Thursday, September 13, 2012

Global competitiveness Report 2012-13 and India - Moving down in Rankings

GDP Per Capita
British author, actor and film maker 'Brayan Forbes' once told 'Nothing recedes like success'. For India, 'World Economic Forum - Global competitiveness Report 2012-13' showed exactly the same. For second straight year, we went down in rankings, from 51 (2010-11) to 56 (2011-12) and to 59 in 2012-13. However, this is not unexpected; people who are following the events will not be surprised by fall in rankings.

Let’s go through the report which ranked 144 countries.

Worst performing areas for India
Problematic areas in doing business
India ranked 101 in 'Health and primary education', a critical sector where we have to invest heavily and judiciously; to stay in the line of growth. In 'Infrastructure' category we are ranked at 84, 'Higher Higher education and training - 86'. In terms of ‘Labour market efficiency' ranking is 82 - an indication that, without improving labour efficiency, we may no longer be able to stay in this highly competitive market. In terms of 'Goods market efficiency' we are in 75 - better position considering the fact that 40% of agricultural produce are getting wasted before reaching consumers. As far as the fate of ‘Goods and Services Tax’ bill is considered, the less said the better.

Problematic factors

In terms of problematic factors, I think corruption stands first. This single entity is one of the major problematic factors - contributing 15.8%. Another, major problem is 'Policy instability' which contributes 7.6%. When central government's decision and policies are frequently changing due to alleged coalition pressure and over care for commanding heights, there is little to wonder about the numbers.
'Inefficient government bureaucracy' contributes 12.7%; 'Inadequate supply of infrastructure' is identified as the biggest problem factor, contributing 20.4%. In the case of later, I won’t criticize government much considering the pressure it has to face when moving ahead with some projects or policies in a highly diversified and overpopulated country like India, where it is difficult to bring all the people to same view point.

However, factors like Inflation and 'Access to financing' contributed only 7.5% and 6.2% only.

Other areas

As expected, in terms of 'Public trust in politicians' India ranked very low. But, the position of 106 is unbelievable, especially after considering the political situation in many countries ranked above India. I wonder how World Economic Forum got this number.
Same thing happened in case of 'Irregular payments and bribes', were we ranked at 99th. There is no doubt that the culture of bribe slowly but steadily eating away the morality of society; but considering the state of many countries listed above, I do have doubt about India's low rankings.

In 'Diversion of public funds' we are ranked at 91, 'Favouritism in decisions of government officials' at 92, 'Burden of government regulation' at 98, 'Business costs of terrorism' 114. Atleast in the last count, we are partially helpless, again, many countries ranked above score nothing better. These abnormalities are forcing me to re-evaluate the usefulness of the ranking itself.
Where we are good?

In terms of 'Judicial independence' we are ranked at 45. Comfortable, but I can’t find any specific problems faced by Indian judiciary which bring it down in the ranks.
We are ranked at 21 in 'Financial market development', 44 in 'Strength of auditing and reporting standards', 39 in 'Strength of investor protection', 52 in Protection of minority shareholders’ interests', 3 in terms of Market size. There is little to say about market size, when the population is so high market will be larger in size. Better ranking in these areas underline the soundness of SEBI, CBDT, IT, IRDA etc.
This report certainly reveals many categories where we have to improve. I won’t accuse the agency of partiality - certainly that is NOT the case, but in terms of country comparison report, this will do little help in many areas. The figures might be based on well established criteria’s, frameworks and standards, but in a practical view point it’s failed in terms of taking realities in to account.


1. 'World Economic Forum - Global competitiveness Report 2012-13'

You can download the report from here - Global competitiveness Report 2012-13.  Don’t forget to take a look in to pages 389-498 and beyond.

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