Though India has climbed 16 places to the 39th rank on the Global Competitiveness Index but still there is a long way to go for India to come in the top five.
Though India has climbed 16 places to the 39th rank on the Global Competitiveness Index but still there is a long way to go for India to come in the top five. According to the Global Competitiveness Index report by the World Economic Forum, “India is “still long way” from having in place all the competitiveness elements to realise its potential as a major global economy.” There is no doubt that India’s competitiveness has improved across the board, in particular in goods market efficiency, business sophistication, and innovation but “the labour market is still bound by rigid regulations and centralised wage determination while infrastructure also remains a bottleneck,” the report added. We take a look at 5 areas where India still needs to work hard according to the WEF report:
1) The efficiency of the domestic market is hindered by fiscal regulations that allow federal states to levy different levels of value-added taxes.
2) Publicly owned enterprises further reduce the overall efficiency of the economy, especially in the utilities sector and the financial market, where there is growing concern about the incidence of non-performing loans.
3) Lack of infrastructure and Information and Communications technology (ICT) use remain bottlenecks.
4) The labor market is segmented between workers protected by rigid regulations and centralized wage determination, especially in the manufacturing sector, and millions of unprotected and informal workers.
5) Improvement has been slow in recent years and further investment will be necessary, especially to connect rural areas and make sure they can equally benefit from and contribute to the country’s development.
In order to come in the top five, Amitabh Kant, CEO Niti Aayog, said in the next four years we need to work on a vast range of measures. “We should work towards improving our patents, policies. We should make India a very efficient and competitive country by improving our productivity levels.” The government is doing a great job across sectors by scrapping a lot of procedures and paperwork, he said. Kiran Mazumdar Shaw, MD Biocon Limited, told CNBC TV 18 that though India’s rank rising on Competitiveness Index is a positive sign but “we are yet to see a major improvement in Ease of Doing Business.”
India has climbed 16 places to the 39th rank on the Global Competitiveness Index prepared by the World Economic Forum as improved business sophistication and goods market efficiency pushed its ranking higher. For the eighth straight time, the list is topped by Switzerland as the most competitive economy. Singapore and the US are at the second and third positions, respectively. The jump of 16 places for India from last year’s 55th place is the highest for any economy this year. India is also the second-most competitive among BRICS nations behind neighbouring China, which is ranked at the 28th position.
On the index, India has a score of 4.52 while that of Switzerland is 5.81. The rankings are based on the Global Competitiveness Index (GCI), which is based on country-level data covering 12 categories. These include institutions, infrastructure, macroeconomic environment, health and primary education, financial market development, technological readiness, market size, business sophistication and innovation.