Read the below statements marked as Assertion (A) and Reason (R). Mark the correct options: Assertion (A): Global Ease of Doing Business (EoDB) indicators excluded informal sectors. Reason (R): Informal enterprises are difficult to measure consistently across nations.

Correct — A. Assertion true: the World Bank's Doing Business indicators measured the rules facing a standardised, formally registered limited liability company in an economy's largest business city, so informal firms fell outside them.

Reason true, and it explains A: a ranking of 190 economies needs a case measured the same way everywhere, which informal enterprises do not offer → option (a).

Why the others are wrong

• (b)
  Both A and R are true, but R is not the correct explanation of A. — R is the reason for A, not a side fact. Doing Business chose a standardised formal firm so results could be compared across economies, and informal firms cannot be standardised that way.
• (c)
  A is true, but R is false. — The Reason is true: informal enterprises are usually unregistered and vary widely from country to country, which is why they resist a uniform cross-country measure.
• (d)
  A is false, but R is true. — The Assertion is true: the indicators covered a formally registered limited liability company, so the informal sector sat outside their scope.

Doing Business was the World Bank's annual ranking of business regulation. It scored rules on paper, such as the procedures, time and cost of starting a business or enforcing a contract, for a hypothetical formal firm, so that 190 economies could be ranked on one scale.

India rose to 63rd of 190 in Doing Business 2020, the last edition. The World Bank discontinued the report in September 2021 after data irregularities in the 2018 and 2020 editions.

Key facts

• Doing Business measured regulation for a standardised limited liability company in an economy's largest business city.
• India ranked 63rd of 190 economies in Doing Business 2020, the report's last edition.
• The World Bank discontinued Doing Business in September 2021 after data irregularities in the 2018 and 2020 reports.
• The World Bank's replacement, B-READY (Business Ready), published its first report in October 2024.

Common traps

• Choosing 'R is not the correct explanation' because the two statements look loosely linked. Ask whether A happened because of R: a comparable global index needed a measurable, registered firm.
• Reading 'excluded informal sectors' as a flaw someone missed. It was a stated limit of the method.

No directly related past PYQ was found.