World Bank pat, a poor consolation

The World Bank’s latest Doing Business report has pushed India up by four places in ranking but this is poor consolation for a country which has grand plans of making it big in industry and business. India was at the 134th position on a recalculated ranking of 189 countries and it has now crawled up to 130. The methodology of ranking has changed since last year and so the country’s original ranking of 142 had become 134. Even a slight improvement in the ranking is a welcome achievement but it should set the government and the country to think more about what is to be done than what has been done. The report has noted that India is among the countries which have made the most improvement in the past one year. But it has been unable to break out of the low rungs. A look at the details of the report is revealing of the areas of improvement and the continuing weakness.

Much of the improvement in ranking is on account of better performance in three of the 10 parameters used to measure the ease of business. They are the ease in starting a business, getting an electricity connection and securing a construction permit. It was an amendment in the Companies Act which did away with some procedural requirements earlier this year that made it easier to start a business. Similarly, procedural changes in securing an electricity connection led to a major rise in the country’s global ranking from 137 to 70. In the case of construction permits, the improvement was just by one rank. In the case of performance in some parameters, the country has stood still or has slided. For example, the ranking has fallen in the important area of access to credit. In the case of resolving disputes and enforcing contracts, India’s ranking is worse than that of other countries in the neighbourhood. Even some poor and backward countries fare better than India in overall ranking and on some important parameters.

The country has to work hard through legislative initiatives, policy shifts and procedural changes if it has to achieve the aim of making it to the first 50 places in the rankings. The government also has to create a conducive atmosphere for investment by instilling confidence among investors. It should also be noted that the report is based on inputs from two representative centres of Mumbai and Delhi and the ranking may be entirely different if those from other states are taken into consideration. The picture is not likely to be better then.