New Delhi: India has dropped 10 positions, ranking 68 out of the 141 economies surveyed, in the World Economic Forum’s (WEF’s) Global Competitiveness Report for 2019.
Although the drop in India’s ranking is dramatic, its overall score on the Global Competitiveness Index (GCI) has gone down by only 0.7 points.
The report, released Wednesday, attributes India’s poor competitiveness to weak performances in “information and communication technology (ICT) adoption”, “diversity of workforce”, “meritocracy and incentivisation” and “skills”.
The country has, however, performed well on certain indicators such as “market size”, “future-oriented government”, “shareholder governance”, and “renewable energy regulation”.
For the record, Singapore has beaten the US to top the 2019 list. The two countries are followed by Hong Kong, Netherlands, Switzerland and Japan.
Other economies perform better
One of the reasons for India’s drop, the WEF says, is that a number of other economies have performed way better. “A number of similarly-placed economies including Colombia, South Africa and Turkey improved over the past year and hence have overtaken India,” the report states.
India has also fared poorly when compared to other G20, BRICS and South Asian countries.
Among the G20 countries, India has one of the least competitive economies, only ahead of Brazil and Argentina who are at the 71st and 83rd spots respectively. Similarly, among BRICS countries, India is only ahead of Brazil.
India’s relatively poor performance among its South Asian peers is especially significant.
“In South Asia, India, in 68th position, loses ground in the rankings despite a relatively stable score, mostly due to faster improvements of several countries previously ranked lower,” the report states. “India is followed by Sri Lanka (the most improved country in the region at 84th), Bangladesh (105th), Nepal (108th) and Pakistan (110th).”
Some silver lining
For its competitive index, the WEF ranks countries based on 12 indicators and several sub-indicators. Some of the indicators include institutions, infrastructure, ICT adoption, macro-economic stability, skills, financial system, labour market and business dynamisms among others.
“India ranks beyond 100th on five pillars (indicators) and features in the top 50 of just four pillars (indicators),” says the report.
The silver lining for India here is its extremely attractive large market size. The Indian economy is ranked as the 3rd best in terms of market size. Following market size, India has done reasonably well in innovation capability (35th), financial system (40th) and macro-economic stability (43rd).
The report specifically talks about India’s good performance in terms of its financial system and innovation capability. “It’s financial sector (40th) is relatively deep and stable despite the high delinquency rate (10 per cent of the loan portfolio, 106th), which contributes to weakening the soundness of its banking system (89th),” notes the report.
When talking about its innovation capability, the report notes that India “does punch above its development status when it comes to innovation, which is well ahead of most emerging economies and on par with several advanced economies”.
Needs considerable improvement
Except for the four aforementioned indicators, India has performed poorly across all the remaining ones.
For instance, among the 141 countries that have been surveyed, India ranks 120th in ICT adoption, 110th in health, 107th in skills, 103rd in labour market and 101st in product market.
These make up the bulk of the chronic issues with the Indian economy.
“Health conditions remain poor, as reflected in low healthy life expectancy (59.4 years, 109th), which is one of the shortest outside Africa and significantly below the South Asian average,” says the report.
“Product market efficiency (101st) is undermined by a lack of trade openness (131st) and the labour market is characterised by a lack of worker rights’ protections, insufficiently developed active labour market policies and critically low participation of women (ratio of female workers to male workers of 128th),” further notes the report.
While not as poor, but India seems to be hovering in the mid-way mark for the remaining indicators. It ranks 59th in institutions, 69th in business dynamism, and 70th in infrastructure.