The recent development that has created a stir in the world of finance and business is the announcement by The World Bank about discontinuation of its ‘Doing Business report’. The decision comes post an investigation that unearthed “data irregularities” in its 2018 and 2020 reports (issued in 2017 and 2019, respectively). It also raised ethical questions concerning bank staff. The World Bank is now focusing on creating a new approach to evaluate the business and investment climate.
About the Ease of Doing Business Report
The World Bank introduced the Ease of Doing Business Report back in 2003. The purpose was to gauge objective measures of business regulations and their enforcement across 190 economies based on ten parameters affecting a business’s life cycle. These parameters include starting a business, dealing with construction permits, availability of electricity, property registration, credit accessibility, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency. These parameters assist in ranking countries based on the Distance to Frontier (DTF) score, which showcases the gap of an economy with respect to global best practices.
India’s Performance in the Report
The performance of India in these reports has been noteworthy. Especially in the reports released in 2017, 2018 and 2019, India found its place among the top 10 economies exhibiting “the most notable improvement”. Between 2014 and 2019, out of the 79 positions that India climbed in the Bank’s Doing Business rankings, 67 rank improvements occurred after 2017. The Doing Business 2018 report, issued in October 2017, witnessed the biggest 30-rank leap for India. The latest iteration of the report published in October 2019, positioned India at 63rd in Doing Business, a significant rise from 77th in 2018 and 100th in 2017. During 2018-19, India carried out reforms across various parameters like ‘starting a business’, ‘dealing with construction permits’, ‘trading across borders’, and ‘resolving insolvency’, contributing to a fifth of all reforms recorded worldwide.
The World Bank: An Overview
The International Bank for Reconstruction and Development (IBRD), known today as the World Bank, was formed in 1944 in unison with the International Monetary Fund (IMF). It is a global partnership of five institutions aiming to provide sustainable solutions to combat poverty and facilitate shared prosperity in developing countries. With 189 member countries, it releases major reports like Ease of Doing Business, Human Capital Index, and World Development Report.
Five Development Institutions of The World Bank
These are: International Bank for Reconstruction and Development (IBRD) that offer loans, credits, and grants, International Development Association (IDA) which provides low or no-interest loans to low-income countries, International Finance Corporation (IFC) offers investment, advice, and asset management to companies and governments, Multilateral Guarantee Agency (MIGA) ensures lenders and investors against political risks like war, and International Centre for the Settlement of Investment Disputes (ICSID) settles investment disputes between investors and countries (India is not a member of this).
