India climbs global business ranking. But it's not that simple
It's getting easier to do business in India. But there's
still a long way to go.
country leaped 30 spots to 100 in the World Bank's latest global ranking
welcome news for Prime Minister Narendra Modi, who has come under fire for
his handling of a series of big economic reforms that have slowed growth
government took advantage of the World Bank announcement to defend its
"I remember in the very
first year, the prime minister had said our target should be to take India into
the [top] 50, I believe this is doable," Finance Minister Arun Jaitley
said at a press conference Tuesday. "There's huge scope for us to now jump
from this position of 100."
Dhume, a resident fellow at the American Enterprise Institute in Washington
D.C., said the World Bank's ranking tells only part of the story but the
improvement in India's position was "undeniably positive news."
"This is the first time that
India has climbed so dramatically in the ease of doing business rankings and it
sends a message to international investors that the government is committed to
slashing India's notorious red tape and rolling out the red carpet for
them," Dhume said.
Bank also named India as one of the top 10 countries in reforming its business
environment, recognizing its strengthened protections for minority investors
and progress in digitization.
"Today's result is a very
clear signal from India to the rest of the world, not only is the country open
and ready for business, it's now competing as a preferred place to do
business," said Annette Dixon, the World Bank's vice president, South Asia
A slowing economy
But the Ease of Doing Business
index presents only a partial snapshot of what's happening on the ground.
In the last 12 months, Modi's
government carried out two huge reforms which political rivals have described
as torpedoes: The first, a cash ban that replaced India's highest denomination
notes; the second, a national tax system that replaced more than a dozen state
and central taxes.
Following the changes, India's
growth slowed to 5.7% in the first half of 2017, its weakest rate in three
years. India's central bank has slashed its growth forecast for the current
fiscal year to 6.7% from 7.3%.
And researchers estimate that the
economy lost two million jobs between January and August this year.
A tale of two cities
The survey is conducted across
major cities in 190 countries around the world. In most countries, it focuses
on only one city per country. In larger countries, it looks at two.
In India's case, it covers Delhi,
the capital, and Mumbai, the leading financial center. That leaves out vast
swathes of the country of 1.3 billion people, and some major business locations
such as Bangalore and Hyderabad.
Another criticism is that
countries get credit for passing laws, even if they haven't been widely
A new law mandating speedier
resolution of bankruptcy cases, for example, has "really not been tested
in the courts," said Pratik Dattani, managing director at Economic Policy
Group. "On paper this is exactly the right direction to travel."