World Bank to review Ease of Doing Business rankings; will it affect India?

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Updated: January 13, 2018 9:24:11 PM

World Bank chief economist Paul Romer told The Wall Street Journal that he would "correct" and "recalculate" national rankings for a period going as far back as at least four years -- a move that could affect the rankings of many countries.

world bank, economy, world economy, world bank forecast, global growth forecasts, us, russia, japan , brazilWorld Bank to review Ease of Doing Business rankings, will it affect India?

Last October, India surprised the world by making a massive jump of 30 ranks and breaking into the top 100 on the World Bank’s coveted Ease of Doing Business Index. The rankings, coveted by nations across the world are a verdict on where a country stands in making it easy for doing business. Now, however, the World Bank chief economist Paul Romer has said that the organisation would “correct” and “recalculate” rankings for a period going as far back as at least four years — a move that could affect the rankings of many countries, primarily Chile.

The World Bank, which changed its methodology several times, now finds the evaluation “unfair” and “misleading”, Paul Romer said to the Wall Street Journal. The statement by the chief economist was particularly made in the context of Chile. “The revisions could be particularly relevant to Chile, whose standings in the rankings have been especially volatile in recent years and potentially tainted by the political motivations of World Bank staff,” Paul Romer was quoted as saying by the American business daily.

He said that “changes to the methodologies used in the rankings had the appearance of being politically motivated.” Now, as the World Bank seeks to correct its rankings, it remains to be seen what, if any, impact it will have on the rankings of other countries down the order.

The Ease of Doing Business or the Doing Business Index is a rank-based performance calculator of nations created by the World Bank to measure regulations directly affecting businesses and overall environment. There are several metrics on which a country is judged and ranked. The latest rankings were based on ten parameters — starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

In its Doing Business 2018 report, the World Bank said that the ranks were not strictly comparable across years because the methodology changed often, with new parameters being added to the study in successive years, the one in which India vaulted into the top 100.

How India fared in the last four years on the Doing Business Index

(Not comparable across years, though)

2018: Rank 100

India made a massive jump of 40 ranks to make it to top 100. India made the giant leap firmly aided by the implementation of reforms in as many as eight out of 10 fronts, including the crucial ones such as starting a business, paying taxes and resolving bankruptcy.

2017: Rank 130

India was ranked low at 130th position for the second year in a row, with the country seeing little or no improvement in dealing with construction permits, getting credit and other parameters.

2016: Rank 130

India was ranked 130, moving up 12 places on the back of elimination of requirements for a paid-in minimum capital and a certificate to commence business operations, significantly streamlining the process for starting a business.

2015: Rank 142

In 2015 report, India was ranked 142 on the index even as it fared much better in terms of protection of minority investors and credit availability, but lagged on other fronts.

Interestingly in 2013, the Doing Business report 2014, India was initially ranked 134, but it was revised to 140 after adjustments were made and data corrections were reflected.

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