The outlook for 13 of the 24 countries covered by the Eurasia Group’s Global Political Risk Index is negative, implying that things do not look good for these countries in the month of August.
This trend in the index compiled by the global risk management specialist explains why India, despite being one of the countries for which the outlook is negative, and whose score has remained almost constant at 62 for some time, has seen its rank in the index move up from 12 to 11 (it moved up from 13 to 12 last month).
The index for India was calculated before the ruling United Progressive Alliance, or UPA, won a trust vote on 22 July that allowed it to stay in power. Earlier that month, the Left Front, a key ally of the government had withdrawn support over the issue of the Indo-US nuclear deal which it opposes.
The win has removed fears of early elections (they will now likely be held in April and May 2009 as they were supposed to be). And while some investment bankers have said that the victory could see the government embark on key reforms, this may not happen.
The UPA will likely avoid reforms requiring parliamentary approval such as those related to banking and insurance. Thus, while the government will go ahead with some reforms, as the Eurasia Group has said, it may find it “difficult to push through...significant policy changes in the next six months”.
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 (July, in this case), the outlook (positive, negative or neutral) indicates which way the scores will likely move.
Mint has partnered with the Eurasia Group for GPRI and runs this every month. Mint carried the previous GPRI on 1 July.
For that, and for previous editions of the index, go to www.livemint.com/gpri
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