Saturday, October 15, 2016

MILES TO GO BEFORE TRUE COMPETITIVENESS

It is notable that, in the World Economic Forum’s Global Competitiveness Index for 2016-17, India is ranked a credible 39th, and has risen 16 places, the highest rise among all economies. It is commendable that India’s competitiveness seems to have improved across the board, and in particular when it comes to goods market efficiency, business sophistication and innovation. However, the ground reality is that investments, including in the corporate sector, remain sluggish, and the current account deficit has been reduced to the tiny decimal points of national income, meaning that the Indian economy is unable to absorb foreign savings to boost domestic investments.

Note also that outward investments keep rising, suggesting that our corporates are somewhat keener to invest abroad than here. The WEF report adds that while recent reforms have focused on improving public institutions, opening up the economy to foreign investment and increasing transparency in the financial system, a lot remains to be done. Banks remain saddled with bad debt, state power utilities are financially moribund and there is scant growth in formal employment. Besides, when it comes to the Networked Readiness Index, the WEF earlier in July, ranked India a lowly 91st on readiness to transition to a digitised economy and society. We need to reduce infrastructural bottlenecks and improve digital access and skills to step-up productivity and boost inattentiveness economy-wide. In the domain of policy, there’s the pressing need to improve the ease of doing business across sectors and jurisdictions. And in tandem, we need transparency in electoral funding across political parties to purposefully stem corruption and the generation of unaccounted black money. It would rev up our competitiveness.

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