Ease of doing business

&

Infrastructure in India
112 122 127 129 130 131 Movin Crasto Manoj Dongare Niranjan More Om Matta Pradeep Fernandes Pravin Desai

Where India stands with rest of the world

Ease of Doing Business

World Bank Study started in 2004.

Purpose of the report.

Covered 183 Nations in 2011 Benchmark product Global acceptance. Influence Policy makers world wide. Importance for developing Countries.

Ease of Doing Business Rankings

Rank
1

Country
Singapore

Hong Kong SAR, China

New Zealand

United Kingdom

United States

134

India

Ease of Doing Business Constituents

Nine Broad Categories that make up The Business Index Ranking for each economy..
Starting a Business Dealing with Construction Permits Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders Enforcing Contracts Closing a Business

Ease of Doing Business India Rankings:2011

Sr. No
-------1 2 3 4 5

Rank
Ease of Doing Business Starting a Business Dealing with Construction Permits Registering Property Getting Credit Protecting Investors

Doing Business 2011

134 165 177 94 32 44

6
7 8 9

Paying Taxes
Trading Across Borders Enforcing Contracts Closing a Business

164
100 182 134

 Measure of cumulative change illustrates how the business regulatory environment has changed in 174 economies* from Doing Business 2006 to Doing Business 2011 Reflects all cumulative changes in an economys business regulation as measured by the Doing Business indicators
This approach shows the extent to which an economys regulatory environment for business has changed compared with 5 years ago

Starting a new business India Ranks - 165

Where are we placed Globally ?
New Zealand 1 1 China 14 38 4.5 118.3 Brazil 15 120 7.3 India 12 29 56.5 188.8

Procedures(number) Time (days) Cost (% of income percapita) Paid-in Min.Capital (% ofincome percapita)

What are the Problems ? High entry barriers to start a new business Red Tapisim What can be done ? Reforms Needs to be undertaken to smoothen the process of starting a business Single Window Clearance

Dealing with Construction Permits India Ranks - 177

Where are we placed Globally ?
Mexico Procedures(number) Time(days) 11 105 China 37 336 Brazil 18 411 India 37 195

Cost (% of Income per capita )

117

523.4

46.6

2143.7

What are the Problems ? Compliance is expensive and time consuming Lack of Clear Policy focus is on procedures and not what the Needs and requirements are What can be done ? Reforms Introducing time limits for different stages of the process Standard template having unique basic list of requirements for different types of construction projects

Registering Property India Ranks - 94

Where are we placed Globally ?
Japan Procedures(number) Time(days) Cost (% of property value ) 6 14 China 4 29 Brazil 14 42 India 5 44

5.5

3.6

2.7

7.4

What are the Problems ?

Formal procedures for Property transfer are expensive and complicated Lack of computerized record of property registrations

What can be done ?

Reforms Making this a fundamental service towards the citizens and not treat it as cash cow Unified and computerized registry of all Property transactions

Getting Credit India Ranks - 32

Where are we placed Globally ?
Japan
Strength of legal rights Index (0-10) Depth of Credit Information Index (0-6) Public Registry Coverage ( % of adults) Private Bureau Coverage ( % of adults) 7 6 0 76.1

China Brazil
6 4 63.9 0 3 5 26.9 53.5

India
8 4 0 10

What are the Problems ?

Limited credible Financial Information High risk for the lender to provide credit without knowing the credit history and real financial capacity

What can be done ?

Reforms Protecting the rights of the borrowers and Lenders trough effective collateral Law and Bankruptcy law Incentivizing borrowers registered with credit rating agencies to cheaper access to credit Private sector credit growth can be associated to higher level of GDP growth.

Protecting Investors India Ranks - 44

Where are we placed Globally ?
New Zealand Strength of investor protection Index (0-10) Japan China Brazil India

9.7

5.3

What are the Problems ?

Protecting Minority Shareholders rights to legal recourse Opaque transactions and no proper disclosures with related parties

What can be done ? Reforms Rating the Corporate governance practices of all listed companies
incentivizing transparent companies with better credit rating

Paying Taxes India Ranks - 164

Where are we placed Globally ?
Japan Payments (number per year) Time (hours per year) Total Tax Rate ( % Profit) 14 355 48.6 China Brazil 7 398 63.5 10 2600 69 India 56 258 63.3

What are the Problems ?

Complicated Tax Laws Compliance is very expensive

What can be done ?

Reforms Simple Taxation Laws Introducing New Direct Tax Laws and GST
Reducing Tax Rates.

Trade Across Borders India Ranks - 100

Where are we placed Globally ?
Japan China Brazil 7 21 500 5 24 545 8 13 1790 7 17 1730 India 8 17 1055 9 20 1025

What are the Problems ?

Excessive Document requirement. Burdensome customs procedure Inefficient port operations and inadequate infrastructure

Documents to export (number) Time to export (days) Cost to export (US$ per container) Documents to import (number) Time to import (days) Cost to import (US$ per container)

4 10 1010 5 11 1060

What can be done ? Reforms Enabling creation of Better Ports facilities

and efficient Cargo Management systems Reducing the time for clearance of goods. Thus reducing the cost of carrying .

