SYLLABUS SECTION: GS II (GOVERNANCE)
WHY IN THE NEWS?
- Recently, in an analysis of the World Bank’s World Governance Indicators, India’s scores were much below its peers on all counts in Govt Flagge Low Score.
- It is a key input for India’s sovereign ratings.
- A sovereign credit rating is an independent assessment of the creditworthiness of a country or sovereign entity.
World Governance Indicators
- The Worldwide Governance Indicators (WGI) project reports aggregate and individual governance indicators for over 200 countries and territories over the period 1996–2020.
- It provides a ranking based on six dimensions of governance:
- Voice and Accountability
- Political Stability and Absence of Violence
- Government Effectiveness
- Regulatory Quality
- Rule of Law
- Control of Corruption
- WGI plays a key role in deciding the sovereign credit rating of any country.
MAJOR INCIDENTS WHICH HUGELY AFFECTED INDIA’S WGI RANK
1) Freedom Rights in Kashmir: Kashmir went from “partly free” in 2017 to 2019 to “not free” in 2020 scoring
- in Political Rights: 8 (out of 40),
- in Civil Liberties: 20 (out of 60).
- Its total score was 28 (out of 110) compared with 50 (out of 100) in 2017.
2) US State Department mention the following:
- Harassment of Activists
- Use of Sedition and Counterterrorism Laws: to suppress free speech.
- Foreign Funding Regulations Misuse: Regulatory misuse was prevalent to target NGOs that were critical to government policies or conduct.
3) Economic Intelligence Unit (EIU) showed India’s rank in the EIU’s democracy index fell from 27 in 2014 to 51 in 2019.
4) In the analysis of the Heritage Foundation Index of Economic Freedom, the presentation noted that “India’s Economic Freedom Score has been “Mostly Unfree”
SIGNIFICANCE OF THIS ANALYSIS:
- India’s WGI score is much below the BBB Median on all six indicators
- BBB is an investment-grade rating issued by global rating agencies such as S&P and Fitch,
- A WGI score below BBB Median would suggest that India falls below the middle when the scores of countries were arranged in a downfall order.
- It can give investors insights into the level of risk associated with investing in the debt of a particular country, including any political risk.
- Many other reports also flagged such downgrading like:
- WHO’s a methodology to estimate Covid-19 mortalities,
- Economic Intelligence Unit showed India’s rank fell from 27 in 2014 to 51 in 2019 and
- Global hunger Index 2021, ranked India at the 101st position out of 116 countries.
- Such methodologies have an issue like weightage to a particular indicator, using inappropriate statistical/mathematical models, comparison of the past performance of a country without incorporating significant inputs, use of a subjective approach to quantify other objective measures, etc.
Read more: UPSC CURRENT AFFAIRS
Source: Indian Express