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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.

https://indianexpress.com/article/india/govt-flagged-low-score-in-world-banks-governance-index-7924696/

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