India slips in competitiveness scale

India has dropped to the 50th rank in the global competitiveness index rankings this year from the 49th position in the previous year due to continued macro-economic instability and poor education and health infrastructure, according to the Global Competitiveness Report 2008-2009.

In sharp contrast, India’s big neighbour, China, climbed four positions to reach the 30th rank due to significant economies of scale. Though China also suffers from some of the financial ills that are plaguing India, its overall macro-economic stability has provided it a competitive advantage.

The GCR 2008-2009, prepared by the Geneva-based World Economic Forum, a non-government organisation, is a barometer of how different countries are faring in global competitiveness rankings annually.

Ironically, the report placed the United States as the leader in competitiveness rankings despite the worldwide calamities caused by its unregulated financial sector.

The US is closely followed by Switzerland, Denmark, Sweden, Singapore and Japan, among others, in the top ten. All countries are faced with unprecedented challenges due to the ongoing “financial crisis”, according to Xavier Sal-i-Martin, an academic at the Colombia University.

“Today’s volatility underscores the importance of competitiveness-supporting economic environment that can help national economies to weather these types of shocks in order to ensure solid economic performance going into the future,” he said.

The GCR, which is compiled from public data in 134 countries, pointed starkly that “India’s overall competitive position is weakened by its macro-economic instability (109th rank), with the government running one of the highest deficits in the world (ranked 127th), unsustainable levels of government debt (ranked 113th), and fairly high inflation.”

It did not, however, mention the fragile political climate in different states, especially the withdrawal of the Tatas’ small car project from West Bengal.

Nor did the report mention the weakened governance and rule-of-law institutions, said a Geneva-based Indian academic.

But it drew attention to the continued poor performance of social sectors, with declining health and education standards. India is ranked 105th for both infant mortality and life expectancy and continues to be dotted with the prevalence of tuberculosis and malaria.

It expressed concern about falling educational enrolment rates as well as quality of education at the primary level. India also suffers from poor labour market efficiency indicators. It is at the 122nd position regarding female participation and at the 104th rank as regards hiring and firing of workers.