Business still not easy in India

India is inching up the scale in terms of the ease of doing business . And it seems to be moving faster than China, though it has miles to go before it can catch up. That is the short message of the Doing Business 2008 report— the fifth in an annual report issued by the World Bank and IFC. India improved its overall rank on ease of doing business to 120 out of 178 countries, up from 134 last year. Improvements in mainly two areas, getting credit (a jump of 26 points) and cross-border trade (a jump of 63 ranks) helped. China’s rank rose to 83 from 92.

However, India has shown a decline on the other eight parameters, mainly due to other countries reforming much faster, says Sabine Hertveldt, Investment Policy Specialist, World Bank-IFC, Doing Business Team. The most serious slippage of 18 places was in ease of starting a business. India requires entrepreneurs to go through 13 procedures—double the average for developed nations and 50 per cent higher than its regional peers. And it needs 33 days to start a business.

Since the report’s scope is limited to business regulations, the authors concede that the rankings may not tell the whole story. That may well seem like the case for India especially, since the report links the pace of reforms to equity returns possible in the country. “Investors look for upside potential, and they find it in economies that are reforming—regardless of the starting point. Indeed, equity returns are the fastest in countries which are reforming the most,” the report notes.

Hence, while India may relish the returns and the pace of reforms till date, World Bank’s Hertveldt says things could be even better. The easiest reform measures could be improvements in tax payment systems and property registrations.

How India stacks up

Of the BRIC nations, only Brazil trails India in ease of doing business; and surprise, Pakistan and Sri Lanka are ranked higher.

1. Singapore
2. New Zealand
3. United States
4. Hong Kong
5. Denmark
6. United Kingdom
7. Canada
8. Ireland
9. Australia
10. Iceland
76. Pakistan
83. China
101. Sri Lanka
106. Russia
120. India
122. Brazil

Figures are country ranks in 2007

Source: World Bank Doing Business database