DMPQ-Why Indian should not be complacent for achieving a high jump on ease of doing business?

Ease of doing business is an index published by the World Bank. It is an aggregate figure that includes different parameters which define the ease of doing business in a country. It is computed by aggregating the distance to frontier scores of different economies. The distance to frontier score uses the ‘regulatory best practices’ for doing business as the parameter and benchmark economies according to that parameter.India has moved 14 places to be 63rd among 190 nations in the World Bank’s ease of doing business ranking.

Though a great measure to gauge ease of doing business, the ranking suffers from a few lacunae:

In large economies, only two cities are taken for consideration under the rankings. This includes the largest and the second largest business city. In India, it is done for Delhi and Mumbai. Thus, it does not give a true reflection of the economy. If ease of doing business was calculated across other areas then the performance would most certainly have dropped.

It only measures the policy side i.e. government efforts and ignores market forces and other factors like human resource. Thus, it should not be taken at face value for deciding which country is better to do business in.

 

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