Celebrating a century

INDIA’S 30-notch jump in the latest ease of doing business ranking is welcome news for the Modi government, after a spate of unwelcome fallouts of demonetisation and hasty implementation of GST. Finance Minister Arun Jaitley did not miss the opportunity to highlight the accomplishment in the media. But, it will be a mistake to consider that the ranking is a thumbs-up to the Modi government’s controversial decision. The World Bank’s report captures data, a month prior to the implementation of GST. Its impact would, therefore, be captured only in the next year. 

The World Bank’s ranking is one of the tools to gauge the general investment climate of a country vis-à-vis 190 aspirants. The report ranking gives a comparative idea of how conducive is the regulatory environment to start and operate a local firm. But, companies do not make investment decisions solely on the basis of this ranking. For instance, investors would not flock to Bhutan because it is ahead of China and India in the latest World Bank’s ranking. Profit is the single-most important factor for companies to decide where they would prefer to put in their money. Unstable indirect tax regulations and unpredictable economic measures like demonetisation force wary investors to postpone their investment decisions. Admittedly, the independent report would, however, help the government to showcase India’s latest ranking to woo potential domestic and international investors. But, such exertions would remain a futile exercise, confined to power-point presentations, unless the government finds ways of ending the prevailing chaos at the ground level. 

Countries have been ranked on the basis of 10 parameters — starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. This year, however, the survey missed the 11th parameter; labour market regulation, a sore point for the Indian economy. Undoubtedly, the Modi government is entitled to crow on India’s improved ranking from 142 in 2015. But, PM Modi’s self-appointed goal of the 50th rank is still a distant dream.