The Doing Business 2008 report from the World Bank points out that India has a long way to go in making business procedures easier. But there is good news too; the country was the top reformer when it came to cross border trade
The World Bank’s Doing Business Report gets its fair share of headlines and criticism when it comes out with its annual ranking of ease of doing business across some two hundred countries.
After all, isn’t India the target of businesses the world over? How could India that is the cynosure of all eyes be worse off than Lituania and Latvia and Namibia and Kenya and Nicaragua? Who has even heard of Micronesia and Samoa who rank way above India? Who does business with St. Vincent and the Grenadines, which at 54 outrank India’s 120 by a huge margin? Infact, India ranks lowest in South Asia. Why?
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The answer to all these questions is in the fine print. A thin line of text on the cover says it all – “comparing regulation in 178 economies”. So, that is what this report is all about – about regulations and the time taken for compliance with regulations. It is not about business potential or actual business.
When asked about this, Sabine Hertveldt, one of the co-authors of the report, told DARE “I agree that the Doing Business report does not cover all factors that matter to businesses. The report does not take into account certain factors such as the quality of the infrastructure, proximity to large markets and a country’s macroeconomic situation. Procedures and the level of red-tape (the focus of our report) do matter though - but a country’s business environment is determined by other factors as well.”
The report offers some interesting insights. Which is the country that has done the most to reform procedures for businesses? Egypt, which undertook significant reforms in as many as five out of the ten sections under which countries were rated.
And all is not bad news for India either. India was the top reformer when it came to doing business across borders, with its rank going up 63 places compared to the previous year! India’s best rank in the 2008 report was 33 in protecting investors, followed by 36 for getting credit. Where we lag significantly behind is in enforcing contracts where our rank is 177 out of 178!. Next from the bottom of the list is a rank of 137 for closing a business.
Having said that, what would it take to improve India’s standing? The doingbusiness.org website provides a simulator in which you can change the data for various parameters and see how it impacts the rankings. Assuming that other countries continue to remain where they are, let us see how to improve India’s position.
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