Is India’s Ease of Doing Business ranking really a cause for celebration?

India has jumped 30 places to occupy the 100th rank in World Bank’s Ease of Doing Business report for the year 2018. The ranking is a significant improvement over last year, when the country stood at 130th position. In 2016, the south Asian country’s ranking was 142. Union Finance Minister Arun Jaitley couldn’t hide his delight at the news, as he held a press conference on Oct 31, before the report was even published.

However, how significant is the report in face of slumping economic growth and worsening unemployment numbers is anybody’s guess. Perhaps, only the government knows how much weight the report carry.

The government patting itself over the report was missing last year, when India climbed 12 places on the ranking. This time around, however, the government seems to be facing flak from all corners over the economy, so a celebration may just be a smokescreen to silence the Opposition and critics.

In recent days, observers of Indian economy, from experts, opposition leaders, common man to some BJP leaders themselves, have made no secret about their displeasure over decisions such as demonetisation and the Goods and Services Tax (GST).

The prevailing scepticism about India’s economy, however, has had no effect on the Union Finance minister, who said the improved ranking was an outcome of constant economic reforms that the Modi government had been introducing of late. Jaitley said that the target now was to achieve a place among top 50.

Congress vice president Rahul Gandhi tweeted out on Jaitley’s remarks:

In the wake of Rahul’s tweet, the question arises, what’s closer to reality— Jaitley’s enthusiasm or Rahul’s jibe. First and foremost, the report is about ease of doing business and is in no way an indicator of the economic health of the country. According to experts, such reports are only good in generating positivity which translates into benefiting economic activities in the long run.

Still, two things about this report should be noted. Firstly, India still lags behind many advanced countries on the rankings. Secondly, India doesn’t fare that well as being projected, on a closer scrutiny. For instance, India is at 181st place on taking permission for construction, 146th rank for trade across border, and 164th in granting contracts. The country rather ranks well at 29th in getting an electricity connection and fourth for small investors. The overall ranking is an average of all these ratings. This analysis clearly shows that this report too does not project economy in a very positive way.

But, how exactly are these rankings calculated?

Congress leader Salman Soz, formerly with the World Bank, shed some light. He recounted how officials of various countries used to register complaints that their country had not been given a proper placing on the report. Those officials, along with some employees of the World Bank, have at times raised questions on the method of preparing this report.

Salman Soz also mentioned an interesting anecdote in an article: “Russia jumped 30 ranks up in 2014 report as compared to 2013. This happened after Russian President Vladimir Putin ordered his officials that the country’s ranking (which was 118 in 2012) should improve and go to 50 in 2015 and by 2018, it should be on 20th place. At present, Russia is on 35th place”

The significance of this report in context of economy, India’s ranking in the various standards and Soz’s revelations is sufficient to establish that this report is merely a pleasant idea and nothing more!