India leapfrogging 30 places in ease of doing business in the World Bank’s ranking has come at the most difficult time, yet most opportune moment for the Narendra Modi government. This has come as vindication of Modi government’s commitment and conviction to right of centre economic policymaking with easier terms of business for companies, services and exporters. There’s no reason why India should not celebrate its achievement of figuring in the top 100 countries in ease of doing business globally. Given that World Bank parameters are one of the toughest in assigning the ranks to different countries, Modi and finance minister Arun Jaitley deserve a pat on their back.
In just a tad over three-years of governance, Modi and his reform oriented team has managed to achieve a big jump of 42 places to 100 in the pecking order. Simplification of procedures, streamlining the moribund bureaucracy and drastic reduction in paper work coupled with lesser time taken to set up businesses in this country seem to have worked well.
It should be particularly gratifying for Modi and NDA government given that India was a top achiever in the last one year in eight out of 10 indicators for ease of doing business. Congress vice president Rahul Gandhi’s criticism notwithstanding, big movement forward in ease of doing business will be taken as a positive by companies scouting for geographies to make their investments. Tax payment, protecting minority shareholders interests in companies and the ease with which bank credit was made available to set up businesses went well with the analysts at World Bank. A significant 53 places jump in ease with which taxes could be paid only signals the massive clean up of intransigent bureaucracy in the income tax department which is regarded as most corrupt in the country.
Assigning fourth ranking in protecting minority shareholders interests only reflects the professionalism and swiftness with which Securities Exchange Board of India (Sebi) and Department of Company Affairs (DCA) dealt with small investors complaints. Moving to 29th rank in accessing credit again drives home the flexibility with which Indian banking industry operated and RBI oversaw the sector.
However, it’s not all hunky dory for the Indian ease of doing business story. First, government will have to sit up and clean up the properties registration process that’s ridden by opaqueness, bureaucratic red tape, corruption and source of massive black money generation. This is the only downer in the bright lights.
Secondly, World Bank’s data was taken from just two cities, Mumbai and New Delhi for assigning the comparative rankings. India will have to devise its own broad-based ranking indices that covers all 29 states and seven union territories given the diversity prevalent on par with European Union member states.
Joining the likes of New Zealand and Singapore that have topped World Bank ranking sweepstakes may not be easy but eminently possible for India before 2019 when Modi seeks re-election. In the meantime, overtaking China at 78 should be achieved over the next 12 months. Meanwhile, Rahul Gandhi’s reaction to World Bank’s rankings for India does not bore well for the country’s polity. Gandhi should not just dismiss what has been painstakingly achieved so far.
From its perspective, government should take both bouquets and brickbats evenhandedly while making its next decisive move on reforms front most vocally. For instance, the government will have to make plans to improve on three different metrics like doing business, obtaining construction permits and enforcing legally binding commercial contracts. Similarly, centre and states will have to evolve a consensus with a definitive plan to make life easier for businesses as a stated policy rather than branding purposes.