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Not the right time for euphoria

The writer, an author and former diplomat, is a member of the JD(U).
Published : Nov 5, 2017, 12:01 am IST
Updated : Nov 5, 2017, 12:01 am IST

It is also important to juxtapose what the Ease of Doing Business report says with other international assessments.

The significant point is that the World Bank report itself highlights this poor showing, stating that there are vital areas where India is lagging behind.
 The significant point is that the World Bank report itself highlights this poor showing, stating that there are vital areas where India is lagging behind.

The wisdom in the old adage, that a glass is either half full or half empty, depending on how you look at it, seems to have been replaced in the shrill political debate of today to the simplistic assertion: The glass is either absolutely empty or absolutely full. There are no shades of grey between the false polarities of black or white. This leads to distortion, either in the form of emphatic critique or misplaced euphoria. I think the time has come to escape this straitjacket of absolutes, and be a little less extreme in our assessments.

These remarks are relevant in the context of the recent announcement that India has jumped up 30 points in the World Bank global index of Ease of Doing Business. The fact that it has, should be welcomed. But the fact that on many vital indicators that are a part of the same index we are still doing far too poorly should be accepted so that euphoria is tempered with realism.

Although we have made progress on some indicators like resolving insolvency, ease of paying taxes online, and protecting minority investors, on many other indicators, we are still lagging far behind most developing nations. And that should be a matter of concern. For instance, of the 190 countries included in the index, on the indicator of starting a business, we are ranked 156; on the issue of enforcement of contracts, we are at a lowly 164; on obtaining construction permits, we are at an appalling rank of 181; and, on registering property, we are 154.

The significant point is that the World Bank report itself highlights this poor showing, stating that there are vital areas where India is lagging behind. In some of these we have fallen further behind. The report cites the area of enforcing contracts. The time taken to enforce a contract, the report says, is longer today at 1,445 days than it was 15 years ago (1,420 days). It also states that the number of procedures required to start a business are still far too cumbersome.

It is also important to juxtapose what the Ease of Doing Business report says with other international assessments. On October 12 this year, the Global Hunger Index (GHI) reported that India had fallen 45 places, and now stands at 100 out of 119 countries. The GHI is a multi-dimensional statistical tool developed by the International Food Policy Research Institute (IFPRI), with inputs from Unicef, WHO, FAO, and our own ministry of women and child development. It measures the proportion of people who are undernourished in a country, the number of children under five who are victims of stunting and wasting, and the mortality rate of children.  

When the GHI was released, the government sought to provide an explanation saying that our position at 100 is a result of new countries being added to the list. To my mind, this defence is untenable, because irrespective of the number of countries surveyed, the indisputable fact is that on the statistical index (where any figure above 20 shows serious levels of hunger), our rating has fallen from 28.5 in 2016 to 31.4 in 2017, which is the third highest score in all of Asia, putting only Afghanistan and Pakistan behind us; even countries like Mozambique and Burkina Faso are ahead of us. The Human Development Index (HDI) report released in May this year shows that in the last one year we have slipped down a position — from 130 to 131 — out of 188 nations, placing us in the company of countries like Congo, Namibia and Pakistan, and far below some of our other neighbours like Sri Lanka and Maldives. India has fallen by 21 places in the Global Gender Inequality Index released by the World Economic Forum in 2017; it now stands at 108 out of 144 countries.

If Ease of Doing Business has improved overall, the country’s performance is still far from satisfactory in a great many areas; if more people are going hungry to bed at night, and basic medical and educational facilities have worsened, are these reasons for euphoria or introspection? In a country with the largest number of the abjectly poor, the largest number of people who cannot read or write; and the largest number of malnourished children, economic growth, while important in absolute terms, must also ensure that the fruits of this growth reach the poorest of the poor. This is what is meant by growth with justice — nyay ke saath vikas — that has always been the clarion call of the JD(U) and Nitish Kumar.

My constructive advice to the Prime Minister and the government would be to restrain any over the top euphoria over the World Bank report, and while welcoming its partial endorsement, focus on what more needs to be done to make our economy more efficient and inclusive. The government must remember that the World Bank report does not take into account hardships being faced — specially by small and medium businesses — as a result of a badly executed GST nor does it fully factor the continuing economic dislocations persisting as a consequence of demonetisation, a step that may have been well-intentioned but was, indeed, a “monumental management failure”.

In a situation where small businesses are closing down or struggling to cope, where farmers continue to commit suicides, where private investment is sub-optimal, and jobs are hard to find, the mature reaction would be to say thank you to the World Bank and maintain a sense of realism and balance as regards the big economic and social challenges that still remain for us to tackle.

Tags: ease of doing business, world bank