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India slips in competitiveness

BS Economy Bureau

India has slipped one notch to the 42nd position in the World Competitiveness Report released on Monday.

The report is prepared by the Switzerland-based International Institute For Management Development.

The ranking of the 49 top economies of the world that cover 90 per cent of the world's gross domestic product shows that India has performed extremely well on the economic front and improved its rank from 33 to 24.

This implies that the impact of the worldwide recession has been less on India in comparison to other countries, the report says.

However, the performance has been abysmal on other fronts like government, business efficiency and infrastructure. As a result, the country's position remained the same as in 1999. The country was ranked 44th for government functioning, with business efficiency just a shade better at 40th.

According to the report, India has the third worst infrastructure among the 49 countries and its political parties rank 40th in terms of their understanding of current economic challenges.

While the US still continues to top the competitiveness ranking for 2002, China has improved its performance to reach the 31st slot from the 33rd last year. India has been ranked 46th in productivity. This is a couple of notches up from last year's 48th position.

"This is an important change because there is a widely held perception that India is among those developing countries that have low and stagnating levels of productivity," the report points out.

Japan has slid by four positions to the 30th rank in 2002 compared to 26th a year ago.

Among Asian countries, Malaysia went up to the 26th slot from 29th, Korea to the 27th (28th in 2001) while Singapore slipped from the second position to the fifth, yielding to Finland.

The report reveals that the overall perception about prevailing interest rates in India still continues to be unfavourable and it has been ranked 33rd on real short-term interest rates and 37th on cost of capital.

On tax policy, the country has been ranked eighth for low rates of effective personal income tax, but has slipped to the 39th position on the corporate tax front. The ranking is a dismal 44th for the extent of tax evasion in the country.

The ranking for legal regulation of financial institutions has also slipped from 31 to 42. The confidentiality of financial transactions index has dived from 38 to 41. Similarly, the rating for share market efficiency has also plummeted with seven of the eight indicators moving down.

But, the rankings for employment and improvement in technological infrastructure have zoomed up to the third position.

The following is a table of the rankings, with 2001 results in brackets:

1 USA (1)

2 Finland (3)

3 Luxembourg (4)

4 Netherlands (5)

5 Singapore (2)

6 Denmark (15)

7 Switzerland (10)

8 Canada (9)

9 Hong Kong (6)

10 Ireland (7)

11 Sweden (8)

12 Iceland (13)

13 Austria (14)

14 Australia (11)

15 Germany (12)

16 United Kingdom (19)

17 Norway (20)

18 Belgium (17)

19 New Zealand (21)

20 Chile (24)

21 Estonia (22)

22 France (25)

23 Spain (23)

24 Taiwan (18)

25 Israel (16)

26 Malaysia (29)

27 South Korea (28)

28 Hungary (27)

29 Czech Republic (35)

30 Japan (26)

31 China (Mainland) (33)

32 Italy (32)

33 Portugal (34)

34 Thailand (38)

35 Brazil (31)

36 Greece (30)

37 Sloval Republic (37)

38 Slovenia (39)

39 South Africa (42)

40 Philippines (40)

41 Mexico (36)

42 India (41)

43 Russia (45)

44 Colombia (46)

45 Poland (47)

46 Turkey (44)

47 Indonesia (49)

48 Venezuela (48)

49 Argentina (43)

(With additional inputs from Reuters)

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