As EMs struggle, India shines in WEF competitiveness report
"Macroeconomic conditions followed a similar path, as India managed only in recent years—thanks also to the drop in commodity prices—to keep inflation below the target of 5 percent while rebalancing its current account and decreasing public deficit," the report said.
The financial market situation has improved after the 2008 recession but compared to institutions and the macroeconomic environment, it is not enough to recover to 2007 levels.
Areas of concern
Despite the improved ranking and positive outlook from global investors on the Indian market, the nation has to check many leaks to maintain the economic growth path it has set for itself.
Financial market development is the pillar most dragging down India’s competitiveness compared to 10 years ago, the report.
WEF laud the efforts made by the Reserve Bank of India (RBI) to bring in more transparency in the financial market and shed light on the large amounts of non-performing loans.
These NPAs were previously not reported on the balance sheets of Indian banks. Now, the banks have not yet found a way to sell these assets, and some need large recapitalisations.
India has made significant progress on infrastructure, one of the pillars where it ranked worst but its biggest relative weakness today lies in technological readiness, where initiatives like 'Digital India' could lead to significant improvement in the coming years, the report said.
Many areas have seen improvement over the last decade but compared to global standards India still lags behind.
Life expectancy is one such area where India ranks only 106th in the world and while the country has almost halved its infant mortality, other nations have done even better which has lead to nine places drop this year to 115.
Higher education and training also lags compared to peers on a global platform.
These challenges are to be tackled along with providing further stimulus to pillars that have led this economic recovery and consumption growth.
In such a fragile environment with sustained high debt levels in emerging markets, that hampers trade and hits the free market, the Global Competitiveness Report for 2016-17 by the World Economic Forum (WEF) has placed India as the 39th spot, a whooping 16 place jump from last year.
In a world of declining consumer demand and geo-political uncertainties, the likes of which have not been seen in the past many decades, the India growth story continues to attract positive sentiment from global markets and experts.
“Declining openness in the global economy is harming competitiveness and making it harder for leaders to drive sustainable, inclusive growth,” said Klaus Schwab, Founder and Executive Chairman, World Economic Forum.
In such a fragile environment with sustained high debt levels in emerging markets, that hampers trade and hits the free market, the Global Competitiveness Report for 2016-17 by the World Economic Forum (WEF) has placed India at the 39th spot, a whooping 16 place jump from last year.
India led the group of South Asian economies and saw major improvements in areas of institutions and infrastructure (42nd and 68th), which have been particularly important in increasing overall competitiveness, the report said.
GCI score range across the 12 pillars in south Asia, 2016-17. Score (1-7)
In a world of declining consumer demand and geo-political uncertainties, the likes of which have not been seen in the past many decades, the India growth story continues to attract positive sentiment from global markets and experts.
“Declining openness in the global economy is harming competitiveness and making it harder for leaders to drive sustainable, inclusive growth,” said Klaus Schwab, Founder and Executive Chairman, World Economic Forum.
In such a fragile environment with sustained high debt levels in emerging markets, that hampers trade and hits the free market, the Global Competitiveness Report for 2016-17 by the World Economic Forum (WEF) has placed India at the 39th spot, a whooping 16 place jump from last year.
India led the group of South Asian economies and saw major improvements in areas of institutions and infrastructure (42nd and 68th), which have been particularly important in increasing overall competitiveness, the report said.
GCI score range across the 12 pillars in south Asia, 2016-17. Score (1-7)
From the comparison above, it is evident that the recent reforms, low crude oil prices and tight monetary policy has worked in the nations favour as it leads the South Asian pack in market size, business sophistication, innovation, financial market development, goods market efficiency and infrastructure.
METHODOLOGY
METHODOLOGY
We define competitiveness as the set of institutions, policies, and factors that determine the level of productivity of an economy, which in turn sets the level of prosperity that the country can achieve.
The report mentions that the quality of infrastructure has improved significantly (although from low levels) in India, Bangladesh, and Sri Lanka, while it stalls in Nepal and deteriorates in Pakistan.
Ten years of competitiveness in India
The report mentions that the quality of infrastructure has improved significantly (although from low levels) in India, Bangladesh, and Sri Lanka, while it stalls in Nepal and deteriorates in Pakistan.
Ten years of competitiveness in India
India’s GDP per capita in purchasing power parity (PPP) terms almost doubled between 2007 and 2016, and rose from USD 3,587 to USD 6,599. Growth slowed after the 2008 crisis, hitting a decade’s low in 2012–13. The economy has been stable and India boasts highest growth level among G20 countries.
Near the global recession in 2008, India's Global Competitiveness Index (GCI) stagnated from 2007-2008 and its ranking slipped.
But after change of government in 2014, growth rebounded and last year surpassed even that of China, making it the fastest growing large emerging market in 2015.
Near the global recession in 2008, India's Global Competitiveness Index (GCI) stagnated from 2007-2008 and its ranking slipped.
But after change of government in 2014, growth rebounded and last year surpassed even that of China, making it the fastest growing large emerging market in 2015.
Health and education improved throughout the decade, growth in infrastructure staggered but after 2014, it has picked up after government increased public investment and sped up approval procedures to attract private resources, the report said.
It was highlighted that institutional environment deteriorated until 2014, as mounting governance scandals and seemingly unmanageable inefficiencies saw businesses lose trust in government and public administration, but this trend was also reversed after 2014.
It was highlighted that institutional environment deteriorated until 2014, as mounting governance scandals and seemingly unmanageable inefficiencies saw businesses lose trust in government and public administration, but this trend was also reversed after 2014.
Pillar contribution to India's competitiveness over time
"Macroeconomic conditions followed a similar path, as India managed only in recent years—thanks also to the drop in commodity prices—to keep inflation below the target of 5 percent while rebalancing its current account and decreasing public deficit," the report said.
The financial market situation has improved after the 2008 recession but compared to institutions and the macroeconomic environment, it is not enough to recover to 2007 levels.
Areas of concern
Despite the improved ranking and positive outlook from global investors on the Indian market, the nation has to check many leaks to maintain the economic growth path it has set for itself.
Financial market development is the pillar most dragging down India’s competitiveness compared to 10 years ago, the report.
WEF laud the efforts made by the Reserve Bank of India (RBI) to bring in more transparency in the financial market and shed light on the large amounts of non-performing loans.
These NPAs were previously not reported on the balance sheets of Indian banks. Now, the banks have not yet found a way to sell these assets, and some need large recapitalisations.
India has made significant progress on infrastructure, one of the pillars where it ranked worst but its biggest relative weakness today lies in technological readiness, where initiatives like 'Digital India' could lead to significant improvement in the coming years, the report said.
Many areas have seen improvement over the last decade but compared to global standards India still lags behind.
Life expectancy is one such area where India ranks only 106th in the world and while the country has almost halved its infant mortality, other nations have done even better which has lead to nine places drop this year to 115.
Higher education and training also lags compared to peers on a global platform.
These challenges are to be tackled along with providing further stimulus to pillars that have led this economic recovery and consumption growth.
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Source:Moneycontrol.com
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