India ranks 130 in World Bank ‘Doing Business’ list

New Delhi, October 26

India may be one the the world’s fastest growing economy, but it still ranks 130 in World Bank’s ‘Doing Business 2017’ list.

India was ranked the same last year among 190 economies, but that ranking has now been revised to 131, making this year’s ranking only slightly better.

However, India was ranked 13th in protection of minority investors — a three notch slide from last year, but much higher than the ‘Doing Business’ list.

New Zealand gained the top spot in both lists. Singapore shared the top position in the ‘Doing Business’ list and came second in the minority investor list.

Others that ranked higher than India in the minority investors protection list were Hong Kong, Malaysia, Kazakhstan, the UK, Georgia, Canada, Norway, the UAE, Slovenia and Israel.

The report said ‘Protection of Minority Investors’ indicators measure the protection of shareholders against directors' misuse of corporate assets for personal gain and the rights and role of shareholders in corporate governance.

According to the report, India carried out an ambitious, multi-year overhaul of its Companies Act, bringing Indian firms in line with global standards, particularly in respect of accountability and corporate governance practices while ensuring businesses contribute more to shared prosperity through a quantified and legislated corporate social responsibility requirement.

Company regulation is an ongoing process. Since the enactment of the Companies Act, 2013, the corporate affairs ministry issued notifications on a regular basis to address ambiguities in the law. Most notably, two sets of amendments were released in August 2014 and May 2015, highlighting the government's ongoing commitment to reform.

Further, in June last year, it set up a committee tasked with identifying further amendments to the Act and centralising recommendations and concerns from private sector stakeholders and regulatory agencies.

"Despite this piecemeal introduction, it has paid off both in economic terms and in India's performance in Doing Business. India's score increased in 3 of 6 indices of the protecting minority investors indicator set," the report said.

To simplify administrative requirements, the minimum paid-in capital was abolished. To instil greater transparency, the Act increased disclosure requirements, particularly regarding related-party transactions.

To bring Indian firms in line with global standards, the Act added requirements to disclose managerial compensation and have one-third independent directors and at least one woman on the board. Besides, India became the first economy in the world with a quantified and legislated corporate social responsibility (CSR) requirement.

"The case of India serves as a reminder of the time it takes and the challenges inherent to a holistic legislative overhaul. Piecemeal fixes can be a time and cost-effective approach, but only a full-fledged legislative reform gives policymakers the opportunity to innovate and sends a strong signal to the business community," the report noted. 

‘Government disappointed’

Reacting to India's rank remaining unchanged in the latest World Bank Doing Business report, the Indian government said on Wednesday that reforms undertaken by it and the states have not been adequately captured in the rankings released.

"I am a bit disappointed. Not only the Government of India, but every state is so actively engaged and wants to ease the situation. But for whatever reason, it has not been adequately captured in the ranking," Commerce Minister Nirmala Sitharaman told reporters here.

"Collectively, Team India has been doing quite a lot of work," she said.

Prime Minister Narendra Modi asked top officials in states and at the Centre to study the report and identify areas that need improvement.

"Mentioning the World Bank's latest Report on Ease of Doing Business, the Prime Minister asked all Chief Secretaries and all Secretaries of the Government of India to study the report, and analyse the potential areas where there is scope for improvement in their respective departments and states," a PMO statement said.

The departments concerned have been given a month’s time to submit a report. Cabinet Secretary will then review the suggestions. — Agencies