India slips 10 places on Global Competitiveness Index topped by Singapore

India has slipped 10 places, to rank 68th out of 141 countries, in the World Economic Forum’s latest Global Competitiveness Index

India has moved down 10 places to rank 68th on an annual global competitiveness index, largely due to improvements witnessed by several other economies, while Singapore has replaced the US as the world’s most competitive economy. India, which was ranked 58th in the annual Global Competitiveness Index compiled by Geneva-based World Economic Forum (WEF), is among the worst-performing BRICS nations, along with Brazil (ranked even lower than India at 71st this year).

Announcing its latest index, the WEF, on October 9, 2019, said India ranks high in terms of macroeconomic stability and market size, while its financial sector is relatively deep and stable, despite the high delinquency rate, which contributes to weakening the soundness of its banking system. India is also ranked high at 15th place, in terms of corporate governance, while it is ranked second globally for shareholder governance, the WEF study showed. In terms of the market size, India is ranked third, while it has the same rank for renewable energy regulation. India also punches above its development status when it comes to innovation, which is well ahead of most emerging economies and on par with several advanced economies, the report said.

However, these positive metrics contrast with major shortcomings in some of the basic enablers of competitiveness in case of India, the WEF said, while flagging limited ICT (information, communications and technology) adoption, poor health conditions and low healthy life expectancy. The WEF said the healthy life expectancy, where India has been ranked 109th out of total the 141 countries surveyed for the index, is one of the shortest outside Africa and significantly below the south Asian average. Besides, India needs to grow its skills base, while its product market efficiency is undermined by a lack of trade openness 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. With a ratio of female workers to male workers of 0.26, India has been ranked very low at 128th place. India is also ranked low at 118th in terms of meritocracy and incentivisation and at 107th place for skills.

In the overall ranking, India is followed by some of its neighbours including Sri Lanka at 84th place, Bangladesh at 105th, Nepal at 108th and Pakistan at 110th place. China is ranked 28th (the highest-ranked among the BRICS) while Vietnam is the most improved country in the region this year at 67th place. Singapore has become the world’s most competitive economy in 2019, pushing the US to second place. Hong Kong SAR is ranked 3rd, the Netherlands is at 4th and Switzerland is ranked 5th. Klaus Schwab, founder and executive chairman of WEF, said, “The report shows that those countries, which integrate into their economic policies an emphasis on infrastructure, skills, research and development and support those left behind, are more successful compared to those that focus only on traditional factors of growth.”

 


India leaps 23 places on World Bank’s ease of doing business ranking

India leaped 23 places to the 77th position on the World Bank’s ‘ease of doing business’ ranking as GST, the insolvency framework and tax reforms made the country more investor-friendly

November 1, 2018: India has jumped 23 places to the 77th position, on the World Bank’s ‘ease of doing business’ ranking. In its annual ‘Doing Business’ 2019 report, the World Bank said India improved its rank on six out of the 10 parameters relating to starting and doing business in a country. Grant of a construction permit, trading across the borders, starting a business, getting credit, getting electricity and enforcing contracts, showed improvement.

Buoyed by the improvement, finance minister Arun Jaitley said the country can break into the top 50, if it made it easier to start a business and improved on contract enforcement. India was ranked 142nd among 190 nations when prime minister Narendra Modi took office in 2014. At that time, the country was battling perceptions of excess red-tape and policy paralysis. Four years of reform pushed up India’s rank to 100th in World Bank’s ‘Doing Business’ 2018 report. It was 130th in 2017, when it was ranked lower than Iran and Uganda.

In the 2019 ranking, New Zealand tops the list, followed by Singapore, Denmark and Hong Kong. The United States is placed eighth and China ranked at 46th. Neighbouring Pakistan is placed at 136.

In New Delhi, Jaitley said a focussed approach, would ensure getting within ‘the 50th rank target is not out of reach’. “The obvious area and target for improvement are registering property, starting a business, insolvency and taxation and the fifth one is enforcement of the contract. Legislation is already in place, with regard to enforcement of contract, taxation, and insolvency. Starting a business, central government and state governments have to work together,” he said.

Jaitley also said the impact of GST has not been entirely accounted for in the ranking, due to an early cut-off date.

Commerce and industry minister Suresh Prabhu, said the improvement in rank was due to a combination of several factors, including administrative changes and legislative reforms like GST and the Insolvency and Bankruptcy Code (IBC). “As we go on, we will continue to improve more. The structural reforms, which have not yet been captured fully, will be reflected,” he said.

The World Bank put India among the top 10 economies to make the most improvements, saying it focused on streamlining business processes. India, it said, made starting a business easier by integrating multiple application forms into a general incorporation form. “India also replaced the value-added tax with the GST (Goods and Services Tax), for which the registration process is faster,” it said. Also, “India made paying taxes easier by replacing many indirect taxes with a single indirect tax, the GST, for the entire country. India also made paying taxes less costly, by reducing the corporate income tax rate and the employees’ provident funds scheme rate paid by the employer,” the World Bank said.

Stating that a well-designed insolvency framework is a vital determinant of debt recovery, it said the establishment of debt recovery tribunals in India ‘reduced non-performing loans by 28 per cent and lowered interest rates on larger loans, suggesting that faster processing of debt recovery cases cut the cost of credit’.

See also: Parliament passes insolvency bill, allowing home buyers to be treated as financial creditors

Further, India reduced the time and cost of export and import through various initiatives, including the implementation of electronic sealing of containers, the upgrading of port infrastructure and allowing electronic submission of supporting documents with digital signatures, it said. The World Bank said India has further streamlined the process of obtaining a building permit and made it faster and less expensive to obtain a construction permit. It also improved building quality control, by introducing decennial liability and insurance.

Prabhu said India’s leap of 23 ranks in the ease of doing business ranking is significant, considering that last year India improved its ranking by 30 places, a rare feat for any large country the size of India. The country, he said, has improved its ranking by 53 positions in the last two years and 65 positions in four years since 2014. The World Bank ranks 190 countries based on 10 parameters, including starting a business, construction permits, getting electricity, getting credit, paying taxes, trade across borders, enforcing contracts and resolving insolvency.

 

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