Delhi vs Mumbai vs Centre: Who gets the credit for Doing Business rank improvement

India just showed a massive jump in the World Bank’s Ease of Doing Business (EODB) ranking from being ranked #130 in the world to #100 in the world. Since then, the claims of the naysayers have differed: the rankings are fixed, the rankings are flawed, the rankings do not mean anything in light of the “mahaul”.

AAP, which is normally an adversary of the BJP, and would have joined the aforesaid chorus, but instead they chose to claim credit for the ranking boost by virtue of ruling Delhi, which was one of the two cities surveyed.

Social media had various “experts” pontificating on the possible reasons as well. One Newslaundry columnist – known for spreading bigotry and propaganda – claimed that rankings shot up as Delhi’s data was included by the World Bank “for the first time”:

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This is a blatant untruth, because at least since 2015, EODB rankings have considered both Delhi and Mumbai:

Next, let us see, based on the latest EODB report, who helped the rankings rise the most. (The report is called DB 2018, although it refers to the year ended June 2017).

According to the report, out of 10 topics under study, India’s score improvement in 8 topics, helped it rise up in the ranks. In the balance 2 topics, India’s score improved, but not enough to push its rank up. One of these topics is “Getting electricity” in which India already has a very impressive score and a high rank of 29 in the entire world.

Out of the 8 which helped India, India’s score improved by 3% or more in 4 topics, as below. In the other 4 topics the improvement was below 3%.

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For each of the above, the EODB report gives a brief description of the specific reforms undertaken, which helped India’s score move up:

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The last sentence in each of the above snippets is important: “This reform applies to both Delhi and Mumbai“.

Further, if the DTF (Distance to Frontier) scores of Delhi and Mumbai are compared for all the above parameters, they are virtually the same:

Is this because both Delhi and Mumbai undertook reforms at the same level to achieve the score improvements? Or is it because the reforms, which helped India move up, via Delhi and Mumbai, were actually undertaken by the Central Government, thus applying to both Delhi and Mumbai?

Mandatory payment of EPF online was notified [pdf] by the Central Government. Corporate Income Tax is under the purview of the Central Government. The Insolvency and bankruptcy code was brought in by the Central Government. Protection of Minority Investors is being attributed by officials, to several reforms undertaken by the capital market regulator SEBI (Securities and Exchange Board of India), which again is under the Central Government.

Thus, all the measures mentioned in the snippet of the EODB report as above refer to steps taken by the Central Government, which had effect on business in Delhi and Mumbai.

To be sure, the EODB report also states that out of the 17 cities in India, Delhi ranks at the 6th place, while Mumbai comes in at 10th. But as seen above, the EODB report indicates the bulk of incremental reforms in the last one year, which pushed India up by 30 places, and almost all of them, are reforms undertaken by the Modi government at centre.

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