The Hindu Business Line : Of business confidence and nuclear strikes

A recent World Bank study "Doing Business in South Asia 2007" ranks India among the top 20 reformers worldwide, and looks at various aspects of doing business in 12 Indian cities. Yet, what price all this, wonders RASHEEDA BHAGAT, with the sha dow of US actions looming over West Asia.

THE CYBER Gateway in phase 2 of the Hitec City in Hyderabad, which a World Bank study ranks as the best in India for ease of doing business. — A. Roy Chowdhury

It is unlikely that anyone will be surprised by the finding of the World Bank's latest report on South Asia that "doing business became easier in India in 2005-2006," but Chennai and Bangalore are going to be jealous of Hyderabad emerging at the top as the Indian city with "most business-friendly regulations". Hyderabad, the city that the former Andhra Pradesh Chief Minister, Mr Chandrababu Naidu, so skilfully plotted on the global map, continues to have "the most business-friendly regulations," says the study titled Doing Business in South Asia 2007.

Released on Tuesday, the study places India among the top 20 reformers worldwide, and covers various aspects of doing business in 12 cities. In the `ease of doing business' category, Hyderabad is followed by Bangalore and Jaipur. The last might come as a surprise, being placed well above Chennai, which is somewhere in the middle of the list, but is a tribute to the management of the BJP-ruled State led by Ms Vasundhara Raje.

Compare this with Kolkata, being the worst among the 12, with Mumbai just a little ahead, "as these cities impose the most complex and costly business regulations. Typically, large urban centres such as Mumbai and Kolkata have a high volume of business, so regulatory and administrative bottlenecks create serious congestion," says the study, which puts Bhubaneswar, Chandigarh, Chennai, Lucknow, New Delhi, Patna and Ranchi in the middle of the list, in that order.

Hyderabad is the preferred destination for businesses because it only takes 35 days to register a property here compared to 138 days in New Delhi, or Kolkata, where it takes almost 155 days. Import and export of goods happen fastest through the Chennai and Kolkata ports, as opposed to Mumbai, says the report, adding: "States can learn from each other in the areas of business regulation. For example, it is easiest to start a business in Jaipur. Closing a business is easiest in Bangalore, while registering a property is easiest in Hyderabad."

Qualifying indicators

To arrive at the rankings, 10 indicators, such as start-up, operation, trade, payment of taxes, and so on, were considered by the study, which is the third in a series on South Asia.

India is ranked a "top reformer," as five reforms introduced by it have "reduced the time, cost, and hassle for businesses in India to comply with legal and administrative requirements, placing the country among the top 20 reformers worldwide." Though Pakistan ranks higher than India in `ease of doing business', India is ranked the top `reformer' in the region, as it pushed through reforms to "simplify business registration, cross-border trade, and payment of taxes," eased access to credit and strengthened investor protection.

"Although the reforms improved India's ranking over last year's, it still ranks relatively low (in ease of doing business) at 134, and stands 41 places after China, which is reforming at a faster pace. The top-ranked countries in the region are the Maldives (53) and Pakistan (74), followed by Bangladesh (88), Sri Lanka (89), Nepal (100), India (134), Bhutan (138), and Afghanistan (162)."

"Significant improvements" had been made by India in reducing the "red tape" that entrepreneurs face in doing business, and it "now takes 35 days to register a business in Mumbai compared with 71 days a year ago and 89 days in 2004," comments Ms Caralee McLiesh, one of the authors of the report, noting that it could do much better by efficient implementation of the regulations in place. Arguing that more business-friendly practices and fewer obstacles for entrepreneurs can translate into potential for creating more jobs, Mr Simon Bell, World Bank Manager for Financial and Private Sector Development in South Asia, says: "In India, over 8 million workers have formal jobs in the private sector — in a country of over 1 billion people and a workforce of 458 million. Indian States would greatly benefit from new enterprises and jobs, which can come with more business-friendly regulations."

In Pakistan, Karachi is the best of the six cities chosen for the study in terms of doing business easily, while "Quetta imposes the most complex and costly administrative barriers." But court hassles, labour regulations and tax complications remain major problems.

Trouble brewing over Iran

But all talk of business confidence in any part of Asia gets clouded when one considers the growing confrontation between the US and Iran over the nuclear issue. When a magazine such as The Economist comes out, in its latest issue, with a cover story titled "Next Stop Iran?" with the words printed beneath the picture of a menacing combat aircraft, it is certainly cause for concern. Though the US Defence Secretary, Mr Robert Gates, has said that the US is not "planning" a war with Iran, "despite Mr Gates' calming words, Iran and America are heading for a collision. Although the risk is hard to quantify, there exists a real possibility that George Bush will order a military strike on Iran some time before he leaves the White House, two years from now."

The editorial argues that the US President, Mr George W. Bush, might see the Iran President, Mr Mahmoud Ahmedinejad, thwarting the two major attempts of his presidency — "bringing democracy to the Middle East and preventing rogue regimes from acquiring weapons of mass destruction. Given his excessive willingness to blame Iran for blocking America'snoble aims in the Middle East, he may come to see a pre-emptive strike on its nuclear programme as a fitting way to redeem his presidency. That would be a mistake."

America's "noble aims in the Middle East?" Come on, who are we trying to kid here. The whole world knows all about Mr Bush's `noble aim' to save the rest of the world from Saddam Hussein's WMDs. Give this theme to a good magician and he will put WMDs in a black hat and pull out the black gold called crude oil from it.

For more details about the hellhole that this `noble aim' has made out of Iraq, one can visit the blog `Baghdad Burning' (http://riverbendblog.blogspot.com/) maintained since August 2003 by a young Iraqi woman who calls herself Riverbend. It will give you gooseflesh and make your heart break, as you read the blow-by-blow account of Iraq under occupation; it is an account no journalist can give.

The winner of a couple of awards, her entries till the end of 2004 were published in India by Women Unlimited in the form of a book with the same title. A computer professional, the woman writes with chilling clarity about the Iraq that was before the US-led attack and the mess it has become now.

Oh yes, she mentions in several places the growing political clout of Iran in her dear country through the Shia clerics — radical and not so radical — holding powerful positions in the "democracy" that the US has helped usher into Iraq. Before its "liberation" Iraq had neither terrorism nor religious fundamentalism oppressing its women. Both these evils have seeped into Iraqi society now.

Riverbend, a computer professional, also tells you that middle-class, educated Iraqis had never any doubt that the US was seeking not WMD but oil when it attacked their country. Sample this entry: `Guess what? The Americans have declared they will be gone by 2010 and they won't leave permanent bases behind!!! (This should be said with a straight face.)"

And now, the most powerful country is all set to worsen the chaos in the region and enlarge its boundary. One may have little love lost for Mr Ahmedinejad and his posturings, but when the Western media have comments such as this one from The Economist: "His apocalyptic speeches have convinced many people in Israel and America that the world is facing a new Hitler with genocidal intent," the signals are ominous.

And when you consider the possibility of nuclear strikes — be it by Israel, the US, Iran or whoever — all talk of business-friendly economies, particularly in Asia, seems pointless.

Response may be sent to rasheeda@thehindu.co.in