Skip to main content

Ease of Doing Business: A Fresh Perspective


Ease of Doing Business: we can look at this ranking in two ways : one, as a political tool, analyzing Party A did this so ranking improved; or Party B didn’t do this, which is why we were bad – or indeed, Party A didn’t so as great as they claim for x,y,z reasons. The second way is use it to introspect, and ask ourselves, regardless of ranking, What can we do as a nation along these parameters, and how can we benefit by doing those steps? In other words, let us de-link politics from this exercise, at least for the purposes of this exercise, and go deep into the parameters of what constitutes Ease of Doing Business.



EODB INTRODUCED
But first, let us settle this Ease of Doing Business matter, and put it in the proper perspective. First, this is a matter of ranking – not an absolute; your rank can improve by virtue of factors not in your control. Second, this ranking is measured in two cities in India – Mumbai and Delhi. By no stretch of imagination can these two cities be considered representative of India as a whole. These two points together are enough to allow us to forget the undue importance given to this ranking. Even if we did deserve the improvement – even then, it isn’t so vital an issue. What we need to do is go into the parameters used to measure, and understand how we can use them for our benefit.

The latest on this is even more interesting – with the claims and counter-claims regarding the admissibility of the rankings as they were declared; whichever side of the debate we are on, this is now a matter embroiled in politics; and politics and economics make for incompatible bed-fellows. Given that the rankings are based on just 2 Urban Agglomerations, whose population is 34.75 Million as per the 2011 census – 2.79% of the nation. As can be seen, that cannot be representative of the entire nation. Even by GDP, it is around 15-18% of the National GDP approximately. Hardly representative in the overall national view. Thus, let us move on from this, to more pertinent matters.



EODB EXPLAINED
The ranking is based on ten indicators :
1.   Starting A Business
2.   Dealing with Construction Permits
3.   Getting Electricity
4.   Registering Property
5.   Getting Credit
6.   Protecting Minority Investors
7.   Paying Taxes
8.   Trading Across Borders
9.   Enforcing Contracts
10.   Resolving Insolvency
Let us not get into what else is needed for a good Business Environment, and ask ourselves some hard questions. Further, let us not over-analyse the parameters in which we showed improvement, but rather zero in on those where we did not perform well, even by the controversial ranking released sometime last year. Let us look at those – which were Contract Enforcement, Registering Property, Trading Across Borders, Dealing with construction permits, paying taxes. A full analysis of all is beyond the scope of one article; so let us, for now, look at just one or two parameters that can put things in the proper perspective, and enable us to get better for ourselves through introspection.



FIRST, CONTRACT ENFORCEMENT
Let us be positive : and start with the negative first, closing with what we feel is a self-congratulatory note of self achievement by a positive point. I start, therefore, with contract enforcement. The data shows that it takes 1445 days in India for contract enforcement. Frankly, having handled a few disputes, I know this to be irrelevant; highly irrelevant. I have never received the permission to go legal, or opt for legal enforcement measures. In fact, the contact itself is a mere formality at times. We all know the kind of backlogs there are in the courts; this has lead to a situation wherein we normally use social measures like find common friends, outreach to other party and compromise to resolve any dispute.

The question in front of all us then is, what can we as a people and a nation do to improve this? For this is one of the most vital aspects of business. And yet, our social structure and prevalent Business Norms on the ground are such that at times, dispute resolution is actually faster than what we perceive, it just isn’t formalized. This is the cultural aspect of Business in India, as covered in at least one landmark thesis from an IIM. As proof, I once resolved a dispute 2 years old by simple followup, and reaching out to the other party by the simple expedient of using a fellow community member, a Gujju. How do we reconcile these twin realities?

