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COMPARING REGULATION IN 17 CITIES AND 181 ECONOMIES COMPARING REGULATION IN 17 CITIES AND 181 ECONOMIES A publication of the World Bank and the International Finance Corporation Bank and the International Finance World A publication of the ©2009 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, D.C. 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: [email protected] All rights reserved 1 2 3 4 5 09 08 07 06 A copublication of the World Bank and the International Finance Corporation This volume is a product of the staff of the World Bank Group. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. 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Copies of Doing Business 2009, Doing Business 2008, Doing Business 2007: How to Reform, Doing Business in 2006: Creating Jobs, Doing Business in 2005: Removing Obstacles to Growth, and Doing Business in 2004: Understanding Regulation may be obtained at www.doingbusiness.org. Doing Business in India 2009 and other subnational and regional Doing Business studies can be downloaded at no charge at http://subnational.doingbusiness.org. Contents Doing Business in India 2009 is the first taxes, trading across borders, enforcing About Doing Business and country-specific subnational report of contracts, and closing a business. These subnational Doing Business in India 1 the Doing Business series that measures indicators have been selected because they Overview 7 business regulations and their enforce- cover areas of local jurisdiction and prac- Starting a business 14 ment across India. It builds on ben- tice. Data in Doing Business in India 2009 Dealing with construction permits 19 chmarks previously published in the are current as of February 2009. regional Doing Business in South Asia The indicators are used to analyze Registering property 24 2005–7 series. Doing Business in India economic outcomes and identify what re- Paying taxes 28 2009 covers 10 out of the 12 previously forms have worked, where, and why. Other Trading across borders 31 measured cities, and documents their areas that significantly affect business— Enforcing contracts 35 progress. It adds 7 new locations, expan- such as a country’s proximity to mar- Closing a business 40 ding the study to 17 locations. kets, the quality of infrastructure services The Indian cities and states covered (other than services related to the trad- Data notes 42 in Doing Business in India 2009 were se- ing across borders indicator), the security lected together with the Indian Ministry of property from theft and looting, the City tables 51 of Commerce and Industry. They are: transparency of gov ernment procurement, Doing Business indicators 57 Ahmedabad (Gujarat), Bengaluru (Kar- macroeconomic conditions, or the un- List of procedures 63 nataka), Bhubaneshwar (Orissa), Chennai derlying strength of institutions—are not Starting a business (Tamil Nadu), Guwahati (Assam), Gurgaon directly studied by Doing Business. Dealing with construction permits (Haryana), Hyderabad (Andhra Pradesh), This report was requested by the Gov- Registering property Indore (Madhya Pradesh), Jaipur (Rajast- ernment of India. It was prepared by the Acknowledgments 134 han), Kochi (Kerala), Kolkata (West Bengal), World Bank Group with the support of Ludhiana (Punjab), Mumbai (Maharashtra), the Department of Industrial Policy and New Delhi (Delhi), Noida (Uttar Pradesh), Promotion of the Indian Ministry of Com- Patna (Bihar), and Ranchi (Jharkhand). merce and Industry. Comparisons with the rest of the world are based on the indicators in Doing Business 2009. The indicators inDoing Business in India 2009 are also comparable with the data in other subnational and regional Doing Business reports. Doing Business investigates the regu- lations that enhance business activity and those that constrain it. Doing Business in India 2009 presents quantitative indica- tors to mea sure the regulations affecting 7 stages in the life of a business: start- ing a business, dealing with construc- tion permits, registering property, paying 1 About Doing was no one group of indicators available subnational studies in Mexico, in Brazil, internationally to monitor these micro- China, Colombia, India, Nigeria, Phil- Business and economic factors and analyze their im- ippines, Pakistan, the Russian Federa- portance. The first efforts to compile such tion, and others. Doing Business has also Doing Business a group of indicators date from the 1980s, begun a program on small islands that and were based primarily on opinion are independent states. in India surveys in academic or business circles. The Doing Business in India is an ex- These surveys are useful indicators of tension of the Doing Business project be- economic and political conditions, but yond Mumbai. By adopting the method- the fact that they are based on percep- ology of the Doing Business report, Doing tions, and that they provide only partial Business in India allows for comparisons information on poorer countries, limits of specific Indian cities’ performances their usefulness as an analytical tool. in terms of business regulations and en- The Doing Business project began forcement, and between these and 181 seven years ago, and aspires to go further economies around the world. National than these initial surveys. The project and international comparisons encour- In 1664, William Petty, advisor to King focuses on small- and mid-sized busi- age competition between cities and align Charles II of England, compiled the nesses in each economy, and analyzes the incentives of public servants toward first national accounts in history. These the regulations that govern each cycle of the reform and implementation of best consisted of only four entries. Expenses that economy’s existence. Doing Business national and international practices. were listed as “food, lodging, clothes, and the standard cost model, developed Doing Business in India 2009 is the and other necessaries,” calculated at 40 and applied initially by Netherlands, are first subnational report on this country million pounds. National revenues were today the only standardized tools that but a number of Indian cities have been divided into three sources: 8 million analyze the full range of jurisdictions to previously covered by regional Doing Busi- pounds from land, 7 million pounds quantify the impact of government legis- ness in South Asia 2005-7 series. In 2005 from other personal estates, and 25 mil- lation on business activity. and 2006, quantitative indicators were lion pounds from labor income. The firstDoing Business report, pub- compiled regarding regulations on busi- In subsequent centuries, estimates lished in 2003, covered five groups of ness activity and their enforcement in 9 on national income, spending, and the indicators in 133 economies. Doing Busi- Indian cities and states. The third report, inflow and outflow of capital became ness 2009 covers 10 groups of indicators Doing Business in South Asia 2007, ex- more abundant, although a system- in 181 economies. The project has ben- tended the coverage to 12 Indian cities and atic framework for measuring national efited from feedback from governments, states. Doing Business in India 2009 covers accounts was not developed until the academics, practicing professional ex- 10 out of 12 previously measured cities1 1940s, under the direction of British perts, and qualified reviewers. The initial and documents their progress. It adds 7 economist John Maynard Keynes. As this goal remains: to provide an objective new locations and measures the impact of methodology became an international basis for understanding and improving recent reforms on the indicators. standard, it became possible to compare the regulatory environment and a guide the economic positions of different coun- for improving performance in the sphere ASPECTS COVERED BY tries. Today, macroeconomic indicators of business. DOING BUSINESS IN INDIA of national accounts are standardized in In the Doing Business report, each all countries. economy is represented by its largest Doing Business in India provides a quan- Governments committed to the eco- business city—Mumbai, for India, for ex- titative measure of the national, state and nomic welfare of their countries and to ample, or Mexico City, for Mexico. Busi- municipal regulations involved in start- providing opportunities to their citizens ness regulation and their enforcement, ing up a business, dealing with construc- today do not limit themselves