World Bank Wanes in Importance?

The World Bank continues to impact decisions of governments in many ways, amongst them, the restructuring of laws pertaining to private enterprise. Anyone who thinks the World Bank is becoming increasingly insignificant should consider the following article. The point is not the merit or shortcomings of specific reforms, whats at issue is the weight the Banks rating system has in determining government policy.


http://economictimes.indiatimes.com/
Setting_up_business_will_soon_be_easier_for_firms/articleshow/2312831.cms

ECONOMIC TIMES

Setting up business will soon be easier for firms
27 Aug, 2007, 0030 hrs IST,M K VENU, TNN

NEW DELHI: Life will soon be easier for companies that are setting up new businesses. They will have all government clearances in place in just half the time, thanks to a joint initiative by the various ministries involved. The ministries of industry, labour, corporate affairs and finance have worked together to reduce the time taken to obtain various clearances from 305 days to 166 days.

Companies will also be able to avoid some 120 procedures that they have to go through to meet the requirements of the labour, land and revenue departments. The government’s new initiative follows a World Bank report which rates India quite low in the ‘ease of doing business index’.

Apart from registering a new business, companies face a series of procedures like getting approval for Memorandum and Articles of Association, obtaining the unique income-tax numbers (PAN & TAN) and registration for value-added tax. Along with a host of procedures, they also have to establish the employees provident fund, all of which are time-consuming. The government’s attempt is to cut the time considerably.

The Centre will soon inform the World Bank about the reduced procedures so that the bank can incorporate them in its yearly publication that rates countries based on the ease of doing business. The annual report for 2006 and 2007 rates India at 134 among the 175 countries listed. Interestingly, Pakistan is placed well ahead in this list at 74.

Reacting to the World Bank report, the government had set up a committee of secretaries to look into the whole issue. The panel studied procedures adopted and the time taken by the various ministries in giving clearances.

After an elaborate exercise, some new models, which substantially cut the number of procedures and the time taken to complete these, have been adopted. On its part, the ministry of small-scale industry has initiated quicker procedures to help closure of small and medium enterprises that are not registered under the Companies Act 1956.

The cabinet secretary will formally be apprised of the new models this week. The Centre has also written to chief secretaries of all states and union territories to adopt the best practices in other states. Many state governments have responded to this by setting up task forces to reduce procedural hassles.

The World Bank essentially considers 10 criteria to assess the ease of doing business. These are: ease of starting business, getting a licence, getting credit, protecting investors, paying taxes, cross-border trade, enforcing contracts and closing a business.

Judged on these factors, countries like Singapore, Japan, Australia, United States, Britain, Canada and some other European economies are rated at the top. Most emerging economies, like India, do not feature among the top 50.