CGD in the News

All that is wrong with Modi govt’s obsession with Ease of Doing Business rankings (The Print)

November 27, 2018

By Sanjay G. Reddy

From the article:

Prime Minister Narendra Modi has given great personal attention to the importance of improving India’s position in the World Bank’s global ranking of the Ease of Doing Business.

India’s rank has improved from 142 in the 2014 ranking to 100 last year and to 77 this year.

The idea that India’s position in the rankings has improved due to the government’s implementation of significant economic policy reforms enhancing the business environment is, however, an exaggeration.

The indicators used in Ease of Doing Business rankings capture the “regulatory environment for business” in a country including the extent of red tape involved in starting or running a business and the protection of selected property rights.

In any case, as shown early this year by the Washington based Center for Global Development, the change in India’s ranking in the two years owes much more to shifts in the methods used by the World Bank than to any actual change in the performance of the country in the underlying indicators. Moreover, because countries’ scores are quite close to each other, small changes can bring about large shifts in rank. It appears that the government has also gone to unusual lengths both to lobby the World Bank to change its method of calculation and to bring about minor, but very specifically targeted, changes in regulations so as to improve India’s performance. For instance, it has required that exporters seal their own containers, despite the industry seeking slower implementation of this new policy.

Read the full article here.