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India’s Big Jump in Ease of Doing Business 2020 – The Key Takeaways

ease of doing business 2020

Prime Minister Narendra Modi on many occasions has said that India at this juncture can’t be satisfied with the incremental gains but only an overhaul will fulfil India’s aspirations. Well, the World Bank’s Ease of Doing Business 2020 report testifies that India is really achieving this objective as India moves up 79 spots since 2014 to 63rd rank in the latest World Bank’s ease of doing business rankings.

Modi Era Ensured A Sustained Progress

On ease of doing business, it is true that India’s move has been rapid. But at the same time, it is not a once in a while gallop either. India was ranked 142nd among 190 nations when Prime Minister Narendra Modi took office in 2014. Four years of reform pushed up India’s rank to 100th in World Bank’s ‘Doing Business’ 2018 report. In the 2019 report of ease of doing business, the country jumped 23 places to the 77th position thanks to the reforms related to insolvency, taxation and other areas and now it has jumped 14 spots since then.

World Bank’s Observations in EODB
  • Doing Business acknowledges India is among the 10 most improved economies on the ease of doing business rankings for the third consecutive time. Perhaps India is the only country to do so.
  • Given the size of India’s economy, reform efforts are particularly commendable
  • Prime Minister Narendra Modi’s “Make in India” campaign focused on attracting foreign investment, boosting the private sector—manufacturing in particular—and enhancing the country’s overall competitiveness.
  • The government turned to the Doing Business indicators to show investors India’s commitment to reform and to demonstrate tangible progress.
  • The administration’s reform efforts targeted all of the areas measured by Doing Business, with a focus on paying taxes, trading across borders, and resolving insolvency.
  • The country has made a substantial leap upward, raising its ease of doing business ranking from 130 in Doing Business 2016 to 63 in Doing Business 2020.
  • A study has been conducted on the effects of the “License Raj” reform in India on firm size distribution and resource reallocation. The authors find that the number of small firms increased in industries with easier start-up rules. They also observe an increase in the productivity of these sectors, suggesting a reduction in resource allocation distortions over the same period.

India’s big and sustained gallop in the ease of doing business comes at a time when the world is discussing the economic slowdown and many companies are shifting their base from China and looking at India. India has asserted that it is the place to opt for doing business hassle free.