1. Relevance to key customers
The World Bank and Bibek Debroy/Laveesh Bhandari (among others who have worked in this area) have extensive experience in identifying relevant variables for analysis. Govrank©, however, would focus on two specific customers:
a) those who want to invest in India (including Indian investors); and
If such a concept were to proceed, a series of workshops would need to be organised between key stakeholders and World Bank and Debroy et al. Stakeholders would include a sampling of investing SMEs from all over the world and, of course, the Government of India (Planning Commission/ Cabinet Secretariat).
These workshops would throw light on the needs of these customers and ensure a practical tool is designed.
2. Possible clusters of variables
Variables identified may include:
a) Efficiency of policy and institutional frameworks: Economic and financial institutions, regulatory modernisation and reform, provision and management of infrastructure
b) Quality of governance: Recruitment and performance of bureaucracy, integrity of public systems (e.g. perceived corruption)
c) Sovereign risks and political uncertainty
The key focus of Govrank© would be on international benchmarks of governance. It will focus on processes and institutions (rules of the game), not on outputs alone. It is not intended to be a substitute for GDP and such measures. What we need is information about how well a State Government is managed.
Investors want forward looking indicators to inform estimated future returns, not an aggregation of historical data. In that sense I'm looking for lead, not lag indicators.
Govrank will also focus on investor friendliness, e.g. openness to FDI, quality of facilitation of SME investors, quality of infrastructure being created or in the pipeline (e.g. bus rapid transit systems), regulation making process, performance-linked wage systems for government staff, performance of State governments against pre-established corruption targets, quality of accountability mechanism for bureaucrats, teacher quality, openness to FDI in VET, competition in the government services market (e.g health), use of online systems and computers in education, level of racism against foreigners, treatment of minorities, and so on.
In addition, the Govrank© system would compile extensive sectoral data of potential interest to investors. It is difficult to propose details of what this would look like absent detailed scoping with relevant customers.
3. Using Govrank to motivate better governance in Indian States
Ideally, Central funding of States could include a proportion (say 5 per cent) that is at risk, based on governance performance. This is ambitious, and unlikely to happen without political will. In the meanwhile, a key design feature of Govrank© would be strategic marketing to create political impact by creating a profile so major newspapers (in all languages) are keen to comment on State ranks. This would drive public demand and momentum for improved governance. Govrank© should only proceed after media interest is locked in.
4. Annual updates
A weaknesses of existing indicators is that these are not always updated annually. Govrank© would be updated annually.
5. Use of proprietary surveys
Govrank differs from Debroy’s methodology in that it will make use of a proprietary survey, and not just use lag indicators of performance. For instance, corruption levels would be measured through surveys and benchmarked to international standards.
6. Full disclosure of data
Govrank would disclose underlying data (except the detailed sectoral level available on commercial basis).
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