As India approaches its crucial election season, the intertwining of political policies and the nuances of democracy have taken center stage, challenging the socio-political landscape and raising questions about its effects on the country’s sovereign ratings. With policy shifts and controversial measures impacting the fabric of Indian democracy, analysts and critics alike are pondering the implications on India’s global standing and financial integrity.
The Democracy Index Concerns
Recent actions by the Indian government, including the notification of a “Fact Check Unit” under the amended Information Technology (IT) Rules, 2023, have sparked a debate on the extent to which these measures comply with democratic principles. The suspension
#BREAKING #SupremeCourt stays the notification of Fact Check Unit by the Union Government, stay to operate till the Bombay High Court finally decides the challenges to the IT Rules amendment 2023.
— Live Law (@LiveLawIndia) March 21, 2024
of this unit’s operation by the Supreme Court, till the Bombay High Court decides on its validity, underscores the judiciary’s concerns over the potential for serious implications on freedom of speech and expression.
This scenario has led to India’s democracy index being scrutinized by international observers and policy analysts. The democracy index, an assessment that reflects the state of governance and political freedom in a country, is not only a measure of democratic health but also influences investors’ perceptions and, consequently, sovereign ratings.
Global Criticism and Election Strategies
In response to global criticism and falling ranks in international democracy indices, the Indian government has reportedly been finalizing its own democracy index. This domestic evaluation tool is seen as an attempt to counteract negative perceptions and showcase the government’s version of democratic integrity ahead of elections. Critics argue that while self-assessment by nations is not new, the credibility and acceptance of such an index are contingent upon transparency and impartiality in its formulation.
The recent measures, including crackdowns on dissent and regulatory changes, are perceived by some as efforts to control the narrative and strengthen the ruling party’s position. Opinions shared on social media, such as a tweet highlighting the financial penalties
Breaking : For an amount of 14.4 lakh Rs, Narendra Modi has put penalty of 210 crores on Congress party.
110 crore Rs has been forcefully transferred to BJP Govt from Congress party's account. This is Autocracy at peak. If people of India won't fight this today, then when?
— Anshuman Sail Nehru (@AnshumanSail) March 21, 2024
imposed on political opponents, exemplify the contentious nature of these policies, further complicating the relationship between democracy and governance in India.
The Economic Ripple Effect
The direct correlation between a nation’s democratic status and its economic indicators, including sovereign ratings, is a subject of extensive analysis. Sovereign ratings, essentially a measure of a country’s creditworthiness, are influenced by its political stability, governance standards, and regulatory environment. A decline in democratic practices may lead to skepticism among international investors and agencies, potentially leading to downgrades in sovereign ratings. Such a scenario can increase borrowing costs for the country, affect its foreign investment inflow, and have a cascading effect on its economic growth projections.
The Road Ahead
As India treads the delicate path towards its upcoming elections, the balance between maintaining democratic integrity and pursuing political objectives remains a critical challenge. The global community, investors, and rating agencies will be closely monitoring how India navigates these complexities, balancing its internal governance with the expectations of democratic norms and financial stability.
The discussions around the democracy index, sovereign ratings, and the overarching political environment reflect the multifaceted nature of governance in today’s interconnected world. As debates unfold on social media, in courtrooms, and amongst the populace, the outcome of these deliberations will not only shape the immediate political landscape but also determine India’s standing on the global stage in the years to come.
Divya 
Mehek