Report card blues

For those who were shocked to see India lag behind Bangladesh in UNDP8217;s Human Development Report, here is another shock. In a survey of...

For those who were shocked to see India lag behind Bangladesh in UNDP8217;s Human Development Report, here is another shock. In a survey of 155 countries on the ease of doing business in 2006, Bangladesh ranks 65th, and India 116th. If anyone thought that when India does not look after its poor, it must be looking after its rich, they are wrong. Poor governance in India has pulled India down on all fronts. The ease of doing business is the way to higher growth 8212; both through big ticket investment and by the efforts of millions of small entrepreneurs. It is not surprising to see India rank low in both. Countries such as Norway and Denmark, that fare well on the ease of doing business, also do well on the HDI. The common factor is good governance.

The survey on the ease of doing business consists of data for entry regulations, employment regulations, regulations of property transfers, court efficiency and other regulations governing business licensing. It finds, for example, that it takes 71 days to start a business in India, in contrast to the best delay of two days in Australia. Shockingly, our closest neighbours do much better 8212; with Nepal at 21, Pakistan at 24, Bangladesh at 35 and Sri Lanka at 50 days. The number of procedures to be followed, the number of taxes to be paid, the number of documents to be filled, all lead to higher costs, and 8212; something the report does not mention, but we are aware of 8212; the number of palms to be greased.

These hurdles may be irritating for the likes of General Motors and Reliance, but they become show stoppers for small entrepreneurs. On the one hand, it leads to great harassment by the police; on the other, it results in fewer jobs in the formal sector where labour might have had better working conditions. The impact of the difficulty of doing business runs through the entire economy in this manner. The rot that is seen in India8217;s bureaucratic redtapism is no different from the one that causes teachers to be absent and doctors to turn away non-paying patients, that are pushing down our scores on health and education. The findings of the two reports, HDI and Doing Business in 2006, should wake up the government to the fact that even our poorest neighbours are reforming their governments. The UPA came into power with big noises about better governance. It must now act urgently.