Prime Minister Narendra Modi has lifted the Indian economy up, making it more competitive than it has ever been.

That’s according to just published World Economic Forum Report (WEFR), which ranked India 40th out of 137 countries included in the report, the highest it has ever been, up from 71st three years ago.

That may come as a surprise to Modi’s critics, especially after his currency experimentations and the biggest ever tax overhaul that shook up the Indian economy in the last year.

Apparently, Prime Minister Modi did a few things right, as noted in the WEFR. Like improving in country’s infrastructure, where India edged up a couple of points compared to last year; education and training, up six points; technological readiness, the spread of the internet to schools, and efficiency of public spending.

India’s competitiveness is supported and reinforced by steady progress with economic reforms, e.g., the loosening of controls on foreign investment, reduction of export-import taxes, and the removal of price controls.

Improving competitiveness has in turn helped India become the world’s fourth fastest growing economy in the world in 2017, according to the World Bank’s latest edition of Global Economic Prospects.

That has attracted the attention of country risk monitoring agencies like Aon, which considers India “a relative bright spot in the region,” in its recent Political Risk Newsletter.

That’s music to the ears of investors who have been driving the country’s equity shares higher. The iShares S&P India 50 have gained 10.69% over the last five years, as Global X MSCI Pakistan shares lost 5.30%.

Index/Fund 12- month Performance
Global X MSCI Pakistan (PAK) -5.30%
iShares S&P India 50 (INDY) 10.69%

Source: Finance.yahoo.com 9/26/17

Still, there are several things in the competitiveness report that should temper investor enthusiasm — like the persistence of corruption, lack of access to financing, and the fluid taxation system — that can eventually take their toll on the country’s competitiveness and eventually financial markets.

Source: www.forbes.com


 

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