Doing business in 2006, World Bank report - lessons for India

The World Bank has released its annual "Doing business in 2006" report. Here are some of the observations about India:

• In the rankings of how easy it is to do business in a paricular country, India, though making big gains on collateral recovery and ease of registering property, ranks 116 - 25 places behind China. (pp 9)
• India ranks among the countries where it is most difficult to fire people. Others in this list include Angola, Cameroon, Togo, Tunisia, etc. (pp 29)
• The Indian state of Maharashtra halved the stamp duty from 10% of the property value to 5%. Pakistan reduced its duty from 3% to 2%. (pp 35)
  
• The reduction in stamp duty in Maharashtra resulted in a 20% increase in stamp duty collections as evasion reduced (pp 36)
  
• India was the top reformer in the area of credit and sharing of credit histories, by establishing a new consumer credit bureau and implementing a much faster proceeding for enforcing collateral agreements. The time to enforce security/collateral agreements fell from 10 years to 6 months because of a new summary proceeding requiring minimal court involvement. India still prohibits the sharing of credit histories with non-financial organizations, though. (pp 39 and 40)
  
• A study in India indicates that tax reform would increase productivity by 60%. (pp 57)
  
• India still lags sorely in terms of bankruptcy reform. It ranks amongst the worst performers in terms of the number of years it takes for bankruptcy proceedings to close - 10! (pp 75)
  
• Starting a business in India, on average required: (pp135)
  
• 11 procedures
• 71 days
• 61.7% of per capita income is average cost
• 0% of per capita is minimum capital required
• Dealing with licenses in India, on average required:
• 20 procedures
• 270 days
• 678.5% of per capita income is cost
• In terms of hiring and firing workers:
  
• 90 on 100 is difficult of firing
• 79 weeks of salary is cost of firing
• In terms of taxes:
• Taxes have to be paid 59 times in a year
• 264 hours are spent per year on paying taxes
• Total tax payable is 43.2% of gross profit

So broadly speaking, reforms occured in credit and duties on property transactions, but are sorely lacking in bankruptcy laws and the job market. The government expectedly refuted the findings as 'presenting too bleak a picture based on limited inputs'. In this case, I am actually tempted to agree with the government. From personal experience, the regulations were never really a hassle in starting my company, and with the right accountant and company secretary working for us, the entire process is more or less pretty painless.