On 17 June 2021, Institute for Management Development (IMD) released the latest country rankings according to the World Competitiveness Index and India maintained its overall rank of 43 over last year. The survey primarily assessed the impact of the COVID pandemic on various economies. Switzerland topped the ranking list, followed by Sweden (6th last year) and Denmark (2nd last year). The ranking of The United States of America (USA) remained unchanged at the 10th position and Taiwan ranked in the top 10 at 8th position for the first time since these rankings started 33 years ago. Despite being the epicenter of the pandemic China ranks at the 16th position.
The government efficiency rank of India improved from 50th in 2020 to 46th this year and is one of the key reasons due to which India’s overall ranking was maintained this year. IMD stated that the improvement in government efficiencies is primarily due to stable public finances, India’s government deficit remained at 7%, and the positive feedback received from Indian business executives for government support and subsidies provided to private firms. However, it did note that India’s short-term performance will depend on how well it responds to the pandemic’s 2nd wave and upcoming 3rd wave.
India has maintained its 43rd rank for the last 3 consecutive years which is an improvement over its ranking of 45 and 44 in 2017 and 2018 respectively. India’s ranking of the 4 factors individually is, 37th in economic performance, 46th for government efficiency, 32nd for business efficiency, and 49th for infrastructure.
The fact that India has maintained its rank in the World Competitiveness Index due to the improved government efficiency coupled with the Reserve Bank of India’s (RBI) prediction in June 2021 of GDP growth at 9.5% in FY 2021-22 are positive indicators for investors. The key attractiveness indicators for India are the skilled workforce, the dynamism of the economy, cost competitiveness, high education level, open and positive attitudes, and a business-friendly environment. Furthermore, India’s stock market capitalization improved from 76.3% in 2020 to 96.51% this year, and exchange rate stability also improved by 14.3%. These factors can help bring in more foreign direct investment (FDI) which will further accelerate economic growth and recovery.
The rankings by IMD World Competitiveness Center measure the prosperity and competitiveness of 64 nations by examining four factors which are economic performance, government efficiency, business efficiency, and infrastructure.