India | Reforms Give A Major Boost To Banking Business

Over the past year, India enforced reforms in eight of the 10 areas on which the rankings are based, showing improvement in nine of them.

Indian prime minister Narendra Modi’s efforts to boost the country’s global appeal are paying off, says the World Bank. In the 2018 edition of its Ease of Doing Business index, India jumped 30 places from last year, reaching 100th place among 190 countries—and cracking the top 100 for the first time.

During a press conference, India’s Finance minister Arun Jaitley said: “This is the highest jump any country has made in the World Bank’s Ease of Doing Business ranking.” Over the past year, India enforced reforms in eight of the 10 areas on which the rankings are based, showing improvement in nine of them.

Jaideep Prabhu, Jawaharlal Nehru professor of business and enterprise at the Judge Business School of the University of Cambridge in England, says Modi can now truly present himself as one of those rare politicians who makes good on his promises: “In the 2014 national elections, Modi campaigned on a platform of ‘minimum government, maximum governance.’ This was a carefully chosen slogan designed to build on his reputation as a competent, business-friendly politician who understood that what India needed was a more rational form of government that created jobs and made it easier for people to start and run businesses.”

Once elected prime minister, Modi promptly launched a slew of initiatives.“These included the Make in India campaign, designed to stimulate manufacturing in the economy, the Digital India program, designed to stimulate digital business, and the Start-up India program, designed to stimulate entrepreneurship,” Prabhu says. “The government also introduced a bankruptcy law to make it easier for entrepreneurs to start-up, fail and start-up again,” he adds. Despite those efforts, India had languished around the 130 mark of the ranking.

However, Prabhu says the World Bank didn’t take into account two other recent initiatives of Modi’s government that actually made it harder to do business: “The first was a demonetization drive introduced in November 2016 that disrupted a large part of the economy that still operates with cash, and the second was the introduction of a uniform national-goods and services tax.”

Many, Prabhu says, now agree that the first was simply a bad idea to start with, while the latter was poorly executed. ”It will be interesting to see how India fares in the next global ranking of the Ease of Doing Business,” he says.