India’s Ease Of Doing Business Not Going Very Easy

As the present data represents, initializing of any Indian business have become easier in India, but also at the same time, these datas also suggests that their access to credits and the ease with which one pays tax, has worsened. The ease of doing business is an index that has been created by the World Bank Group. It indicates that higher rankings indicates strong protection of property rights, and also indicate better and simpler regulations for businesses.

What Do We Know About The Position Of India From This Index?

The total participating countries for the recognition of their ease of doing business ranking is 189.Among all of them, India ranks 130. Definitely not good, right? Well, if we see the previous year’s record, India has shifted its ranking from 134, to 130, this year, as compared to the last year. But the point is, is this ranking enough? And should India be satisfied?

Well, from my point of view, the answer would be a NO. India definitely has improved itself in terms of starting a business, or getting permits of construction, and even in terms of accessing of electricity. The third parameter has seen the biggest improvement, where India has moved from a spot of 20, from the initial spot of a 70. But the fact due to which India’s ranking is still so low is that it has worsened its performance on two parameters, the first one is the access of credit, and the second one, being the tax payment.

What Could Be The Possible Speculations For This Position Of India?

We all know that the economies of any country are always ranked on the basis of their ease of doing business, i.e., countries from within the rank 1-90. A high ranking means that the ease of doing business as well as the regulatory environment is very much conducive to the starting and operation of local firm. We can surely say from all these facts that having a high ranking is very crucial for development, and should be of utmost importance for a developing country like India. Well so far and so forth, India has not been able to achieve the desired ranking. There are many speculated reasons for the same. Some say that the operations, size, and the number of upcoming companies are very small in India, relatively. There have been any positive modifications in the academic institutions, which can help us fuel up the ranking of India in ease of doing business index. Also, it has been seen that there is a major reason for such a rank, well you all should guess it correctly, and that is the tax evasion strategy that most people of our country apply.

How Can We Make India Climb Up The Ranks?

We actually need to come up as a whole, come up as a country. Also, India must include the cooperation from the government, as well as the industry, which by so far, is not the case. To implement and achieve all these things mentioned above, the entire ecosystem, and also the academic institutions are needed to be included. From the various reasons stated, the important one is that the whole culture of entrepreneurship should be enhanced and accelerated, keeping in mind the fact that time is very much limited, and all the changes and enhancements should be made even prior to the minimum time requirement. It is definite that efforts are being made, but we need to put all those in a right direction. To ensure no tax evasion, the GST bill has been proposed that will ensure one tax in the country, ease in transferring of goods and services in the country. This GST bill can be seen as a major indirect form of tax reform. While the GST bill is expected to be implemented from 2017, there are speculations that after the implementation of this bill, our ease of doing business will improve. These conjectures are evident from a large number of examples, set by many countries that have implemented GST bill. There are over 160 countries that have implemented this bill. It has been a European tax landscape for more than 50 years till now. Well you also may find it interesting that there have been over 40 models of indirect tax that are currently in execution. There are also countries such as Singapore, New Zealand and Indonesia, implementing everything at a single rate. These countries are given a rank of 2, 1 and 91 respectively.  Even in Australia, GST is a federal tax, and it shares a rank of 15 in Ease of doing business index.  While in China, GST applies only to goods and the provision of repairs, replacement and processing services, and it has been given a rank of 78.

Hence, it has been a very important initiative taken by the government of implementing GST bill. This will definitely make sure that India’s Ease Of Doing Business ranking index goes up, and hence the overall development of India, as seen in the Modi government can actually bear some fruits.