GST had no role in India’s current 23-point surge in the World Bank’s ‘Ease of doing business’ index

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The World Bank’s ‘Ease of doing business’ index is the cumulative report of a survey that the international monetary forum (IMF) conducts on 190 countries every year, evaluating six core regulatory reforms. As the organization unveiled this year’s index globally, India became the only country among the top 10 improvers for a second consecutive year. Last year, India had reached the 100th position after jumping through 30 places. This year, it climbed a further 23 spots, closing in at rank 77.

A statement from India’s commerce ministry commemorated the achievement:

“India has improved its rank in 6 out of 10 indicators and has moved closer to international best practices (Distance to Frontier score) on 7 out of the 10 indicators, but the most dramatic improvements have been registered in the indicators related to ‘Construction Permits’ and ‘Trading across Borders’.” (Statement from India’s Union Ministry of Commerce)

India’s Union Finance Minister Arun Jaitley, while addressing a press conference in New Delhi, claimed that India will now aim to rank in the top 50 on this index in the years to come. Shri Suresh Prabhu (Minister of Commerce)  said, “It is (the) teamwork between Central, state and local governments. It’s (the) collaborative effort and combination of several interventions that has resulted in improvement into this ‘Ease of doing business’ index.”

Trade practices led to better ranking, not GST reforms

Market gurus and speculators have attributed the current growth spurt (and consequent improvement in ranking) to policy reforms that have improved the global business climate in terms of interactions and trade practices with Indian organizations. Previously, many experts had claimed that the Goods and Services Tax (GST) reforms that were launched in July last year in an attempt to singularly replace more than a dozen (former) levies by both state governments and the centre, would lead to a positive impact on India’s position. This did not happen. In fact, the World Bank’s 2017 report had exhaustively excluded the impact of GST reforms within a coverage period that ranged between June 2, 2016 to June 1, 2017.

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