It is certainly good to see that there has been a consistent improvement in the World Bank EODB rankings of India. But to us, it is nothing great to gloat over.
The World Bank recently announced its 2020 Ease of Doing Business Rankings (EODB). It has a lot to cheer for the BJP government, which has been a great practitioner of media headlines management, which its detractors like Arun Shourie and Manmohan Singh accuse it of. India’s ranking in the global EODB index has further risen by 14 notches to 63, from 77 last year, falling short of PM Modi’s expectation that India would be in the top 50 ranks this year. India has now been amongst the top ten economies, with the most notable improvements for the third year in a row.
It is worth noting that from a lowly global ranking of 134 when Mr.Modi came to power in 2014, our ranking has risen to 63 this year. India performed better in six of the ten parameters used for the global ranking viz. starting a business, dealing with construction permits, trading across borders, resolving insolvency, paying taxes and getting electricity. In three areas which are very material ie. getting credit, protecting minority interests and enforcing contracts, India fared the same as last year and showed no improvement. Its performance fell in respect of registration of properties, yet another critical issue for the conduct of business.
It is certainly good to see that there has been a consistent improvement in the World Bank EODB rankings of India. But to us, it is nothing great to gloat over. There is a huge mismatch between these rankings and the ground reality loaded with struggles, that an ordinary entrepreneur faces in India. There has been no improvement of such magnitude in his daily reality.
And moreover, with these rankings based merely on the basis of surveys done in Delhi and Mumbai only, the ranking does not represent the true and real India at all. It is more a theoretical study based on the conditions in Mumbai and Delhi and not one that reflects the actual ground reality that Indians face in daily life. It is like the AAA ratings given to those entities, which have ultimately collapsed, making the ratings a wholly theoretical exercise.
To us, the ease of doing business would improve in India, only if there is a visible improvement in the following parameters, which is not so at all:-
- Reduction in corruption.
- Reduction in red-tapism.
- Heavy-handed laws and compliances.
- Stability of laws and regulations.
- Reduction in judicial delays.
- Working capital stuck in delayed payments.
- Prosecution and penalty raj.
- Logistics costs and delays.
- Rigid labour laws.
- Complex taxation laws and tax terrorism.
- Holding back tax refunds.
- Resolving the NPA and NBFC crisis.
- Protect public money from ponzis and PMC kind banks.
- Battling poor infrastructure.
The realities of business and its ease are harsh in India. In addition to battling ease of doing business, we also battle the risk of doing business and the cost of doing business, both of which are very high. India’s ground reality is reflected not in these World Bank rankings, but in the fact that India is ranked a pathetic 163 out of 190 in the most critical aspect of doing business ie. enforcing contracts and that explains why despite this significant improvement are the EODB rankings, fresh investments is receding, exports are falling, investor confidence is low, India has failed to take advantage of global trade opportunities, and there is a mismatch between EODB and economic growth.
Akhilesh R. Bhargava
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