WB survey: Good but more needs to be done

It can be nobody’s case, least of all the Modi Government’s, that the good tidings from the World Bank ought to make us oblivious to the huge task of putting right the economic system. The WB’s ease of doing business has noted that India has moved up as many as 30 notches in the rankings, reaching 100 among 190 countries. That is a substantial improvement and need not be sniffed at by anyone. A leap of 30 in just one year was made possible by a slew of refor ms. India was one of the top ten improvers in this year’s rankings, implementing refor ms in eight out of ten specific indicators. According to the WB, India has adopted 37 refor ms and implemented half of them in the last four years. Protection of minority shareholders, for instance, has elicited a special mention in the WB report which noted that the market regulator, the Securities and Exchange Board of India, had enhanced investor confidence. A major plus is the implementation of the bankruptcy code, making it easy for the exit of fir ms and improving the allocation of capital. The bank evaluates each economy’s performance on an objective set of parameters, including the ease of starting and closing a business, registration of property, grant of construction per mits, getting electricity connections, paying taxes, enforcing contracts, etc. Though the survey was done before the introduction of the GST, there is every likelihood that once the initial glitches are sorted out, the next year’s survey would report further considerable improvements. The land registration and land records need special attention. But land being a state subject, it is heartening to note that several State gover nments have already undertaken to digitize land records. India ranks pretty low in matters pertaining to land and construction, at 181 among 190 countries. Even when it comes to enforcing contracts, despite recent improvements, the system lags far behind. The failure of the judicial system to enforce contracts, and its laxity in allowing endless adjour nments, contributes to the hazards of doing business in the country. The manner in which a couple of Indian partners of foreign companies have given the runaround to the latter despite unambiguous awards by the arbitrators underlines the frustration of doing business in the country. Instead of honouring the contract, the Indian partners have avoided fulfilling the prior commitment on one pretext or the other. This sends out a bad signal to foreign investors who might otherwise be attracted by a growing economy with a huge market.

A day after the publication of the WB survey, a financial daily polled a g roup of cor porate bosses. The findings endorse the WB survey, though the CEOs lamented that cor ruption at the local level was still a big negative. Also, eighty percent of the polled said that enforcing contracts was still difficult. This is an area which cannot be improved without a comprehensive refor m of the police, municipal, judicial processes. Errant parties unwilling to honour contracts take recourse to all manner of stratagems. Ensuring the sanctity of contracts requires closer centre-State cooperation. The CEOs were unanimous that the GST will further improve the ease of doing business after the initial problems are resolved. For instance, the movement of trucks had already improved due to the abolition of municipal toll bar riers, thus cutting down journey time considerably.

Meanwhile, while the Prime Minister and the Finance Minister, predictably, welcomed the findings of the WB survey, the Congress leader Rahul Gandhi’s response was downright churlish. Ascribing motives to the WB and questioning the veracity of its findings showed the immaturity of the Congress’s heir apparent. Partisan politics ought not to har m the national interest, nor should it show the country in global forums in poor light. Debunking the survey when its findings cor respond to the general perception among the stakeholders opens the soon-to-be head of the Congress Party to further ridicule. Instead of welcoming the findings, and then pointing out the huge work still required to be done, for instance in the area of labour refor ms, Rahul Gandhi has appeared petulant and meanspirited. He should pause to ponder why in spite of the fact that his party had ruled the country for over threefourths of the time, it was languishing at near- bottom of the pile in the ease of doing business. If Modi has pulled it up from 130 to 100 in the year under review, it should be a matter of sober celebration rather than sor rowful lamentations. Grow up, the not-so-young Congress Prince.