Logistics performance Index -2018 – All is not Well with INDIA slipping on the League Table

“India jumps 19 places in the World Bank Logistics Index “ screamed the headlines carried by the mainstream media and the business publications when the last rankings were published in Jun 2016. From Rank 54, India catapulted to the 35th rank in the report published every two years. Every one involved in administration, economics, trade saw this acknowledgement as a huge positive impact and was confident that all policies and investments being made were in the right direction. This indicator was used all through 2017 to project the “Ease of doing business in India” showcasing the government’s progressive development stand. The enthusiasm also paved way to introduce the Statewise Logistics performance index, a first time in the country. However this was shortlived

Circa July 2018, when World Bank published the Logistics Performance Index 2018, India has slipped from the 35th position to the 44th position! Shocking ! What would have happened.!

Logistics is a $4.3 trillion Industry globally. It is the backbone of trade and good logistics can reduce trade cost and make countries compete globally. Getting logistics right, means improving infrastructure, skills, customs and regulations, policies and governance at the right proportion.

Lets understand what comprises the World Bank, Logistics performance Index :

The logistics performance (LPI) is the weighted average of the country scores on the six key dimensions:

  1. Efficiency of the clearance process (i.e; speed, simplicity and predictability of formalities) by border control agencies, including customs.
  2. Quality of trade and transport related infrastructure (e.g., ports, railroads, roads, information technology);
  3. Ease of arranging competitively priced shipments;
  4. Competence and quality of logistics services (e.g., transport operators, customs brokers);
  5. Ability to track and trace consignments;
  6. Timeliness of shipments in reaching destination within the scheduled or expected delivery time.

Find the comparison between the two reports:-

Report is published every two years by the World Bank

Almost all seven parameters that go into building the Index, has dropped for India. Now this is startling for the fact that in the last 24 months some of the key initiatives from the government in the area of Core infrastructure and logistics has been unleashed. The biggest reform in the form of GST “ One country one market” was implemented in 2017. This is considered the harbinger of reforms that would be actually propelling and smoothening the Logistics infrastructure across the country. Logistics sector was accorded Infrastructure status, paving way for development funds and priority in decisions.

The Government introduced several important measures to develop Infrastructure in the country, with the allocation of Rs. 5.35 lakh crore to develop 35,000km under phase-I of the Bharatmala road project, electrification of railway tracks, focus on high-speed trains, the Sagarmala programme and by actively working on e-mobility solutions for clean and cost-effective mobility. The initiative to set-up National Logistics Portal as a single online window to link all stakeholders will also give a big digital push and streamline the functioning of the Logistics sector. Another significant development is the Rs. 2.4 lakh crore towards development of smart cities that will give a uniform development across the nation.

The road sector has attracted private investments with new measures like the Hybrid Annuity Model (HAM), Toll-Operate-Transfer (TOT) model, improved land acquisition process, the launch of masala bonds and Infrastructure Investment Trusts (InvITs) besides other initiatives. The Indian Railways has gained traction with a handsome budget allocation of 1.48 lakh crores furthering investment potential in areas such as elevated rail corridor in Mumbai, some parts of dedicated freight corridor, freight terminals, redevelopment of stations and power generation/energy saving projects. The introduction of Sagarmala programme, Major Port Authorities Bill, 2016 and the ‘Landlord port’ model have all been instrumental in giving a boost to the Ports & Shipping sector. The initiative of DPD Direct Port to door by JNPT has further eased the congestion at the port paving way for better efficiency and throughput. Several Logistics parks have been initiated across vital centres.

The Road ministry’s impetus on coastal and hinterland roads, objective to complete 300 road projects by 2019 , per day road construction moving from 8km to 22 km and targeting 40 kms is also very un-precedented.

All these buzz and activities in India, seems to have had no baring on the Task project team from the World Bank entrusted with publishing the Logistics performance Index. Have they been biased?

Maybe the reality of projects taking shape to give overall benefit at the ground level will still take some time. Until then, India needs to take cue and step on the accelerator for improvement

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