IFC & World Bank Report?

Weak PM, frozen government make Doing Business  difficult?

By Ravi Shanker Kapoor?

The recent report, ‘Doing Business 2012’ by the International Finance Corporation and World Bank, showed slight improvement, with India placed at 132nd position, up from 139th in the previous year in the Index. In fact, India was among the 30 economies that improved the most overtime. However, the improvement is notional rather than real, for India is far behind not only from the developed world but also lags behind the countries in our troubled neighbourhood.

Sri Lanka, despite having a devastating and brutal civil war, provides the best business environment in South Asia and stands at 89th position. Nepal, having undergone violence and massive turbulence, is at 107th and Bangladesh at 122nd. Even Pakistan, besieged by mad mullahs and crafty generals, fares better than us and is positioned at 105th.

Doing business analyses regulations that apply to an economy’s businesses during their life cycle, including start-up and operations, getting electricity, trading across borders, paying taxes, and resolving insolvency, says the World Bank. It, however, adds that the report does not measure all aspects of the business environment that matter to firms and investors. For example, it does not measure security, macroeconomic stability, corruption, the level of skills, or the strength of financial systems.

Getting electricity became easier in India, with the index rising from 109 in 2011 to 98. Similarly, paying taxes showed improvement, from 165 to 147 and resolving insolvency from 140 to 128. However, there was some decline in getting credit (three points), protecting investors and trading across borders (two points each), and registering property (one point).

In a crucial aspect, the Doing Business report shows complete failure on the part of the United Progressive Alliance (UPA) government: India’s position in ease of starting a business is 166; five years ago, it was 88. This means that starting business has become almost twice as difficult in the last five years.

On the face of it, the development seems incongruous, even bewildering. After all, the Congress-led UPA claims to be a great champion of the aam aadmi. Prime Minister Manmohan Singh is credited with introducing economic reform two decades ago when he was finance minister. Now, at the helm of affairs, why is that things have become so bad for common folks trying to set up an enterprise?

The answer is: The UPA regime, though ostensibly committed to deepening of economic reforms, is under the spell of the Sonia Gandhi-led National Advisory Council (NAC). Most NAC members are Leftists who want to take the nation back to dark ages of pre-liberalisation. Apart from thrusting revenue-guzzling populist schemes on the nation, they want to shackle private businesses on one pretext or the other.

The buddies of NAC members campaign against industrial projects at the ground level. There is nothing wrong in fighting for the genuine interests of the poor or the wrongly displaced people. But these professional revolutionaries are fighting industry for the benefit of the locals; they are doing it because they are doctrinally opposed to private enterprise. In New Delhi, the NAC does the same thing—on a much bigger scale. Sadly, the Prime Minister and his ministers meekly follow the diktats of the bunch of anti-business activists.

The effect is seen all over. Consider common parlance. It was rarely, if ever, the word ‘profiteering’ used during the six years of the Atal Behari Vajpayee government (1998-2004). The term reeks of the muddled mindset and perverted policies of Nehruvian socialism. In the UPA era, it is prominently used. Similarly, the common refrain during the pre-UPA times was that ‘economic reforms are irreversible’; nobody says that today, because we know that reforms have been stalled.

With the power that be showing an anti-industry bias, it is not surprising to find escalation in the virulence of what is called ‘Inspector Raj,’ that bane of small and medium enterprises.

It is unlikely that the UPA bosses and their mentors, the NAC-types, would be bothered about such a development. Their priorities and concerns are totally different; they want socialism by backdoor. You don’t have a job? There is the rural employment guarantee scheme to take care of this problem; they may begin work to extend the scheme to urban areas. Don’t have food? They want to enact the food security law.

What the UPA is doing is bring in socialism by stealth. So, it is not startling to know that we don’t really shine in the Doing Business Report.

(The author is a freelance journalist)
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