This week in India politicians were all appraise. India had achieved the unthinkable – leaping 30 places in the World Bank’s ranking for ease of business. How was it possible?
India is now the 100th easiest country in the world in which to do business, out of 190 ranked. It outperformed several other emerging economies – Brazil dropped two places to 125 and Argentina one place to 117. South Africa slid eight places to 82.
India was among top the improvers in this year's report (it has climbed from 142 to 100 in just three years). Alongside Brunei and Thailand it implemented the highest number of business regulation reforms in 2016/17,
New Zealand was again the easiest country to run and start a business in (see the below graphic drawn from the report).
India is now ranked just behind countries like Kuwait and Guatemala and ahead of places like Jordan (see below graphic).
Writing in Economic Times, Amitabh Kant (pictured above), the head of the government's think tank NITI Aayog, said in the last three years the government has sought to cut red tape with a single-minded pursuit, with almost 1,200 laws scrapped.
Kant points out that competition among states in India has become intense. As the ranking was placed in the public domain, chief ministers have been under pressure to deliver.
The Indian government however is bent on getting a place among the top 50 easiest places to do business. It already has about 90 reforms lined up for various ministries.
Among various suggestions Kant says India needs business process re-engineering to reduce the propensity to inspect by switching to real time registration and a culture of risk-based verifications. This requires cutting the bureaucracy which India is notorious for.
But behind the fanfare India will have to do more to ensure that it simplifies things far more. If the way the government handled GST is anything to go by (opting for six tax types rather than just two or three), it will prove harder to move from treating the World Bank's rankings as a mere marketing exercise to enacting real reforms that unleash entrepreneurship.
Timm is a South African who writes on small business in emerging economies. Follow Small Business Insight on Twitter at @Smallbinsight and on Facebook.
Stephen Timm is a