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New Delhi, 1 October 2010
Global Competitiveness
INDIA DROPS TO 51st POSITION
By Dr. P. K. Vasudeva
(Retd)
It is a matter of grave concern that
India has slipped by two
places to 51st in the World Economic Forum's (WEF) global competitiveness
rankings, while rival China
has managed to improve its standing to 29th position. The global
competitiveness rankings are viewed as a barometer of the business climate in
139 countries and mirrors the assessments of leading businessmen on a range of
political, social, and economic parameters
As per the WEF's Global
Competitiveness Report 2010-11, released recently, Switzerland is number one in the
world in terms of its ability to provide the most competitive environment on
several fronts.
Sweden, another technology powerhouse in
Europe, ranks second, followed by Singapore
and the United States,
which both fell by two positions from their ranking last year. The African
nation of Chad
figures at the bottom of the list.
Though Switzerland has
"state-supported monopolies in key sectors, it maintains overall economic
stability and largely open trade and investment policies," explains Margareta
Dryeniek Hanouz, senior economist and director of the WEF, who is also the
co-author of the report.
India has been pushed down from 51st
position to 49th due to its poor performance in a range of social sector areas
such as education, health and infrastructure. Though India has performed well in complex
financial sector areas, attaining the 17th rank globally in terms of its
financial markets, 44th in business sophistication and 39th in innovation, it
has failed to improve the basic drivers of competitiveness, the report said.
"There are two India’s,"
said Thierry Geiger, an associate director at WEF, who also authored the
report. "While there is widespread poverty, poor health and education
facilities and poor infrastructure in rural India,
the other India
is experiencing rapid growth," he added.
China, which climbed up to 27th position
from 29th last year, came in for praise for making a dent in poverty and for
improving overall access to education and health, suggesting that India is far
from making a noticeable impact in these two areas.
Consequently, life expectancy is 10
years shorter in India as
compared to China and Brazil. Despite
high economic growth, India
continues to be plagued by budget deficits, high public debt and high
inflation. In contrast, China
has over $2 trillion in foreign exchange reserves and a sound macro-economic
environment and India
has $293 billion as the balance of payment and poor macroeconomic environment.
The reasons for India sliding
down in the global competitiveness ranking are: Least care for
people below poverty line; rising inflation and increasing fiscal deficit.
Insofar as
people being below poverty line are concerned, the present Government appears to be working on sheer
vote bank politics. It is least bothered to take care of the population below
poverty lines and is sticking to reservations based on castes, which needs to
be completely abolished.
According to a recent committee, constituted by the Government to
estimate poverty, nearly 38 per cent of India’s population (380 million) is
poor. This report is based on new methodology and the figure is 10 per cent higher
than the present poverty estimate of 28.5 per cent.
The committee, headed by SD Tendulkar, used a different methodology to
reach at the current figure. It has taken into consideration indicators for health,
education, sanitation, nutrition and income as per National Sample Survey
Organization survey of 2004-05. This new methodology is a complex scientific
basis aimed at addressing the concern raised over the current poverty
estimation.
Since 1972 poverty has been defined on basis of the money required to
buy food worth 2100 calories in urban areas and 2400 calories in rural areas.
In June this year, a government committee headed by NC Saxena estimated that 50
per cent Indians were poor as against
Planning Commission’s 2006 figure of 28.5 per cent.
Even after more than 63 years of Independence,
India still has
the world's largest number of poor people in a single country. Of its nearly
one billion inhabitants, an estimated 260.3 million are below the poverty line,
of which 193.2 million are in the rural areas and 67.1 million are in urban
areas. More than 75 per cent of poor people reside in villages. Poverty level
is not uniform across India.
The poverty level is below 10 per cent in States such as Delhi,
Goa, and Punjab etc whereas it is below 50 per cent in Bihar
(43 per cent) and Orissa (47 per cent). It is between 30-40 per cent in
Northeastern states of Assam,
Tripura, and Mehgalaya and in Southern states of Tamil Nadu and Uttar Pradesh.
In regard
to rising inflation, the Government has to make serious efforts to control its
inflation, hunger and malnutrition. This is one of the reason that life span of
its citizens instead of improving is slipping down. India's food inflation in September
2010 rate rose further to 11.47 per cent in the week ended August 28 from 10.86
per cent in the previous week, staying in double-digit territory for the fifth
straight week.
The return of the food inflation rate to double digit levels last week
after two weeks in single digit territory came at a time when the Government
was facing a steady attack from the Opposition on the issue of rising food and
fuel prices. High prices of food items have been a cause of worry for the
Government since the worst monsoon in more than three decades last year and
floods in some States adversely affected the Kharif crop. The Government must
take action on hoarders and smugglers to control inflation.
India’s fiscal deficit soared by 34 per
cent to Rs 3.5 lakh crore in the first ten months of the financial year against
Rs 2.62 lakh crore a year ago, mainly on account of the stimulus measures taken
by the Government to prop up the economy hit by the global financial crisis.
 This makes the April-January
fiscal deficit at 87.2 per cent of the budgeted estimate of 4.01 lakh crore for
the current fiscal. To spur economic activities, the Government had initiated
massive spending programmes and slashed duties from December 2008 in three
stage following the global financial crisis that began in September 2008.
India's fiscal deficit, including the
Centre and States, would be among the highest in the world and is likely to be
10.3 per cent of GDP in the current fiscal and 10 per cent in the next fiscal.
The deficit would not come down substantially over the next few years due to
increase in spending, especially on higher wages and unemployment benefits as
well as a large increase in the Government's interest burden. The Government
expenditure has to be curtailed to keep the fiscal deficit under check.
If India
has to retain its lost sheen, it has to do well in social fields such as education
and health. It needs to emulate Kerala and Gujarat
for their performance in these two sectors, but the Government ignores the
claim of Kerala for more incentives for its high contribution to health and
education sectors. Indeed, these micro socio-economic parameters need to be
given weightage when doling out Plan funds.--INFA
(Copyright,
India News and Feature Alliance)
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