Notable Improvement

India can count itself among 115 economies with the most notable improvements in doing business. India ranks alongside Saudi Arabia, Jordan, Togo, Bahrain, Tajikistan, Pakistan, Kuwait, China, and Nigeria for making it easier to do business. With a ‘Doing Business’ score of 71.0, it ranks 63rd behind Saudi Arabia with a marginally higher score of 71.6 and ahead of Ukraine with a marginally lower score of 70.2. China ranks higher at a distant 31 with a score of 77.9. If one were to scroll up further, in the World Bank Doing Business 2020 rankings, one can’t help but notice the top six racing ahead of the pack. Led by New Zealand, the top six include Singapore, Hong Kong SAR China, Denmark, Korea Rep, and the United States. Jumping 14 spots in the list (and from ranking 130 in 2016), India is known to have been rewarded for reforms across areas of starting a business to facilitating trade across borders.

Even as the report commends India in the assessment, it is also true that India, in 2015, set a target of joining the top 50 economies by 2020. The license Raj reform in India is said to have contributed to the rise of small firms in industries. The rise in productivity across sectors is credited to the reduction in resource allocation distortions. Ironically, the pandemic has put to test India’s capability of optimally utilising its scarce resources. Not so much on the capacity front as much on the distribution front. Among areas slated for improvement include the effects of electricity shortages on input choices, revenue and productivity in manufacturing plants. India could also do better on restrictive labour regulations held responsible for a 35 per cent increase in a firms’ unit labour costs. On the plus side, India has also been rewarded for making the resolution of insolvency easier.

Ironically, the pandemic has put to test India’s capability of optimally utilising its scarce resources. Not so much on the capacity front as much on the distribution front.