While others climb up, India remains in its old rut

The country’s competitiveness has improved marginally, however most indicators remain unchanged

ENS ECONOMIC BUREAU

NEW DELHI, OCTOBER 18: India’s had more than a decade of economic reforms, but it still takes 90 days to start a new firm in India as opposed to just a week in the UK or a month in countries like Korea, Philippines and Thailand. The only country that tops India in the time taken for this is Italy, at 105 days.

The World Economic Forum’s Global Competitiveness Report which has done this analysis doesn’t tabulate the time taken to close down firms, but if they did, the India figure would be just under 20 years. And a recent file-tracking exercise by disinvestment minister Arun Shourie shows it can take upwards of 15 years to just sack a bureaucrat on corruption charges.

Of the 75 countries ranked by the WEF, India’s corruption ranking in government is 70. And when it comes to other government-related indices like road infrastructure, India ranks a lowly 73. Government subsidies that distort free-market pricing take India’s rank to 68 in this instance.

Given the tremendous boom in India’s infotech industry and its fame abroad (remember President Clinton’s famous ‘you guys own half of Silicon Valley’ statement?), it’s not surprising that India scores well on most IT parameters. India is ranked 11 on the government’s success in promoting IT, 13 when it comes to the priority given to IT by government, and 25 when it comes to the legal framework for this in the country. India is number four on the availability of scientists and engineers, and is 9th when it comes to IT training and education.

When it comes to more basic stuff, though, like tertiary enrolment (higher education), India is ranked a very poor 67, it’s labour laws get a rank of 73. In other words, the WEF’s 2001 report holds no special surprises — India is doing very well in the new economy, but is doing precious little for the old one.

Will the new economy pull India out of its present rut fast enough? The WEF has something called the Growth Competitiveness Index — or the index which tells you just how fast countries will grow in the future.

India’s ranking on this has improved somewhat from 48 in 2000 to 47 this year (based on the old sample of 58 countries), but that’s way below India’s ranking on the Current Competitiveness Index of 33. In other words, until the old economy gets fixed, India’s going nowhere.