All you wanted to know about the Ease of Doing Business rankings

The last few days have seen a lot of media coverage and talk about the World Bank’s “Ease of Doing Business Rankings”. So yes, India has been ranked 100 out of 190 countries and that’s a gigantic leap of 30 places up from last year but what does this mean? Why is it important for a common man to know? How are these ranking derived? If you’ve been wondering this and more, then read on as the GK Nugget tries to simplify the Ease of Doing Business Rankings.

What are the Ease of Doing Business rankings?Every year the World Bank ranks 190 countries of the world on the basis of various parameters. These rankings are based on 10 indicators such as getting credit, paying taxes, enforcing contracts, resolving insolvency, etc. Higher the ranking; better is the environment to start and run a business in that country. The rankings are calculated for the period June to May of the previous year (i.e. June 2016 to May 2017 for the Doing Business Report 2018). Usually 1 city in each country is surveyed, but for large countries 2 cities are surveyed (Mumbai & Delhi were surveyed for India).

Why are the rankings important?
These rankings indicate how easy it is to run a business in that country, which in turn boosts employment and growth. It also attracts foreign investment. Most importantly, an improvement in the rankings indicates that the country is taking steps to implement reforms and is bringing about positive changes.

So how has India fared?
India was ranked 142 in 2015, 130 in 2016, 130 in 2017 and now it has been ranked 100 in 2018. India making a jump of 30 rankings is a big deal because it is a feat which is rarely achieved and also it is very difficult for a large economy to make such a drastic advance.  The report acknowledges India as a top improver with the highest jump in rank of any country.


Which areas showed improvement?
Out of the 10 indicators that are taken into account to get the Ease of Doing Business rankings, India has improved its rankings in 6 indicators compared to last year.
Construction permits – 181 (up from 185)
Getting credit – 29 (up from 44)
Protecting minority investors – 4 (up from 13)
Paying taxes – 119 (up from 172)
Enforcing contracts – 164 (up from 172)
Resolving insolvency – 103 (up from 136)


In which indicators did our performance deteriorate?Starting a business – 156 (down from 155)
Getting electricity – 29 (down from 26)
Registering property – 154 (down from 138)
Trading across borders- 146 (down from 143)


What led to this improvement in the rankings?Some of the reforms which were implemented by the government in the past year have helped boost the ranking. E. g.: Insolvency & Bankruptcy Code coming into force has made it easier to resolve insolvencies, rules & procedures cut for building permits, paying taxes has become easier owing to online means adopted, PAN & TAN applications merged & put online to make it easier to start a business, etc.

Uhh… you forgot to mention GST!!
That, my dear friend, is the icing on next year’s cake. The cut-off date for taking into account reforms implemented was 1^st June. Therefore the impact of GST will come into play in next year’s rankings. You can expect a substantial jump in rankings again, since the World Bank has already acknowledged the implementation of GST as a very important reform.


Sannu ki? Ki farak penda hain? (So what’s in it for the common man?)
Ah, now this is the tricky question. There is no direct benefit for the common man, but the reforms that are being put into place (which help improve our rankings) will also help boost employment, growth & development in the country which will in turn raise the living standards.


Hope that helped clear some of your confusion about the Ease of Doing Business rankings. That’s all on this edition.