Is ease of doing business undermining green norms?

The central government and media celebrated the recent news about India’s improvement in the World Bank’s “Ease of Doing Business” annual ranking from 130 to 100. The celebration was understandable considering there’s little to be chirpy about these days. Even Diwali greetings were taken over by controversy over the cracker ban and the onset of winter across North India has meant gloomy photos on the front pages of most newspapers. 

But what does this rating really mean and what is the cheering government not telling us? The Bank’s “Doing Business” project was launched in 2002 as an attempt to “encourage economies to compete towards more efficient regulation” and offer “measurable benchmarks for reform”. Since the 1970s and through the 1990s as countries engaged in economic liberalisation and privatisation, regulations were meant to create a level playing field for businesses, provide systematic procedures for their lawful operations and also safeguard public resources from takeover by private businesses. 

Environmental and social safeguards

One such set of balancing regulations is the environmental regulatory framework. The citizens of North India suffering the impacts of severe air pollution are gradually waking up to the need for stronger regulations on thermal power plants, on private vehicles, on the construction sector etc. 

This improved ranking has come at the cost of environmental safeguards.

When the BJP government took charge at the Centre, environment minister Javadekar’s eye was clearly on this ranking. He was quoted as saying, “Getting environmental clearances was a “nightmare” for companies”, and that ease of doing business would need to be introduced with “more sensibility”. In January 2015, the environment ministry’s achievements booklet titled “Towards Transparency and Good Governance, listed a slew of favourable measures for businesses. Speeding up project approvals and simplified procedures for expeditious project implementation were in the top five. In April 2015, at a national conference on ease of doing business, the Prime Minister introduced a system of standardised environmental assessments to grant approvals to projects within 30 days! Assessments are done for mining, dams, coastal ports, industries, infrastructure and other kinds of high-impact projects. These run into several thousand pages and ought to be carefully gone through. The only way to do this in 30 days is to do it mindlessly. 

Unequal treatment

The second major concern is how the term “business” is used and understood when speaking of this ranking. As per the World Bank’s statistics, it takes into account only small or medium scale, domestically-owned businesses into account. And India fares quite poorly on the parameter of how such businesses can start. We are a poor 156. Yet, the government has hit out at environmental regulations as the greatest bottleneck and eased the entry of large corporations into forest areas, coastal lands, riverbeds, and mountains. While the makers of this tool may be focused on dealing with bureaucratic corruption that affects small and medium startups, the government uses this tool to chop regulations that restrict large companies engaged in land grabs and natural resource extraction. The manner in which the centre and state governments jointly deleted the clauses of public consent and social impact assessment in the land acquisition laws are one example of this. Not only are these projects getting a far greater share of natural resources and profits through such compromised regulations, but they are also getting away despite their most outdated technology and poor environmental performance.  

Illegal growth

The third use of this narrative for the government is to ignore and obfuscate the large-scale illegality of certain sectors of businesses. Those who have been in India for the last year have seen and heard a lot about financial corruption and the government’s coarse attempts to tackle it. But another form of corruption that is almost encouraged by the government is to allow businesses with recorded violations to continue their operations. As a facilitator of businesses, the government views these violations as a “necessary evil”. It is not surprising that these sectors have been called out for tax frauds, human rights abuses, and environmental degradation. And the task of holding businesses accountable has fallen heavily on courts. Both the Supreme Court appointed MB Shah Commission on the iron ore sector and the Coalgate judgement revealed the extent and scale of such illegality that governments have taken to be a part of India’s growth story.  

While the World Bank and those who crafted this tool may have their reasons, the Indian government has so far used this phrase “ease of business” to effectively defend the expansion of large-scale, extractive businesses that are allowed to violate the law. Like with all such catchy slogans that are used routinely these days by the government and media, it is important to look under them. 

The authors are with the CPR-Namati Environment Justice Program