Ease of Doing Business

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The Ease of Doing Business (abbreviated as EODB) is basically an index of a ranking system that is constructed by the World Bank Group. In the EODB index, a ‘higher ranking’ (which is a lower numerical value) characterizes a better and simpler regulated business having stronger protections and property rights.

Ease of Doing Business or EODB is the pioneer consideration that businessmen like to know and evaluate before starting their business in a specific place. Not only do the foreign businessmen harness information about the EODB of another country but also the same is done by the local businessmen of that country. 

In light of this discussion, ease of doing business meaning, the report established by it, and what is India’s rank currently – all will be taken up as a discussion in this informative content. 

Explain Ease of Doing Business

Ease of doing business is a popular index system that is published by the World Bank on a regular or yearly basis in order to give a crisp representation of the complicacy of doing business in different countries. 

The aggregated score demarcated along each country becomes the Ease of doing business index of that particular country. Indicators for computing the EODB include - construction permits and limits, registration process, getting easy availability of credit, tax payment system, etc. These countries are ranked as per the index system.

Ease of Doing Business Indicators

The research which is broadcasted by EODB presents data for around 190 economies and their aggregates information from 12 corners of business regulations, they are indicated as the ease of doing business indicators. They are as follows:

1. Starting a Business of all kinds

2. Dealing with the Construction Permits

3. Getting the source of electricity

4. Registering with the Property

5. Getting Credit facilities

6. Protecting the minority investors

7. Paying the taxes, the taxation policy

8. Trading across the borders, foreign trade

9. Enforcement of legal contracts

10. Resolving cases of insolvency

11. Employing of low-cost workers

12. Contract and influence of the government.

These rankings and weights which are presented on each of the mentioned parameters are used to develop the overall EODB ranking. A higher EODB ranking means that the regulatory environment is even more conducive for starting, operating or functioning of the businesses.

Explanation of The Ease of doing Business Indicators

The indicators which are presented above are discussed here as under: 

Who Publishes the Ease of Doing Business Report? 

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Ease of Doing business is published by the World Bank. 

As mentioned earlier, Ease of Doing Business is particularly a report which is published by The World Bank in order to 'Compare the Business Regulation among the 190 Economies'. The report of 2020 says - India has elevated to 17 notches, ranking herself at the 63rd position in the ranking.

Ease of Doing Business Report 

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Ease of Doing Business Report gives an understanding about the ease of business done by different economies. This report is mainly analyzed by the investors and the businessmen which gives them a brief sketch about the complicity of the business which they have in mind to acquire. 

Recently, the 2020 Ease of Doing Business report features three main studies:

• business regulatory reforms like starting of the business

• getting the credit

• paying of taxes

• resolving the insolvency rate 

• contracting with the government 

• employing the workers

Report at a Short Glimpse

• Countries that have the most striking improvement in regards to the ease of doing business 2020 are - Saudi Arabia, Togo, Bahrain, Tajikistan, Jordan, Pakistan, Kuwait, China, India, and Nigeria.

• Only two African economies are able to reach the top 50 in the Ease of Doing Business 2020. While there are no Latin American economies that ranked in this said group.  

• Saudi Arabia has the most improved economy with the Ease of Doing Business in the year 2020, it has a total of eight reforms present within it.

• What does the data for 2020 show?

The data of 2020 suggests that a persisting disparity exists between the low-and high-income economies in regards to the ease of starting a business.

In order to launch a company in the low-income economy, the entrepreneur has a typical expenditure of around 50% of the income per capita while an entrepreneur who launched his business in a high-income economy spends only 4.2% of his income per capita.

Improvement of India in EODB

A total of 17 notches are elevated by our country with its ranking at the 63rd position in the annual report published by The World Bank in 2020. 

It is analyzed that the ‘Make in India’ campaign has actually attracted foreign investors in our self-growth market. The ‘Make in India’ campaign was launched by PM Narendra Modi, he initiated such an operation to attract foreign money in our economy which will boost up the growth of the national economy. The same happened and the private sector enhanced their own competitiveness via this campaign.   

Back in the year 2015, the Government of India targeted at joining the top 50 economies on the 'Ease of Doing Business ranking by 2020. India's Ease of Doing Business ranked from 130 in the year 2016 to 63 position in the year 2020.

EODB Ranking of Our Economy – India 

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The ease of business ranking in India is done among the chosen 190 countries, out of which India secured the 63rd in Doing Business in the year 2020.

The Indian Government has initiated a lot of various programs to boost the EODB in India. The positive changes which have led to this impressive achievement are summarized as under:

• Construction Permits: 

India’s ranking on this parameter has improved from a pointer of 184 in 2014 to an elevated pointer of 27 in the year 2019. This improvement is done because of the decrease in the number of procedures and the time taken for obtaining the construction permits in our country.

• Getting Electricity: 

Now it takes only 53 days and about 4 procedures for a business to get the source of electricity connection in India.

• Minority Interest:

Among the 190 economies, India ranks 13th in position in regards to protecting the minority investors and the 25th in getting the credit in this regard.

Did You Know? 

• Economies are ranked on the basis of ease of business ranking from 1–190. 

• A higher ease of doing business ranking means the economy has a regular business environment which is even more conducive to the starting and operating of the local firm. 

• The rankings of every economy are determined by computing the aggregate scores on each of these indicators, each of them consisting of several indicators which give equal weight to all the indicators.