DOING BUSINESS IN INDIA, EASIER BUT NOT AS EASY

DOING BUSINESS IN INDIA MAY BE EASIER BUT NOT AS EASY AS IT SHOULD BE The chest thumping that accompanied the Modi government’s celebration of India having moved up 30 positions on the World Bank’s Doing Business 2018 rankings was understandable because it came as a silver lining to what has generally been dismal economic news—a slowdown, sluggish job creation and dwindling investment, particularly in manufacturing. Then there were the controversies surrounding a hasty demonetisation policy and the introduction of a new bug-ridden goods and services tax system. In the context of these depressants, a 30-position gain on a survey as credible as World Bank’s may provide good reason for elation. It is also good reason to feel quite chuffed about. But India’s position on the ranking of 190 countries has to be viewed in another context—that of relativity. Its rank on that list does not owe only to how it fared on the 10 parameters or topics that World Bank employs to arrive at its rankings but equally on how others fared on them. World Bank’s Doing Business 2018 rankings are its 15th annual survey and is based on surveys of entrepreneurs in each country to gauge their assessment on aspects that include the ease with which one can start a business, get credit, register property, pay taxes, enforce contracts, and so on. Most of these are affected by reforms and changes in rules and law that governments introduce and it is to India’s credit that some of the changes brought about by Prime Minister Narendra Modi’s government have had their impact on how India has fared in the survey. Programmes such as the Make In India campaign to encourage foreign and domestic investment in manufacturing by simplifying processes, StartupIndia to help facilitate setting up of small businesses, or even Skill India, which aims at equipping India’s vast population of youth with employable skills, are some initiatives that may have had an impact on how India fared on the World Bank rankings. However, India’s performance in the survey has to be viewed in a context that is relative to other economies. At No. 100, India is a market where it is easier to do business than it is in tiny countries such as Fiji and Haiti, less developed countries such as Namibia, Nigeria, Nepal, or Sri Lanka, and obviously risky destinations such as the West Bank & Gaza, Iran and Iraq. India could perhaps take credit for the fact that the ranking places it higher than it does Brazil, which at 125 is, like India, a part of the BRICS set of emerging economies, or that its neighbour and adversary, Pakistan, lags behind at 145 but the facts are that it is still way behind China (No. 78), with which it sometimes tries to benchmark itself, and that even Colombia, Indonesia, Chile and Turkey are places where it is easier to do business than it is in India. The point is that there is a long way to go. A close scrutiny of the World Bank survey shows that on some parameters India still languishes towards the bottom. Its system for granting permissions is still quite forbidding. On the ease of dealing with construction permits, it is ranked at 181 among the 190 countries covered. On the ease of property registration, which often involves myriad paperwork, it ranks 154. But perhaps most alarming is how entrepreneurs perceive the enforcement of contracts in India. The rule of law is often taken for granted in business-friendly economies but in India it can still pose a serious risk. On the World Bank’s ranking, India comes in at a low 164 rank on that parameter, certainly not a position that would enamour it to potential investors, particularly those who may have a choice of going elsewhere where contracts are enforced better. It is worth noting that the World Bank’s Ease of Doing Business rankings come with some other sorts of surprises. A deep dive into the data reveals how on certain parameters, conventional beliefs get upturned. Take enforcement of contracts, for example. Among the 17 Indian cities covered by the survey, Hyderabad, Patna, Ludhiana and Guwahati rank higher than Mumbai, Delhi, Gurgaon, and Bangalore. And while it is easiest to start a business in Delhi (it ranks No. 1 among the 17 Indian cities ranked), Bangalore is No. 17, Mumbai 12 and Ahmedabad 14. Data can be sliced, diced and analysed ad infinitum but these two examples could point to the lack of uniformity across India: there are places in India where some aspects of doing business might be easier but other aspects might not. There is also the matter of perception. Well-packaged programmes that the Modi government has launched (viz. Make In India, Startup India, Skill India, etc.) also create hype and influence the perception of entrepreneurs who are respondents in surveys such as World Bank’s but in the end it is what changes actually happen in practice that matters. Anyone diving deep into the data behind the Doing Business 2018 report can see that the average time and cost it takes to negotiate the procedures, obtain permissions and licences can still weigh down entrepreneurial efforts in India. All of this implies that it may be early to celebrate India’s “business friendliness”. But it definitely marks the beginning of a journey. Once it is glitch-free, the new uniform nationwide tax system for goods and services ought to make it easier for businesses to grow; the move towards cashless transactions, which was triggered by demonetisation, will have benefits for trade and commerce in general; and a government that kick starts investment which, in turn, has a multiplier effect on the rest of the economy, would be a facilitator for business. The most important signal from India’s better showing on these rankings is an endorsement that things may have begun improving. For the government and its policy makers what that means is not just that India is on the right path to reform but that it must keep on following it. // ]]>

