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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Govt flagged low score in World Bank’s governance index