After the sharp jump in the World Economic Forum (WEF) competitiveness rankings last month, most thought an equally sharp jump in the World Bank’s Doing Business index was a cinch. But, as the mere one point jump in India’s rankings show, the results of a survey-based index like the WEF are quite different from one where actual number of procedures are tabulated to see how much time a business has to spend on various parameters. A new process included this year, on ‘postfiling processes’ measures how long it takes to get tax refunds and, as a result, India’s rank on paying taxes has plummeted from 157 last year to 172 this year—out of 190 countries. If, for instance, tax cases like Vodafone or Cairn, and more recently MakeMyTrip where the courts came down heavily on the taxman, are taken into account, the ranking would probably fall even more.
While it is always possible to game the system—the dramatic improvement in the electricity ranking, thanks to Tata Power in Delhi easing procedures for a new connection—the lesson is that this doesn’t really matter. In the case of the power ranking, surely the speed at which a new connection is got is irrelevant for an investor, especially in contrast to issues like high tariffs and lack of open access for industrial customers?
None of this is to say the government isn’t doing its bit—when commercial courts take off and when the insolvency bill starts working, life will become easier. But all of this takes time. Instead of dissipating its energy in trying to fix certain parts of the index—like the time taken to get an electricity connection—the government should worry about how its talk isn’t matched by action on the ground. The fact that India is ranked 155th on starting a business after all the talk of the reforms in the ministry of corporate affairs and its portal tells a sad story; being ranked 138th in registering property, similarly, suggests the land-registration-reform talk is just that. Aspiring to be ranked among the top 50 countries is a good goal but getting there is not going to be as easy as is made out.