The Hindu Business Line : World Bank puts India among top-10 reforming nations

EVEN as India managed to make it to the list of the top 10 reforming nations in the world, it still languishes at the bottom quartile among 145 nations surveyed on the ease of doing business, according to a World Bank Group report released in Washington today.

This, according to the World Bank and International Finance Corporation's second annual business-regulation survey titled `Doing Business in 2005: Removing Obstacles to Growth', is despite India making the most progress among South Asian nations in improving its investment climate during the last year.

What could be a matter of concern, though, for the fast growing Asian tiger economies and Latin American nations, is that the list of top 10 reforming nations consists of eight European countries, with India and Columbia making up the list. "It should definitely come across as a cause of concern for South Asian, Latin American and African countries that the top reforming nations are dominated by European countries," Mr Simeon Djankov, Manager of World Bank's Monitoring, Analysis and Policy Unit and a co-author of the survey, told Business Line.

In case of India, the good news is that businesses have better access to finance, as compared to countries such as China. The report, which lauds India's efforts at enforcing debt contracts and bankruptcy laws, strikes a note of caution when it comes to the `heavy regulatory burden on business' existing here.

"The big problems faced by businesses in India remain rigid labour regulations, lack of administrative and judicial reforms, in that order," Mr Djankov said. While China and some of the East European nations fare much better in terms of the pace of reforms vis-à-vis India, the problems of access to finance is a serious one in some of these economies, he said.

The report, which benchmarks regulatory performance and reforms in 145 countries, shows a widening gap between rich and poor nations on the quality of business regulation — an important factor in economic growth. For instance, the survey suggests that for entrepreneurs in poor nations it is twice as hard to start, operate or close a business in comparison to those in rich nations. Also, businesses in poor nations have less than half the property rights protections available to businesses in rich nations.

According to the report, New Zealand made it the easiest to start and operate businesses, closely followed by the US. Among the 20 countries where excess regulation most stifles business development, 80 per cent are in Sub-Saharan Africa.

The report, issued in co-operation with academics, management-consulting firms, law firms and government officials, analyses how regulation and legal systems in 145 industrialised and developing nations affect entrepreneurs' ability to start and operate businesses.