Observing that the recent increase in India's ease of doing business ranking by the World Bank was long overdue, a top Indian American economist today said the country as a place for business is a lot more attractive than its ranking suggests.
Investors usually go where the environment is the best and not where the World Bank collects its data, Arvind Panagariya, professor at the prestigious Columbia University, told PTI in an interview.
"Our best investment destinations do significantly better than the latter," said the former vice chairman of NITI Aayog."I have often said that India as a place to do business is a lot more attractive than the World Bank ranking suggests.
Panagariya was responding to a question on the latest annual report of the World Bank on ease of doing business. India registered an impressive 30-point jump in one year, registering the best performance among emerging economies.
"This (increase in ranking) was overdue. The government had made a large number of improvements that did not getincluded last year. I am delighted this has been rectified in the 2018 rankings," Panagariya said.
The single most important factor, for this he said, has been the focused effort by the Department of Industrial Policyand Promotion (DIPP) to "cajole" the relevant entities into making improvements to the ease of doing business in areascovered by the World Bank survey.
The DIPP created a detailed checklist of items and saw to it that the entities involved do the needful, noted the economist who headed NITI Aayog from January 2015 to August 2017.
"From NITI, we helped the DIPP where we could, particularly in getting the states on board," he said, adding that frankly, this is the area in which the credit must go largely to DIPP. Panagariya said he has known for some time that the processes were undergoing improvement continuously after thepresent government came to office. But the recognition of this fact by a major international financial institution sends a very important signal, he said.
"As you must know, the western press has been slow to recognise the improvements in governance that have taken placein India in the last three years. Hopefully, the jump in the rankings will go some distance towards convincing foreign investors that India is fast changing as a place to do business," he hoped.
Based on the series of reforms that have been going on for quite some time now, the economist exuded confidence infurther improvement in India's ranking next year. "Not only can India improve its ranking, it will do so.
Many improvements already in place have not been included in the 2018 rankings due to usual lags between implementation and their recognition. Inclusion of these change alone would give India another boost in the 2019 rankings," he said.
Prime Minister Narendra Modi has now set the target of India's ranking in ease of doing business in the top 50. Thishe said is achievable, but one should not underestimate the difficulties. "The prime minister always thinks big.
At the time, he moots these big ideas, they seem unachievable. But he makes them achievable," he said. "Today, reaching into the top 50 looks a lot more within our grasp RPT grasp, though we should not underestimate the difficulty: as we climb up, the slope gets steeper and steeper since we are competing against better and better performing countries," Panagariya said.
Responding to a question, Panagariya said there are several areas where there is considerable scope for improvement. Prominent among them being registration of properties, enforcement of contracts, starting a business, construction permits and trading across borders.
"Each of these areas has its own multiple pain points that must be addressed using the DIPP checklist approach," hesaid. India, he asserted, is already looking a lot better than in May 2014. "The growth rate during the last three full financial years has averaged 7.5 per cent compared with 5.9 per centduring the last two years of the UPA. By May 2019, we will see further improvement," Panagariya said.