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What is the news?
Doing Business’ report, was recently junked by the World Bank.
The author welcomes the move, stating that we celebrated improvements in such rankings without quite understanding the underlying methodology or the impact such rankings had on the lives of a larger group of stakeholders.
|Must Read: The end of Doing Business report – Explained, pointwise|
What are some positive outcomes of Doing Business rankings for India?
Reforms initiated: Inspired by the ‘Doing Business’ rankings, the Indian government initiated improvements at the level of Indian states and Union territories (UTs) as well.
In 2014, based on the 10 business topics tracked and monitored by the World Bank’s report, the Centre came up with a Business Reform Action Plan (BRAP) for Indian states and UTs.
The implementation of these rankings and the Ease of Doing reforms by those administrative units has been linked to additional borrowing permissions for states, apart from other benefits.
Why we should not focus excessively on rankings?
An excessive focus on rankings can result in the following negative outcomes:
Sub-optimal strategies: It can cause developing countries to choose sub-optimal strategies, with their adverse fiscal and welfare implications. These are strategies that devote little attention to improving social equity and addressing ecological concerns.
A one-size-fits-all approach: Ratings and rankings, in general, promote a certain uniform metric of success, one which may not be in line with the specific needs of individual countries or even institutions.
Source: This post is based on the article “The doing-better syndrome and our prisoner’s dilemma” published in Livemint on 22nd Sep 2021.