India has jumped 16 ranks to reach 55th in the Global Competitiveness Index of the World Economic Forum's Global Competitiveness Report 2015-2016. A failure to embrace long-term structural reforms that boost productivity and free up entrepreneurial talent is harming the global economy's ability to improve living standards, solve persistently high unemployment and generate adequate resilience for future economic downturns, according to the Report, which is released today (September 30, 2015).
The report is an annual assessment of the factors driving productivity and prosperity in 140 countries. This year's edition found a correlation between highly competitive countries and those that have either withstood the global economic crisis or made a swift recovery from it.
After five years of decline, India jumps 16 ranks to 55th place. This dramatic reversal is largely attributable to the momentum initiated by the election of Narendra Modi, whose pro-business, pro-growth, and anti-corruption stance has improved the business community's sentiment toward the government, the Report says.
The quality of India's institutions is judged more favorably (60th, up 10), although business leaders still consider corruption to be the biggest obstacle to doing business in the country. India's performance in the macroeconomic stability pillar has improved, although the situation remains worrisome (91st, up 10), according to the Report.
Thanks to lower commodity prices, inflation eased to 6 percent in 2014, down from near double-digit levels the previous year. The government budget deficit has gradually dropped since its 2008 peak, although it still amounted to 7 percent of GDP in 2014, one of the world's highest (131st).
Infrastructure has improved (81st, up six) but remains a major growth bottleneck—electricity in particular. The fact that the most notable improvements are in the basic drivers of competitiveness bodes well for the future, especially the development of the manufacturing sector.
But other areas also deserve attention, including technological readiness: India remains one of the least digitally connected countries in the world (120th, up one). Fewer than one in five Indians access the Internet on a regular basis, and fewer than two in five are estimated to own even a basic cell phone, the Report adds.
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