Euromoney, September 18 2019
Some uncomfortable conclusions arise from a close look at Euromoney’s country risk data for Asia since 1982. India’s opening has been rewarded with a dismal decline in its score, while the overthrow of local dictators doesn’t appear to do much for economies either.
This is part of a series of articles on country risk. See the full article and links to others here: https://www.euromoney.com/article/b1h6nd8cpwzm8v/why-india-is-as-risky-as-it-ever-was?copyrightInfo=true
The most beguiling thing about long-term data is when it tells you something completely different to what you were expecting. An analysis of 37 years of sovereign data on Asia does exactly that.
A case in point is India. Since 1982, when Euromoney’s country risk survey began, India has emerged from being an introspective, centrally planned former colonial state to one of the growth engines of the global economy.
In the first year of our study, a strike of 250,000 workers in 80 mills crippled the vital textile industry for the whole year. Subsequent years have brought Rajiv Gandhi’s tax reforms; the launch of the Sensex index and the establishment of the Securities and Exchange Board of India; the Rao era of liberalization; the launch of the demutualized and electronic National Stock Exchange; Indian companies raising money in the international markets; and the ascent of globally recognized companies, such as Infosys, with related domestic IPOs.
The period has seen the launch of private-sector banks; the convertibility of the rupee on the current account; the opening of the country to foreign direct investment; groups such as Tata going out into the world and acquiring western businesses; and the development of Aadhaar and the Unified Payments Interface, perhaps the most ambitious biometric payments infrastructure ever attempted.
This year India is likely to overtake the UK and become the fifth-largest economy in the world, while also passing the $2,000 threshold of per capita GDP, up from $1,452 as recently as 2013, according to the World Bank.
All of which raises the question: why is India one of the world’s worst-performing countries in terms of overall ECR score during the life of the survey?
It started with a ranking of 72.6 in 1982; it hit 53.52 in 2019. That’s a drop of over 19 points, worse than any other Asian nation bar Sri Lanka, which endured a 26-year civil war that started a year after the survey began, and, by a hair, Indonesia, which suffered more than any other nation in the Asian financial crisis.