India becomes even more uncompetitive

The World Economic Forum's Global Competitiveness Report is just out and India has done predictably bad 56th out of 142 countries (down from 51st last year and sandwiched between Azerbaijan and Slovenia). Here is the full report and the following commentary about India says it all (jump to page 204 of the pdf file to get a snapshot of India rankings in each area):

India ranks 56th in this year’s assessment. The
country drops five places and demonstrates only minor
changes in its competitiveness performance since last
year.25 Among the BRICS, India continues to rank on
a par with South Africa (50th) and Brazil (53rd) and
ahead of Russia (66th), but its gap with China is widening:
the score difference between the two economies
has increased sixfold between 2006 and today, the gap
expanding from less than 0.1 to 0.6 points.
India continues to be penalized for its mediocre
accomplishments in the areas considered to be the basic
factors underpinning competitiveness. The country’s
supply of transport, ICT, and energy infrastructure
remains largely insufficient and ill-adapted to the needs
business (89th). Indeed, the Indian business community
continues to cite infrastructure as the single biggest
hindrance to doing business in the country. It must
be noted, however, that the situation has been slowly
improving since 2006, although this does not translate
into a higher ranking because other countries have been
improving faster. The picture is similar in the health
and basic education pillar (101st). Despite improvements
across the board over the past few years, public health
and education quality remain a prime cause of concern.
While we observe some encouraging trends in
these two areas, the same cannot be said of the country’s
institutions and macroeconomic environment, the
other two dimensions comprising the basic requirements
component of the GCI. In the past five years,discontent in

the business community about the lack of
reforms and the apparent inability of the government
to provide a more conducive environment for business
has been growing. Corruption (99th) and burdensome
regulation (96th) certainly fuel this discontent. Since
2006, India’s score in the institutions pillar has plunged
from 4.5 to 3.8. Once ranked a satisfactory 37th in this
dimension, India now ranks 69th, having dropped 11
places this year alone. Meanwhile, the macroeconomic
environment (105th) continues to be characterized by
large and repeated public deficits and the highest debtto-
GDP ratio among the BRICS. More recently, the
stability of the country’s macroeconomic environment
is being undermined by high inflation, near or above 10
percent. As a result, India has been hovering around the
100 mark in this pillar for the past five years.
Despite these considerable challenges, India does
possess a number of remarkable strengths in the more
advanced and complex drivers of competitiveness. This
“reversed” pattern of development is characteristic of
India. The country boasts a vast domestic market that
allows for economies of scale and attracts investors. It
can rely on a well-developed and sophisticated financial
market (21st) that can channel financial resourcesto
good use, and it boasts reasonably sophisticated (43rd)
and innovative (38th) businesses.