After improving its standing in the World Bank’s ease of doing business rankings, it is good to see India doing an encore in the World Economic Forum’s Global Competitiveness Index (GCI). The latest rankings for 2016-17 show India climbing to the 39th rank (among 138 nations) in 2016 from 55th place last year. This upgrade, the highest achieved by any country this year, comes on top of a similar 16-place jump in 2015. This marks a decisive reversal from six consecutive years of slippage in rankings.

The report notes that India has made significant leaps in cleaning up its public institutions , increasing transparency in its financial system and opening up its economy to foreign investors/trade in the past year. It acknowledges the role of recent reforms and faster approvals in upgrading infrastructure. It recognises that the clean-up of public institutions has made progress, stating that the “scandals and gross inefficiencies” which had led to a trust deficit until 2014 are now in retreat. Of course, an improving GDP trajectory thanks to benign oil prices has also given India a leg-up in the rankings. On the flip side, rigid labour markets, fragmented State taxes and low ICT use are the key pain points yet to be addressed. The mention of ICT is important as the report predicts that the next leg of global growth will be powered by a “Fourth Industrial Revolution” where artificial intelligence, biotechnology, robotics and the Internet of Things will hold the key to efficient manufacturing. Thus, a country’s technological readiness and ability to innovate will drive its GCI rank from here. India has little to be complacent about as its GCI score on technological readiness is a lowly 110. This is a pointer to the Centre to push hard on the Digital India, Start Up India and Skill India initiatives, as these will decide Indian enterprises’ ability to ride the digital wave.

Such ranking exercises do have their shortcomings, though. As its stalling exports prove, a higher GCI ranking does not automatically guarantee India a larger share of the global trade. Given that executive surveys, and not just statistical data, play a role in these rankings, they can be susceptible to prevailing mood and sentiment. But at a time when India’s employment and growth targets rely heavily on initiatives such as Make in India and the new foreign trade policy, the report does offer insights for policymakers. For instance, it argues that for any country to break into the intensely competitive global market with a new set of products/services, innovation and productivity are far more important than a cheap currency. It also finds a high correlation between a diversified export basket and global competitiveness. These are areas for India to work on, not just to improve its GCI rankings, but also to garner a higher share of global trade.

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