Page 111 - ES 2020-21_Volume-1-2 [28-01-21]
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94 Economic Survey 2020-21 Volume 1
3.11 Figure 9 shows a positive correlation between sovereign credit ratings and current account
balance (as per cent of GDP) across India’s sovereign credit ratings cohort. However, India is a
negative outlier, currently rated much below expectation for its level of current account balance
(as per cent of GDP).
Figure 9: Sovereign Credit Ratings Figure 10: Sovereign Credit Ratings
and Current Account Balance and Investor Protection (Business
(per cent of GDP) Extent of Disclosure Index)
6 6
5
Average rating (1=BBB−/Baa3 to 6=A+/A1) 3 Ordinal scale 4 Average rating (1=BBB−/Baa3 to 6=A+/A1) 4 3 Ordinal scale
5
2
2
India
1 1 India
−4 0 4 8
6
Current Account Balance (% GDP) 2 4 Business Disclosures Index 8 10
Source: Bloomberg and IMF Source: Bloomberg and World Bank
3.12 There is no clear pattern of correlation between sovereign credit ratings and investor
protection, measured through the Business Extent of Disclosure Index, across India’s sovereign
credit ratings cohort (Figure 10). India remains a negative outlier, currently rated much below
expectation for its level of investor protection.
Figure 11: Sovereign Credit Ratings Figure 12: Sovereign Credit Ratings
and Political Stability and Government Effectiveness
6 6
5
Average rating (1=BBB−/Baa3 to 6=A+/A1) 4 3 Ordinal scale Average rating (1=BBB−/Baa3 to 6=A+/A1) 4 3 Ordinal scale
5
2
2
1 1 India
India
−1.0 −0.5 0.0 0.5 1.0
0.5
1.0
Political Stability Index 0.0 Government Effectiveness Index 1.5
Source: Bloomberg and World Bank Source: Bloomberg and World Bank
3.13 Figure 11 shows a positive correlation between sovereign credit ratings and political
stability across India’s sovereign credit ratings cohort. It may be seen that India is a negative
outlier and is currently rated much below expectation for its level of political stability.
