Institute for Management Development (IMD) has suggested the Modi government to fix short-term problems and improve the credibility of the government itself.
Poor infrastructure and low investment in social sectors such as education and health are still keeping India away from prosperity. Out of the list of 63 nations, India ranked 43rd on the World Competitiveness Index compiled by the Institute for Management Development (IMD). Even as the Narendra Modi government announced landmark decisions and economic packages to boost the economy, the overall competitiveness of the country is much poor, compared to other nations. India continued to struggle on the list of competitiveness index and the recent downgrade in India’s sovereign rating has reflected the uncertainties regarding the economy’s future, said Arturo Bris, Director of the IMD World Competitiveness Center.
IMD suggested ways to catch China in race
While the Modi government is strongly putting efforts to attract companies exiting China, to invest in India, the IMD report said that for India to follow the path of China, it must increase its stress on intangible infrastructure. Despite various efforts by the centre, India’s rank in the IMD global competitiveness list marginally improved from 45th in 2017 to 44th in 2018 and then to 43rd in 2019, indicating the efforts of the government are playing little role to push India’s competitiveness in the global market.
Modi government should increase its credibility
Earlier this month, Moody’s threatened India to downgrade its sovereign rating further to junk status, which would put India in a terrible position to attract foreign investment. In the report, Moody’s said that the government introduced many schemes in the last few years but could not implement in swiftly. Given the situation, the IMD report has suggested the Modi government to fix short-term problems and improve the credibility of the government itself.
Rupee may weaken
What also alerts India is the estimate that the rupee may weaken soon and display high volatilities. India is an import dominated country and a weak rupee tends to make imports expensive. The biggest share of India’s imports – crude oil – may also get expensive, surging the overall inflation in the country.
Meanwhile, Singapore continued to remain at the top position on the 63-nation list followed by Denmark at the second position, and Switzerland at the third position. However, the US fell to 10th place from 3rd last year, while China has also slipped from 14th to 20th place.