Skip to main content

People over business? Ease of doing business 'hurting' India's poor, environment


By Maju Varghese
In the last week, we saw two indices, which were released globally. One on hunger and another on Ease of Doing Business. India slipped from 95th position to 102nd position out of 117 countries in Global Hunger Index, while the country gained another 14 points in Ease of Doing Business jumping from 77th position last year to 63rd position this year among 190 countries. India improved its ranks by 79 position from 2014.
The Ease of Doing Business is calculated by the World Bank Group, while the Global Hunger Index is published jointly by two humanitarian organisations – Concern Worldwide and Welthungerhilfe.
India has been trying relentlessly to improve their doing business ranking by involving World Bank representatives in India and developing a subnational index bringing in a competition among states to reduce regulations based on a set of indicators developed for the same. The said aim is to reach into the first 50 rankings.
This year doing business reported 294 regulatory reforms worldwide in 115 economies. The top 10 reformer countries constitute 1/5th of these reforms and include Saudi Arabia, Jordan, Togo, Bahrain, Tajikistan, Pakistan, Kuwait, China, India and Nigeria. The Doing Business report has recorded 3,800 business regulatory reforms across 190 countries since its inception in 2005.
According to the report, the upward movement of Indian ranking is due to four areas. These include regulation which made it easier to obtain construction permits, reduction in cost for starting a business, reduction in cost and time associated with border and documentation requirements, and resolving insolvency. India gained most was in resolving insolvency where India’s rank moved from 108 to 52.
The reality of these reforms, particularly the insolvency, is manifested in deep haircuts by public banks which gets its capital from depositors who save their earning in the banks. This could be seen from the fact that banks could only recover Rs 75,000 crore out of the 1.75 lakh crore which amounts to 57% haircut in the last financial year.
The government is giving all kind of exceptions for relaxing environment norms so that development projects are not affected by existing laws
With the insolvency and bankruptcy code (IBC), the banks are taking a massive cut which has resulted in capital erosion of the banks. In some cases, the hair cuts were as high as 83 %, like in Alok Industries which Reliance acquired with just above liquidation value resulting in massive loss to the banks.
This is over and above the write off by public sector banks. State Bank of India, which is the largest public sector bank in India, has written off bad loans worth Rs 76,600 crore of 220 defaulters, who owed more than Rs 100 crore each. 
Public sector banks, on the whole, have written off a sum of Rs 2.75 lakh crore for entities that borrowed Rs 100 crore or more from scheduled commercial banks. The ease of start of business and exiting business is a key indicator to the Doing Business reports.
What is often pushed is not just public paying for the corporate debts but more subtle reforms which relax environmental norms and labour standards for the business. Simeon Djankov, Director of Development Economics at World Bank have commented that India needs a fresh set of “bold reforms” to enter into top 50 countries, indicating a fresh push for more business-friendly reforms in the country.
The President of the PHD Chamber of Commerce and Industry has come out asking for reforms in land acquisition and relaxation of labour laws in the country. The lack of environment clearance has already been sited by the industry as an impediment for business in the country and have succeeded in changes in policies and laws and special treatment to bypass existing regulations.
Another area in which the Ease of Doing Business is cutting roots is in the case of environmental norms and regulations. The government is giving all kind of exceptions for relaxing environment norms so that development projects are not affected by existing laws. 
This includes exemption of mining of minor minerals like sand in up to 25 ha area from prior public consultation and the environmental impact assessment (EIA), which was later struck down by the National Green Tribunal. 
The Central government also exempted industries like steel, cement and metal from mandatory prior environment clearance for setting up a new or expanding the existing captive power plant employing waste heat recovery boilers (WHRB) without using any auxiliary fuel. 
The World Bank has been advocating lower minimum wages and greater hiring and firing power for employers
The Environment Ministry has also tampled with the procedure for environment clearance of developmental activities with the 10 km buffer zone around sanctuaries. There will be no need for prior clearance for projects in the buffer zone thus diluting the earlier provisions. 
India’s apex national board for wildlife (NBWL) who have responsibility for allowing forest land in protected areas to be diverted for industry cleared 682 of the 687 projects almost 99% which came up for scrutiny. 
According to Ritwich Dutta, an environmental lawyer who has challenged the dilution of environmental norms in National Green Tribual in an interview says that not a single legislative step was made in the last four years to protect the environment and every law related to environment is being diluted which will make urban areas unliveable. 
The offense is not limited to the environment alone, labour laws are the major area in which Ease of Doing Business proponents was to deregulate for carrying the business with ease. The World Bank has been advocating lower minimum wages and greater hiring and firing power for employers and to remove regulations which prevent companies from hiring labour at lower cost. 
The indicator on labour though not a part of the ranking, is still retained in the Doing Business even after global protests from labour unions. India passed its code on wages which consolidate older laws like the minimum wages act, payment of wages act, equal remuneration act but in the process dilutes critical provision for the protection of wages as being crtiqued by the trade unions for dergulating the labour sector. The Indian trade unions are on a warpath against the proposed reforms and have been critical of changes made in the name of Ease of Doing Business.
Some of the earlier reforms which were cited for a higher ranking in the Ease of Doing Business like goods and services tax (GST) have been acknowledged to have an opposite effect by Indian traders who claim the processes are cumbersome. 
The high GST rates have increased the indirect tax and together with demonitisation, GST is being blamed for the slowdown of the economy resulting in lower tax collections, prompting the government to divest in public sector for raising resources. Likewise, corporate tax is being reduced significantly from 30 % to 25% resulting in exchequer losing ₹1.45 lakh crore per year.
The share of wasting among children in India rose from 6.5 per cent in the 2008-2012 period to 20.8 per cent in 2014-2018 the highest for any country
The additional burden on common people and working-class will result in massive strike back to the prescriptions of IMF and World Bank as we see the protests in Greece, Ecuador, Lebanon and other countries.
While the government was busy pushing for Ease of Doing Business and gifting public money for corporates and easing land acquisition, labour laws and environment, the share of wasting among children in India (the share of children under the age of five who are wasted – that is, who have low weight for their height, reflecting acute undernutrition) rose from 6.5 per cent in the 2008-2012 period to 20.8 per cent in 2014-2018 which is the highest for any country studied under the Global Hunger Index and less than 10% of the children in the country is having a minimum acceptable diet this day.
The indicators and directions used in the Ease of Doing Business ranking are challenging the very notions of environmental regulations and equity which is at the heart of the global movement of people who question the role of corporate greed is destroying the planet. Business can no longer be blind to labour and environment and it has to subsume itself for ease of living and life on the planet.
---
Source: Centre for Financial Accountability

