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Wednesday, January 18, 2012

Its not easy doing business in India

Our neighboring countries viz — maldives, sri lanka, pakistan, nepal, and bangladesh are higher in the world bank's latest ‘ease of doing business' rank. Only bhutan and afghanistan trail india [in the south asian region]

However india has moved up seven places to 132 this year, from 139 last year in the overall ease of doing business rankings, which is based on 10 parameters.

We have to build up infrastructure such as roads, ports, airports, power projects, irrigation, water supply and sewerage projects.

Out of the 183 economies that have been ranked for ease of doing business, the top ten are – singapore, hong kong, new zealand, the us, denmark, norway, the uk, south korea, iceland and ireland.

Another remarkable finding is  china's ranking has dropped from 87 last year to 91 this year.

India's overall ranking has improved solely due to improvement in rankings in three parameters:— 
* getting electricity (previous year 109 now 98), 
* paying taxes (165 to 147) and 
* resolving insolvency (140 to 128).

Following 4 parameters have dipped:— 
* registering property (96 to 97), 
* getting credit (37 to 40), 
* protecting investors (44 to 46) and 
* trading across borders (107 to 109).

No change in:- 
* starting a business (166), 
* dealing with construction permits (181) and 
* enforcing contracts (182).

Our  government has to act fast to push through key economic reforms.  Even pakistan, bangladesh and nepal fare better than india in the ease of doing business ranking is a telling commentary that policy making leaves a lot to be desired.

Paying taxes

The total tax rate (as a percentage of profit) in india 61.80% 
South asia - 44.40% 
Oecd countries (convention on the organisation for economic co-operation and development) - 42.70%  (few countries - australia, usa, belgium, canada, japan etc)

Starting a business

The total number of procedures required to register a firm in india is 12, south asia: 7 and oecd: 5The total number of days required to register a firm in india is 29, south asia 23, and oecd 13. The cost (recorded as a percentage of the economy's income per capita) incurred for starting a business in india is 46.8 per cent, south asia: 21.6 per cent, and oecd: 4.7 per cent.

The paid-in minimum capital requirement, which reflects the amount that the entrepreneur needs to deposit in a bank or with a notary before registration and up to three months following incorporation and is recorded as a percentage of the economy's income per capita, in india is 149.6 per cent; south asia 19.1 per cent and oecd 14.1 per cent.

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