India has surged ahead in the World Economic Forum's (WEF) 2006 index of world's most competitive economies, leaving behind nations like China, Russia, Brazil, South Africa and Kuwait.
According to the World Economic Forum's Global Competitive Index (GCI) for FY 2007, India climbed two spots to 43rd, well ahead of Brazil (66), China (54), Russia (62), South Africa (45) and Kuwait (44).
Even last year, India, in the 45th place, was ahead of the other three BRICs nations â€“ Brazil Russia and China.
In fact, each of the other three slipped this year: China from the 48th place to 54th, Brazil from the 57th to 66th and Russia from the 53rd to 62nd.
Switzerland, Finland and Sweden are the world's most competitive economies, according to the report.
Denmark, Singapore, the United States, Japan, Germany, the Netherlands and the United Kingdom complete the top 10 list, but the United States showed the most pronounced drop, falling from first to the sixth.
While the US remained the best country to do business in, it ranked 69th for its economic environment with the government set to post a fifth consecutive annual budget deficit and after its current account deficit widened more than forecast last quarter to the second-largest on record.
India's overall rank of 43 in the Geneva-based WEF's global competitiveness index for 2006 demonstrates remarkably high scores in capacity for innovation and sophistication of firm operations, Augusto Lopez-Claros, Chief Economist and Head of the World Economic Forum's Global Competitiveness Network, said in a report released on Tuesday.
The quality of the business environment in India has improved tangibly in recent years... The available evidence suggests that the Indian economy may have entered a high growth plateau...the challenge for the authorities will be to ensure that this process is sustained and that it precipitates further progress in poverty reduction, Lopez-Claros said.
India scored 4.44 overall in the index in which the top ranking Switzerland got 5.81 in the study covering 125 nations. China's overall score was 4.24.
India got credit in particular for the quality of scientific research and the number of scientists and engineers, which are increasingly supplying highly-skilled professionals to the private sector.
Firm use of technology and rates of technology transfer are high, although penetration rates of the latest technologies are still quite low by international standards, reflecting India's still low levels of per capita income and high incidence of poverty, Lopez-Claros said.
According to the report, India scored well in innovation and sophistication of firm operations, as well as in the adoption of technologies from abroad.
But its level of fiscal deficit is still an area of concern, along with that of lack of appropriate infrastructure, hampering growth in remote regions. The other concerns revolve on shortcomings in the provision of health services and education, which are necessary to ensure that the benefits of economic growth are more broadly distributed.
India's South Asian neighbors scored poorly in the index â€“ Pakistan (91), Nepal (110), Bangladesh (99) and Sri Lanka (79). Bhutan did not even find mention on the index.
The Asian continent is home to some of the most as well as least competitive economies, the index has revealed. Singapore leads the pack (5), followed by Japan (7), Hong Kong (11), Taiwan (13), South Korea (24), Malaysia (26) and Thailand (35).
These economies all have high-quality infrastructure, flexible and efficient markets, and healthy, well-educated workforces. They also operate on the outer boundaries of the technology frontier.
Others like Philippines (71), Vietnam (77), Mongolia (92) and Cambodia (103) fared poorly.
The report mentioned that India's economic rival, China, needs to make progress in improving various institutions, including reducing the burden of the government regulation, improving the climate for the protection of property rights as well as safeguarding the independence of the judiciary.
The rankings are drawn from a combination of publicly available hard data and the results of the Executive Opinion Survey, a comprehensive annual survey conducted by the World Economic Forum, together with its network of Partner Institutes (research institutes and business organizations) in the countries covered by the report.
This year, over 11,000 business leaders were polled in a record 125 economies worldwide. The survey questionnaire is designed to capture a broad range of factors affecting an economy's business climate that are critical determinants of sustained economic growth.
The Forum annually delivers a comprehensive overview of the main strengths and weaknesses in a large number of countries, making it possible to identify key areas for policy formulation and reform.