Moving up the ladder of ease of doing business environment exclusively won’t lead to boom in the economy

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Although India is becoming competitive at global charts in terms of ease of doing business and competitiveness, however, the condition of India on socio-economic front is a matter of concern.

According to the analysis of India’s ranking on global business and socio economic indexes by various international organizations such as World Bank, Legatum Institute, International Food policy Research Institute, AT Kearney, World Economic Forum, UNDP etc, it is observed that significant improvement is registered in almost all the business indicators analyzed in this research report in the last three years.

Out of all the business indexes, remarkable improvement is observed in India’s Ease of Doing Business rankings as India’s ranking declined from 131 in 2016 to 100 in 2018. Further, India jumped 19 places in World Bank’s logistics performance index from 54th rank in 2014 to 35th in 2016. On the Global Competiveness Index, India’s ranking improved by 15 positions from 55th rank in 2015 to 40th rank in 2017. Recently, India has secured a top position in the Global Retail Development Index by moving from 15th rank out of 30 economies in 2015 to 1st rank in 2017.

Table: India’s performance on Global Business Indexes

Index 2018 2017 2016 2015 2014 Change in the rankings in the last 3 years
Ease of Doing Business Index (out of 190 economies) 100 130 131 142 134 31
Logistics Performance Index (out of 160 economies) 35 54 19
Global Competitiveness

Index

40* 39** 55*** 71**** 15
Global Retail Development Index (out of 30 economies) 1 2 15 20 14
Legatum Prosperity Index (out of 149 economies) 104 105 108 4
Global Entrepreneurship Index

(out of 137 economies)

68 69 98# 104## 75@

Source: Data compiled from various sources. Note: * pertains to rank out of 137 economies, ** pertains to rank out of 138 economies, *** pertains to rank out of 140 economies, **** pertains to rank out of 144 economies, ^pertains to rank out of 137 economies @pertains to rank out of 120 economies, # pertains to rank out of 132 economies, ## pertains to rank out of 130 economies

Also, India has been titled as ‘One of the biggest driver’ of global prosperity growth over the past ten years, where millions moved from poverty to prosperity. According to the Legatum Prosperity Index 2016 report, India ranked 104th out of 149 nations from 108th in 2014.

While the performance of India on Global Business Rankings presents a rosy picture, the analysis of various socio-economic indexes revealed that India’s performance on socio-economic fronts is not very progressive. According to the Global Hunger Index (GHI) Report 2017, India is ranked 100th out of 119 countries and has the third worst score in all of Asia – only Afghanistan and Pakistan. The report mentioned that India’s score is at the high end of the ‘serious’ category and is one of the main factors pushing South Asia to the category of worst performing region on the GHI this year, followed closely by Africa south of the Sahara. Also, it has been observed that India’ ranking has worsened by 20 positions in the past 3 years from 80th rank in 2015 to 100th in 2017.

Table: India’s performance on Global Social Indexes

Index 2017 2016 2015 Change in the rankings in the last 3 years
Global Hunger Index (out of 119 economies) 100 97 80^ +20
Gender Parity Index (out of 144 economies) 108 87 127# 19
Human Capital Index (out of 130 economies) 103 105 100^^ +3
Human Development Index (out of 188 economies) 131 130 +1
Social Progress Index (out of 133 economies) 93 98 101 8

Source: Data compiled from various sources. Note: *pertains to the year 2014-16, ^ pertains to rank out of 104 economies, ^^ pertains to rank out of 124 economies, # pertains to rank out of 142 economies

India slipped 21 places globally on Gender Parity Index by ranking at 108 out of 144 countries in 2017 from last year’s 87th rank according to the World Economic Forum’s (WEF) Global Gender Gap Report 2017. India is behind neighbors China and Bangladesh, primarily due to less participation of women in the economy and low wages. However, India’s Gender Parity Index ranking improved significantly during the last three years by moving up by 19 points from 127th position in 2015.

On the Global Human Capital Index 2017, India has been placed at a low 103 rank, the lowest among BRICS economies. Also, India has not shown any significant improvement in Global Human Capital Index rankings in the last three years due to low educational attainment and low deployment of its human capital.

Further, on the Human Development Index, India has been ranked at 131st out of 188 countries in 2016 by slipping on position down from 130th in 2015. India’s human development index (HDI) value of 0.624 puts it in the “medium human development” category, alongside countries such as Congo, Namibia and Pakistan. It is ranked third among the SAARC countries, behind Sri Lanka (73) and the Maldives (105), both of which figure in the “high human development” category.

Talking about economic inequality in Indi according to the World Inequality Report 2108, deregulation and opening-up reforms in India have led to substantial increase in inequality since 1980s in an extent that the top 0.1% of earners have continued to capture more growth than all those in the bottom 50% combined. The figures indicate that the share of national income captured by India’s top 1% of earners was 22% in 2014, while share of top 10% of earners was around 56%. The bottom 50% now have about 15% share in the total income. This rising inequality contrasts to the 30 years following the country’s Independence, when income inequality was widely reduced and the incomes of the bottom 50% grew at a faster rate than the national average.

Despite the gloomy status of socio-economic indexes of India, the country has shown some improvement on the Social progress Index by moving up from the tier of “Low Social Progress” to “Lower Middle Social Progress. Also, the rank improved by 8 points in the last three years from 101 in 2015 to 93 in 2017.

Going ahead, for the overall economic development of the country, it becomes pivotal to strengthen and enhance the socio-economic condition primarily the Human Development Index. Therefore, it is important for India to act on social challenges by designing innovative mechanisms that will help them move towards a more inclusive society.