Comments

لایوکار said…
Thanks for this nice post. I like your website.
simran said…
Thanks for information.i really like your blog and information keep it up and i m also waiting for your next blog ...... char dham yatra char dham

TRENDING

Vaccine nationalism? Covaxin isn't safe either, perhaps it's worse: Experts

By Rajiv Shah  I was a little awestruck: The news had already spread that Astrazeneca – whose Indian variant Covishield was delivered to nearly 80% of Indian vaccine recipients during the Covid-19 era – has been withdrawn by the manufacturers following the admission by its UK pharma giant that its Covid-19 vector-based vaccine in “rare” instances cause TTS, or “thrombocytopenia thrombosis syndrome”, which lead to the blood to clump and form clots. The vaccine reportedly led to at least 81 deaths in the UK.

'Scientifically flawed': 22 examples of the failure of vaccine passports

By Vratesh Srivastava*   Vaccine passports were introduced in late 2021 in a number of places across the world, with the primary objective of curtailing community spread and inducing "vaccine hesitant" people to get vaccinated, ostensibly to ensure herd immunity. The case for vaccine passports was scientifically flawed and ethically questionable.

'Misleading' ads: Are our celebrities and public figures acting responsibly?

By Deepika* It is imperative for celebrities and public figures to act responsibly while endorsing a consumer product, the Supreme Court said as it recently clamped down on misleading advertisements.

A Hindu alternative to Valentine's Day? 'Shiv-Parvati was first love marriage in Universe'

By Rajiv Shah*   The other day, I was searching on Google a quote on Maha Shivratri which I wanted to send to someone, a confirmed Shiv Bhakt, quite close to me -- with an underlying message to act positively instead of being negative. On top of the search, I chanced upon an article in, imagine!, a Nashik Corporation site which offered me something very unusual. 

US 'frustrated' with India’s discomfort: Maritime exercise in South China Sea

By Vijay Prashad*  In early April 2024, the navies of four countries -- Australia, Japan, the Philippines, and the United States -- held a maritime exercise in the South China Sea. Australia’s Warramunga, Japan’s Akebono, the Philippines’ Antonio Luna, and the United States’ Mobile worked together in these waters to strengthen their joint abilities and -- as they said in a joint statement  -- to “uphold the right to freedom of navigation and overflight and respect for maritime rights under international law.” 

Dadi, poti discuss 'injustice' under 10 yr Modi rule: Video campaign goes viral

By Our Representative  Watan Ki Raah Mein, a civil society campaign of the Samvidhan Bachao Nagrik Abhiyan, has released a short video conversation on social media of an exchange of letters between a dadi and her poti discussing poverty, unemployment, corruption and women’s safety. The letters also raise the question of  suppression of our fundamental rights of speech, expression and justice. 

Magnetic, stunning, Protima Bedi 'exposed' malice of sexual repression in society

By Harsh Thakor*  Protima Bedi was born to a baniya businessman and a Bengali mother as Protima Gupta in Delhi in 1949. Her father was a small-time trader, who was thrown out of his family for marrying a dark Bengali women. The theme of her early life was to rebel against traditional bondage. It was extraordinary how Protima underwent a metamorphosis from a conventional convent-educated girl into a freak. On October 12th was her 75th birthday; earlier this year, on August 18th it was her 25th death anniversary.

India 'not keen' on legally binding global treaty to reduce plastic production

By Rajiv Shah  Even as offering lip-service to the United Nations Environment Agency (UNEA) for the need to curb plastic production, the Government of India appears reluctant in reducing the production of plastic. A senior participant at the UNEP’s fourth session of the Intergovernmental Negotiating Committee (INC-4), which took place in Ottawa in April last week, told a plastics pollution seminar that India, along with China and Russia, did not want any legally binding agreement for curbing plastic pollution.

No compensation to family, reluctance to file FIR: Manual scavengers' death

By Arun Khote, Sanjeev Kumar*  Recently, there have been four instances of horrifying deaths of sewer/septic tank workers in Uttar Pradesh. On 2 May, 2024, Shobran Yadav, 56, and his son Sushil Yadav, 28, died from suffocation while cleaning a sewer line in Lucknow’s Wazirganj area. In another incident on 3 May 2024, two workers Nooni Mandal, 36 and Kokan Mandal aka Tapan Mandal, 40 were killed while cleaning the septic tank in a house in Noida, Sector 26. The two workers were residents of Malda district of West Bengal and lived in the slum area of Noida Sector 9.