Finance Minister Arun Jaitley said on Sunday the World Bank’s latest ranking of India should have actually been “significantly higher” as the bank had not factored in all the steps taken by the government to improve business environment.
“The World Bank has upped India’s ranking in the Ease of Doing Business by twelve positions. Last month the World Economic Forum had similarly upgraded India. Even though the push up numerically is modest, it marks the reversal of an adverse trend,” Jaitley said in a Facebook post titled ‘The Ease of Doing Business’.
“Considering the number of steps taken in the last 17 months, India’s position should have moved significantly higher,” he wrote, but added: “I understand that all steps have not been factored in since the World Bank criteria has a cut-off date and it also waits for announcements to translate into action before they can be factored.”
According to a new World Bank report released earlier this week, India made the biggest improvement in business regulations among South Asian economies, moving up in the ease of doing business ranking from 134 to 130.
India also ranked amongst the world’s top 10 in Protecting Minority Investors with a global ranking of 8, noted the bank’s annual report “Doing Business 2016: Measuring Regulatory Quality and Efficiency”.
Jaitley said there was need to further cut down on the number of permissions required so that the time lag between the decision and actual investment can be shortened significantly.
“States must realise that local laws which enable availability of land, environmental permissions, sanction of building plans need a relook,” he said, noting many countries have switched to an architect’s certificate as a substitute for building plans being sanctioned.
“When you compulsorily need a completion certificate for a building, the permission required for start of construction should be replaced by a regulatory mechanism. These additional changes will further improve India’s ranking for ease of doing business,” he said.
Describing the initiatives taken, he said the government last week issued two important ordinances – the Arbitration Law has been changed to make arbitrations cheaper, faster and free from judicial intervention, and a commercial division is being constituted in all high courts to adjudicate quickly upon investment-related matters.
“This would improve the enforceability of contracts where India’s ranking is relatively poor,” he said.
“Dispute resolutions with regard to public projects require a quicker settlement mechanism. The same is being worked out,” he added.
Reiterating that the government had opened most sectors to foreign direct investment, Jaitley said it was now time “to examine whether some of the conditionalities on which FDI investment is permitted, have become anachronic”.
He said it was encouraging that states have also altered their work culture.
Noting that competitive federalism can be witnessed among states, he said the Gujarat model of Global Investors Meet has been replicated in Tamil Nadu, Madhya Pradesh, West Bengal and in Punjab. Rajasthan, this month, would be seeking to attract global investors.
Telangana and Andhra Pradesh have been reaching out to investors globally.
He said three states with a significant tribal population — Chhattisgarh, Jharkhand and Odisha — figure in the top six states in the World Bank Ease of Doing Business rankings.