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Home / News / India /  India’s business climate rank may be hit by World Bank probe

India’s business climate ranking could be impacted with the World Bank (WB) ordering a review of its flagship Doing Business (DB) reports of the last five years, during which India’s ranking shot up by 67 slots to 63.

On Thursday, the WB said it has paused publication of the DB report due in October and is undertaking a review of the data changes in the last five reports after discovering a number of irregularities. “We will act based on the findings and retrospectively correct data of countries that were most affected by the irregularities," it said.

The WB’s reports were mired in controversy in recent years with a former chief economist Paul Romer resigning from his post in January 2018, claiming that the methodological changes in compiling the report led to a downgrade in socialist Chile’s ranking. Romer was planning to review the reports of past four years and recalculate the rankings.

India benefitted from methodological changes, Kaushik Basu who supervised the release of the reports during 2012-16 as the chief economist of WB had said, alluding to the “two big controversies" involving India’s rise from 130th place to 100, and Chile losing its ranking between 2016 and 2017.

“For example, when India moved from 142 to 130 between 2014 and 2015, the DB team and I computed that only four of the 12 positions that India had climbed reflected changes India had made, with the remainder attributable to changes in the DB methodology," Basu wrote in an article published on Project Syndicate in February 2018. India’s ranking improved from 142 in 2014 to 63 in 2019, with the Union government under Prime Minister Narendra Modi making concerted efforts to improve its business competitiveness ranking. NITI Aayog chief executive officer Amitabh Kant had recently said that India aims to be among the top 50 countries by 2021.

However, Basu defended the reports published under his watch, while admitting that there were ways to influence the rankings without cooking up data: “Although there were aspects of the DB rankings I did not like, I do not find the charges of data rigging to be credible. Having personally supervised much of the process, which involves a very large team compiling economic data from around the world, I can vouch for the multiple layers of checks and balances in place," he wrote.

The opposition did not lose the opportunity to target the Centre on its excessive focus on improving the DB ranking. Congress leader Jairam Ramesh tweeted: “Mr. Modi was busy drumbeating India’s improvement in World Bank indices. Now the Bank has paused further publication of these rankings due to irregularities in data & methodology. So much energy of this Govt was wasted chasing a bogus ranking, while our MSMEs continued to languish."

The government will wait for WB to complete its internal review before reacting, said an official seeking anonymity. “Our data filings have been transparent and are based on genuine reforms on the ground. We don’t have a problem with a review," the official said.

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