There are reasons for finance minister Arun Jaitley and Prime Minister Narendra Modi to be upbeat on the foreign investment front. The UK-based Financial Times (FT) reported this week that India led the world in FDI during the January-June 2015 period. According to FT, India received $31 billion, leaving behind China ($28 billion) and the US ($27 billion). The RBI figure puts the FDI figure in the first half of this year at $28.141 billion.
Other piece of good news came from the World Economic Forum (WEF). The body said in its latest report that India has jumped 16 ranks to 55 (out of 144 countries) in the WEF Global Competitiveness Index (GCI). While there are obvious reasons to be happy, the government will do well by keeping in mind that any improvement in India’s attractiveness for investment is because China and the US have gone down, and not due to any change on the ground here.
GCI is calculated on 12 pillars across three parameters—basic requirements (4), efficiency enhancers (6) and innovation and sophistication factors (2). Despite the better GCI rank, India is a laggard in many areas. A country that leads in IT services is ranked 120 (up one over last year) in technological services among 140 nations. The situation is same with labour efficiency (103), macroeconomic environment (91), and higher education and training (90). Clearly, there is a lot to be done to improve the ease of doing business scenario.