Skip to main content

Ranking India poor 130th for Ease of Doing Business, World Bank wants urgent steps to drop labour regulations

By Our Representative
The World Bank has created flutter by ranking India 130th for ease of doing business in its latest flagship report, “Doing Business Comparing Business Regulation for Domestic Firms in 190 Economies 2017”. This is in sharp contrast to the Narendra Modi government’s announcement two years ago to “improve” India’s rankings among the top 50 by 2018.
An improvement of just one against the last 2016 report, which saw India jump by 12 ranks, the country’s performance is worst among all the BRICS countries. Brazil, scoring 56.53 on a scale of 100, is ranked 123rd; Russia, scoring 73.19, ranks 40th; India, scoring 55.27, ranks 130th; China, scoring 64.28, ranks 78th; and South Africa, scoring 65.20, ranks 74th.
The only consolation for India is, among the immediate neighbours, Pakistan ranks 144 Pakistan with a score of 51.77 and Bangladesh ranks 176 Bangladesh with a score of 40.84. Interestingly, the other two neighbours – Sri Lanka (score 58.79) and Nepal (score 58.88) – rank better than India, 110th and 107th, respectively.
While agreeing that The Indian government has committed to improving its doing business ranking by steadily implementing reforms across all indicators… on a platform of increasing job creation, mostly through encouraging investment in the manufacturing sector”, the report regrets, India’s labour regulations remain “associated with a number of economic distortions.”
Pointing out that “labour market issues in India are regulated by 45 central government laws and more than 100 state statutes”, the report says, “One of the most controversial laws, the Industrial Dispute Resolution Act (IDA) of 1947, requires factories with more than 100 employees to receive government approval to dismiss workers and close down.”
“Obtaining such approvals entails a lengthy and difficult process and illegal worker dismissals can result in significant fines and a prison sentence. Industrial establishments also have to observe many other laws that regulate every aspect of their operations from the frequency of wall painting to working hours and employee benefits”, the World Bank states.
Insisting that rigid employment regulations have had “lower output, employment and productivity in formal manufacturing than they would have had if their regulations were more flexible”, the World Bank report favours rise of the “informal sector”, in which labour is “contracted”, and there is more flexibility. It believes, the states which have adopted the contractual ways have seen “a larger increase in value added per worker compared to states with more rigid regulation.”
The World Bank believes, “Although Indian labor laws aim to increase employment security and worker welfare, they often have negative impacts by creating incentives to use less labour and encouraging informality and small firm size.” It adds, “Indeed, Indian firms are more capital-intensive relative to the economy’s factor endowments.”
“High labour costs in formal manufacturing have also contributed to India’s specialization in the production and export of capital-intensive and knowledge-intensive goods despite the country’s comparative advantage in low-skilled, labour-intensive manufacturing”, the reports underlines.
Appreciating Government of India announcement about “plans for major reforms to labour regulation”, the report says, “The planned legislative amendments include the consolidation of central labour laws, facilitating the retrenchment and closing down of factories by allowing firms employing less than 300 workers to dismiss them without seeking government approval, and increasing compensation to retrenched workers.”
Among major achievements in ease of doing business, the World Bank report notes how “India has achieved significant reductions in the time and cost to provide electricity connections to businesses”. In Delhi, for instance, the “time needed to connect to electricity was reduced from 138 days in 2013/14 to 45 days in 2015/16. And in the same period, the cost was reduced from 846% of income per capita to 187%.”
Then, the World Bank notes, “India has made paying taxes easier by introducing an electronic system”. In another important change, it adds, “the minimum capital requirement for company incorporation was abolished and the requirement to obtain a certificate to commence business operations was eliminated.”

Comments

TRENDING

132 Gujarat citizens, including IIM-A faculty, others declare solidarity with Kashmiris

Counterview Desk
A week after it was floated, 132 activists, academics, students, artists and other concerned citizens of Gujarat, backed by 118 living in different parts of India and the world, have signed a "solidarity letter" supporting the people of Jammu and Kashmir (J&K), who, it claims, have been silenced and held captive in their own land. The signatories include faculty members and scholars of the prestigious Indian Institute of Management-Ahmedabad (IIM-A).

