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: That India still ranks in the last quarter of a world ranking on economic freedom with an index score of 3.5 illustrates the extent to which we are inured to clamps on our rights to trade and invest. One needn’t agree with all the details of this ranking of 155 countries by The Heritage Foundation and The Wall Street Journal to go along with its basic thrust. The notion of economic freedom is only a theoretical ideal — like perfect competition — and its finest expressions are found in small trading bastions like Hong Kong (which topped the 2005 index for the 11th year running)followed by Singapore. Interestingly, the paragon of freedom in the world, the US, dropped out from the top 10 for the first time.
This global ranking should set aside a lingering delusion among India’s officialdom that one major advantage we have vis-a-vis our emerging economy rivals like China is our wider range of economic freedoms — rule of law and all that! Far from it. China occupies the 112th place when compared to India’s 118th and the report notes that the dragon has reduced tariff barriers since joining the WTO, cut government expenditure and privatised some companies. India, by contrast, has wound up the disinvestment ministry altogether under the Manmohan Singh-led UPA government.
India wallows in the last quarter due to a broader set of factors. While politics doesn’t constrain economic freedom in city states, the fractured verdict of the 2004 election here has raised a whole series of doubts on whether key economic reforms can be pushed through due to Left opposition. The P word is out, although the ruling party is committed to selective privatisation. So too is the D word, for that matter. Less said the better about labour reform. Interestingly, it is observed that the Left and the ruling party agree that lack of investment resulting from inefficient bureaucracy and regulations hampers progress in the economy. But what are they doing about it? When there are restrictions on labour and capital, is it any wonder then that we are mostly unfree!
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