World Governance Indicators (WGI)

MAY 28

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Why in news?

  • Recently, the World Governance Indicators (WGI) has been released by the World Bank.
  • 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.

About World Governance Indicators (WGI):

  • The WGI are a research dataset that aggregates the opinions of a substantial number of corporate, citizen, and experts survey respondents from both developed and developing nations on the quality of governance.

Parameters:

  • It assesses 215 countries and territories based on a certain set of criteria.
    • Voice and Accountability
    • Political Stability and Absence of Violence
    • Government Effectiveness
    • Regulatory Quality
    • Rule of Law
    • Control of Corruption

India’s performance:

  • India’s WGI score is much below the BBB Median on all six indicators.
  • 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.

 Outcomes associated with the WGI:

  • Worsening of Sovereign Credit Rating of India deteriorating its credit worthiness.
  • Investment in India’s Debt market will be risky.
  • It also includes political risk and provides insight to the Invester about the economic and political stability.

Major incidents which hugely affected India's WGI rank:

  • Kasmir was partly free from 2017 to 2019 but in 2020 its freedom was again curtailed.
  • Harassment of Activists: Activists, lawyers, human rights defenders, and journalists have been harassed and persecuted.
  • Sedition and Counterterrorism Laws used to suppress free speech.
  • Misuse of Foreign Funding Regulations: Misuse of regulations were prevalent to target NGOs that were critical to government policies or conduct.

PRACTICE QUESTION

World Governance Indicators (WGI) is released by

(a) World Bank

(b) International Monetary Fund

(c) World Economic Forum

(d) UNDP

Answer