India’s efforts to create a more conducive climate for business activity were "remarkable" and "substantial", says the World Bank’s Chief Economist Kaushik Basu.
It is possible for India to break into the top 100 rankings in the World Bank’s Ease of Doing Business listing within one year, according to the Bank’s Chief Economist Kaushik Basu.
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India’s efforts to create a more conducive climate for business activity were “remarkable” and “substantial”, Professor Basu, who was the Indian government’s Chief Economic Adviser between 2009 and 2012, said in an exclusive conversation with The Hindu.
Still, the nation’s absolute rank in the Bank’s 2016 Doing Business report was 130 and it had “no business being there,” he said.
The report’s release comes just as the Narendra Modi government has begun its 18th month in power. Questions persist as to whether the high expectations for economic reform, including specific hopes that the ease of doing business would improve, will be met with numerous initiatives facing obstacles to full passage and implementation.
In that context Professor Basu noted, “This improvement that we have got this year is a pat on the back but it is also a reminder to buck up and carry on, because there is a great distance to go. It is not an easy task for India.”
The 2016 report found that while India has performed well on some indicators such as protecting minority investors, the improvement has been lacklustre on other important criteria such as enforcing contracts and registering property.
These results do matter to India, especially from the point of view of global investors coming in with Foreign Direct Investment (FDI), the Bank’s Chief Economist explained. Investors would be “looking at eight or nine countries and trying to decide where they should go, their eyes quickly go to the ranking and where the country stands.”
Even if a country has improved its frontier score, as India has, a failure to improve it beyond what its nearest-ranking-rivals have could lead to the country losing out on some investments.
Professor Basu underscored the role of the bureaucracy in aiding or hindering the process of bringing a more streamlined system of regulations into action.
Reflecting upon his own experience of “interacting” with the Indian government in this regard he said: “I worked in India for a short period in government and before that interacted with government from the outside of government as an ordinary citizen. When you’re outside of government trying to get things done in interaction with government, it’s very cumbersome. Most people in India…who are in the bureaucracy don’t get to experience the interface with the government because they are in it almost for life.”
Yet, he noted, in the last one or two years “the bureaucracy now coming together with the political leadership in the country to try to effect this… an important and positive change.”
On the prognosis for India sustaining its efforts to keep improving the ease of doing business, Professor Basu said, “We know from the experience of some other countries that usually when you start big reforms on the ease of doing business, the first year you get some movement and you get more movement in the second and third years.”
Also, to get the full impact of doing business reform it was “important for India to work on two other fronts, infrastructure and inclusiveness. I mean ports, roads and railway, and also giving all people a sense of belonging and being a part of the process,” Professor Basu explained.
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