World Governance Indicators

Syllabus: General Studies Paper 2

What is Governance?

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.

What are World Governance Indicators?

• Released by the World Bank.
• WGI provide a ranking of 215 countries based on six dimensions of governance:

1. ‘Voice and Accountability’.
2. ‘Political Stability and Absence of Violence’.
3. ‘Government Effectiveness’.
4. ‘Regulatory Quality’.
5. ‘Rule of Law’.
6. ‘Control of Corruption.’

Sources: These aggregate indicators are based on over 30 individual data sources produced by a variety of survey institutes, think tanks, non-governmental organizations (NGOs), international organizations, and private sector firms such as Economist Intelligence Unit (EIU), Varieties of Democracy (V-Dem) Project and Freedom House, etc.

Significance: WGI plays a key role in deciding the sovereign credit rating of any country.

Concern of the Indian government:

• World Governance Indicators (WGI), according to the government, are based on impressions from the Western press or tiny polls of NGOs and a handful of academics, many of whom lack an India specialist.
• There would be a decline in WGI results as a result of these institutes’ critical comments towards India. This could result in India’s sovereign rating being downgraded.

India’s score in the latest WGI:

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.
• 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.

 Major Incidents Which Hugely Affected India’s WGI Rank:

• Kashmir issue.
• Harassment of Activists.
• Sedition laws.
• Cancellation of NGO licences.