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India jumps 23 spots to 77 in World Bank’s ease-of-doing-business rankings

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New Delhi : India jumped 23 places to come in at the 77th spot in the World Bank’s latest ease-of-doing-business global rankings in 2018, a year after it had jumped 30 places.

The World Bank’s ‘Doing Business 2019: Training for Reform’ report, released on Wednesday, showed India’s rank in ease of doing business jump up from the 100th place among 190 countries. India had broken into the club of 100 nations easiest to conduct business in last year when it managed to jump 30 places from the 130th position.

The latest rankings could become a major poll plank for the ruling Bhartiya Janata Party in the upcoming national elections, as the World Bank has named India as ‘one of the economies with the most notable improvement’ for the third year in a row.

 

India has been adjudged the fifth-best performing nation in reforming the business environment.

The country improved its rankings in six of the 10 sub-categories used by the World Bank to judge business climate. It had delivered a similar performance last year.

Interestingly, India’s ranking actually took a beating in two categories where landmark government reforms were expected to lead to better results. In ‘Paying Taxes’, India actually saw its rank slip two notches to 121, despite the implementation of the Goods and Services Tax. The World Bank praised India for merging taxes and significantly revising the tax code, but it didn’t lead to a better ranking.

The implementation of the Insolvency and Bankruptcy Code (IBC) could not save India from shedding five positions in ‘Resolving insolvency’, to 108. Estimates by the Department of Industrial Policy and Promotion (DIPP) suggest that creditors working through the IBC have realised almost 59 per cent of claims.

However, a recent report by Debtwire Asia has pointed out that on average, it took 275 days to approve a resolution plan from the time the corporate debtor was admitted under the Corporate Insolvency Resolution Process of the IBC. The government’s estimate is 233 days.

However, in ‘Trading across borders’, India surged 66 places to come in at the 80th spot. DIPP Officials attributed this to the implementation of a risk management system at ports that waives inspection requirement for 80 per cent of products. “Also, the E-Sanchit mobile app makes e-payment of customs documents possible as well, as a number of major seaports that have been made operational 24×7 have been considered by the World Bank” he added.

Among categories, the country had the best performance in ‘Dealing with Construction Permits’ where it jumped by a massive 129 places to become the 52nd easiest place to construct a business unit. Improved transparency and streamlined procedures were behind India cleaning up its notoriously corrupt land sector and the financial transactions that come with it.

The report, covering all policy reforms undertaken by the government till May 1 of this year, ranked India top among the South Asian nations. There was an improvement in the country’s ‘ease of doing business score’, which indicates the extent to which a country’s regulatory practices are in sync with global best practices.

India also remained among the top-30 nations in the same three categories as last year — getting electricity, securing credit and protecting minority investors. However, the World Bank noted that the country needed to do more in areas such as enforcing contracts, registering property and the most fundamental of them all — ease of starting a business.

The latest report by the Washington DC-based multilateral agency encompasses 128 economies, implementing 314 specific business reforms over the past year. This surpassed the previous all-time high of 290 reforms two years ago.

India is among 11 major economies for which the World Bank took into account two specific metropolitan areas, in this case, Delhi and Mumbai.


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RBI-industry meet: India Inc pitches for rate cut to prop up growth

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New Delhi: Ahead of the monetary policy review, India Inc urged the Reserve Bank of India (RBI) to cut interest rate and reserve ratio to prop up growth.

In a meeting with RBI Governor Shaktikanta Das in Mumbai, industry chambers suggested various measures to ease tight liquidity situation and reduce high cost of credit in the light of consistently falling inflation.

The Confederation of Indian Industry (CII) suggested the policy measures required to ease the tight liquidity situation by effecting a cut in cash reserve ratio (CRR) by at least 50 basis points (bps), measures to facilitate flow of credit to industry, especially to MSMEs and the infrastructure sector, and steps to address the high cost of credit by considering a reduction of 50 bps in repo rate given that inflation has been consistently low, the chamber said in a statement.

