Insights into Editorial: Governing India’s many spaces
- February 11, 2019
- Posted by: InsightsIAS
- Category: EDITORIALS
Insights into Editorial: Governing India’s many spaces
There are three important Indices which needs to be analysed and interlinked with each other as well. They are of the ‘Ease of Doing Business’ (EDB), ‘Human Development’ (HDI) and ‘Environmental Performance’ (EPI).
Published by separate international bodies, they are used to rank the world’s countries according to their performance in the related sphere.
Rankings by themselves do not reveal the level of attainment but they do convey how far a country is from the global frontier.
India in Ease of Doing Business rankings:
The present government has set much at store by India’s improved ranking in terms of the Ease of Doing Business index.
Actually, the improvement is considerable. From a rank of 134 in 2014, India’s rank improved to 77 in 2018. As 190 countries were ranked in 2018, India was in the top 50%. The position is not spectacular but the improvement is noteworthy.
The Ease of Doing Business, an indicator put out by the World Bank, is meant mainly as an index of the effect of government regulations on running a business.
It is also meant to reflect the extent of property rights in a society.
A country’s ranking is based on the extent to which government regulations facilitate the following: 10 Parameters:
- starting a business, obtaining construction permits, getting an electricity connection, registering property, accessing credit, protection of investors, paying taxes, trading across borders, enforcement of contracts and resolving insolvency.
Ease of Doing Business rating are based on the responses are taken from government officials, lawyers, business consultants, accountants and other professionals involved in providing advice on legal and regulatory compliance.
Neglecting area in Ease of Doing Business:
A bigger problem with the EDB is that it measures the effect of government regulations alone.
But it is important to take that, in any situation the ease of doing business is dependent upon other factors too.
One of these is the availability of ‘producer services’, with electricity, water supply and waste management . There is little reason to believe that this infrastructure has improved in India in the last five years.
The Planning Commission used to release data on infrastructural investment, but we have had none since its demise.
Despite all these shortcomings, it is yet important to be concerned with the ease of doing business in India, to note that the EDB ranking for the country shows significant improvement since 2014.
Human Development Index (HDI): A true measure:
Human Development Index is the result of a rare India-Pakistan collaboration in the global discourse on public policy, having been devised by Amartya Sen and Mahbub ul Haq for the United Nations Development Programme.
The HDI is a combination of indicators of income, health and education in a country.
In HDI, we find that India’s ranking has not altered since 2014. India was ranked 130 in 2014, and has remained in the same place out of 185 countries in 2018.
India’s HDI ranking has not improved despite it being the world’s fastest growing major economy in recent years, as the government often points out in its assessments.
But Its conceptual basis has been critiqued:
- First, it has been pointed out that the index combines incommensurate categories, as income, health and education are not substitutes.
- Second, while it does go beyond purely economic measures of progress, in that it looks at the health and education achievements in a population, it can say little about the ‘quality’ of development.
As pointed out by Selim Jahan of the UNDP, data can tell us only a part of the story about people’s lives.
- For instance, it is increasingly clear that it is not enough simply to count how many children are in school: we need also to know whether they are learning anything.
This despite income being a component of the index. What this reveal is that an economy can grow fast without much progress in human development.
Environmental Performance Index measures the Environmental costs:
The Environmental Performance Index (EPI) is produced jointly by Yale and Columbia Universities in collaboration with the World Economic Forum.
The index ranks countries on 24 performance indicators across several ‘issue categories’, each of which fit under one of two overarching objectives:
- Environmental health and
- Eco-system vitality.
The issue categories are air quality, water and sanitation, water resources, agriculture, forests, fisheries, biodiversity and habitat, and climate and energy.
These metrics are meant to serve as a gauge at a national level of how close countries are to accepted environmental policy goals.
India’s recent record on the Environmental Performance Index is that In 2018 India ranked 177 out of 180 countries, having slipped from an already very low rank of 155 in 2014.
The country is today among the worst performing on the environmental front and its ranking has worsened over the past five years.
Quote: “Ill fares the land where wealth accumulates, but the social and natural environment suffer.”
The government has marginally lowered health and education expenditure as a share of national income and distinctly lowered environmental standards.
An instance would be the Coastal Regulation Zone Notification of 2018 which allows construction and tourism development on land earlier considered inviolable due to its ecological value. This de-regulation is a setback for India.
It is only one instance of the failure to recognise the plunder of India’s natural capital taking place at an accelerated pace.
We now have indicators of the progress India has made in the past five years in the three crucial spheres of business, human development and the natural environment.
The government has aggressively pursued an improvement in the business environment. This appears to have yielded fruit in terms of an improvement in the EDB index.
However, at a time when it has been the fastest growing economy in the world, India’s rank on human development has remained unchanged and on environmental performance has slipped close to the last place.
Therefore, there is a definite need to improve the indicators other than the EoDB, particularly when it comes to the Quality of Human Development as well as the Environmental Performance.