WORLD INDICES

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Context

The recently released Worldwide Governance Indicators by World Bank and Freedom House Report have downgraded India’s score and this may affect India’s sovereign ratings.
The Ministry of Finance’s Economic Division is planning to draft a strategy named “Subjective Factors that impact India’s Sovereign Ratings: What can we do about it? to counter the ‘negative commentary’ on India by various global think tanks, indices and media.

About Sovereign Credit Rating

A sovereign credit rating is an independent assessment of the creditworthiness of a country or sovereign entity.
It can give investors insights into the level of risk associated with investing in the debt of a particular country, including any political risk.

About Worldwide Governance Index

The Worldwide Governance Indicators are a collection of responses from a wide range of people acquired through a variety of surveys as well as other cross-country governance evaluations.
The World Bank’s World Governance Indicators provide a ranking of 215 countries and territories 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
India’s WGI score 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, WGI scores below BBB Median would suggest that India falls below the middle when the scores of countries are arranged in descending order.

About Freedom House

USA based human rights watchdog Freedom House, which is largely funded through USA government grants, has been tracking the course of democracy since 1941.
The scores are based on:
- Political rights indicators such as the electoral process, political pluralism and participation and government functioning.
- Civil liberties indicators are related to freedom of expression and belief, associational and organizational rights, the rule of law and personal autonomy and individual rights.
- Countries are declared as “free”, “partly free” or “not free”.
Its 2020 report mentions alarming setbacks in the world’s largest democracy (India) and highlighted that a series of actions by India’s Hindu nationalist government in 2019 violated democratic rights in India and Indian Kashmir.

Other Indicators

The Economic Intelligence Unit (EIU) Global Democracy Index showed India’s rank in the EIU’s democracy index fell from 27 in 2014 to 51 in 2019 and considered India a flawed democracy.
In the Bertelsmann Transformation Index (BTI), India has fallen into Defective Democracy.
The Reporters Without Borders in its 20^th World Press Freedom Index 2022, ranked India 150 from 142.
In the Heritage Foundation Index of Economic Freedom, India’s Economic Freedom Score has been “Mostly Unfree” since Heritage Foundation started publishing data in 2008.