SECOND – EASE OF CREDIT
Just a short and terse summary here. I was sitting last week with a top manager of a large company, who was deeply connected to many startups, being a startup evangelist. I asked – why don’t startups avail institutional credit in greater numbers? The answer: it is too much of a hassle. Now this is a parameter in which we have performed well; but are our MSMEs well served? Are the Micro and Small scale sector, which is the bulk contributor, adequately addressed? I don’t think so. Another anecdote : three years ago, I came across a company with its production lines closed { I was the Sr KAM, wanted to clear my OS}; the company had no recourse available. This was an SME. SMEs don’t get credit as easily as do the bigger corporate, as documented in one article : “While the Micro, Small and Medium Enterprises (MSMEs) form an integral part of the economy, access to credit is a concern that continues to haunt the sector.” : http://knnindia.co.in/news/newsdetails/msme/credit-crunch-continue-to-haunt-msmes-sector-expect-fresh-air-in-upcoming-budget. Enough said.

CONCLUSION
Yes – the improvement is welcome, which is why, despite my many, many questions – most not asked here, I am silent on the matter by and large. We need all the good news and benefits it brings, fact is fact. But, let us not get carried away, or look at it from a political prism. How can we further improve – and what is the real, on-ground situation for all of India, not just two cities? We need to examine the excellent framework this ranking system provides, and use it as a motivator to propel further improvements that can enable us to realise our many ambitions! Let us not politicise this; let us treat this purely as an economic phenomenon, and use it as a benchmark for a national project!

BIBLIOGRAPHY


IMAGE CREDITS : From the Bibliograpy articles


Comments

Popular posts from this blog

PK, The Movie : One Of The Best...

\ PK : A Movie Ahead Of Its Time; A Movie That Is A Very Vital And Current Need! I dont normally review movies; my blog does not lend itself to such an activity, given its positioning as one that asks some tough questions to Indians. I am making an exception for this movie, not because it is a landmark movie {which it is}, but because this movie is also one that asks some pretty blunt, and to some people, offensive questions.  It is rather sad and humbling to see the vigorous protests to this movie, and some cases of active on-street protests and interference in some places. Sad, because there is almost nothing in the content that should excite such actions; and humbling because it is a painful reminder that we as a nation have still a ways to go in our quest for true development! Before I move onto the movie, I have just one question : did the protesters also protest to Haider? If no, you did not find the negative portrayal of The Indian Army objecti

Tarkeshwar Mahadev : Pune Hidden Gems

What do you do when you have something good, something that is praiseworthy, and something that can be an attraction? Answer, if you are in Pune – keep silent about it, tell no one. This is seemingly exaggerated – perhaps it is exaggerated; but I am flabbergasted by a series of unbelievable locations that I have visited in Pune City – within main Pune City, mind you . These are not well known – at least not one single localite informed me, even on asking . At least those I talked. If I didn’t talk to the right people, perhaps I am in the wrong. But – if you expand your vision to TV, Cinema, Popular opinion, hotels – the situation above gets proof. I earlier visited Pune on a family holiday, stayed in a good Hotel. Not one Hotel informed me of these; not one person – Taxi, Tour Guide – even mentioned these . Thus, it seems to me that Puneites don’t realise how lovely a city they have, how mesmerizing are its many, many tourist-worthy places, how rich and unspoiled,

Book Review : Chhatrapati Shivaji

Chhattrapati Shivaji stands as one of the most celebrated medieval heroes in Modern India; it is a name that touches a chord in almost every Indian, and is a powerful force to reckon with even today, three centuries after his death. He is present everywhere you can see; he is one of the few to withstand the onslaught of naming everything in sight after the Nehru family. A Chhatrapati square her, a Shivaji Terminus there – many cities have honoured themselves with some landmark, statue, street or square in his name. Such is his current followership, and so powerful is his presence. This makes reviewing any book related on this personality a big responsibility, a tough task  – and not one to be taken with insincerity, or with bias,  or attitude. I had always thought of The Chhatrapati as a tall personality, a commanding and great Indian; but had never given a thought to the pull, the deep connect and the powerful influence this genius had on me; as I read the current book, as I t