Bibek Debroy takes dig at World Bank’s ease of doing business index
New Delhi : Sounding critical of the World Bank’s Ease of Doing Business Index, prominent economist and the Chairman of the Economic Advisory Council to the Prime Minister, Bibek Debroy on Monday said that the index on which India has risen significantly of late is formulated after taking into account just two cities in the country.
He further noted that the sample size of research for the index India is just 30.
“The World Bank’s ‘ease of doing business’ indicators are based on surveys in just two cities…and the sample size, for India (is) around 30 and for some other countries the sample size is 2 or 3. Nonetheless, its the World Bank…” Debroy said speaking here at an event organised by the Insolvency and Bankruptcy Board of India.
The statement gains significance as India has of late improved its ranking in the World Bank’s index. In the latest ranking released in October, India jumped 14 ranks to the 63rd position and was also among the top-10 progress-making countries.
The government also cites the improvement in rankings as a reflection of an improving business environment and economy.
The World Bank’s survey has so far featured Delhi and Mumbai but in its latest report it has said that the survey will expand its ambit to Kolkata and Bengaluru next year.
He further said that the doing business index consists of an index on legal infrastructure, which he has not been able to decipher how the World Bank constructed the index.
“There is a 25 per cent weightage attached to a cross country index of legal infrastructure that the World Bank has. I have not been able to find any information despite this work of transparency about how that index of legal infrastructure is constructed.”
Debroy, however, said that improvement in the World Bank’s rankings is not the primary intention of the government’s initiatives for economy.
“World Bank’s ease of doing business ranking is not the primary intention to do what India has done in this area (insolvency) or other area. A better rank in the ease of doing business list is at best a by-product,” Debroy said.
Regarding the reforms in business environment of India, he said that the emphasis is mostly given on entry of firms and making the market competitive but a major aspect of exit of a firm is not discussed.
He also said that along with discussing the insolvency resolution process, there should also be talks on the issues which delay the resolution process of companies.