Editorials Today – Swadeshi Index

What is Ease of doing Business?
What are the indicators on which this index is calculated
World Bank’s report on India
Why India should not base its result on basis of this index
Do we need a swadeshi index?
Incentives taken by India

Context- India is ranked at 130th position among 190 nations in ease of doing business ranking released on Oct 25th by World Bank. India’s rank last year was 130 among 189 countries.

[1] What is Ease of Doing Business Index

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The Ease of doing business index is an index released by the World Bank Group in its Doing business report. Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.

New Zealand has topped the Ease of Doing Business rankings in 2017.

Singapore has topped the Ease of Doing Business rankings in 2016.

[2] What are the indicators on which this index is calculated–

Starting a business
Dealing with construction permits
Getting electricity
Registering property
Getting credit
Protecting investors
Paying taxes
Trading across borders
Enforcing contracts
Resolving insolvency

[3] World Bank’s report on India–

It acknowledges reform measures taken by india like the amended Companies Act, passage of reforms in commercial courts, and changes in the insolvency and bankruptcy code.
Acknowledging improvement in electricity connections to businesses, payment of taxes, electronic system for paying employee state insurance contributions, and electronic filing of integrated customs declarations
this year India has fallen down several ranks in parameters such as payment of taxes, trading across borders, and enforcing contracts.

[4] Why India should not base its result on basis of this index–

World Bank index is based on limited data.
There is a disjunct between how things get done in india and Bank’s methodological approach .Many achievements have not been covered by the report due to methodological issues.
Eg- According to DIPP, Online filing and payment of returns at the Employee Provident Fund Organisation has been implemented, but it was not considered by the World Bank, even after it shared “logs and voluminous evidence” of the same.
Bank’s report is based on data collected from very few cities.
Centre has only partial control over several of these sub indices as it needs states support to bring the required legislations.
It does not directly measure more general conditions such as a nation’s proximity to large markets, quality of infrastructure, inflation, or crime.
Rankings are incompletely reflective of the significant transformation in the overall business environment in key areas such as openness to FDI, online procedures, MSME facilitation

[5] Do we need a swadeshi index?

India can contemplate bringing out its own index developed by a non partisan institution, keeping indicators which suit its economy .
Putting emphasis on Labour intensive manufacturing industries and clean energy.
Index could be focused on incentives provided to private sector and measuring improvement in fields where private sector is active.
Like an index that tracks improvement in digitization of land records , availability of water , travel time from one point to another , rules related to taxation ,IPR.
A different indicator for areas heavily dependent on government like railways , road , port, pipeline development.

[6] Incentives taken by India –

The government has managed to pass the Insolvency and Bankruptcy Code. It is supposed to significantly reduce the average time taken for the insolvency process to complete, which currently is 4.3 years
To simplify the process of starting a business the government launched an “e-biz” portal that integrates 14 regulatory permissions in one place
India has reduced the number of mandatory documents for export and import from seven and nine, respectively, to just three.Physical submission of documents for export and import is no longer required; they can be submitted electronically using digital signatures.
To start business operations the provision of minimum capital requirement, which was 111.2% of income per capita i.e. 1 lakh for private company and 5 lakh for public company, has been eliminated in 2015 .

Comment-

Doing business in india is unquestionably difficult .
Indices like the world bank’s can not be a pivot deciding our policy framework but having an index is required to measure the positive change.