With growing allegations of the ‘Doing Business’ rankings being fudged by the World Bank, leading to inaccuracies, the WB is now in the process of reworking on the inconsistencies owing to the change in business methodology.
The recent external audit has brought to the fore that with new dispensations, India is expected to turn into the most preferred destination for investments and China, misleading investors about the worsening state of affairs, is slipping down on the global scale.
The Covid19 pandemic which engendered a high degree of uncertainty in global trade owing to manufacturing supply chains being rendered unreliable is now turning out to be favorable for India, albeit on totally unrelated grounds. As cries against China pressuring the World Bank (WB) into a massive fraud grew louder on the basis of audit reports that cast a shadow on its methodology of coming out with ‘Doing Business’ rankings, expectations ran high on this turning out to be a boom to Indian industry in the years to come.
The massive fraud allegations have forced the WB into discontinuing its practice of regularly publishing the ‘Doing Business’ ranking. A recently conducted external audit brought to light this glaring irregularity, stating rankings of specific countries were fudged as a result of both intimidating intervention from senior staff members as well as persuasive lobbying from several quarters. Indian bureaucrats when queried stoutly defended our country’s rankings, stating, “No irregularities have been found in Indian data.”
The alleged fraudulent practices that came to light recently had its roots in what transpired way back in early 2018 with former chief economist Paul Romer expressing his dissatisfaction over the methodical changes that were affected in the WB ranking system, further seeking to review and recalculate the ranking tally. However, Romer had to resign in protest at that point of time.
The major findings related to the audit report stressing on a massive fraud centered on socialist China being allowed to muscle its clout by virtue of presence in the WB top management to reverse the downgrading of its rankings from 78 to 85. The reports stated that the reversal was effected under express instructions from then-president Jim Yong Kim and then chief executive officer Kristalina Georgieva.
From India’s point of view, these trends augur well as after being ranked at 142 in the world rankings in 2014, consistent efforts made by our Prime Minister Narendra Modi to facilitate ease of doing business had placed the country’s ranking at 63 in the world chart, in 2020. It was learnt from the commerce ministry that efforts were afoot to ensure that India is placed among the top 50 nations of the world on this ranking barometer.
However, with the onset of the current anomaly about WB rankings, the international finance body has affirmed that it will rectify the lapses by reworking on the inconsistencies owing to the change in business methodology. The WB statement also averred that it will chalk out a new approach that will subscribe to international transparency norms. The WB also spelt it out that the reworking of methodology will adequately address issues concerning ethical conduct.
Officials from the Indian commerce ministry opined, “The said audit report entails that India turns into the most preferred destination for investments. India moves up the scale on trustworthiness of conducting business, with China slipping down on the global scale. The ministry official pointed out that the reported fraud will cause the Supply Chain Resilience Initiative (SCRI), one of the key multilateral initiatives to facilitate India turning into a manufacturing hub. The SCRI was an initiative jointly hosted by Japan and Australia along with India in early April 2021 with an eye to counter Chinese domination in regional trade.
While Indian ministry officials claimed it to be a thumbs up for Indian manufacturing and trade, they also stressed that for years China has been misleading investors about the worsening state of affairs in their economy. While the government including the bureaucracy sounded upbeat, there were voices from the opposition Congress after learning about WB being forced to discontinue its issuing ranking charts that implied India too was into big time fudging. It came in the form of a tweet from Congress leader Jairam Ramesh: “If they start an Ease of Fudging Data index, Mr. Modi’s so-called “New India” will top the charts,” the tweet concluded.