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"Its overall score has increased by 1.9 points, led by improvements in judicial effectiveness, business freedom, government integrity, and fiscal health. India is ranked 30th among 43 countries in the AsiaPacific region, and its overall score is below the regional and world averages," it added.
Noting that India is developing into an open-market economy, the Index said traces of its past autarkic policies still remain.
Economic liberalisation measures, including industrial deregulation, privatisation of state-owned enterprises and reduced controls on foreign trade and investment, that began in the early 1990s, accelerated growth, the report said.
More recently, the government reformed one of its more opaque operational practices to make the auctioning of rights to exploit state-owned resources more transparent.
"Corruption, underdeveloped infrastructure, a restrictive and burdensome regulatory environment, and poor financial and budget management continue to undermine overall development," the report said.
"India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services," it said.
Although land titles in some urban and nearly all rural areas remain unclear, real property rights in large metropolitan areas are generally well enforced.
"The judiciary is independent, but the Indian courts are understaffed and lack the technology necessary to clear an enormous backlog. Although officials are often caught accepting bribes, a great deal of corruption goes unnoticed and unpunished," according to the Heritage Foundation.
Observing that non-tariff barriers significantly impede trade, the Heritage Foundation said the government's openness to foreign investment is below average.
"State-owned institutions dominate the financial sector, and foreign participation is limited.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)