Ease of doing business

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Bikky Khosla | 02 Nov, 2016
India has continued to rank low in the World Bankâs ease of doing business Index. The latest report 'Doing Business 2017: Equal Opportunity for All', published last week, places us in the 130th position, which, although represents an improvement of one rank over last year, looks disappointingly low considering the target of 50th rank set by our prime minister for the next year. The World Bank lauds the government for its concerted efforts for improving business environment, but as far as expectations are concerned the report has come as a big dampener.

So, what went wrong? According to the Centre, the ranking does not reflect all the progress India has made recently. The commerce minister has claimed that the efforts and reforms undertaken in the last year have not been adequately captured. Also, some of the steps are taking time to show their effect as India is a vast country. Several industry bodies have viewed in a similar tone. In fact, the World Bank report itself recognizes this fact. Needless to say, these arguments sound logical, but I think the latest ranking still calls for soul-searching on the part of the government.

While there is little doubt that the new government has taken a number of measures to improve ease of doing business, we are still clearly lagging in a number of areas. Labor reform, for example, is an area, which needs urgent attention. The World Bank report clearly points out this challenge. Some other sectors such as agriculture and retail also require attention. Similarly, steps need to be taken to improve efficiency of Indian bureaucracy and judicial system. In addition, I think interests of the MSME sector need to be adequately taken care of as reflected by fall in our position in the report with respect to starting a business.

Meanwhile, a recent study on exports raises a concern which I have pointed out several times. It says that domestic bottlenecks are more responsible than the global downturn for India's prolonged exports slowdown. While our ministers take no time to blame slow global growth for our export drought, the report says it accounts for only 33 percent of the decline. In contrast, our poor infrastructure and policy bottlenecks are responsible for 50 percent of the decline. So, these findings reflect again the huge gap that still exists in terms of improving our business environment.

I invite your opinions.