The Corruption Perceptions Index (CPI) is widely cited in governance discourse. How does India's position on this index affect its foreign investment potential?
Show answer & explanation
Correct answer: A
Explanation
Solution: The correct answer is Negatively, as it signals high regulatory risk and lack of institutional transparency.
Explanation:
☛ The Corruption Perceptions Index (CPI) is published annually by the international non-governmental organization Transparency International.
☛ The index evaluates and ranks countries based on the perceived levels of public sector corruption as assessed by experts and business executives.
☛ A poor ranking or low score on the CPI reflects systemic administrative inefficiencies, red tape, and weak enforcement of laws.
☛ Foreign investors closely monitor global governance indicators; high perceived corruption increases compliance costs and legal uncertainties, thereby negatively impacting foreign direct investment (FDI).
Extra Exam-Relevant Facts:
☛ Transparency International: Founded in 1993, this global civil society organisation has its international secretariat in Berlin, Germany.
☛ Scoring Methodology: The CPI uses a scale of 0 to 100, where 0 indicates 'highly corrupt' and 100 indicates 'very clean'.
☛ Top Performers: Nordic countries such as Denmark and Finland, along with New Zealand, consistently score highest, reflecting strong rule of law and transparency.
☛ Governance Indicators: The World Bank also publishes Worldwide Governance Indicators (WGI), which include the dimension of 'Control of Corruption'.
Important One-Liners for Upcoming Exams:
☛ Which organisation publishes the Corruption Perceptions Index (CPI)? → Transparency International
☛ Where is the headquarters of Transparency International located? → Berlin, Germany
☛ What is the scoring range of the Corruption Perceptions Index? → 0 (highly corrupt) to 100 (very clean)
☛ In which year was Transparency International established? → 1993
☛ Which nation consistently ranks among the least corrupt countries on the CPI? → Denmark