India’s leap in Ease of Doing Business rankings obscures the full picture

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By Sara John*

The World Bank’s Ease of Doing Business (EoDB) ranking for 2018 offers some respite to India. It comes at a time when its economy is mired in the after-effects of demonetisation and hasty implementation of the Goods and Services Tax (GST). On the one hand, India can flaunt its record 30-notch leap in the EoDB ranking from 130 to 100. On the other hand, India has reason to fret, as the World Bank itself ranks the country 120th out of 131 countries in female workforce participation.

The importance of gender as a factor

Among 144 countries, India is ranked 108th in the Global Gender Gap index, which was first introduced by the World Economic Forum in 2006. It is used as a framework for capturing the magnitude of gender-based disparities. One of the sub-indices considered under the index is ‘Economic Participation and Opportunity for All’, which takes into account parameters like the comparison of labour force participation, wage equality and estimated the earned income of females over males.

India stands at 139 among the 144 countries in this sub-index. The World Bank’s Doing Business report in 2017 has included a gender dimension for the first time in the three indicators such as starting a business, registering a property and enforcing contracts. The report reveals that a high rate of gender discrimination is prevalent in terms of the three indicators.

Women workforce

Considering the scenario where women and men can participate in the workforce in equal numbers, it is expected that India can increase its GDP by 16 percent. Presently, women’s contribution to India’s GDP is only 17 percent, which is less than the global average of 37 percent. Hence, discriminating against women not only denies them their basic human rights but also scuttles the nation’s potential to grow.

Employment generation opportunities in India should be considered while stating that involvement of women in the workforce can boost India’s GDP. As per the data on employment creation from the Labour Bureau of India, less than two million jobs are created annually, whereas the working age population grows by 16 million every year. Currently, the employment of women is restricted to certain sectors and occupations. Nearly 79.4 percent of women in rural India are employed in agriculture. Though manufacturing and service sectors employ women in large numbers, their opportunities are limited to a few industries like tobacco, apparel, and textiles.

Proposed reforms for employment opportunities

The Central Government has been proactive in introducing labour reforms intended to boost employment generation. The Model Shops and Establishments Act 2016 approved by the Centre is a progressive step intended to create more job opportunities, especially for women. One of the proposals of the Model Act is to remove the restrictions on the opening and closing hours of shops and establishments, giving employers the freedom to operate 24/7, if they choose to do so.

Another proposal of the Model Act intends to include distribution, packaging and repackaging centres under the definition of shops in the Act. This is expected to ease the process of setting up such centres and benefit logistics and e-commerce sectors, which have a huge potential for creating more jobs. E-commerce also provides women with a platform to become entrepreneurs, as it gives them the flexibility to work from home. This gains significance, considering the fact that 20 percent of total online sellers are women.

The underlying problem

Ironically, certain laws promote protective discrimination against women and inhibit their opportunities by imposing constraints on them. A World Bank report of 2016, ‘Women, Business and the Law’ that studied 173 economies reveals that 155 among them had at least one law impeding women’s economic opportunities, like restricting them from working in certain jobs and in the night. The state takes the easy way out by imposing restrictions on the rights and movement of women, citing safety reasons, without doing enough to tackle the deep-rooted problems of violence and sexual harassment against women. This approach, in effect, approves gender discrimination under the shroud of women’s safety. This is unjust and discriminatory, and not smart economics.

The Model Act puts forth the progressive idea of allowing women to work night shifts, if they are willing, thus eliminating the long-standing discriminatory practice against women. This welcome move may put a stop to the protective discrimination against women, but this alone may not help in increasing the workforce participation of women. To quote Mahatma Gandhi, “The day a woman can walk freely on the roads at night, that day we can say that India has achieved independence.”

India has reason to cheer its improved Ease of Doing Business ranking. However, as Finance Minister Arun Jaitley candidly agreed, it is possible to work on the Ease of Doing Business parameters. Comparing the exercise to “an examination, whose syllabus is known and to do well, the examinee just needs to crack that”, he said that a considerable improvement in the ranking is possible. India’s achievement in improving the EoDB ranking is not to be retracted, but it would do good to remember that higher ranking is not all that India needs and a lot more is left undone.

*This article is written by Sara John (Project Associate, Centre for Public Policy Research). Views expressed by the author is personal and does not reflect that of CPPR.

This article was first published in Qrius, click to read:  India’s leap in Ease of Doing Business rankings obscures the full picture

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