India's move towards 'top 50' in Ease of Doing Business just got tougher

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India's move towards 'top 50' in Ease of Doing Business just got tougher

The new indicator would be called "contracting with the government", and would assess contracting public procurement system of the governments around the world.

As India targets to be amongst the top 50 countries in Ease of Doing Business (after having moved up 23 notches from 100 to 77 this year), the World Bank, which comes out with the ranking every year, is going to make the country's progress towards the target even tougher.

From next year, the World Bank is going to add another indicator to assess a country's ease of doing business ranking, said the World Bank's Country Director for India Junaid Ahmad on Monday, during an event on Public Procurement and Competition Law in New Delhi.

The new indicator would be called "contracting with the government". This would assess contracting public procurement system of the governments around the world.

Ahmad informed that there are three reasons for including this as an indicator in assessing ease of doing business -- public procurements account for a big chunk of a country's GDP, public procurement is a powerful source of competition and in a multi-delivery system, public procurement system should match the diversity of the delivery system.

Explaining this, Junaid Ahmad said, "With public procurement being a major component of the GDP, government and public procurement system is going to be an important aspect in the ease of doing business. With that kind of fire power, it is a very big instrument for creating competition. It is not just about value for money but it is about efficiency in the economy," said the World Bank Country Director.

He further said that in a federal system, competition would require movement of bidders across the states. The World Bank has found that a lot of bidders are not moving across the states -- there are certain barriers which need to be removed.

In the global system, enabling foreign bidders to come in would create more competition. It's a two-way street as others come in, while Indian suppliers go abroad.

Finally, he said that in a system with a multiple system of delivery -- MSMEs, public private partnership and even community-based services -- the procurement system has to match the diversity of the delivery system.

According to him, public procurement is the face of the government -- it shows transparency, credibility and accountability.

However, Finance Minister Arun Jaitley, who was chief guest at the event, said that before widening ease of doing business criteria, the World Bank should be aware of the fact that there is general reluctance among many countries to open up the government procurement markets, to global players as it might adversely impact domestic manufacturing and services sector.