Ease of doing business ranking

May 25, 2018 112 views
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India showed an unprecedented jump by securing a rank of 100 in the World Bank’s ease of doing business ranking of 2018 from its position of 130 last year. Interestingly, India is the first country to make such a feat of climbing ranks by a huge margin. This performance has been attributed to the undertakings of the government which are said to be taken after consultation with stakeholders, identifying needs of users, modifying the rules and procedures to make the economy more favorable to conducting businesses.

The ease of doing business ranking was formulated by Simeon Djankov at the World Bank Group. The ranking was supported by an academic research which was contributed to by professors Oliver Hart and Andrei Shleifer.

The ease of doing business ranking by the World Bank is based on 10 indicators carrying equal weightage. Higher rankings, i.e., a low numerical value, indicate better and simpler regulations for more conducive businesses.They are:

1. Starting a business: This involves the procedures, time and cost taken and the minimum capital required to open a business.

1. Starting a business: This involves the procedures, time and cost taken and the minimum capital required to open a business.

Employment Generation

The government in its budget has envisioned creating 7 million jobs in the formal sector during the year 2018 to 2019 and also contributing 12 per cent of the wages of the new employees in the Employees’ Provident Fund for all the sectors in the coming 3 years. Further, women employees’ contribution has been reduced to 8 per cent while no change has been stated with regards to the employers’ contribution. The government seeks to set up a model aspiration skill centre in every district of the country. Thus, the government has focused on the formal sector as well encourage employment of women in these sectors.

Digital Economy

Digital economy finds its mention in the union budget and the government has allocated Rs 3,073 crore (US$ 483.09 million) for the Digital India programme for the year 2018-19. Further, the need to initiate awareness and efforts in the area of artificial intelligence, robotics, digital manufacturing, big data analysis, quantum communication, etc has been recognized. The government has also allocated budget for telecom infrastructure and setting up of 5,00,000 Wi-Fi hotspots to connect rural citizens. It is also mentioned that the government shall assign unique IDs to individual enterprises in India.


The government has set a target of Rs 80,000 crores (US$ 12.58 billion) for disinvestment and most importantly, merged National Insurance Co. Ltd., United India Assurance Co. Ltd., and Oriental India insurance Co. Ltd., into a single insurance entity. In an effort to regulate gold exchanges, the government envisages to establish a system for regulation and a comprehensive gold policy to develop gold as an asset class.

Fiscal Management

One of the issues that plague the country is with regards to fiscal management. The government has set Rs 2,442,213 crore (US$ 383.93 billion) as the total budget expenditure for 2018-19. The Finance minister also stated that the Central Government’s debt to GDP ratio will be brought down to 40 per cent. The budget remarked the growth in direct taxes for 2017-18 (up to January 15, 2018) as 18.7 per cent. Another good initiative is the abolishment of Education Cess and Secondary and Higher Education Cess on imported goods which will be replaced by a Social Welfare Surcharge at the rate of 10 percent of the aggregate duties of customs. However, the Cess on personal income tax and corporation tax is proposed to be increased from 3 per cent to 4 per cent.

Medium, Small and Micro Enterprises (MSMEs) and Employment

The Budget has focused on the Medium, Small and Micro Enterprises (MSMEs) to improvethe employment and economic growth of the concerned. Further, Rs. 3794 crores has been allocatedwith the intention of providing credit support, capital, subsidy on interest etc.The Union launched the MUDRA Yojana in April, 2015 for the purpose of credit loans. Since almost 76% of loan accounts are of women and 50% belong to Scheduled Castes, Scheduled Tribes and Other Backward Castes, the State has framed the budget in a friendly manner. Atarget of Rs.3 lakh crore for lending under MUDRA for 2018-19 has been set.

Infrastructure and Financial Sector Development

The union budget also takes into account the importance of infrastructure in a growing economy and has therefore allocated huge funds that would also accelerate the growth in GDP as well as to integrate all parts of the country by improving the connectivity such as railway, roads, etc. The finance minister, in furtherance of this, has allowed Rs.5.97 lakh crore as the necessary fund. The investment in this is seen as public investment. The State shall also monitor by using PRAGATI which is a system overlooking projects worth 9.46 lakh crores. The government also has planned toboost tourism and develop ten tourist sites which are prominent to ensure development of infrastructure and skill, technology, branding marketing, etc.


The expenditure for the railway sector in the current financial year is capped at Rs.1,48,528 crore. The union has envisaged large amounts of fund for the purposes of capacity creation including around4000 kilometers of electrified railway network. Work shall also be done on theFreight Corridors on Eastern and Western railways. 12000 wagons, 5160 coaches and around 700 locomotives shall be introduced and 600 major railway stations will be revamped.


The government has also kept in mind the defence sector and suggested the sector to be developed to meet the challenges and needs of security. For the same, two defence industrial production corridors has been mentioned.


The government has framed the union budget keeping in mind the latest technological developments and economic and social issues. It expects the GDP growth to be at around 7.4 per cent in 2018-19 and exports to be at its highest best. The finance minister has stated that he expects India to become the fifth largest economy in a matter of time. Clearly, good days are promised in the budget, the question shall be of implementation now.

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