India has slipped sharply by 10 notches to 68th position in the Global Competitiveness Index, 2019, released by the World Economic Forum (WEF). The irony is that India’s score fell in eight out of 12 parameters while other countries improved their domestic business environment faster than India. Iran (99) is the only other country out of 141 countries surveyed whose ranking also fell by 10 positions. India has lost the ground in the rankings despite a relatively stable score, mostly due to faster improvements of several countries which were previously ranked lower. The WEF’s Global Competitiveness Index has wider parameters compared with the Ease of Doing Business index. So, India’s fall in the former’s ranking index is indeed a rude reminder and must ring alarm bells in the government circles. The Centre must take urgent corrective steps to capitalise on the changing global trade landscape and revive a floundering economy. While India has not slipped much in terms of overall score — it has a score of 61 against 62 last year, the fall comes on the back of other countries improving much more and faster than India. For instance, it is finding it difficult to compete with Vietnam in wooing manufacturing firms moving out of China. While India remains a leader in South Asia, it has performed badly when compared with the other members in BRICS (Brazil, Russia, China and South Africa). In South Asia, India is followed by Sri Lanka (84), Bangladesh (105), Nepal (108) and Pakistan (110). India trails China by 40 places and 14 points.
The key takeaway from these rankings is that New Delhi needs to do better in terms of global integration and structural changes if it is to compete with the likes of Vietnam. Although India ranks third in terms of market size, it is 131 in terms of trade openness and 103 in labour market. In several parameters like financial markets, business dynamism, infrastructure, labour market, innovation and higher education, the country’s ranking saw a decline. However, there is also a silver lining in an otherwise dark cloud. On macroeconomic stability, India’s position improved to 43rd from 49th in 2018. This comes at a time when analysts have expressed doubts over the government’s ability to meet its fiscal deficit target of 3.3% of the gross domestic product for 2019-20. Keeping inflation in check seems to have worked in favour of India, and it is the top-most country on this front, scoring 100% as against 99.9% last year. The other segment within macroeconomic stability in which the country’s ranking improved is debt dynamics. Policymakers must seriously ponder over the report and take necessary corrective measures to improve the ranking.