In an extraordinary achievement, India jumped 30 places to rank 100th in the World Bank's 'ease of doing business' ranking. The World Bank Group's Doing Business 2018 report, released on October 31, 190 countries were assessed based on several categories. The jump does not only highlight the ruling Narendra Modi government's steady slew of tax reforms and anti-corruption policies, it also serves as an indication that the economic narrative of the country is currently under-passing a mammoth-sized change.
The report, which bases rankings on field surveys and interviews with corporate lawyers and company executives in Delhi and Mumbai, it also recognised India as one of the top five reformers in this year's assessment. India's ranking improved based on six out of the 10 parameters used to measure ease of doing business- the only large economy to pass on such a scale. It got its highest ranking on “protecting minority investors” by rising to the fourth position globally from 13th last year as the country's corporate law and securities regulations were recognised to be highly advanced. India fared worst in “dealing with construction permits”.
The National Democratic Alliance has seen to have set more ambitious targets for itself, seeking an improvement in India's ranking to attract greater foreign investment. Finance Minister Arun Jaitley said the target of making it to the top 50 countries in the Doing Business ranking now seems achievable. “In parameters such as doing business, dealing with construction permits, enforcing contracts and registering property where India is still lagging behind, there is reason to believe that we can improve our position significantly.” World Bank president Jim Yong Kim called reforms undertaken by Modi as “significant”. He added that the results would be reflected in the mid and long-term growth figures.
“The reform process has been significant. We think that certainly in the medium and long term, the growth will reflect the seriousness of Prime Minister Modi's government in making those reforms,” Kim said. “The goods and services tax would be very good for Indian growth, but for now the sense is that companies are waiting until that passes before really making investment and taking action. So, our sense is that this (slowdown in growth) is temporary.” He added, “Prime Minister Modi took a different approach to our doing business report, and his approach was we are going to move up quickly and we are going to do the things that we need to do to reform the business environment.”
Meanwhile, World Bank CEO Kristalina Georgieva said the Indian government has shown resolve in tackling difficult issues. She added that its performance in the ease of doing business has been remarkable.
While the update brings India in good light, the Indian Opposition couldn't help but wag their tongues on how “policy adventurism” and Jaitley's “adhocism” have cause economic misery. Congress chief spokesperson Randeep Singh Surjewala said the reports presented by the Finance Minister would not change the reality driven by “disastrous” demonetisation and “failed” goods and services tax. “The prime minister's policy adventurism coupled with the adhocism of his finance minister to deliver has caused widespread economic misery and distress,” he said.
“With great responsibility, we would like to say that Jaitley has proved to be the worst FM in India's history. Hiding behind the World Bank reports will not alter this grim reality,” Surjewala said in a statement. “Crores of job losses in the informal sector have resulted in a 'cease of doing small businesses'. All this is due to the prime minister's personal adventurism in policy- making. The double whammy of demonetisation and GST has wreaked havoc for the economy.”
The allegations and statements received a deserved reply as Modi stated that those who worked with the World Bank are now doubting its ranking. Speaking at the Pravasi Bhartiya Kendra at New Delhi, the PM had the previous UPA government done some work when they were in power, then India would have achieved this milestone long back. Taking an obvious jibe at Congress vice-president Rahul Gandhi, he said people were not able to understand the surge in India's ranking and they were not moved by its import.
“Some of these people have been in the World Bank earlier. But today, they are questioning India’s ranking,” Modi said. “If reforms such as the insolvency code, bankruptcy code, commercial courts were brought in your time, then our ranking would have improved earlier itself,” he said. “Wouldn’t the country’s conditions have improved? [They] didn’t do anything and are questioning those who are doing it. Since then, everyone knows who was running the government till 2014. I am such a Prime Minister who hasn’t seen the World Bank building, while earlier those who ran the World Bank were in the seat of power.”
Former prime minister Manmohan Singh had represented India on the World Bank's Board of Governors as a government official. His close aide Montek Singh Ahluwalia, Deputy Chairman of the erstwhile Planning Commission, had worked with the Bank in 1979, before joining the government. Modi's brilliant speech hit the bulls eye. The current Opposition has always called foul for every time the ruling party made a move to bring the country to the forefront. One can't help but wonder how far India could come if they put all that energy into helping the government instead of creating deliberate barriers.