The latest EODB Report on India shows a very optimistic future for us. While the ranking of India (based on data collected from Delhi and Mumbai) has increased on several parameters such as minority protection, starting a business, getting construction permits etc, India struggles at the fact front. The research methodology indicates that it is premised on changes in substantive policy and lacks any empirical evidence to back it.
While Mumbai and Delhi do show great improvement in their commercial activities, owing to the overall structural reforms, other cities do not show the same level of development. In fact, this goes for many countries where the report considers only top performing cities for its data analysis.
If the median between the top performing city in a country vis a vis worst performing city is considered and this inequality is factored in the overall growth indicators, results will speak otherwise.
some may say that ease of doing business does not require study any inequality factor; however, inequality in the enforcement of laws, especially in case of enforcement of contracts, protection of minority shareholders, protection of creditors offers a true picture of the state of commercial affairs in a country. Further, the report assumes that red tapism is factored in the “actual time taken” for enforcement of any provision such as enforcement of the contract, obtaining a permit etc. There is no mechanism to check those businesses that failed to even kick start due to this.
Last but not least, any updates in legislation leading to a change of 2% or more on the distance to the frontier gap are considered progressive.
Placing reliance on new laws for assessing development comes with a caveat. Reforms and amendments brought under a law in short span of time and especially under new legislation (as seen in IBA 2016) speaks more of bad drafting. While at one side, changes and amendments are a welcome move, too many changes and amendment makes legal environment uncertain. Further, for any reform to show the result, some lapse of time is essential. Thus, in case of IBC 2016, though the idea of introducing new code is a very welcome move, the act of promising a higher rank for introducing this code is hasty, considering hundreds of amendments that have been made in the Act within a span of 13 months.
Placing reliance on new laws for assessing development comes with a caveat. Reforms and amendments brought under a law in short span of time and especially under new legislation (as seen in IBA 2016) speaks more of bad drafting. While at one side, changes and amendments are a welcome move, too many changes and amendment makes legal environment uncertain. Further, for any reform to show the result, some lapse of time is essential. Thus, in case of IBC 2016, though the idea of introducing new code is a very welcome move, the act of promising a higher rank for introducing this code is hasty, considering hundreds of amendments that have been made in the Act within a span of 13 months.
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