January 09, 2020

Govt reforms appear task-based; it's time to focus on structural changes to improve India's ease of doing business rankings

Writing for Firstpost, Kadambari Shah and Tinaz Mistry discuss the structural reforms needed to improve India's ease of doing business rankings. Excerpts below: 


"India has improved its rankings—from rank 137 to 22 in getting electricity, 184 to 27 in dealing with construction permits and 126 to 68 in trading across borders. Yet, broader structural issues such as judicial inefficiencies, the difficulty of setting up a business and ease of exits are still cause for concern. Targeted changes are both important and necessary, but they must not distract from the core issues that facilitate ease of doing business.

Two key areas in need of systemic reforms are enforcement of contracts and resolving insolvency. While on paper there has been progress, there are several issues still that prevent these changes from being reflected in ground realities."


On the effectiveness of the Insolvency and Bankruptcy Code (IBC):


"After the introduction of the IBC, a healthy market for bad loans emerged. At the same time, however, the backlog of cases and slow resolution has undercut this market, too. In some cases, there was interest from potential buyers but the process at the NCLT was so drawn-out that eventually, the credit dried up."


Read the full article here.

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