Business ranking doesn’t make sense to common man

In a big boost for the BJP-led NDA government, India climbed another 23 points in the World Bank's ease of doing business index to 77th place, becoming the top ranked country in South Asia for the first time and third among the BRICS group of nation. “India continued its reform agenda, implementing six reforms in the past year. It is now the region's top-ranked economy,” the World Bank said, ahead of Bhutan, Sri Lanka, The Maldives, Pakistan, Afghanistan and Bangladesh.

In the last two years the country has climbed 53 notches, a performance matched in the past only by Bhutan. Further, India now ranks in the top 25 in the world on three indicators – getting electricity, getting credit and protecting minority investors, the department of Industrial Policy and Promotion (DIPP) said on October 31. The doing business report ranks countries on the basis of distance to frontier (DTF), a score that shows the gap of an economy to the global best practice. However, the Doing Business methodology has five limitations that should be considered when interpreting the data.

First, for most economies the collected data refers to business in the largest business city and may not be representative of regulation in other parts of the economy. The exceptions are 11 economies with a population of more than 100 million as of 2013, where Doing Business now also collects data for the second largest business city. To address the limitation, subnational Doing Business indicators were created. Second, the data often focus on a specific business form - generally a limited liability company of a specified size and may not be representative of the regulation on other business.

Third, transactions described in a standardised case scenario refer to a specific set of issues and may not represent the full set of issues that a business encounters. Fourth, the measures of time involve an element of judgment by the expert respondents. Finally, the methodology assumes that a business has full information on what is required and does not waste time when completing procedures.

In practice, completing a procedure may talk longer if the business lacks information or is unable to follow up promptly. The protagonists may argue that still, it is transparent, using factual information about what laws and regulations say and allowing multiple interactions with local respondents. However, Narendra Modi's goal of reaching the top 50 is not easily going to happen for India even though at this point of time, it no longer seems to be impossible for India. There are some areas where India is lagging behind the global rankings.

For the country, the next set of reforms is difficult and at times politically complicated. Probably one of the more challenging reforms in India is to get the judiciary on board to improve that part. We also lag behind when it comes to registration of properties where it is ranked 166 among the 190 countries. This leads to the 'not-so-near, not-so-far' situation. Anyway, all this simply does not make sense to the common man who is burdened with inflation.