New release: Mr Michael Klein, IFC Chief Economist, releasing a report on the CEOs panel on Doing Business in India 2008 in New Delhi on Thursday.
The private sector lending arm of the World Bank, International Finance Corporation, on Thursday said that India can greatly enhance its business environment if the best practices, currently prevalent only in some cities, can be replicated across the country.
India can jump 55 places if best regional practices, in ten business areas, are adopted nationwide, said Mr Michael Klein, Chief Economist, IFC, at a panel discussion on the Doing Business 2008 Report of the World Bank. India is currently ranked 120 in the Doing Business Index, up 12 places from 132 last year.
The report pointed out that best domestic practices in the area of starting a business prevails in Jaipur, dealing with licences in Bhubaneshwar, registering property in Hyderabad, paying taxes in Bhubaneshwar and Chandigarh, trading across borders in Chennai, enforcing contracts in Bhubaneshwar and closing a business in Bangalore. These practices, if adopted by the entire nation, would significantly improve the business environment in India, he said.
Mr Klein further said that many countries have been focusing on the reforms relating to starting a business but were often found wanting in so far as taking up labour reforms were concerned for fear of political fallout. Tax reform, he said, was the second most popular reform agenda among nations as it helped the industry as well as the exchequer by increasing compliance and improving realisation.
Pointing out that reforms create growth potential and attract investments, Mr Klein said, China, India and Vietnam will keep reforming and create lot of business opportunities.
In the area of enforcing contract, India ranked 177 out of 178 nations, the Doing Business 2008 Report said, adding that it takes almost four years to resolve a commercial dispute through courts in Mumbai compared with slightly over a year in Shanghai. Similarly, it takes 10 years to go through bankruptcy cases here, as against less than two years in Shanghai.
According to the report, yet another area that required reform was property registration. It takes two months to transfer and costs 7.7 per cent of Indias gross national income. In China, it takes half the amount of time and cost, said the chief economist. To ease the business environment, he added, it was necessary to ensure that success of an entrepreneur depends on rules and not on personal contacts.