India’s latest surge in the World Bank’s Ease of Doing Business report is very impressive and rare, but the country must further strengthen its commitment to reforms as it gets harder to climb a mountain as one gets nearer its top, the Bank’s CEO Kristalina Georgieva said on Saturday.
The jump of thirty positions in a year, that has taken India to the 100th rank from the 130th position a year earlier, has been very rarely seen in the 15-year history of the index — especially in a country of India’s size and scale, Ms. Georgieva said.
“In cricket, I understand hitting a century is an important milestone. What we see here is a chance to harness the fruits of past work which raises the confidence of India one notch higher. What we are recognising in India is that this success should put more energy in reforms for the future,” she said.
“On the road ahead, when you are climbing a mountain and get closer to the top, it gets harder. So, it is absolutely vital to strengthen the commitment to reforms and we have to make sure that not only are we implementing the reforms but also creating the feedback mechanisms,” the Bank’s CEO stressed.
Speaking at an event on India’s business reforms presided over by Prime Minister Narendra Modi, Ms. Georgieva said that high-level ownership and championship of reforms is critical for success and there is no better evidence of this than the Indian PM’s drive to move up the rankings.
Placing the ease of doing business in the larger context of India’s extraordinary success story, Ms. Georgieva said that India’s per capita income has quadrupled in the past three decades and she expects extreme poverty to be conquered sooner than expected. “Given the track record, I have no doubt that when India hits another century of independence, in 2047, most people will be part of the global middle class and it will be a high/middle income country,” she said. While foreign direct investments have almost doubled from $36 billion in 2013-14 to around $60 billion last year, Ms. Georgieva said it was more important to note what happens with domestic investments. She said the Bank hoped the improvement in the index will address one particular challenge for Indian businesses.
‘Capacity to create jobs’
“Nearly two-thirds of private sector jobs are in firms with less than six workers, and often, the size of the firm is just one person. As the economy grows, we also see the capacity for firms to generate more employment,” she pointed out.
Reforms such as the Goods and Services Tax and the focus on building infrastructure, she said, will make India a competitive global player as well as a formidable unified national market that could improve the well-being of its people.
“We are working on many other initiatives with a focus on improving the ease of trading and ensuring all the impediments faced by entrepreneurs are unshackled,” said Commerce and Industry Minister Suresh Prabhu, expressing confidence that the improved rank on the Bank’s index would propel India to a higher growth trajectory
“In fact, ease of doing business means the same amount of capital invested can get you a better return, so we will improve the incremental capital output ratio. Therefore, the GDP growth rates in a few years’ time will be significantly higher due to all these initiatives that the Prime Minister has taken,” he said.