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Govt flagged low score in World Bank’s governance index

Published: 27th May, 2022

Context

In an analysis of the World Bank’s World Governance Indicators, a key input for India’s sovereign ratings,  a presentation by the Ministry of Finance’s Economic Division found that India’s scores were “much below” its peers on all counts. 

About

About World Bank’s World Governance Indicators:

  • The World Bank’s World Governance Indicators provide a ranking of 215 countries territories 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.
  • These aggregate indicators combine the views of a large number of enterprise, citizen and expert survey respondents in industrial and developing countries. 
  • India’s WGI score:It is much below the BBB Median on all six indicators.
  • While 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 are arranged in a descending order.
  • WGI play a key role in deciding sovereign credit rating of any country. India is losing its sovereign credit rating due to low score in WGI parameters.

Governance:(as defined by WGI)

  • Governance consists of the traditions and institutions by which authority in a country is exercised.
  • This includes:
    • the process by which governments are selected, monitored and replaced;
    • the capacity of the government to effectively formulate and implement sound policies; and
    • the respect of citizens and the state for the institutions that govern economic and social interactions among them

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