Economy

Improvement in India’s rank will boost SMEs, job creation: World Bank

After India, for the first time found a place in the top 100 in the World Bank’s Ease of Doing Business global rankings, The Hindu caught up with Annette Dixon, the World Bank's vice president for the South Asia Region, for her views on the country’s performance. She said the World Bank has found that when a country improves its (ease of) Doing Business rankings globally, its economy performs better, particularly in terms of supporting Small and Medium Enterprises (SMEs), overall growth and jobs. “India has over a million new job seekers joining the labour market every year. So SMEs are a really powerful engine for job creation and this improvement in Doing Business rankings will make a big difference for them,” she said. (Edited excerpts from the interview)

From a global perspective, what will be the impact of India’s huge jump in Doing Business rankings, in terms of investments and jobs?

India’s improvement this year is substantial. It is the country that recorded the maximum improvement in South Asia, and it is also in the top 10 in the world in terms of most improved nations. It has come from persistent efforts to improve the business environment across the board. We measure ten indicators, and India has recorded improvements in nearly all of them. Even with reforms that have just been taken, we expect India to continuously improve them as well.

We know that if a country improves its Doing Business rankings, the economy performs better, particularly in terms of supporting SMEs, growth and jobs. Here in India, SMEs are rather small compared to other countries. The average SME in India employs just six people, which is pretty small. If the doing business environment improves, we would expect to see SMEs able to grow and create more jobs for Indians.

Also, countries that do well on the Doing Business make continual efforts every year, and are persistent. It is not like they get there at one go. Here in India, (you have to) keep on doing the things that have worked well this year, like strong leadership setting ambitious targets. Getting into the top 50 is an ambitious target, but it will be important to get the momentum going to make progress, and you also need to coordinate across all the government agencies and between the Centre, the States and at the local level to get the implementation right and fast. Doing Business is not just about changing the legal code and policies, but also about the implementation and whether they are beneficial to the user-entities.

Are there examples of across the world where an improved Doing Business ranking has resulted in increased employment and inclusive growthinthosecountries?

A: Yes. We have studied the countries doing well in our Doing Business report and we saw a high correlation with more inclusive and job-creating economic growth because of the focus on SMEs, which are the real driver of job creation. India has over a million new job seekers joining the labour market every year. So SMEs are a really powerful engine for job creation and this improvement in Doing Business rankings will make a big difference for them.

The World Bank Doing Business parameters do not capture the skill development initiatives and job creation. Without measuring those, how do you ensure that an improvement in the rankings will lead to more jobs and inclusive growth? Is the World Bank open to including the parameters of skill development and job creation as well in its Doing Business report to make it more comprehensive?

A: Improving the business environment through getting improvements in Doing Business (ranking) is a necessary precondition for job creation. But if we look at the broader competitiveness of a country, our Doing Business (survey) not only measures things that helps in comparison across countries, but it also relies on macroeconomic stability, the strength of the financial sector, the skills of the work force and so on. The Indian government needs to make continual efforts not only in doing business, but also on these other things that will make India more competitive. So the Skill India initiative is a very important complementary activity going on in addition to Doing Business reforms.

With increasingcompetition fromnew multilateral development banks such as the Asian Infrastructure Investment Bank and theNew Development Bank (or the BRICS Bank), how does the World Bank plan to make it relevant to countries like India?

The World Bank is relevant because we are the only multilateral development bank that has this global reach. We are able to do things like Doing Business report which is really important for helping countries to compare their performance across all countries in the world and bringing international knowledge to help countries. So we know a lot, for example about what will help in ease of doing business, and the things that countries can do in that regard. We get to study countries that do well, and we get to help in transferring this knowledge across countries so all of them can do better. We are also innovative in helping India to access developmental solutions more quickly in order to make progress at a speed that it want to.


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Printable version | May 20, 2022 1:31:00 pm | https://www.thehindu.com/business/Economy/improvement-in-indias-rank-will-boost-smes-job-creation-world-bank/article19957137.ece