Despite the teething troubles before the nascent nationwide Goods and Services Tax (GST) regime and the Insolvency and Bankruptcy Board of India (IBBI), the key indirect tax reform and the insolvency proceedings under IBBI may help India improve its ranking in the World Bank’s annual “Doing Business” index next year. The introduction of the GST and enactment of Insolvency and Bankruptcy Code are considered to be the two key parameters where India made significant progress during 2017/18, say commerce ministry officials.
While GST subsumed various tax payments into one, insolvency code reduced the number of days needed to liquidate a company. For instance, of the total 118 cases under the corporate insolvency resolution process till May 2018, the average days for resolution were just 233. The cost of resolution was also just a fraction (0.06 percent) of the admitted claims, officials explain.
The World Bank’s ‘Doing Business’ assessment covers aspects of business regulation and their implications for firm establishment and operations in about 190 countries. India had jumped 30 positions to reach the 100th most business friendly nation in the list in the current year’s index. The just ended assessment will be considered for the Doing Business Report 2019.
During 2016/17, India carried out eight specific reform measures to become the only economy in South Asia to make it to the list of 10 top improvers.
The list of reforms that helped India last year
- Faster mechanism to start a business
- Reduction in number of procedures and time required to obtain construction permits
- Improved access to credit by amending the rules on priority of secured creditors
- Minority investor protection measures
- Administrative measures easing compliance with corporate income tax
- Reduction in import border compliance time
- Enforcement of contracts made easier by introducing the National Judicial Data Grid
- Adoption of new insolvency and bankruptcy code
Source: July 28, 2018, Business Times