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India flags errors in World Bank’s Ease of Doing Business report

India has written to the World Bank pointing out factual errors in its assessment of the country's current laws in last year's Ease of Doing Business report. Contrary to expectations of a big improvement, India saw only a one position rise in its last ranking — to 130 out of 190 countries.

 Modi-led government has taken focused initiatives to improve Ease of Doing Business ranking and enter the first top 50 bracket.

 The rankings are based on 10 parameters: Starting a business, Dealing with construction permits, Getting electricity, Registering property, Getting credit, Protecting minority investors, Paying taxes, Trading across borders, Enforcing contracts and Resolving insolvency.

 India was ranked a low 172 among 190 on enforcing contracts. The government has cited provisions in the existing legal framework that deal effectively with the issue. The government has in the past three years taken a host of measures to make it easier to do business in the country, including a single company registration window for all clearances, including allotment of permanent account number and tax identification number.

In an early June communication to the World Bank, the Department of Industrial Policy and Promotion (DIPP) highlighted changes to the legal framework regarding enforcement of contracts not taken into consideration in the report. "We have communicated to them certain factual errors in their assessment," according to a government official aware of the matter .The communication is part of the assessment process, but India decided to break away from the practice of yes-and-no answers to explain its viewpoint.

Customs clearance is also available on a single platform now. The government wants the World Bank to correct its findings related to arbitration and settlement of commercial disputes in the country following substantial changes to the framework for such redressal. 

India is keen to emerge as a low-cost arbitration hub for businesses. The government also wants corrections on items such as attorney fees, which range between 8 per cent and 10 per cent of the claim value instead of the 30.6 per cent estimated in last year's study. It also stated that as per law the court fee cannot exceed 1 per cent of the claim according to the Court Fee Act 1870, in contrast with 8.5 per cent stated in the World Bank's report last year.

 Similarly, it wants the provisions for availability of financial incentives for parties to attempt mediation or conciliation such as refunds of court filing fees to be recognised in the assessment. The DIPP communication also said the time taken for enforcing a judgment does not take 305 days as estimated by 2017 report but 35-60 days.

 World Bank officials are expected to send a team to India in July to gather feedback from industry and users to vet responses. The study only takes into account ease of doing business in Delhi and Mumbai. 


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