Dinesh Kamath's Editorial 'India improves considerably in ease of doing business' that was published in Newsband

India improves considerably in ease of doing business

India has moved up 53 ranks in two years (from 2016 to 2018) in the World Bank’s Ease of Doing Business Index, its ranking now at 77. More remarkably, it stands out among the top five reformers among 190 countries, its score up by 6.63 points to 67.23; the four countries whose score has jumped more are Afghanistan, Djibouti, China and Azerbaijan.

The Finance Minister said, India seems to have ‘cracked the code’ in moving up the rankings ladder. There can be no denying that both GST and the Insolvency and Bankruptcy Code, if properly implemented, will go a long way in enhancing the business climate.

However, the index does not take qualitative factors into consideration. India’s improved ranking coincides with an extraordinary outbreak of discord within India’s premier investigative agency CBI, and between the Centre and the Reserve Bank. A government that promised ‘minimum government and maximum governance’ seems to evoke fear among sections of industry. A liberal regulatory environment must be accompanied by transparency and consensus in policymaking. An index that takes social and physical infrastructure as well as grievance redressal systems for all stakeholders into account

Nobel prize winner Paul Romer suggested that the methodology of the index was biased. Critics have argued that the report does not take a nuanced view of regulation. While clunky regulation holds up day-to-day operations of a business, some rules are needed to protect public goods as well as vulnerable groups.

Ease of doing business is based on two things: Ground level changes and Perception. There has been significant changes at the ground level after this government took over. From GST, to IBC, tightening regulations and implementing them, reduction in corrupt practices, uniform application of law etc. Perception is based on what the media carries. If business face a problem in India, it will be covered in headline news whereas if the same problem occurs in US or Europe, you will struggle to find it out in the media. That speaks a lot.

Another thing is please stop looking through dark glasses. For the critics, ease of doing index was a good measure when it showed the poor rank for India. Now the same index has many flaws when it shows the high jump of India during the last two years. Criticism must be transparent. Good work or the achievements must be recognised. The tumbler is never full, but please don't call it half or partial empty.

If the mentality of people changes from Self-aggrandizement to nation building in discharge of responsibilities, India can still move several steps ahead.