlights the gap of an economy with respect to the global best practice. For example, a score of 75 means an economy was 25 percentage points away from the frontier constructed from the best performances across all economies and across time.

Source: TH