Giving Compass' Take:

• In this story from India Development Review, author Gagan Sethi argues that India's corporate world must invest in justice and the rule of law to ensure greater ease of business.

• Sethi argues that the cost of investing in justice reform would outweigh the savings in the long run for businesses. How could philanthropic organizations communicate this information to businesses and facilitate that investment?

• To learn more about what is stopping India from experiencing the economic growth that it wants, click here.


We received good news recently that India had climbed 23 points to the 77th rank (out of 185 countries ranked) in the Ease of Doing Business index.

The World Bank ranking however, only looks at issues related to corporate experience with government regulations—such as ease or difficulty in starting a business, obtaining a construction permit, getting electricity, registering property, enforcing contracts, trading across borders, getting credit, paying taxes, resolving insolvency, and protecting the minority investor.

As the World Bank admitted about its own index, its assessment precludes a crucial factor: the rankings in this index do not “measure all aspects of the business environment that matter to firms or investors”. These other ‘aspects’, as noted by Kaushik Basu, an Indian economist and former chief economist of the World Bank, could in fact be “bad for growth”.

Indeed, it is time India’s corporate world begins investing in ensuring that rule of law at the grassroots level does not run riot. As part of its corporate social responsibility (CSR), it has chosen to largely invest in education and healthcare. However, regrettably, it has done little to ensure access to justice and establishing rule of law.

Effective governance of law can help reduce external costs of corporates, such as bribes, litigation costs, and so on. Inside the business establishment, it would provide a better work environment for the employees.

Read the full article about the rule of law by Gagan Sethi at India Development Review