NO EDB INDEX – CAN GOVT CONCENTRATE ON US NOW?

about 18 days ago
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Raghu had plans to start a new restaurant. Having worked as a chef at various hotels, he decided to start his own. Lured by India’s constant climb up on the Ease of Doing Business Index (EDB), he felt that it would be so easy to realise his dream.

He got the place (on rent) after a lot of haranguing and tonnes of paperwork. Getting an electrical connection was easy pesy but soon realized that getting a connection does not mean uninterrupted supply. But all this was a cakewalk compared to the nightmare – he needed to get 15, not one or even 5, but 15 licenses before he could start his restaurant. This included all – health and trade  fire, tourism, pollution, liquor, police clearance, Eating house license, registration under Shops and Establishment Act, GST registration, restaurant music license, signage license. He had to deal with the Central Govt but mainly with the state Govt and the municipality. This meant that every single license, at each step meant giving cash under the table and some would be required to be kept “happy” month-after-month once the restaurant starts.

After a few months, he just gave up as he felt there was nothing easy about setting up any business in India, wondering how could be easy for a foreigner?

That’s why we have always felt that what our ranking was on the EDB Index and the ground reality had no co-relation. The struggles, the delays, the paperwork, the greasing of the palms, everything remains the same.

And it is based on this reality that we heaved a sigh of relief when we learnt that the WHO has decided to take a pause on the publication of the Doing Business report as a number of irregularities have been reported regarding changes to the data in the Doing Business 2018 and Doing Business 2020 reports, published in October 2017 and 2019. The changes in the data were inconsistent with the Doing Business methodology. A Wall Street Journal article has claimed that China, Azerbaijan, the UAE, and Saudi Arabia were the ones that benefited the most.

This is actually a good thing. The EDB Index has become a policy tool – all actions are taken by the Govt to improve this ranking to get India within the first 50 in the world. But then, like so many other things, this ranking looks good on the paper and even as we climb up, things on the ground remain more or less the same. And it is not as though FDIs have come pouring in because our ranking has climbed up. The recent AGR debacle had Vodafone reconsidering its decision to do business in India, making many wonder whether the lure of a large population alone was enough. Constant policy flip-flop, retrospective taxes, influence of powerful lobbies – these remain major issues despite our higher rankings.

Justin Sandefur, a senior fellow at the Center for Global Development said that the rankings are strife with conflict of interest which is bound to happen when the counties being ranked are the ones that get a loan from the World Bank. Hence, he said, there might be pressure from within to either show a countries performance as better or worse. He was also of the opinion that the report on Ease of Doing Business should be scrapped.

With no EDB Index for now, we hope that India will concentrate on what needs to be done to make the citizens happy and keep the Indians within India. Yes, the Govt too need to become Atmanirbhar and look within first. Get the reality corrected and then talk about rankings.

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