Q. India’s ranking in the ‘Ease of Doing Business Index’ is sometimes seen in the news. Which of the following has declared that ranking?

  • Organization for Economic Cooperation and Development (OECD)
  • World Economic Forum
  • World Bank
  • World Trade Organization (WTO)

Answer: (c) World Bank

Notes:
  • The Ease of Doing Business Rank (EODB) is a measure of an economy’s position to the best regulatory practices. Though World Bank used to publish the ‘Doing Business’ reports from 2003, the ranking of economies started only from 2006.
  • The EODB study tries to capture the experience of small and mid-sized companies in a country with their regulators, by measuring the time, costs and red tape they deal with.
  • The goal of the World Bank in coming up with Doing Business score every year is to provide an objective basis for understanding and improving the regulatory environment for business around the world.
  • The Ease of Doing Business Rank is based on 10 parameters relating to starting and doing business in a country –
    1. Ease of starting a business.
    2. Dealing with construction permits.
    3. Getting electricity for the same.
    4. Registering your property.
    5. Getting credit for your business.
    6. Protecting minority investors.
    7. Paying taxes.
    8. Trading across borders.
    9. Enforcing contracts.
    10. Resolving insolvency.
  • It ranks countries on the basis of Distance to Frontier (DTF) score that highlights the gap of an economy with respect to the global best practice.
    • For example, a score of 75 means an economy was 25 percentage points away from the frontier constructed from the best performances across all economies and across time.
  • India’s Performance:
    • Notably, in three reports, released in 2017, 2018 and 2019, India ranked among the top 10 economies showing “the most notable improvement”.
      • Of the 79 positions in the Bank’s Doing Business rankings that India gained between 2014 and 2019, 67 rank improvements happened 2017 onwards, with the biggest 30-rank jump happening in the Doing Business 2018 report, released in October 2017.
    • The latest report, published in October 2019, placed India at 63rd in Doing Business, compared with 77th in 2018 and 100 in 2017.
      • India, along with other top improvers, had implemented 59 regulatory reforms in 2018-19, accounting for a fifth of all reforms recorded worldwide.
      • During 2018-19, India had implemented reforms across parameters such as ‘starting a business’, ‘dealing with construction permits’, ‘trading across borders’, and ‘resolving insolvency’. The government’s goal was to be among the top 50 economies by 2020.
    • The scores for India used to be based on coverage of just two cities, with Mumbai carrying a weight of 47% and Delhi a weight of 53%.
  • The World Bank would discontinue the practice of issuing ‘Doing Business report’ following an investigation reported “data irregularities” in its 2018 and 2020 editions (released in 2017 and 2019, respectively) and possible “ethical matters” involving bank staff.
    • It will be working on a new approach to assessing the business and investment climate.