India’s global competitiveness rank rose three notches to 41 from a year ago due to significant improvement in exchange rate stability, fiscal deficit management and efforts to tackle corruption and red tape, according to a survey by the Switzerland-based IMD World Competitiveness Centre (WCC).
The Centre also found about 70 per cent of the executives surveyed on attractive economic indicators rated cost competitiveness, skilled workforce and a dynamic economy as India’s biggest plus points.
Half the executives also identified high education levels as a positive factor while 33 per cent said the government’s competency made the economy more attractive.
India was ranked 44th in 2015, according to IMD. The current ranking is lower than the 35th position it secured in 2012.
Higher consumer price inflation, lower public spending on education, tax revenue collection and merchandise exports proved to be the biggest drags on the country’s economic competitiveness, according to the Centre.
The biggest challenges for the economy in 2016 would be sustaining its high growth rate, increasing the share of research and development in the economy and implementation of the Goods and Services Tax Regime. Infrastructure development and disbursing public benefits digitally would also be keenly watched, according to the IMD WCC.
The U.S. is ranked third this year yielding the numero uno position to China Hong Kong followed by Switzerland.
“The sheer power of the U.S. economy is no longer sufficient to keep it at the top,” said Professor Arturo Bris, Director, IMD WCC. “A consistent commitment to a favourable business environment was central to China Hong Kong’s rise and that Switzerland’s small size and its emphasis on quality have allowed it to react quickly to keep its economy on top.”
China Hong Kong fosters innovation through a low and simple taxation and imposes no restrictions on capital flows while offering a gateway for foreign direct investment into mainland China — which incidentally dropped three places to 25th rank in 2016.
“Nations as different as China Mainland and Qatar fare very well in terms of economic performance but they remain weak in other pillars such as government efficiency and infrastructure,” Mr. Bris said. The common pattern among the top 20 countries is a focus on business-friendly regulation, physical and intangible infrastructure and inclusive institutions, he said.
Within Asia-Pacific, India is now the 11th most competitive economy with peers like Taiwan, Malaysia, Korea and Indonesia seeing a significant fall in their rankings this year.
Rich getting richer The rankings are based on analysis of over 340 criteria derived from four principal factors: economic performance, government efficiency, business efficiency and infrastructure. Responses from an in-depth survey of more than 5,400 business executives asked to assess the situation in their own countries are also factored in.
“One important fact that the ranking makes clear year after year is that current economic growth is by no means a guarantee of future competitiveness,” Mr. Bris said.
Data gathered since the first ranking was published in 1989 also lend weight to fears that the rich are getting richer and the poor poorer.
“Since 1995 the world has become increasingly unequal in terms of income differences among countries, although the rate of increase is now slowing,” he said.
