For a different yardstick: on 'Doing Business' report

Context: The World Bank has paused the publication of its ‘Doing Business’ report because of statistical irregularities. There is a need to revamp the report for its usefulness.

Weaknesses in the index

• Lack of transparency and objectivity in scoring: Eg- questions have been raised on Russia’s leap in ranking from 120 out of 190 countries in 2012 to 62 in 2015.

• Excludes the informal sector

• Sidesteps societal costs of deregulating pollution, worker safety, and health risks: Eg- China and India improved their scores sharply in 2019 and 2020, though the world’s first and third largest emitters increased carbon effluents significantly.

• Presumption that less regulation is better: This is not always true. Eg- 2008 global financial crisis resulted from too little banking supervision.

•  Ignores the impact on health, ecology, worker protection and right to information

• Assumes that lower tax rates are best: Tax rate depends actually on each country’s fiscal requirements.

• Eg: Maldives and Qatar scored high on paying taxes, but are not role models for India as most of their revenue relies on unique assets.

• Supports lighter rules and taxation to encourage shifts from informal to formal sectors: formalisation per se may not create jobs and cutting obstacles to starting a business will not necessarily expand the formal economy

• Neglects indicators of infrastructure, entrepreneurship, and competition

Conclusion

A revamped indicator should reward, not penalise, investments in workers’ skills, health and safety, low polluting activities and climate resilience.