What is 'Ease of Doing Business'?

What is 'Doing Business'?

According to the world bank report, "The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level."

Most importantly, EOB, looks at the conducive and harmful norms that pertain to a particular national economy. Most importantly it captivates one's attention, because it tells more about the regulatory norms for starting a business at the local level.

Amid all the political controversies, if one goes through the report, the leap although not spell bound, but it is worth to inspire entrepreneurship in India.

Image source: Doing Business.

What is DTF?

In above picture there is a diagram showing something called Distance to Frontier(DTF). It is just comparing the economy under consideration to the best one on an absolute scale upto 100.(It can be viewed on diagram above.)

It is designed to address both shortcomings, complementing the ease of doing business ranking. It is a score derived from the most efficient practice or highest score achieved on each of the component indicators.

Reliability of report and important indicators:

The reliability of the report is reinstated due to the parameters it discusses at large, pertaining to subnational economies. Some of them are highlighted below:

A) It describes step by step procedures to start, establish and develop a business in various prominent Indian cities. The detailed report explains it at length. The various indicators and variables mentioned in the report are highlighted below:

Image source: Doing Business.

B) The reforms carried out on yearly basis are highlighted and explained wherever necessary. Some of them are listed below as mentioned:


Starting a Business: India made starting a business faster by merging the applications for the Permanent Account Number (PAN) and the Tax Account Number (TAN), and by improving the online application system. This reform applies to both Delhi and Mumbai. Mumbai also made starting a business faster by merging the applications for the value-added tax and the profession tax.

Dealing with Construction Permits: India made dealing with construction permits less cumbersome by implementing an online system that has streamlined the process at the Municipality of New Delhi and Municipality of Greater Mumbai. The online system has streamlined the process of obtaining a building permit, thereby reducing the number of procedures and time required to obtain a building permit in India.

Getting Credit: India strengthened access to credit by amending the rules on priority of secured creditors outside reorganization proceedings and by adopting a new law on insolvency that provides a time limit and clear grounds for relief to the automatic stay for secured creditors during reorganization proceedings. This reform applies to both Delhi and Mumbai.

Protecting Minority Investors: India strengthened minority investor protections by increasing the remedies available in cases of prejudicial transactions between interested parties. This reform applies to both Delhi and Mumbai.

Paying Taxes: India made paying taxes easier by making payment of EPF mandatory electronically and introducing a set of administrative measures easing compliance with corporate income tax. This reform applies to both Delhi and Mumbai.

Trading across Borders: India reduced import border compliance time in Mumbai by improving infrastructure at the Nhava Sheva Port. Export and import border compliance cost were also reduced in both Delhi and Mumbai by eliminating merchant overtime fees and through the increased use of electronic and mobile platforms.

Enforcing Contracts: India made enforcing contracts easier by introducing the National Judicial Data Grid, which makes it possible to generate case measurement reports on local courts. This reform applies to both Delhi and Mumbai.

Resolving Insolvency: India made resolving insolvency easier by adopting a new insolvency and bankruptcy code that introduced a reorganization procedure for corporate debtors and facilitated continuation of the debtor’s business during insolvency proceedings. This reform applies to both Delhi and Mumbai.

Labor Market Regulation: India increased the mandatory length of paid maternity. This reform applies to both New Delhi and Mumbai.

C) One of the test cases is a Mumbai based ex-pilot and innovator named Amol Yadav. He built a six-seater aircraft on his rooftop. But the most important hurdle was getting green signal from Director General, Civil aviation. It took six long years for the project to get recognized. In 2014, the norms were changed, so that even amateurs can build planes. Not only did he got permission to build and test planes, but Devendra Fadnavis, Chief Minister of Maharashtra offered tie-up with this budding entrepreneur and also took up the issue to PMO.

D) The methodology is scientifically established and subjected to continuous scrutiny in public and elite domain.

There are more salient points, some pros and cons, but still the EOB report is no doubt a reliable measuring wand out of many available avenues.

What's in future?:

The state and central governments has been has been provided with extensive goal with 122 initiatives comprising of attracting investments. Moreover Make in India will be hopefully getting some boost from these facts and figures involved The effort would be undoubtedly at much larger scale. The present achievement too is laudable. More to come!!