Context: Recently, Union Minister of Finance and Corporate Affairs announced the 4th edition of Business Reform Action Plan (BRAP) ranking of states.
Key Points

• Ranking of States based on the implementation of the Business Reform Action Plan started in the year 2015.
• The current ranking announced is for 2018 – 19 (previously, the ranking was done for 2015-2016 and 2017-18).

Business Reform Action Plan 2018-19

• This ranking includes 180 reform points covering 12 business regulatory areas such as Access to Information, Single Window System, Labour, Environment, etc.
• The top ten states under State Reform Action Plan 2019 are Andhra Pradesh, Uttar Pradesh, Telangana, Madhya Pradesh, Jharkhand, Chhattisgarh, Himachal Pradesh, Rajasthan, West Bengal and Gujarat.
• The state which showed the most improvement since the 2018 ranking is Uttar Pradesh which moved from rank 12 in 2018 to rank 2 in 2019.

Need for the Business Reform Action Plan

• The larger objective of attracting investments and increasing the Ease of Doing Business in each State was sought to be achieved by introducing an element of healthy competition through a system of ranking states based on their performance in the implementation of the Business Reform Action Plan.
• The Business Reform Action Plan (BRAP) is aimed at promoting competition among states with a view to improving the business climate to attract domestic as well as foreign investments.
• The ranking this time gives full weightage to the feedback from over thirty thousand respondents at the ground level, who gave their opinion about the effectiveness of the reforms.
• State rankings will help attract investments, foster healthy competition and increase the Ease of Doing Business in each State.
• The Ease of Doing Business Index is based on the BRAP.

Ease of Doing Business Index

• Ease of Doing Business report is an Annual Report published by the World Bank which ranks countries based on their performance in easing the rules and regulations to start a business. 
• “Ease of doing business” refers to the regulatory environment in a country to set up and operate a business.
• Economies are ranked on their ease of doing business, from 1–190. A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm.

Criteria
A nation’s ranking on the index is based on the average of 10 sub-indices:

• Starting a business: Procedures, time, cost and minimum capital to open a new business
• Dealing with construction permits: Procedures, time and cost to build a warehouse
• Getting electricity: procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse
• Registering property: Procedures, time and cost to register commercial real estate
• Getting credit: Strength of legal rights index, depth of credit information index
• Protecting investors: Indices on the extent of disclosure, extent of director liability and ease of shareholder suits
• Paying taxes: Number of taxes paid, hours per year spent preparing tax returns and total tax payable as share of gross profit
• Trading across borders: Number of documents, cost and time necessary to export and import
• Enforcing contracts: Procedures, time and cost to enforce a debt contract
• Resolving insolvency: The time, cost and recovery rate (%) under bankruptcy proceeding

Highlights of India’s ranking

• India climbed 14 ranks in the World Bank’s Ease of Doing Business 2020 survey to stand at 63, among 190 countries, making it the one of world’s top 10 most improved countries for the third consecutive time.
• Compared with 2019, in 2020 India’s ranking deteriorated on only two parameters — “protecting minority investors” (from 7th to 13th position) and “getting electricity” (from 22nd to 25th) — and remained unchanged in “enforcing contracts”.
• Among the BRICS countries only Russia and China are ahead of India with their rankings at 28 and 31 respectively.
• Among the SAARC countries India is the topper in rankings.