Amit Shah 'wrong': Lack of transparency characterized bank frauds, NPAs, jobs data

Counterview Desk
India's senior RTI activists Nikhil Dey, Anjali Bhardwaj, Venktesh Nayak, Rakesh Reddy Dubbudu, Dr. Shaikh Ghulam Rasool, Pankti Jog and Pradip Pradhan, who are attached with the National Campaign for Peoples' Right to Information (NCPRI), have said that Union home minister Amit Shah's claim that the Government of India is committed to transparency stands in sharp contrast to its actual actions.

Untold story of Jammu: Business 'down', students fear lynching, teachers can't speak

By Rajiv Shah
A just-released report, seeking to debunk the view that people in Jammu, the second biggest city of Jammu and Kashmir (J&K) after Srinagar, people had gone “out celebrating” abrogation of Article 370 which took away the state’s special status, has reported what it calls “abominably high levels of fear” across all sections in the town.

Success of 'political' Hinduism: Kashmiris being depicted as antagonists of rest of India

By Anand K Sahay*
There are times in history when facts call attention to themselves; they assert their independence in all its amplitude and are in no need of the crutch of interpretation. Such a moment is visible in Kashmir now. Merely by being on the table, the facts there taunt the regime’s proclamations.

Gujarat's incomplete canals: Narmada dam filled up, yet benefits 'won't reach' farmers

By Our Representative
Even as the Gujarat government is making all out efforts to fill up the Sardar Sarovar dam on Narmada river up to the full reservoir level (FRL), a senior farmer rights leader has said the huge reservoir, as of today, remains a “mirage for the farmers of Gujarat”.
In a statement, Sagar Rabari of the Khedut Ekta Manch (KEM), has said that though the dam’s reservoir is being filled up, the canal network remains complete. Quoting latest government figures, he says, meanwhile, the command area of the dam has been reduced from 18,45,000 hectares (ha) to 17,92,000 ha.
“According to the website of the Sardar Sarovar Narmada Nigam Ltd, which was last updated on Friday, while the main canal, of 458 km long, has been completed, 144 km of ranch canals out of the proposed length of 2731 km remain incomplete.
Then, as against the targeted 4,569 km distributaries, 4,347 km have been constructed, suggesting work for 222 km is still pending. And of the 15,670 km of minor canal…

Kashmiris in a civil disobedience mode, are going against 'diktat' to open shops

Counterview Desk
A team of concerned citizens, including Ludhiana-based psychiatrist and writer Anirudh Kala, Mumbai-based activist and public health professional Brinelle Dsouza, Delhi-based journalist and writer Revati Laul, and social activist Shabnam Hashmi, travelled to Kashmir and Jammu to understand the impact of the abrogation of Article 370 and the subsequent security clampdown and communication blockade on the lives of the people of Jammu and Kashmir (J&K).

Ceramic worker dies: 20,000 workers in Thangadh, Gujarat, 'risk' deadly silicosis

By Our Representative
Even as the country was busy preparing for the Janmashtami festival on Saturday, Hareshbhai, a 46-year-old ceramic worker from suffering from the fatal lung disease silicosis, passed away. He worked in a ceramic unit in Thangadh in Surendranagar district of Gujarat from 2000 to 2016.
Hareshbhai was diagnosed with the disease by the GCS Medical College, Naroda Road, Ahmedabad in 2014. He was found to be suffering from progressive massive fibrosis. He is left behind by his wife Rekha sister and two sons Deepak (18) and Umesh (12),
The death of Hareshbhai, says Jagdish Patel of the health rights group Peoples Training and Research Centre (PTRC), suggests that silicosis, an occupational disease, can be prevented but not cured, and the Factory Act has sufficient provisions to prevent this.
According to Patel, the pottery industry in the industrial town of Thangadh has evolved for a long time and locals as well as migrant workers are employed here. There are abou…