India has found problems with the current method under which the Organisation for Economic Cooperation and Development (OECD) ranks countries based on their services trade policies, indicating the outcomes are biased and counter-intuitive.
Services Trade Restrictiveness Index (STRI):
STRI was launched in 2014.
STRI is computed by the OECD.
It ranks countries based on their service trade policies.
The ranking for 2018 for a total of 45 economies, among them 36 are OECD and the rest non-OECD, and 22 sectors are available.
Faulty OECD:
A study commissioned by the Commerce Ministry found that the OECD index has a large number of problems associated with it, including some significant design issues that render it impractical for use.
For example, the index seems to show the Indian services sector as one of the most restrictive, particularly in policy areas like foreign entry (FDI).
This factor, for instance, is not true as since 1991, the one area that has seen maximum liberalization in India is FDI.
India's move:
India has approached various developing countries including China, Brazil, Indonesia, Turkey, South Africa, and Malaysia during the recently-concluded World Trade Organization talks in New Delhi to try to build consensus around adopting a new method of measuring trade restrictiveness in the services sector.
In order to rectify this, a team of econometricians from Indian Institute of Foreign Trade has designed a new way of measuring restrictiveness in the services trade that would be more robust and would not have a bias either for developed or developing countries.
Organization for Economic Co-operation and Development (OECD):
Established in: 1961
Headquarters: Paris, France
Membership: 36 countries
Secretary-General: Angel Gurria
OECD aims to promote policies that will improve the economic and social well-being of people around the world. It provides a forum in which governments can work together to share experiences and seek solutions to common problems. It sets international standards on a wide range of things, from agriculture and tax to the safety of chemicals.