Pulapre Balakrishnan, professor at Ashoka university, has analyzed India’s performance on three global indices that is Ease of Doing Business (EDB), Human Development (HDI) and Environmental Performance (EPI)
India Performance Indices:
- India has been the fastest growing economy in the world, however its rank on human development has remained unchanged and on environmental performance it has slipped close to the last place.
Ease of Doing Business:
- World bank has released the report in Oct, 2018 and placed India at 77th rank among 190 countries.
- India has recorded a jump of 23 positions against its rank of 100 in 2017.
- A country’s ranking is based on the extent to which government regulations facilitate the following: starting a business, obtaining construction permits, getting an electricity connection, registering property, accessing credit, protection of investors, paying taxes, trading across borders, enforcement of contracts and resolving insolvency.
- However according to World Bank’s Chief Economist, the progress in EDB does not reflect reality and point outs several shortcomings.
- Critical Argument:
- EDB rank is a de jure measure that does not capture the de facto or actual practices that are used to get around the law to get business done.
- Many state governments have claimed to regularize the inspections processes to enforce environmental regulations and labour laws but he formula for selecting enterprises for inspections or calculating risk are unclear.
- Biggest problem with the EDB is that it measures the effect of government regulations alone and ease of doing business is dependent upon other factors too such as availability of “producer services” with electricity, water supply and waste management.
- The government has not made any higher level recommendations on emerging industries for example, waste management in India is largely run through informal enterprises. But registration rules, procedures and costs to set up e-waste enterprises make it expensive and challenging to move away from informality.
- The World Bank’s Ease of Doing Business report does not highlight issues that affect small-scale retail enterprises, particularly those yet to be registered or formalised that affect a bulk of self-employed entrepreneurs and corner shops.
- EDB ranking for the country shows significant improvement since 2014 with little or no importance given to public policy for over 50 years such as lowered health and education expenditure as a share of national income.
- Reports and surveys on the ease of doing business in India are studying only certain types of businesses large (number of employees or income)
Human Development Index:
- The HDI is prepared by the UNDP, is a combination of indicators of income, health and education in a country.
- India was ranked 130 in 2014, and has remained in the same place out of 185 countries in 2018.
- HDI ranking has not improved despite it being the world’s fastest growing major economy in recent years.
- Critique of Human Development Index:
- Inequality in income distribution, poverty and unemployment which also determines well-being of the people has been ignored.
- For estimating literacy rate, expected years of schooling by children at the entrance age is used which overstates the literacy rate as in many countries (including India) many children who join primary school later drop out at some stage
- Similarly, in constructing HDI only the number of years of schooling is taken into account while the quality of education also matters a lot for good living.
- In constructing human development index, role of quality has been ignored. For example, there is a big difference between extra year of life for a healthy well-educated person and extra one-year life for a person who is bed-ridden and has limited capability to do work.
- Due to lack of adequate data about quality of health and education, it is not incorporated in the construction of HDI. But without the quality of health and education being considered, HDI does not represent the true index of human development.
- Human development index still does not take into account social, economic and political freedoms as well as human rights.
Environmental Performance Index:
- The EPI is produced jointly by Yale and Columbia Universities in collaboration with the World Economic Forum
- In 2018 India ranked 177 out of 180 countries, slipped from an already very low rank of 155 in 2014.
- The index ranks countries on 24 performance indicators across several ‘issue categories’ such as air quality, water and sanitation, water resources, agriculture, forests, fisheries, biodiversity and habitat, and climate and energy, each of which fit under environmental health and eco-system vitality.
- The country is today among the worst performing on the environmental front and its ranking has worsened over the past five years.
- Government has lowered environmental standards for instance Coastal Regulation Zone Notification of 2018 allows construction and tourism development on land, earlier considered inviolable due to its ecological value.