The World Bank, on August 27, 2020, announced its decision regarding suspension of the publication of Doing Business Report, which carries the Ease of Doing Business (EODB) Rankings.
The decision is taken in the wake of a number of reported irregularities related to changes to data in the 2018 and 2020 reports, published in October 2017 and October 2019. Now, the Bank is undertaking a systematic review and assessment of data changes that occurred subsequent to the institutional data review process for the last five Doing Business reports. The World Bank Group’s independent Internal Audit function is entrusted with the task to perform an audit of the processes for data collection and review for Doing Business and the controls to safeguard data integrity. This process will be followed by a retrospective correction in the rankings.
The Controversy This is not the first time the rankings are courting controversy. In 2018, Paul Romer, the then chief economist of the World Bank, quit after criticising the rankings in an interview with the Wall Street Journal for having conveyed the wrong information about the business environment in Chile. In his book, The Rise and Fall of Nations: The Rules of Change in Post-Crisis World, Ruchir Sharma, the Chief Global Strategist and head of Emerging Markets Equity Team at Morgan Stanley, criticises these rankings on various counts.
Other scholars have also criticised these rankings. A 2016 Indian Institute of Management Bangalore working paper by Vivek Moorthy and A Arul Jason argued the rankings cannot capture the true cost of doing business in countries with a large unorganised sector. Another 2019 paper by Sabyasachi Kar and others argued the fundamental premise of the rankings. What matters for doing business, the paper argues, is not rules but deals struck between firms and the political or bureaucratic arms of the state.
Impact on India However, this decision would neither halt nor deter India’s commitment towards Ease of Doing Business because it has taken several positive steps in this direction to attract foreign investment. The reforms in tax administration, faceless assessment system in the income-tax matters to curb corruption, faceless appeal system are part of ongoing reform aimed at Ease of Living for the common man, will benefit businesses. Furthermore, wide-ranging reforms have been introduced for the Ease of Business keeping both agriculture and industry in mind. Farmers have been unshackled now so that they can sell their produce to lucrative markets. The commerce and industry ministry is working on a technology-based single-window system that would ensure expeditious multiple regulatory approvals at both the Central and state levels from one point.