CEA Nageswaran calls on World Bank to make governance indicators transparent

Subject: IR

Section: International Organisation

Context: CEA Nageswaran calls on World Bank to make governance indicators transparent

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Chief Economic Adviser V Anantha Nageswaran has urged the World Bank to enhance the transparency of its Worldwide Governance Indicators, stating that their subjective nature is leading to inappropriate assessments of developing countries’ sovereign ratings by global rating agencies.
Speaking at a seminar in the Capital, Nageswaran emphasized that making governance indicators “less arbitrary” is the “easiest way” for Multilateral Development Banks (MDBs) to aid member countries in accessing capital for global challenges and development needs.
He highlighted the significant role these indicators play in the opaque credit rating assessment process used by major agencies, including S&P Global, Moody’s Investors Service, and Fitch Ratings.
The World Bank compiles the Worldwide Governance Indicators from various credible sources, but concerns have been raised about the methodological problems of these indicators, including those from the Freedom in the World Index and the Economist Intelligence Unit Democracy Index.

What is Worldwide Governance Indicators:

The World Governance Indicators (WGI) constitute a research dataset that consolidates the perspectives of a significant number of respondents, including corporate, citizen, and expert survey participants from both developed and developing nations, regarding the quality of governance.
The WGI was developed in 1999 by two World Bank researchers, Daniel Kaufmann and Aart Kraay. The data are updated annually each September
The WGI covers six key dimensions of governance:
- Voice and Accountability
- Political Stability and Absence of Violence
- Government Effectiveness
- Regulatory Quality
- Rule of Law
- Control of Corruption
Various reports on which India’s WGI ranking based on-
- Economist Intelligence Unit
- Varieties of Democracy Project
- Heritage Foundation Index of Economic Freedom
- Freedom House Report