India is ranked abysmally as business destination
The WB ranks India at 134 among 175 countries on various parameters of business climate, reports M Rajendran.india Updated: Sep 09, 2006 22:12 IST
Doing business in India is a difficult proposition. The World Bank and the International Finance Corporation have ranked India 134 among 175 countries on various parameters of business environment.
The rankings track indicators of the time and cost needed to meet government requirements in business start-up, operation, trade, taxation, and closure. They do not track variables like market size, macroeconomic policy, quality of infrastructure, currency volatility and investor perceptions.
A report prepared by the World Bank and the IFC- Doing Business 2007: How to Reform- says that despite the reforms that India undertook in 2005-06, a number of obstacles, like slow courts and rigid labour laws, remain.
Even among eight south Asian countries, India ranks sixth in the category of "ease of doing business"- ahead only of Bhutan and Afghanistan.
Melissa Johns, investment policy specialist ('Doing Business' team), IFC, said, "This year the 'Doing Business' report has added an additional 20 economies to the survey. If we were to adjust last year's ranking for India, it would be 138 and not 116. So India's ranking has shown an improvement from 138 to 134 this year."
The government, however, dismissed the report as bogus. MoS for Commerce Jairam Ramesh told HT, "All such rankings are bogus, whether the World Economic Forum, Transparency International or the World Bank does it. What matters is the economic performance. We are doing well on that front as is reflected by the growing interest of international investors."
Investors and economists agreed. GE Money, a foreign-owned non-banking financial company, said it did not feel there was any problem in doing business in the region. "We have been India for last 12 years. The business is booming. We have had over 50 per cent growth and we do not see any impediments, which would slow down business," said Vishal Pandit, president and CEO (India Region), GE Money.
Rajeev Kumar, CEO, Indian Council for Research in International Economic Relations, said, "Archaic laws and procedures that have become dysfunctional need to be weeded out."
Arun Maira, chairman, Boston Consulting Group, India, said, "I would like to see a report from IFC-World Bank that takes into account three critical parameters: the speed at which the foreign companies have earned profits, how big is the volume of profit and how easy or difficult it is to repatriate profits from the country. I am sure the results and ranking would be different."
Siddharth Pai, partner and MD, Technology Partners International, leading business strategy analysts, said, "Most of the factors that would be important to any investor seem to have been excluded from the report. Our experience is that India is on top of the mind of major business establishments abroad."
FICCI President Saroj K Poddar said labour reforms were imperative. "It is only then that Indian manufacturing industry can attain the competitiveness needed to fight international competition," said Poddar.