CII moots 10-point agenda for ease of doing business in India

Context: Ahead of the Union Budget 2025-26,
the Confederation of Indian Industry (CII) on Sunday shared a 10-point agenda
to further improve ease of doing business (EoDB) in the country where urgent
policy interventions would be immensely helpful. The key areas of business
reforms in the country needs a simplified regulatory framework, which will help
in reducing compliance burdens and enhancing transparency should continue to remain
our focus agenda for the next several years.

Ease of Doing Business
Report

·       About: Ease of Doing Business was
a report published by the World Bank Group to provide a ranking of countries
based on fixed parameters. It ranks economies from 1 to 190, with 1 being the
best. The aggregate ease of doing business scores is sorted to determine the
order of the economies. If a country receives the first rank, then the
environment for doing business in that country is favourable.

·       Ease of
Doing Business India Rank 2020: India's performance in the Ease of Doing Business
rankings for 2020 marked a significant milestone in the country's ongoing
efforts to improve its business environment. Ranked 63rd out of 190 countries,
India moved up 14 spots from its 2019 position of 77th. This continued upward
trajectory highlights India's commitment to regulatory reforms and its focus on
creating a more conducive environment for business operations.

·       Significance: A higher rank signals a
conducive business environment, attracting more foreign direct investment. Helps
governments identify areas needing regulatory reform and improve business
conditions. Enhances a country’s global competitiveness by showcasing
improvements in business regulations. Facilitates economic growth by improving
the ease of conducting business operations, leading to higher productivity and
job creation.

·       Shortcomings
of the Ease of Doing Business Report: Urban bias - The general evaluation made in
the report is mainly based on two large cities (Mumbai and Delhi for India). It
therefore may not best capture the situation in other parts of the country,
especially rural areas. Such a concern might give a less realistic perception
of the business environment.

Informal Sector - The report tends to focus
on formal businesses and perhaps overlooks the challenges that the large
informal sector of India faces, which is part of the lion's share of its
economy. Many small enterprises are informal; hence, their regulatory problems
may not be captured in this report.

Legislation vs.
Implementation - Very often, the
report focuses on legislative changes and not so much on their practical
implementation. In terms of paper alone, laws and regulations look very
encouraging, but their effective enforcement and the real experience of
businesses are completely different.

Narrow scope - It covers starting a
business, dealing with construction permits, getting electricity, registering
property, and paying taxes; other principal factors affecting the business
environment, such as macroeconomic stability, infrastructure quality, workforce
skills, and innovative capacity, are not involved.

·       Conclusion: The World Bank decided to
discontinue the Ease of Doing Business report in 2021 following data
irregularities and allegations of manipulation. An internal audit revealed that
data for certain countries had been manipulated to improve their rankings. These
findings compromised the credibility and integrity of the report. This led to
the decision to halt its publication.