HOW IMPORTANT IS THE BRICS DECLARATION ON TERRORIST OUTFITS

What exactly does the Declaration say (and doesn’t)?  Point 48 of the BRICS Leaders Declaration expresses “concern on the security situation in the region and violence caused by the Taliban, ISIL/DAISH, Al-Qaida and its affiliates including Eastern Turkistan Islamic Movement (ETIM), Islamic Movement of Uzbekistan (IMU), the Haqqani network, Lashkar-e-Taiba (LeT), Jaish-e-Mohammad (JeM), Tehrik-e-Taliban Pakistan (TTP) and Hizb ut-Tahrir.” Point 48 starts by listing groups mainly active in Afghanistan (Taliban, ISIL and al Qaeda) as it follows a lengthy statement affirming BRICS’ support for that war-torn country’s national reconciliation process. While the statement tellingly doesn’t name Pakistan, all of the groups mentioned have origins in Pakistan or have strong links with Pakistan-based groups. Which are these groups? While all of the terrorist groups mentioned in the BRICS statement subscribe to radical Islamist ideologies, they do have distinctions in goals and methods:

  • Global goals: ISIL, al Qaeda and Hizb ut-Tahrir have the overarching goal of establishing a new Islamic caliphate by uniting existing Islamic nations or Muslim-majority regions and overthrowing non-Muslim “invaders” (U.S., Israel, India, etc.). Al Qaeda and, in recent years, ISIL have hogged global headlines for nearly two decades for spectacular strikes in the west. Hizb ut-Tahrir has operated as more of an ideological and religious organisation across the globe though it has been proscribed by numerous Islamic nations, with several members accused of carrying out attacks.
  • Afghan centred: The Taliban, Haqqani network and TTP have predominantly operated in Afghanistan and Pakistan since the U.S. invasion of 2001. While the Haqqani network and TTP both pledge support to the erstwhile Taliban regime, the two groups have attempted to maintain distinct identities. Over the past decade, the TTP has launched several high-profile attacks in Pakistani cities in retribution for Islamabad’s support to U.S. operations in Afghanistan as well as counterinsurgency operations in Pakistan’s tribal areas. The IMU, as the name suggests, emerged in the early 1990s with the aim of establishing Islamist rule in Uzbekistan. The IMU has been weakened by U.S. operations in Afghanistan though it has continued to operate in Pakistan and Afghanistan.
  • Anti Indian: The JeM and LeT have mainly used Pakistan as a launch pad for operations against Indian forces in Jammu and Kashmir (J&K). These groups have also shown their determination to strike at other high-value targets in India; the two groups were thought to be behind the attack on the Parliament building in 2001 and LeT carried out the Mumbai terror attacks of 2008.
  • Anti Chinese: ETIM has been fighting to establish an Islamist state in China’s Xinjiang province where the ethnic Uighur community lives; the Uighurs are predominantly Muslim. The Chinese government’s clampdown on news in Xinjiang has meant that there has been little information on ETIM’s activities beyond that released by the government. The group has been accused of small-scale bomb and gun attacks against Chinese security forces in the province.
Why were these groups mentioned? The Pakistani Army and its intelligence service, the ISI, have been frequently accused of having strong links with the JeM, LeT and Haqqani network. These groups have served as proxies to further Pakistani strategic goals against India and Afghanistan. Despite pressure from the U.S., Pakistan has done little to curb the activities of these groups, beyond nominal arrests of leaders. While Pakistan has cooperated with China in cutting off support for ETIM militants, the “globalisation” of terror with the emergence of al Qaeda has meant that ETIM and even weak groups such as IMU have drawn support from and built ties to organisations backed by the Pakistani military. In 2014, IMU and the TTP claimed responsibility for an attack on the Karachi Airport that left 36 people dead. And, as is well known, the killing of al Qaeda founder Osama Bin Laden at the garrison town of Abbottabad in 2011 caused considerable embarrassment to the Pakistani army. In June this year, Islamic State claimed responsibility for killing two Chinese nationals it had kidnapped in Pakistan’s Baluchistan province. Even though the Chinese government pledged support for Pakistan’s counter-terrorist efforts, the incident triggered unease among the Chinese expatriate community in Pakistan. Earlier this year, Islamic State released a video purportedly showing Uighur militants training in Iraq and vowing to shed “rivers of blood” in China — this is considered as the first direct threat from the group to China. What effect will the BRICS Declaration have? A cursory reading of the BRICS Declaration shows that it doesn’t name Pakistan even once and only expresses concern over the activities of the aforementioned groups. Rather than confronting Islamabad, the Declaration appears to be aimed more at assuaging Afghanistan’s concerns about terrorism originating in Pakistan. The censure by BRICS comes as India, Russia and China have all pledged support for Afghanistan’s rebuilding process. Beijing has sought to increase its influence in Afghanistan, given that country’s geographic proximity to former Soviet republics, even as Trump announced plans to deploy more U.S. troops there. The Afghan government has been as vehement as India in calling for tough action against Pakistan for its support to terrorist groups. Appearing reasonable to Kabul’s demands on Pakistan gives China leverage in the renewed Great Game unfolding in Afghanistan. China remains Pakistan’s main strategic ally and arms supplier and has committed close to $60 billion to projects linked to connecting Xinjiang province with the Pakistani port of Gwadar. On September 13, both Russia and China assured Pakistan that they would block any attempts by the U.S. to impose economic sanctions on Islamabad. Furthermore, Beijing has repeatedly reiterated its determination to block any attempts by India at the United Nations to designate Maulana Masood Azhar, the founder of the JeM, as a global terrorist. A charitable explanation for the BRICS Declaration is that China is nudging Pakistan to act against terror though it is unlikely to push Islamabad to abandon its strategic goals in Kashmir and Afghanistan, many of which serve Beijing’s own interests.   // ]]>