India moves up the ladder, ranks 55th on global competitiveness index of WEF

India has jumped 16 places and ranked at 55th position among 140 economies ending five years of decline in this year’s Global Competitiveness Index of World Economic Forum (WEF). But, despite this massive jump, India still ranks seven notches lower than it did in 2007 as per Global Competitiveness report by WEF. Report stated that the jump in India's position underlines the country's recent economic recovery, improvement in the competitiveness of the country's institutions and its macroeconomic environment and a slight improvement in infrastructure.

An important indicator of the economy showing signs of revival is improvement noted in terms of competitiveness of India’s institutions, ranked 60th out of total 140 countries up 10 positions from last year. India's competitiveness has also been helped by a slight improvement in infrastructure where it has gained six places to 81 and its macroeconomic environment where India is ranked 91st, helped by a reduction in commodity prices and improvement in the government's budget deficit. The government budget deficit has gradually dropped since its 2008 peak, although it still amounted to 7 percent of GDP in the last fiscal, one of the world's highest (131st). 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.

Besides, the areas where India ranks better were investor protection, gross national savings, quality of education system, venture capital availability, hiring and firing practices, GDP and domestic market size, public trust in politicians and burden of government regulation.

WEF stated that the main concerns for doing business in India include corruption, policy instability, inflation and access to finance. WEF said that in order to improve further  India must stay the course ,its overall ranking is still hampered by one of the highest budget deficits in the world (131 out of 140). Besides, the quality of its electricity supply which is still too low to 91st and, surprisingly for a country with so many IT champions, the overall technology readiness of its businesses, which comes in at a poor 120, up just one position on 2014. 

Switzerland has retained its top position as the world's most competitive economy, for seventh year in a row and is followed by Singapore, the US, Germany and the Netherlands in the top-five. Japan, Hong Kong, Finland, Sweden and the UK took the place in the top-ten. Meanwhile, macroeconomic instability and loss of trust in public institutions has dragged down Turkey (51st), as well as Brazil (75th), which posted one of the largest falls.

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. As per the report, seven years after the global financial crisis, the world economy is evolving against the background of the new normal of lower economic growth, lower productivity growth, and high unemployment.