India's ranking in economic freedom tumbled down to 105th in 2018 from 79 in the previous year despite the report to this effect not taking into account the impact of Covid-19 which would be available in 2020.
The major disappointment for India comes on the parameter of "freedom to trade internationally" on which India ranked 139 compared to 137 in 2017, showed the Economic Freedom of the World: 2020 Annual Report, released today by Centre For Civil Society in conjunction with Canada’s Fraser Institute.
The other major disappointment was India's ranking on "regulation" where it stood 122nd in 2018 against 114th a year ago.
However, the country gained one place to come 88th on "sound money" in the latest report against 89 in the previous one.
It retained its position at 79th on "legal systems and property rights".
On the size of the government, the major claim of the Modi government, the country's ranking declined to 54th in 2018 from 36 in the previous year.
India reported decreases in each of the components of economic freedom. A score closer to 10 indicates a higher level of economic freedom. Its score fell to to 7.16 from 8.22 on size of the government, to 5.07 from 5.17 on legal system and property rights, to 8.34 from 8.37 on sound money, to 5.71 from 6.08 on freedom to trade internationally and to 6.53 from 6.69 on regulation of credit, labour and business.
Parth J Shah, president of the Centre for Civil Society, said,"The centre and state governments have initiated business process re-engineering to simplify business registration and compliances. No doubt some of these efforts have had a bearing on India's score.”
He said since the ranking is based on 2018 data, many of new restrictions on international trade, tightening of the credit market due to NPAs and Covid’s impact on debt and deficits are not reflected in India’s score.
The government still continues to play an overbearing role in many areas of economic life. The prospects for increasing economic freedom in India depend on next generation reforms in factor markets and in greater openness to international trade, he said.
Economic Freedom of the World measures how policies and institutions of countries support economic freedom. This year’s publication ranks 162 countries and territories.