 

Suggestions come ahead of the sixth bi-monthly monetary policy statement for 2018-19 scheduled to be announced on February 7.

CRR, currently at 4 percent, is the percentage of deposits kept as reserves with the RBI. Repo rate, currently at 6.5 percent, is the rate at which the central bank gives loans to the banks.

CII lauded the RBI for steps taken to ease financing challenges faced by the real sector, especially micro, small and medium enterprises (MSMEs), through various measures such as reducing Turn Around Time (TAT) and measures to boost liquidity in the economy.

On measures to address the financial challenges faced by the MSMEs, CII suggested that the RBI consider limiting the collaterals sought by banks to 133 percent of the exposure and eliminate the need for personal guarantees where sufficient collateral exists.

The chamber delegation, led by its president designate Uday Kotak, also suggested that letters of undertaking (LoUs) for buyers’ credit for the cases where MSMEs investing to expand capacity may be permitted and the RBI might consider allowing banks to sanction buyers’ credit facility to MSMEs, wherever import of raw materials is being done under letter of credit.

The Federation of Indian Chambers of Commerce and Industry (FICCI) also made a pitch for a cut in repo rate and CRR to enable lowering of lending rates by banks.

A reduction in repo rate and CRR would help in reviving the investment cycle in the country and will also boost consumption and support growth, FICCI President Sandip Somany said.

It will also help in reviving the investment cycle in the country and will also boost consumption and support growth.

“The need of the hour is to have an accommodative monetary policy, focusing on growth. The objectives of the Monetary Policy Committee should not be restricted to only price stability but also to consider growth and exchange rate stability,” he said.

On the RBI’s February 12 circular, CII highlighted that while it was aimed at improving the credit discipline and early identification of probable defaults, but it has, however, put pressure on already distressed sectors impacted due to business performance reasons and, hence, should be given sufficient time to resolve the defaults.

Among many key recommendations, CII recommended that the RBI may revisit the lending restrictions on the weak banks under prompt corrective action and consider allowing them to lend to the National Housing Bank which, in turn, can be used to finance housing projects through housing finance companies (HFCs).

The Associated Chambers of Commerce and Industry of India (Assocham) suggested that the economy needs credit loosening so that liquidity can sustain the growth.

The fundraising capability of NBFCs/HFCs has reduced significantly, warranting support from the government. They need to be provided the alternate options for raising funds. This is imperative not just for the health of NBFCs/HFCs but for sustaining the GDP growth rate as well,” Assocham said.

Sectors such as textile, handicraft and leather goods need to be given interest subvention to boost their export capabilities, it said, adding that the rate of interest subvention should be increased from 3 percent to 5 percent to take into account the combined effect of the commercial interest rate and the prevailing inflation.

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Telecom sector may stabilise soon post-consolidation: Trai

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New Delhi: Trai chairman RS Sharma expressed hope that the telecom sector is set to achieve stability soon post consolidation and the country needs heavy investment in fibre if it is to succeed in 5G technology and services roll out.

“My sense is that the sector is going to acquire stability and looking at the examples around the world scene 3+1 (3 private players and a PSU) is a good number and I don’t see it going down from that,” Sharma said here.

The Indian telecom operators are now reduced to three -Airtel, Vodafone-Idea and Jio and BSNL-MTNL following a bloody battle on tariffs that has seen shut down of operations of many fringe telcos and merger of two big telcos to take on Reliance Jio which unleashed a free and cheap service era that catapulted India to be data consuming nation ahead of US and China combined. But in the process, the incumbent telcos have bled on revenues and profitability and have found it diffcult to even service spectrum loans.

 

While the talk of India not missing the 5G bus is loud on private telcos and the government, the Trai chairman had a word of caution — India can be a frontrunner in deployment of 5G but a lot will hinge on bolstering investments in fibre infrastructure, which is currently inadequate and trailing countries like China.

