India has catapulted from 142nd rank in the World Bank’s Ease of Doing Business Ranking in 2014 to an impressive 63rd position in the Ranking for 2020. According to the Economic Review Report for 2024, this remarkable ascent in the ranking can be attributed to regulatory reforms, particularly the decriminalization of 3,600 compliances.
The Economic Review Report 2024 has been published by the Department of Economic Affairs under the Ministry of Finance.
The Economic Review Report states that the investment incentives and initiatives to ease business compliances and remove policy uncertainties have created an ecosystem for start-ups to nurture. The number of recognised start-ups has increased from 452 in 2016 to more than 98,000 in 2023.
Decriminalization Propels Ease of Doing Business
The report underscores the impact of regulatory reforms, stating, "Regulatory reforms, including the decriminalisation of 3,600 compliances, have improved the ease of doing business." Notably, the Jan Vishwas Amendment Bill 2023, which aims to decriminalize 183 provisions across 42 Central Acts administered by 19 Ministries/Departments, has played a pivotal role.
“Regulatory reforms, including the decriminalisation of 3,600 compliances, have improved the ease of doing business. The Jan Vishwas Amendment Bill 2023, passed by the Parliament, proposes to decriminalise 183 provisions across 42 Central Acts administered by 19 Ministries/Departments,” states the report.
Startup Ecosystem Flourishes
The startup landscape in India has witnessed a flourishing growth, with a staggering 1.14 lakh startups recognized under the Startup India initiative as of October 2023. These startups have not only contributed to economic vibrancy but have also generated over 12 lakh jobs. The Open Network for Digital Commerce (ONDC) recorded over 6.3 million transactions in November 2023, reflecting the increasing digitalization of business processes.
Empowering Women Entrepreneurs
Female participation in the entrepreneurial landscape has been notably encouraging. Under the MUDRA Yojana, 44.5 crore loans worth Rs 26.1 lakh crore were sanctioned, with 68% of accounts belonging to women entrepreneurs. Similarly, Stand-Up India has seen the sanctioning of 2.1 lakh loans, with 84% going to women entrepreneurs as of November 24, 2023.
Inclusive Human Capital Formation
The Economic Review Report highlights the inclusive nature of the reforms, emphasizing that human capital formation has not been limited to large businesses. The government's progressive reforms for Micro, Small, and Medium Enterprises (MSMEs) have been instrumental in supporting smaller businesses to recover from the pandemic's impact. Initiatives like the Emergency Credit Line Guarantee Scheme (ECLGS), revised MSME definitions under Aatmanirbhar Bharat, and the introduction of TReDS have played a vital role in this recovery.
"All these investment incentives and initiatives to ease business compliances and remove policy uncertainties have created an ecosystem for start-ups to nurture. The number of recognised start-ups has increased from 452 in 2016 to more than 98,000 in 2023," the report highlights.
Impressive Female Participation in Skill Development
The wave of human capital formation through the Skill India Mission has seen impressive female participation. Over 59 lakh women have been certified under the PM Kaushal Vikas Yojana, constituting more than 40% of the total certified as of June 2022. Moreover, around 70% of the loans sanctioned under PM Mudra Yojana have been for women entrepreneurs.
India Stack: A Digital Transformation
India's digital public infrastructure, known as the India Stack, has been a game-changer, enabling online, paperless, and cashless digital access to various public and private services. Comprising the Identity Layer (Aadhaar), Payments Layer (UPI, Aadhaar Payments Bridge, Aadhaar Enabled Payment Service), and Data Layer (Account Aggregator), the India Stack has revolutionized financial inclusion, transaction efficiency, and economic opportunities.
Digital Platforms Drive Reforms
The review underscores the role of technology and digital platforms as a common thread in the reforms over the past nine years. The Identity Layer, through Aadhaar, has provided a digital identity to every Indian. The Payments Layer, particularly the Unified Payments Interface (UPI), has witnessed a multi-fold increase in transactions, reaching Rs 143.4 lakh crore in FY24 (April-December 2023). The Data Layer has transformed the authentication ecosystem, reducing the cost of e-KYC from Rs 1000 to Rs 534.
The digital world has also built several e-commerce platforms for merchandise, food, and transport services that proved critical during the lockdowns.
As per a report by UNICOMMERCE on ‘India E-Commerce Index 2023’, the overall order volume witnessed a growth of 26.2% in FY23, indicating a flourishing e-commerce landscape in India, supported by a 23.5% rise in annual Gross Merchandise Value (GMV) as compared to FY22.
"India’s e-commerce market is expected to reach USD 163 billion by 2026, with online sales accounting for over 25% of the sales across major non-grocery retail categories. The proliferation of internet connectivity and smartphones in India, coupled with rapid urbanisation and the rising influence of India’s middle class, have propelled the e-commerce market," highlights the India'a E-Commerce Index 2023 Report.
Financial Inclusion through Account Aggregator
The IMF's Working Paper on 'Stacking Up the Benefits: Lessons from India’s Digital Journey' emphasizes the impact of Account Aggregator, stating that roughly 4.5 million individuals and companies have benefited from easier access to financial services since its launch in August 2021. The use of collaterals is diminishing as payment layers capture credit and spending behaviour, providing a comprehensive understanding of default risks.
India's economic reforms showcase a forward-looking approach, fostering an environment conducive to business growth, inclusive development, and digital transformation. The nation's journey from 142nd to 63rd in the Ease of Doing Business ranking reflects the concerted efforts and impactful policies driving India's economic resurgence.
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