India’s ease of doing business ranking may be hit as World Bank orders review

The World Bank on Thursday said it has decided to pause the publication of its Doing Business report following a number of irregularities regarding changes to data in previous reports.

"A number of irregularities have been reported regarding changes to the data in the Doing Business 2018 and Doing Business 2020 reports, published in October 2017 and 2019. The changes in the data were inconsistent with the Doing Business methodology," the World Bank said in a statement.

The Board of Executive Directors of the World Bank has been briefed on the situation, as have the authorities of the countries that were most affected by the data irregularities, it said, adding "the publication of the Doing Business report will be paused as we conduct our assessment."

The World bank’s reports stirred the pot of controversies when a former chief economist Paul Romer resigned from his post in January 2018. During his resignation, he claimed that the methodological changes that were made in the compilation of the reports led to socialist Chile’s rank deterioration.

Kaushik Basu who was Chief Economist of the World Bank from 2012 to 2016, however, claimed that the methodological changes benefitted India. Basu was the one who had supervised the release of the reports during 2012-16. He had alluded to the “two big controversies.” First, India’s rise from 130th place to 100, and second, 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 a Project Syndicate article published in February 2018.

With the Modi government was constantly trying to improve India’s business competitiveness ranking, India’s ranking went from 142 in 2014 to 63 in 2019.

Recently, NITI Aayog CEO Amitabh Kant noted that India's business climate has been continuously improving and the government will work tirelessly to make India one of the easiest countries to invest and create wealth.

However, even though Basu defended the reports that were published during his tenure, he has also admitted that there are ways in which one can manipulate rankings without really manipulating the 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," Basu had written.

In this regard, the Opposition did not shy away from taking a dig that the Centre for going above and beyond to improve India’s rankings.

“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,” Congress leader Jairam Ramesh wrote in a tweet.

An official under the conditions of anonymity told Mint that the government will wait for World Bank to complete its internal review before reacting. “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 added.