Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

Global Ease of Doing Business Report 2020


From UPSC perspective, the following things are important :

Prelims level : About the index

Mains level : Ease of doing business in India

  • India has improved its score in the World Bank’s global Ease of Doing Business rankings, rising 14 notches to be placed 63rd out of 190 countries on the back of “sustained business reforms”.

About the index

  • The indicator measures the performance of countries across 10 different dimensions in the 12-month period.
  • The DBR ranks countries on the basis of Distance to Frontier (DTF), a score that shows the gap of an economy to the global best practice.
  • The 10 areas of study are: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency.
  • Each country is scored and also ranked ( a comparison ).
  • The 0-100 score measures any given country’s performance with respect to the best practice across the entire set of countries. A score of zero signifies worst regulatory performance and 100, the best.
  • The indicator, however, is not necessarily representative of each country.

Important features of India’s performance

  • The World Bank has recognized India as one of the top 10 improvers for the third consecutive year.
  • Recovery rate under resolving insolvency has improved significantly from 26.5% to 71.6%.
  • 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.

What helped India improve?

  • For 11 countries, two cities were selected to construct the indicator – Delhi and Mumbai in the case of India.
  • It has further streamlined, in Delhi, the process and reduced the time and cost of obtaining construction permits and improved building quality control by strengthening professional certification requirements.
  • In addition to this, Mumbai’s streamlining of obtaining building permits has made it faster and less expensive to get a construction permit.
  • Its efforts to make it easier to trade across borders and resolve insolvency have also helped improve its ranking.
  • The government’s goal was to be among the top 50 economies by 2020.

What are the problem areas?

  • India still lags in areas like enforcing contracts and registering property.
  • It takes 58 days and costs on average 7.8 per cent of a property’s value to register it, longer and at greater cost than among OECD high-income economies.
  • And it takes 1,445 days for a company to resolve a commercial dispute through a local first-instance court, almost three times the average time in OECD high-income economies.

Global performance

  • The 10 top ranking countries with respect to the indicator were: New Zealand, Singapore, Hong Kong SAR China, Denmark, Korea, USA, Georgia, United Kingdom, Norway, and Sweden.
  • China (rank 31, score 77.9) made it to the top 10 list for the second such year.
  • New Zealand and Somalia retained their 1st and 190th spot respectively.
  • As far as India’s neighbourhood is concerned, Pakistan carried out the most reforms in the South Asia.
  • Bangladesh, Sri Lanka, the Maldives and Afghanistan made zero regulatory changes.
  • South Asian region generally underperforms with regard to enforcing contracts and registering property, as per the Bank.
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