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Govt should seek transparency from providers of governance indicators: Sanjeev Sanyal

India's deteriorating performance in global governance indicators cannot be ignored given their influence on sovereign ratings, the member of the Economic Advisory Council to the Prime Minister has argued in a paper

November 24, 2022 / 10:09 AM IST

The government should push for greater transparency from publishers of world governance indicators (WGI) as India's deteriorating performance can have "concrete implications" given their link to sovereign ratings, according to a top economist.

"...as a first step, the Indian government should request the World Bank to demand transparency and accountability from think-tanks that provide inputs for the WGI," a paper, released on November 23, co-authored by Sanjeev Sanyal, member of the Economic Advisory Council to the Prime Minister (EAC-PM), said.

"Independent Indian think-tanks should be encouraged to do similar perception-based indices for the world in order to break the monopoly of a handful of western institutions," the paper added.

The paper has been co-authored by Sanyal and Aakanksha Arora, a deputy director in the EAC-PM. Its views are those of the authors and are not endorsed by the council or the government.

Arbitrary and subjective

The paper criticised the arbitrary nature of the methodology followed by the publishers of indices such as the Freedom in the World index, Economist Intelligence Unit Democracy index, and Variety of Democracy indices and said they could not be ignored because they are inputs into the World Bank's WGI, which have an 18-20 percent weightage in sovereign ratings.

Taking the example of the Freedom in the World Index published by Freedom House, a US-based non-profit organisation that conducts research in democracy, political freedom, and human rights, the paper said India's current score of 66 put it in the same "partially free" category as it was during the Emergency and the economic liberalisation years of the early 1990s.

Sanyal and Arora wrote that this seems very arbitrary because the period of economic liberalisation or the current times had nothing similar to the Emergency, which was a period of clear curtailment of various activities. They also pointed out that Freedom House continues to treat Jammu and Kashmir as a separate territory and classifies it as "not free".

The second index examined by the paper is the Economist Intelligence Unit's Democracy Index, where India's rank has fallen to 53 in 2020 from 27 in 2014—before rising to 46 in 2021—due to a decline in the scores of the civil liberties and political culture categories.

The improvement in the rank in 2021 came after the Centre rolled back the three farm reform laws following months of nationwide protests. This, Sanyal and Arora noted, was strange "as the report is taking a political position on agriculture policy of a country".

Further criticising the Democracy Index, the paper said it relies on the opinion of certain experts, whose number, nationality, credentials, or area of expertise are not revealed. The Democracy Index is also calculated on the basis of the World Value Survey. In the case of India, the latest World Value Survey report available is of 2012.

"Since the latest public opinion poll has not been conducted after 2012, this implies that the score for India is based only on expert opinions since 2012 till today," the paper said.

Sanyal and Arora also took issue with the V-DEM rankings, released by the University of Gothenburg's Varieties of Democracy Institute. Constructed using more than 450 variables – both factual and ratings provided by unidentified experts – the paper said the questions asked of these experts were subjective.

"One sub-index in V-DEM Participatory Component index is direct popular vote – i.e. to what extent is the direct popular vote utilised?"

"Now this is a question which is not a meaningful way to capture democracy. It may be possible for small countries like Switzerland," but not for a country like India, the paper argued, adding that India and the US get a score of zero on this variable, while Afghanistan (0.02), Belarus (0.064), and Cuba (0.151) get higher scores.

Untenable methodologies

This is not the first time that India has criticised how global organisations have assessed its non-economic performance.

In October, the Global Hunger Report 2022 ranked India at 107 out of 121 countries, below Pakistan, Nepal, and Bangladesh. This prompted a response from the government, which said the index is an "erroneous measure of hunger and suffers from serious methodological issues".

"Three out of the four indicators used for calculation of the index are related to the health of children and cannot be representative of the entire population," the government said on October 15.

The Global Hunger Report is released by the Ireland-based Concern Worldwide and Welt Hunger Hilfe, one of the largest private aid organisations in Germany.

In their paper, Sanyal and Arora doubled down on the criticism, saying the methodologies used in computing perception-based indices "is not tenable".
Siddharth Upasani is a Special Correspondent at Moneycontrol. He has been covering the Indian economy, economic data, and monetary and fiscal policies for nine years. He tweets at @SiddharthUbiWan. Contact: siddharth.upasani@nw18.com
first published: Nov 23, 2022 05:40 pm