The Hindu : Business : ‘Business environment needs to be improved’

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‘Business environment needs to be improved’

Special Correspondent

— PHOTO: KAMAL NARANG

TRADE FACILITATION: Lead economist and trade programme leader, The World Bank Institute, Gianni Zanini, releasing a report on World Trade Indicators 2008 in New Delhi on Friday.

NEW DELHI: India’s institutional and business environment is “poor”, with India’s Ease of Doing Business overall rated at 120 out of 178, according to the World Trade Indicators (WTI) 2008 released here on Friday.

Giving a snapshot of WTI 2008 at a FICCI-World Bank seminar, Gianni Zanini, Lead Economist and Trade Programme Leader, The World Bank Institute, said: “While India has achieved substantial reductions in tariffs since the Nineties and the current external environment is relatively favourable compared to low-income and South Asian country group averages, India’s agriculture exports face high barriers and its share of trade with preferential partners is low.”

Dr. Zanini said, along with an improvement in trade facilitation, real growth in trade and related jump on trade integration had been high, driven by high import requirements of a booming economy and services exports.

(Globally, over the past decade, countries with lower barriers tended to have stronger, more consistent trade and export performance, WTI 2008 points out).

WTI 2008 notes that India’s governance environment is relatively more favourable than the average South Asian or low-income country and is an improvement from the situation in the early 2000s.

Poor infrastructure

However, severe power shortages, congested roads, and poor-quality railways and ports, deficient infrastructure are the major binding constraints to trade activity in the country.

Nonetheless, India surpasses its comparators on nearly all aspects of the 2006 Logistics Performance Index with a rank of 39 (out of 150). Its strongest logistics indicator was timeliness of shipments, while its weakest were efficiency of customs and other border procedures and quality of transport and information technology (IT) infrastructure.

Sub-category

It is also ranked 79th on the Doing Business—Trading Across Borders sub-category, a dramatic improvement over its previous year’s rank of 142 on account of substantive reductions in the average cost (per container) and time required to trade across borders. While still fairly low, India’s per capita rate for telephones and mobile phones (19 per cent in 2006) is thrice its early 2000s mean, and Internet usage (10.8 per cent) is more than seven times its early 2000s mean. Both are higher than the low-income country averages. Its 2005 secondary school enrolment ratio of 54 per cent is higher than both the regional and income group comparator means.

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