In the April Global Political Risk Index, or GPRI, the outlook for India continued to remain negative, while that for Pakistan turned positive (it was neutral last month). This can be explained by the fact that the index was compiled and released before India’s annual credit policy—which analysts at Eurasia Group, the risk management firm behind the index, expected to be anti-inflation and, consequently, anti-growth—and before the turmoil in Pakistan over the reinstatement of judges fired by the previous government (talks on this appeared to be coming to a satisfactory end on Thursday).
India’s central bank did raise the balance commercial banks need to keep with it in an effort to fight inflation by tightening money supply.
That will crimp the country’s growth, but as RBI governor Y.V. Reddy told Mint in an interview,even in a worst-case scenario, India will continue to grow its gross domestic product at 8%. This could mean India improves its score (and outlook) in the May GPRI—unless elections in the key state of Karnataka throw up an unplesant surprise for the government at the Centre.
The index is a composite measure of a country’s government, society, security and economy. While the score indicates stability or instability for the month gone by (April, in this case), the outlook (positive, negative or neutral) indicates which way the scores will likely move.
Mint has partnered with Eurasia Group for GPRI and runs this every month. Mint carried the previous GPRI on 3 April. For that, and for previous editions of the index, go to www.livemint.com/gpriten.htm.
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