We need to think beyond ease of doing
Mains Paper 3: Economic Development
Prelims level: Ease of doing business ranking
Mains level: Indian Economy and issues relating to planning, mobilization of
development and employment
- We need to think beyond the rank.
- A puzzle which we have faced is that notwithstanding all that has
been done on improving conditions for business, the investment rate or the
gross fixed capital formation, remains unchanged at 28.5%.
- Lesson number 1 is that higher rank does mean higher investment.
Other conditions like demand for investment, availability of finance, sector
policy, actual ease of operating etc. are important.
Limitation of PPP
- The limited success of public–private partnership is testimony of
why investment is not forthcoming in infra.
- The ranking is based on what happens in Mumbai and Delhi but
investment takes place everywhere.
- Lesson number 2 is that we cannot sit back and wait for
investments to take place as in a federal structure there are central, state
and municipal laws which have to be aligned.
- A positive is that there is an effort to rank states too.
- India has improved its rank on getting credit. But this is just
the kind of conundrum we are facing today with there being pressure to lend
more to small and medium-sized enterprises and farmers.
- We do not seem to be bothered about quality when we chase such
- Lesson 3 is that when it comes to credit, we should not let
emotion or rhetoric fog our vision as the dangers of reckless lending can be
hard to address.
- We have not done too much in ranking in terms of enforcing
contracts and resolving insolvency where the rank is almost unchanged.
- We have the Insolvency and Bankruptcy Code (IBC) which augurs well
- The IBC was brought in with a lot of fanfare, the will to carry it
out seems to be missing as the recent debate on dilution of the central
bank’s February circular shows.
- Lesson 4 is that the centre should back up any major reform in
doing business as mere announcement will not suffice to improve investment
- The same analogy can be carried to other areas of reforms which
have not seen considerable success post announcement and implementation.
- The Ujwal DISCOM Assurance Yojana was quick to be absorbed on
debt, but the commitments of the distribution companies have not been met in
- “Indradhanush”, the seven-point agenda for banking reforms, has
yet to be implemented.
- So, while there have been a plethora of reforms there needs to be
a will to follow up and implement in spirit to make a difference.
- Also, as can be seen on the ten-point scale, the ones which are
process-based have been easy to beat like starting business, construction,
electricity, and probably even registering property in the future.
- But where there is ideology which affects commitment, there is
still some push that is required. Admittedly, all this takes time.
Q1. Consider the following statements regarding the Swachh Sarvekshan
1. It is an all-India survey to measure citizen connect with sanitation
2. It ranks states in India on the basis of sanitation.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Q1. The ranking is based on what happens in Mumbai and Delhi but investment
takes place everywhere. Critically examine the statement.