The Finance Minister Arun Jaitley on Sunday said that Government was working hard to address two critical areas — enforcement of contracts and bankruptcy law — that came in the way of a better ranking for the country in the World Bank’s ‘ease of doing business’ index.

Although the World Bank had upped India’s position by twelve positions in its latest ‘Doing Business’ report, Jaitley felt the ranking should have moved “significantly higher” going by the number of steps taken (by the Modi-led Government) in last seventeen months.

In the Doing Business 2016 report, India was ranked 130th position out of 189 countries, twelve places higher than 142nd rank in last year’s edition. 

The improvement, however, looks modest if one were to compare it with the recalculated 2015 ranking of 134, based on a new methodology. 

“I understand that all steps have not been factored in since the World Bank criteria has a cut-off date and it also waits for announcements to translate into action before they can be factored”, Jaitley said in a Facebook blog post.

Although the “push up” numerically is modest, it marks the reversal of an adverse trend, he said.

Jaitley said the Government’s recent move to issue ordinance to amend the Arbitration Law and constitute commercial division in all High Courts would improve the enforceability of contracts where India’s ranking is relatively poor.

It is reckoned that setting up commercial divisions in High Courts would help in quicker adjudication of all investment related matters, thereby improving enforceability of contracts.

Bankruptcy Law

Jaitley said that the ease of opening business must also be accompanied by an ease in exiting. For this, the framework of the Bankruptcy Law is being readied. Dispute resolutions with regard to public projects require a quicker settlement mechanism. The same is being worked out, Jaitley said.\

Indications are that the Government would in the upcoming winter session of Parliament introduce necessary bankruptcy code.

FDI Conditions

Jaitley also said that time has come to examine whether some of the conditionalities on which FDI investment is permitted, have become “anachronic”. 

“We need to cut down on the number of permissions required so that the time lag between the decision to invest and the actual investment can be shortened significantly”. 

Jaitley wanted States to realise that local laws which enable availability of land, environmental permissions, sanction of building plans need a relook

Pat for States

Jaitley said an equally encouraging factor is that the States have also altered their work culture. Investment is the starting point of all economic activity. An investment friendly State will be a natural destination. This realisation has donned upon the States. Competitive federalism can be seen. 

“The Gujarat model of Global Investors Meet has been replicated in Tamil Nadu, Madhya Pradesh, West Bengal and in Punjab. Rajasthan, this month, would be wooing global investors”. 

Telangana and Andhra Pradesh have been reaching out to investors globally. Three States with a significant tribal population – Chhattisgarh, Jharkhand and Odisha, figure in the top six States in the World Bank Ease of Doing Business rankings. The work culture is changing in most States, Jaitley said. 

srivats.kr@thehindu.co.in

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