Government reports low score in World Bank’s Governance Index
IN AN analysis of the World Bank’s Global Governance Indicators, a key input for India’s sovereign ratings, a presentation by the Ministry of Finance’s Economics Division found that India’s scores were “much lower” than those of his peers in all respects. He also said factors noted in the Freedom House report also led the country to record the biggest drop in score among the world’s 25 largest democracies in 2020.
The Indian Express had reported on May 9 that the finance ministry’s economic division was drawing up a strategy to counter ‘negative commentary’ on India by think tanks, indices and global media, amid fears it could lead to a sovereign rating downgrade to “trash”. In June 2020, Sanjeev Sanyal, then Senior Economic Advisor at the Ministry of Finance, prepared a presentation titled “Subjective Factors Impacting India’s Sovereign Ratings: What Can We Do About It?” — for internal circulation within the government.
The World Bank’s Global Governance Indicators provides a ranking of the territories of 215 countries based on six dimensions of governance: “Voice and Accountability”; “Political stability and absence of violence”; “Government Effectiveness”; “Regulatory quality”; “Rule of Law” and “Control of Corruption”.
Sanyal’s presentation showed that the government believed there was a danger that India would witness a drop in WGI scores “due to the latest negative comments about India from think tanks, polling agencies and international media,” he noted.
The presentation noted that India’s WGI score is well below the BBB median for all six indicators. While BBB is a quality rating issued by global rating agencies such as S&P and Fitch, a WGI score below median BBB would suggest that India falls below the middle when country scores are ranked in descending order.
An eye on the picture
The World Bank’s Global Governance Indicators ranks 215 countries and territories based on: “Voice & Accountability”; “Political stability and absence of violence”; “Government Effectiveness”; “Regulatory quality”; “Rule of Law” and “Control of Corruption”. The government noted that the WGI matters more than the ease of doing business index.
To figure this out, the government analyzed the 15 data sources whose ratings have the most impact on India’s overall WGI scores, including the Economist Intelligence Unit, the Varieties of Democracy project, Freedom House and the Heritage Foundation Index of Economic Freedom.
He noted that Freedom House’s 2020 report mentions “alarming setbacks in the world’s largest democracy” and pointed out that “a series of actions by the Hindu nationalist government of India in 2019 violated democratic rights in India and Indian Kashmir”.
He also noted that Kashmir went from “partially free” in 2017 to 2019 to “not free” in 2020 with a score of 8 (out of 40) in political rights, 20 (out of 60) in civil liberties. His total score was 28 (out of 110) compared to 50 (out of 100) in 2017, 49 in 2018 and 49 in 2019.
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In particular, he said that the US State Department mentioned the following: “In 2018, the BJP-led government harassed and sometimes prosecuted activists, lawyers, human rights defenders and journalists for criticizing the authorities. Draconian sedition and anti-terrorism laws have been used to chill free speech. Foreign funding regulations were used to target NGOs that were critical of government actions or policies…”
Its analysis by the Economic Intelligence Unit (EIU) showed that India’s ranking in the EIU’s Democracy Index fell from 27 in 2014 to 51 in 2019. 51st place from 42nd on the EIU’s 2019 Global Democracy Index and remains classified as “imperfect democracy”.
In the Bertelsmann Transformation Index (BTI), the government noted that under “Political Transformation”: “From the first category of ‘consolidating democracies’ in 2014, we moved to ‘defective democracy’.