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

[op-ed snap] Good report card

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Ease of Doing Business

Context

The rise in India’s ranking by 14 places to 63 in the World Bank’s Ease of Doing Business 2020 survey is a positive development. 

EoDB

  • India also figures in the top ten most improved countries in the world for the third consecutive year. 
  • From 142 in 2014 to 63 in 2020, it has been a significant upward journey for the country.
  • The rank list is an important input in the plans of global investors. 

Reasons for improvement

  • IBC implementation – India’s rank improved from 108 to 52 in the “resolving insolvency” category. The overall recovery rate for lenders moved up from 26.5 cents to 71.6 cents to the dollar according to the World Bank. 
  • TFA – signing TFA at WTO resulted in a reduction of trade procedures and paperwork. The country’s ranking in the “Trading across borders” category jumped 12 places from 80 to 68. This shows abatement of paperwork in favor of the electronic filing of documents and single-window customs procedures.
  • Dealing with construction permits – The country’s ranking has improved by 25 places from 52 to 27.

Challenges remain

  • Global competitors – India is still below its competitors for global capital, particularly China. 
  • Other indicators – The country lags in key metrics such as “Starting a business’, “Enforcing contracts” and “Registering property”. 
  • Delhi and Mumbai only – The rankings are based on samples and audits done in Mumbai and Delhi only. Starting, running or shutting down a business may be easier in Delhi and Mumbai compared to Coimbatore or Hyderabad where it is more difficult.
  • Federation – It is not easy to streamline processes across the country due to India’s federal set up where States have a big say in several parameters such as securing building permits, land approvals, electricity connections, registering assets etc. 

Conclusion

The easier part is now done and the rise in the rankings from hereon will depend on how much the Centre is able to convince the States to reform their systems.

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