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 1^st position whereas Somalia was ranked at 190^th spot.
• India was placed at 63^rd position this time (2019) out of 190 countries marking an improvement of 14 places from its 77^th 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 6^th (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