The role of the World Bank in deciding the ease of doing business
ECONOMY & POLICY

The role of the World Bank in deciding the ease of doing business

 - Anil Swarup

Earlier in September, the World Bank announced discontinuing its Ease of Doing Business reports after an investigation alleged the staff of this international financial institution changed data on China to improve its rank of doing business.

Why was the World Bank releasing this report in the first place? Who should determine whether doing business in a country is easy or not?
I had raised these and some other questions when the NITI Aayog/Department of Industrial Policy (DIPP) and Promotion was going head over heels to “satisfy” the World Bank officials about the improving business environment in the country.

 - Anil SwarupEarlier in September, the World Bank announced discontinuing its Ease of Doing Business reports after an investigation alleged the staff of this international financial institution changed data on China to improve its rank of doing business. Why was the World Bank releasing this report in the first place? Who should determine whether doing business in a country is easy or not? I had raised these and some other questions when the NITI Aayog/Department of Industrial Policy (DIPP) and Promotion was going head over heels to “satisfy” the World Bank officials about the improving business environment in the country. Consequent to the efforts, India climbed the “ease-of-doing-business” ladder. Whether business actually became easy or not was a totally different matter. If private sector investment is the criteria to go by, the ease of doing business had not undergone any change. Yet again, the “road-showing” model of NITI/DIPP became an important component of the “ease-of-doing-business”. Very interestingly, during the initial years, the World Bank looked at only Delhi and Mumbai for determining whether business had become easy (cities that were already saturated with investment), but we lapped it up so long as it suited us. In a letter to the Prime Minister, FICCI had written “the model being followed by PMG (could be) replicated across the processes where approvals and clearances are granted under various departments”. No, this was not when the country was apparently climbing the ease-of-doing-business ladder. This was in 2013 when everything that could go wrong was going wrong. But the businesses were perceiving the approach adopted by the Project Monitoring Group (PMG) to fast-track projects that had investment above Rs 1000 crore could be adopted by all. In fact, CII too wrote to the Prime Minister about “appreciation for the good work being done by the PMG”. Why did they say that? They were under no pressure to say that because they and everyone else were aware that the government was crumbling. They said it because they perceived it as an evolving ease-of-doing-business model. The results were here for everyone to see. In just 15 months, projects worth more than Rs 5 lakh crore were cleared in a transparent manner. Ironically, Prime Minister Modi, in one of his Independence Day speeches “claimed” PMG was his government’s creation. What was PMG doing? Can it become the model for ushering in true ease-of-doing business? A web-based platform was created wherein any industry (public or private) proponent could create their own login and password and upload cases pertaining to a specific ministry and/or state. Simultaneously, each ministry was asked to designate a Joint-Secretary level officer as the nodal officer. Once the project was accepted for consideration by the PMG, the project details and the issues relating to the ministry/department went automatically to the concerned nodal officers along with an automatic mailer. The nodal officer then had to provide comments on the portal itself. These comments were accessible to the concerned project proponent. Sub-groups were set up for each ‘recipient’ ministry (there were 12 of them till February 2014), and these sub-groups met periodically on fixed days and times (three of them met every week). The project proponents made brief presentations on the issues that were discussed in the presence of representatives of the ‘sponsoring’ ministry and the ‘recipient’ ministry. The primary objective was to obtain a timeline for a decision to be taken by the recipient ministry. The minutes of the meeting were recorded on the portal at the time of the meeting itself. The discussions were focused, and the meetings were short as the quality groundwork was done by the respective ministries in advance. Learning from the experience in the implementation of Rashtriya Swasthya Bima Yojana (RSBY), the discussions were also held at the state headquarters and not merely in Delhi. This facilitated larger participation of the state bureaucracy, including the district collectors, and more in-depth and detailed deliberation on issues. This approach entailed a lot of travelling, but was well worth the effort as it facilitated marketing the concept behind the resolution of issues. Industry associations like the Confederation of Indian Industries (CII) and the FICCI were leveraged to disseminate the message behind the setting up of PMG and the progress thereunder. Soon, the PMG had started showing results. Analyses of the problems revealed systemic bottlenecks. These were then taken up with the concerned Ministries/Departments for resolution. The Ministry of Environment and Forest was persuaded to digitise the entire process of clearances. Digital tracking enabled transparency and the pinpointing of the place of delays. One cabinet minister lost her job because she was sitting on files worth Rs 54,000 crore. Many states replicated the model for projects below Rs 1000 crore. The PMG was now helping them get their clearances from the central ministries. It emerged truly as a facilitating organisation. Is there a rationale for reviving the PMG in letter and spirit? Yes, not merely at the centre but also at the state level. It will not only fast-track projects as it had done in the past. It will provide a platform to the industry to resolve not only their individual problems, but also point out systemic issues. The PMG will provide evidence relating to procedural complications and the impact on clearances. They can then be corrected. This would be true ease-of-doing-business. Whether the business has become easy or not cannot and should not be determined by agencies like the World Bank. The “consumer” or “recipient” of the services from the Government should determine whether the business has become easy. Don’t ask them at a conference. No one will dare to speak the truth. However, if we continue to be preoccupied with roadshows, we will have only anecdotal evidence of “Make-in-India” happening. It will never actually happen. Until and unless we dare to face the truth, business will never become easy. However, to do that, there has to be acceptance of the fact that it is still not very easy to do business in India, and then work at a strategy that is designed not to please a few but to please the investor. The “Make-in-India” lion will not need to roar. It will need to walk the rough terrain of Indian business.About the author: Anil Swarup has served as the head of the Project Monitoring Group, which is currently under the Prime Minister’s Office. He has also served as Secretary, Ministry of Coal, and Secretary, Ministry of School Education.

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