Starting in 2003, the World Bank published the Ease of Doing Business (EODB) report that provided a data driven ranking of countries for their regulatory burden and business environment. The research underlying the report provided quantitative evidence that entry regulation only benefited politicians and bureaucrats without adding any value to the private sector. This was widely covered in the media and many countries launched reforms in order to improve their ranking.
India under the leadership of Prime Minister Narendra Modi made EODB improvement a key platform to communicate to the world that India was open for business and several reforms were undertaken. By the time the 2020 report arrived in Oct 2019, India had landed on the top-10 improved list 3 times in a row to a rank of 63. When some of our clients asked if indeed the business environment was that much improved we analyzed to answer the following questions:
- Can the EODB ranking be gamed?
- Where does India stand relative to its peers?
- Has the EODB improvement had a real impact in terms of the business environment?
And we offer some suggestions on what India could do to make real and sustained progress in encouraging entrepreneurship and foreign direct investment.
Epilogue: In 2021, an independent investigation concluded that senior bank management pressured staff to alter data affecting the ranking of China and other nations. In response, the World Bank canceled the report.