“In 5G space, we can leapfrog inadequacies which we have in physical world, all of which can be overcome with use of information and communication technologies…There is a serious concern that while people are talking of 5G as a slogan but it won’t happen unless we put a lot of investment in fibre. Without fibre, 5G will not happen. 5G is going to have important use-cases in India because it will be a platform over which all the applications will be run. But it will not happen if there is no fibre”, Sharma said. He was speaking at the India Digital Summit organised by Internet and Mobile Association of India (IAMAI). At the same time, he said the investment need not just come from the TSPs (telecom service providers) it should also come from eco system companies as well.

“It is not just telecom companies that will need to invest. There are several avenues to generate investment and we are already seeing it happen now.” For instance, telecom service providers are already sharing tower. Infrastructure sharing could be one of the keys for the 5G network,” Sharma said. He said the fiberisation of the whole country is a must for the success of 5G.

India has only 22 per cent of mobile towers connected on fibre, while 78 per cent are without fibre, on wireless. China on the other hand, has 80 per cent connectivity through fibre and the rest through wireless. The optical fibre cable laid today till date is equal to optical fibre cable laid in China in one single year,” Sharma said adding fixed infrastructure will be critical for attaining a reliable and sustainable growth. Policies need to focus on promoting investments in infrastructure, he said.

“The National Digital Communications Policy (NDCP) contains those set of policies and statements and we need to operationalise those to ensure investment,” Sharma said. The new telecom policy – NDCP – aims to attract USD 100 billion investment and create four million jobs in the sector by 2022. It seeks to provide universal broadband connectivity at 50 Mbps to every citizen by 2022, and also talks of enhancing the contribution of digital communications sector to 8 per cent of India’s GDP, from the about 6 per cent now.

The TRAI chief further said there would be a need to unbundle service and infrastructure layers at some point, and fibre sharing could be one of the options in infrastructure sharing. “We think end-of-end service provisioning will not happen in 5G,” Sharma said. He further said, the connectivity problems in the country need to be solved with urgency, and regulations should not be “constrained” by the fact that only a certain set of service providers should provide a particular service. “No one should have the monopoly of providing services to people of this country, and we should solve this problem by whatever means and instruments we can deploy,” he said.

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GDP growth likely to be tad higher at 7.5 pc in FY20, says Ind-Ra

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New Delhi: The country’s economy is likely to grow a tad higher at 7.5 per cent in 2019-20 on account of steady improvement in major sectors — industry and services, said India Ratings and Research (Ind-Ra).

According to the advance estimates of the Central Statistics Office (CSO), the economy may clock a growth rate of 7.2 per cent in the current financial year, up from 6.7 per cent in the previous year.

Ind-Ra, a Fitch Group company, expects gross domestic product (GDP) growth to be a “tad higher” at 7.5 per cent in fiscal 2019-20.

 

After demonetisation and the GST implementation, the agency had expected 2018-19 to be a year of quick recovery and, indeed, the recovery has been sharp with GDP growth coming in at 7.2 per cent, it said.

It further said GDP growth would have been even better but for the global headwinds caused by an abrupt rise in crude oil prices and strengthening of the US dollar, among other factors.

“However, GDP growth in 2019-20 will be more dispersed and evenly balanced across sectors as well as demand-side growth drivers,” Ind-Ra said.

Over the past few years, private final consumption expenditure and government final consumption expenditure have been the primary growth drivers of Indian economic growth.

Ind-Ra said it believes that investments are slowly but steadily gaining traction, with gross fixed capital formation growing 12.2 per cent in the current fiscal and projected to clock 10.3 per cent in the next year.

“This is certainly a comforting development, but the flip side of this development is that it is primarily driven by the government capex (capital expenditure), as incremental private corporate capex has yet to revive” it said.

It further said that due to the slowdown in private corporate and household capex, GDP growth has failed to accelerate and sustain itself close to or in excess of 8 per cent.

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