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HomeEconomyWorld Bank auditors detect fraud by China

World Bank auditors detect fraud by China

The audit found that China had pressured the World Bank top management into reversing the country's ranking fall from 78 to 85

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The World Bank in a statement on 16 September said it was discontinuing publishing its Ease of Doing Business ranking after an external audit unearthed undue interference from its senior staff in changing rankings of specific countries.

The World Bank had hired American law firm WilmerHale that studied 80,000 documents and used extensive interviews to compile its report on 2018 and 2020 Doing Business rankings. The audit found that China pressured World Bank top management into reversing their ranking fall, which would have otherwise fallen from 78 to 85.

On instructions from then-president Jim Yong Kim and then CEO Kristalina Georgieva, the Doing Business team was instructed to reevaluate China’s data to keep the rank at 78.

Experts say the massive fraud highlighted in the audit report of Doing Business ranking by the World Bank augurs well for India and would improve its positioning as a global manufacturing hub. Experts believe top MNCs would consider shifting their manufacturing base from China to India as the Narendra Modi-led government is continuously making policy changes in order to make it easier for foreigners to invest in the country. 

“India remains the preferred investment destination for the world and a reliable, trustworthy destination, while China is slipping in attractiveness. Fraud by China will boost multilateral initiatives like supply chain resilience initiative to move manufacturing to India,” Mint quoted a commerce and industry ministry official as saying.

Worth mentioning here is that India, Japan and Australia formally launched the Supply Chain Resilience Initiative (SCRI) in order to counter China’s dominance of supply chain in the Indo-Pacific region.

“The entire episode once again exposes the rampant fraud on which Chinese data is built and the integrity of Indian statistics. China has actively defrauded the World’s investors to hide their worsening investment climate,” the official said.

With the union government under the leadership of Prime Minister Modi making concerted efforts to improve its business competitiveness, India’s ranking improved from 142 in 2014 to 63 in 2019. The Modi government was aiming to improve its Doing Business ranking to be among the top 50 countries by 2021. The World Bank audit did not find any fraud in India’s ranking.

Experts say the production-linked incentive (PLI) schemes announced so far for various sectors in India including mobile handset manufacturing, would go a long way in making the country a production hub over the period of next five years.

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