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Wednesday, April 01, 2020

Memo to the World Bank

India should be rated even higher in the ease of doing business rankings the next time

Written by Bhaskar Chakravorti | Updated: November 27, 2017 12:16:55 am
world bank, direct benefit transfer, dbt, world bank india branch, indian express The first thing to remember about climbing up the ladder of the World Bank league tables is that it is not accomplished through some theory of globalisation or “win-win” mumbo-jumbo.

Pop the champagne and pass the mithai — for it is, indeed, the epoch of belief, the season of light in the world’s largest democracy. After languishing in the World Bank’s league tables, India is, finally, getting its due: It has been admitted to the top 100 nation club for Ease of Doing Business. Prime Minister Narendra Modi is one giant step closer to fulfilling every Indian’s dream.

It is now time to plot the next big move — to break into the top 80 nations club. With all the hard work already behind us, this next step should be a piece of cake. Here is how.

I hope someone is taking notes.

The first thing to remember about climbing up the ladder of the World Bank league tables is that it is not accomplished through some theory of globalisation or “win-win” mumbo-jumbo. You win by beating others. What India’s policymakers need to focus on next is to take down some of the countries above it on the list. Find their weaknesses and make a strong case to press for India’s competitive advantage the next time the WB’s bean counters come into town.

Let’s see, there is the Dominican Republic, Dominica, Malta, Puerto Rico, Samoa, Seychelles, St. Lucia, Tonga and Vanuatu. A review of the map instantly reveals the gross unfairness to which India has been subjected all these years. These so-called nations are all located on islands with turquoise waters lapping up against them and heavenly breezes that blow away even the slightest whiff of carbon monoxide, sulphur dioxide or particulate matter of any consequence.

I would have advocated for a detailed complaint to the World Bank. But these irrelevant island nations basking in their elevated league table status above India can have their ocean breezes as much as they want; lethal air will not stop India’s relentless march up into the rarified altitudes of the rankings.

While we are on the topic of tiny island nations, allow me to bring up a more serious instance of unfairness that India has to contend with; and this, most certainly ought to be the subject of a detailed memo. The World Bank bases its analysis on surveys focusing on the major city in a country. In India’s case, it covers Delhi and Mumbai, with 53 per cent and 47 per cent weights applied to each city respectively. You would think that Mumbai being the business capital would get a higher weight, but no — the World Bank insists on its own formula regardless of the country’s rich history of separating the bureaucracy from business.

To get a sense of what patriotic Indian officials have to endure, consider an example. Apparently, in the last round of evaluation, the survey team from the World Bank felt that the cost of getting a building permit in Mumbai was too high compared with the country’s per capita income. Thank goodness for the patriots, who also know that Mumbai is home to 46,000 millionaires and 28 billionaires. The clueless visitors from the Bank were eventually convinced to apply the per capita income of Mumbai, and not of the entire country — which would have included the hoi polloi of Chhattisgarh, Nagaland, Manipur and Arunachal Pradesh, and Bihar — as the appropriate denominator.

You can see what I am talking about in terms of the memo that must be urgently drafted before the World Bank starts the next iteration on its survey. Imagine answering pesky questions like the one above and negotiating over every tiny point for two cities. In the meantime, the cosy island club occupying the slots above India are probably places where the deal is settled over a nice pina colada and the per capita income is juiced by tourists or people looking to park money in a nice tax haven (think: Dominica, Samoa, Vanuatu).

Now let’s consider the next category of targets. I am talking about the likes of Bosnia and Herzegovina, Zambia, Malta, Kyrgyz Republic, Bhutan, El Salvador, Jamaica, Albania and Mongolia. Yes, folks, you read that right. India has to compete with Bhutan — Bhutan! — for a higher ranking and for precious foreign investment. Fortunately, many of those investors making a beeline for Bhutan would have to fly in through India, so we can just make sure that their connecting flights do not take off because of the smog. I think each of the other countries en route to the top 80 club can similarly be dealt with using a customised competitive strategy.

More generally, there are broader injustices that should be addressed in the memo to the World Bank. Have the mandarins from the Bank given any consideration to the fact that India which used to be famous for the stack of paper files that the babus would hold onto for ransom is a country where the talk today is all about the “India Stack” — layers of digitally turbo-charged services from identity to payments; the stack gets stronger from some shock therapy. Surely, Bank mandarins have noticed the hundreds of pre-fab tweets that sent the Demonetisationsuccess hashtag trending recently. This is a shame, since demonetisation was such a boost to doing business in India by taking care of the corruption and trust problem once and for all.

Speaking of trust and the digitally powered India Stack, at Tufts’ Fletcher School, we recently did a study of digital trust around the world — how users feel and the actual digital experience of users across 42 countries. To facilitate comparisons, we created two indices. One index is based on surveys that span a wide range of questions: How do users feel about the digital environment? Do they trust and find value in their transactions and interactions? Do they trust the leaders of major technology companies? Do they trust their governments to keep their data secure?

The second is an index that compares the speed and ease of use when transacting online, drawing upon data on multiple sources of friction — regulatory, infrastructural, and identity and interface-related. We use this second index as a proxy for the quality of the users’ digital experience in a country.

Using the first index, which is, in essence, a digital user attitudes measure — India ranked 13th out of 42 countries. In other words, in terms of sheer attitude, the Indian user is quite positively disposed and willing to be trusting of the system. On the second index, which reflects the quality of the actual user experience, India ranked 41st out of 42 countries. The country it beat? Pakistan.

Thank goodness, we are still better than Pakistan. On Ease of Doing Business, Pakistan came out 47 ranks below India. Another notch on the belt in that long-running friendly intra-sub-continental rivalry. These are, indeed, the best of times.

Now if someone gets that memo to the World Bank before it gets down to doing its mysterious calculations. Even better days — achhe din — are ahead.

Chakravorti is the senior associate dean of International Business & Finance at The Fletcher School at Tufts University and Non-Resident Senior Fellow of Brookings India. He is the author of ‘The Slow Pace of Fast Change’

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