Enforcing Contracts India Ranks - 182

Where are we placed Globally ?
Japan Procedures (number) Time (days) Cost (% of claim) 30 360 22.7 China Brazil 34 406 11.1 45 616 16.5 India 46 1420 39.6

What are the Problems ?

Inefficient courts Large no of pending cases High Cost of litigation

What can be done ?

Reforms Implementation of specialized commercial courts in result in significant reduction of case backlogs Electronic Data management and Judgment delivery .

Closing a Business India Ranks - 134

Where are we placed Globally ?

Japan Recovery Rate (% of Investment) Time (years) Cost (% of estate) 92.7 -

China 36.4 1.7 22

Brazil 17.1 4 12

India 16.3 7 9

What are the Problems ? Stringent pro labour but anti business laws. Unclear complicated procedures Inefficient Units a drag on the recourses available for the society What can be done ? Reforms Enabling Fast and cheap insolvency proceedings. Efficient and predictable outcome will enable closing down of Sick units and reallocating recourses to efficient units.

Infrastructure in India

Indian Infrastructure - Overview

Accounts 26.7% of industrial output Worlds third largest road network Worlds fourth largest railway network Sixth largest in the world, 3.4% of global energy consumption In the past, completely in the hands of public sector PPP model to build roads, ports

Two Decades of Development

1991-1995 De-licensing New policies for Telecom and Power. MRTP act Air corporation act Mega power policy. 1996- 2000 TRAI was started NHAI was constituted . Golden Quadrilateral project First private airport opened in Kochi ISD for private sector

Two Decades of Development

2001-2005 DVB splits in to Six companies DOT corporatized Delhi Metro FDI cap increased for airlines, telecom National broadband policy 2006-20011 100% FDI in all mining projects Pvt of Delhi and Mumbai airport Launch of 3G T3 Terminal opens Cargo at port exceeds 1 billon tons

Why emphasize on Infrastructure?

2025 - Urban population will grow by 50% GDP growth 8-9% p.a. Road Traffic growth 15% p.a. Air traffic growth 25% p.a. Peak hour power deficit 12% Poor infra of ports resulted in loss of Rs. 1400 crores

Projected Gap Until 2012

Ports

Accounts 90% by volume and 70% by value Contributes > 0.2 % of GDP 12 major ports and 187 minor ports in India. Coastline 7517 km Avg. turnaround time of major ports was 3.87 days in 2008-09, compared to 10 hrs in Hong Kong Growth in cargo handling at port 7.7% p.a. till 2014

Power
6 th largest energy consumer, 4.0% of global energy consumption by more than 17% of global population 3rd largest T & D network in the world 6.6 million circuit km 45% Coal fired plant, 25% hydel power, 10% gas based, 8% renewable energy and 3% nuclear Large demand supply gap

Investment of $300 billion in the Power sectors. Thrust on renewable energy The sector has been significantly de-regulated

Roads
To get rich, build roads first; to get rich fast, build fast roads
Poverty reduction through investments in roads 10% increase in road network 3.4% increase in per capita From 1951 to 1995 Vehicles - 90 fold increase but Roads 7 fold increase Network of 3.3 million kms - the 2nd largest in the world Only 20% of the surfaced roads are in good condition. Carries 61% of the freight and 85% of the passenger traffic Highways/Expressways 70,934 kms (2% of all roads), Carry 40% of road traffic Transport sector pays Rs. 4500 Cr to states

Airports
97 % of the countrys foreign tourists arrive by air 2nd largest FOREX earner 12 domestic and above 60 international airlines operating in India connect more than 80 cities in India Passenger traffic grown from 5.92 crores in 2004-05 to 11.68 crores in 2007-08 -- Expected to grow to 31.66 crores by 2022-23 Air cargo traffic expected to grow by 8.14% in next 12 year period Flights between metro cities increased 5 to 10 folds in last 10 years
No of Population Sr. No. Country Airports (Cr) 1 U. S. 5146 30 2 Brazil 734 19 3 Russia 594 14 4 China 413 133 5 India 251 116

Growth in Indian aviation almost 4 times above intl. avg. Mumbai-Delhi air corridor is the 6th most busiest route

Telecom
861.48 million connection in April 2011 Third largest and fastest growing in the world. Over the last 5 years, nine out of every ten new telephone connections have been wireless India ranks 14th in broadband users Contribute nearly 1% to Indias GDP 3G : The next driver Mobile TV, Location Surveillance, Streaming video on demand, Video telephony

Shortfalls
Challenges in tendering phase Quality of planning and engineering design is poor Tendering unviable PPP projects is common Flawed Contractual Processes leading to Cost Escalation Pre tendering process is centralized and slow Construction phase besets with over runs and costs Land acquisition delays are common Dispute resolution processes are ineffective Performance management is weak Availability of skilled and semiskilled manpower insufficient Lack of best in class procurement practices. Overall economy impact of slow progress: Suffer a 10% loss to GDP by 2017

Recommendation
Change the land availability norms and tighten contractual penalties for delays Establish high power group to monitor and de-bottleneck infrastructure projects Amend policies and regulation to hasten dispute resolution process Judiciously adopt delivery mode to increase success rate of tendering PPP projects