Unease with Doing Business report
The World Bank last week discontinued its Doing Business survey after allegations of data irregularities in its 2018 and 2020 reports. Held in high esteem mostly by emerging countries jostling with each other for attracting foreign investors, the Doing Business report always had many critics. This, however, did not stop nations from taking pride in these rankings if they were doing well. Take India, for example, which improved its standing from 142nd in 2014 to 63rd in 2020.
The NDA government has showcased the improvement in its Ease of Doing Business ranking in its sales pitch to foreign investors, so much so that it has been used by the BJP in seeking votes from the educated middle class, which seems to get easily impressed by these indicators. But it should be noted that India’s rank improved 30 places to 100 in 2018 and 17 places to 63 in 2020—the two years when the rankings were allegedly manipulated. While we may not blame the government too much for taking pride over India’s rankings, it should be kept in mind that critics have been pointing out the flaws, of which data manipulation seems to be the least of the concerns.
One of the biggest criticisms of the rankings has been its use of hypothetical case studies instead of real-life experience of actual business owners. Experts have also recommended expanding the sample size of the surveys. Some of the indicators used in the ranking may not be objectively measured, while others may give misleading information. Some experts have pointed out that while the ranking favours lower tax rates, this may not be good for the government of the country. Yet other indicators may only be applicable on listed companies, leaving out the small and medium businesses.
Now that China’s use of its money power to influence the Ease of Doing Business survey has stained its report card, other global indices could also be suspect, needing a thorough cleanup.