Contact Your Financial Adviser Money Making MC
6
March 2017
 |
INDIA (The Total Investment & Insurance
Solutions)
India
improved its ease of doing business ranking last year -- moving up from 131 to
130 in a list of 190 countries -- by reducing the average time taken to start
an enterprise and secure a permanent electricity connection, according to 2016
World Bank data.
However, an
IndiaSpend analysis of these data shows that India still ranks among the worst
performers on other key parameters. The
Total Investment & Insurance Solutions
Using five
parameters, we picked 10 nations across seven regions to compare India's ease of
doing business -- south and east Asia (including China), developed countries,
sub-Saharan Africa, lower middle income countries such as India (with per
capita incomes between $1,026 and $4,035) and the European Union. The Total Investment & Insurance
Solutions
In most
indicators, India ranked low, coming closest to sub-Saharan African countries.
The five
indicators are all related to the time taken to get key tasks completed. Those
include: (1) starting a business, (2) building a warehouse and equip the
industrial premises with water and sewerage connection, telephone line and
safety measures (3) getting permanent provision of electricity, (4) completing
legal procedures and (5) resolving insolvency if a business fails.
We compared
these parameters in India with three country groups over the decade 2007 to
2016: (1) neighbouring Asian countries (2) developed countries and (3)
differently developed country groups.
When
compared to the most advanced Western economies and Japan, Indian businesses
take twice the time (26 days) that the slowest of the four most advanced
countries take: US (6), UK (5), Germany (11) and Japan (11). However, it is an
improvement over the 34 days it took in 2014 to get a new project going. The Total Investment & Insurance
Solutions
The one area
where India has made considerable improvement is provision of electricity to
new businesses. It has overtaken three major economies and lags only behind
Germany in this aspect. From 60 days in 2009-12, the time taken to provide
electricity to a new enterprise rose to 100 days in 2013-14, and then gradually
fell to 46 days in 2016. South Korea leads with the least time, 18 days.
When it
comes to warehousing, dispute resolution and dealing with insolvency, India is
still way behind.
Companies
here take about half a year to build a warehouse, costing about Rs 50 lakh
($75,000) in Mumbai, with provisions for water, telephone and safety. This is
about the same time that Japan takes and twice the time taken by developed
Western nations such as US, UK and Germany. South Asia is the slowest region in
this respect, slower than even African countries.
In every
country, industrial and commercial disputes arise when there is a conflict of
interest between companies or between companies and the government. Resolving
these conflicts in the least possible time is a sign of a healthy and growing
economy. The Total Investment &
Insurance Solutions
India, on an
average, takes thrice the time to resolve disputes than developed countries.
The country's judicial system is fraught with delays and there is a shortage of
lower as well as higher court judges.
India is
slower than even its poorer Asian neighbours at resolving insolvencies that are
common in market economies. When businesses collapse, it is important to
resolve and recover accumulated loans and debts so that entrepreneurs and banks
do not suffer. The Total Investment
& Insurance Solutions
This
"twin balance sheet problem" -- soaring company debts coupled with
unrecovered bank loans -- was stressed in the Economic Survey 2015-16, after
non-performing assets (NPA) of public sector banks piled up to nine per cent of
the total loans disbursed by them. Today, their NPAs have crossed 12 per cent
of the total advances. The Total
Investment & Insurance Solutions
It takes, on
average, four years and four months to resolve insolvency in India, compared to
four years in Bangladesh, two years and seven months in Pakistan and one year
and eight months in China and Sri Lanka.
The Total Investment & Insurance Solutions
Japan
resolves insolvency issues in seven months, the least time taken among the 10
countries and regional averages analysed.The Total Investment & Insurance Solutions
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