The World Bank’s decision to halt its annual ‘Doing Business’ report on data authenticity issues has major implications. Critically analyse (200 Words)
Refer - The Hindu
Enrich the answer from other sources, if the question demands.
IAS Parliament 4 years
KEY POINTS
India has sought to improve its ease of doing business index ranking, as a means to attract investments to achieve the targets set for ‘Make in India’, that was announced in 2014.
Many flaws
· There are many shortcomings in the design and implementation of the index. The Indicators used for the index are de jure (as per the statute), not de facto (in reality).
· The data for computing the index are obtained from larger enterprises in two cities, Mumbai and Delhi, by lawyers, accountants and brokers — not from entrepreneurs.
· The World Bank conducts a global enterprise survey collecting information from companies. Interestingly,there is no correlation between the rankings obtained from ease of doing business and the enterprise surveys.
· More seriously, the theoretical underpinning of the ease of doing business index is suspect. There is little in any major strand of economic thought which suggests that minimally regulated markets for labour and capital produce superior outcomes in terms of output and employment. Economic history shows rich variations in performance across countries and policy regimes, defying simplistic generalisations that inform the construction of the ease of doing business index.
Time for a rethink
· To sum up, the World Bank’s decision to halt its annual ‘Doing Business’ report on account of data authenticity issues of some countries has implications for India.
· Since 2015, the government has invested considerable political and administrative capital to improve India’s global ranking, with impressive success. But the enhanced ranking has failed to augment investment and output growth.
· Analytical and empirical foundations of the index are weak, if non-existent. There is no credible association between improvement in ranking and a rise in capital formation and output growth, anywhere.
· Worst of all, it is an ideologically loaded measure against the interest of workers. It is time the World Bank rethinks its institutional investment in producing the ‘Doing Business’ report. India should do some soul searching as to why the much trumpeted rise in global ranking has failed miserably on the ground.
