India has been ranked 60th among 79 developing economies, below neighbouring China and Pakistan, in the inclusive development index, according to a WEF report.
WEF’s ‘Inclusive Growth and Development Report 2017’, released on Monday, said that most countries are missing important opportunities to raise economic growth and reduce inequality at the same time because the growth model and measurement tools that have guided policymakers for decades require significant readjustment.
In order to provide a more complete measure of economic development than GDP growth alone, the Inclusive Development Index has three pillars — Growth and Development, Inclusion and Intergenerational Equity, and Sustainability.
Lithuania tops the list of 79 developing economies that also features Azerbaijan and Hungary at second and third positions, respectively.
While India is placed at the 60th spot, many of the neighbouring nations are ahead in the rankings. China is ranked at the 15th position, Nepal (27th), Bangladesh (36th) and Pakistan (52nd).
Two BRIC nations, Russia and Brazil, are at 13th and 30th places, respectively.
Others in the top ten are Poland (4th), Romania (5th), Uruguay (6th), Latvia (7th), Panama (8th), Costa Rica (9th) and Chile (10th).
“India, with a score of only 3.38, ranks 60th among the 79 developing economies on the IDI, despite the fact that its growth in GDP per capita is among the top 10 and labour productivity growth has been strong.
“Poverty has also been falling, albeit from a high level,” the report said.
However, it noted that the country’s debt-to-GDP ratio is high, raising some questions about the sustainability of government spending.
Among the advanced economies, Norway is at the top, followed by Luxembourg (2nd), Switzerland (3th), Iceland (4th) and Denmark (5th).
Other nations in the top ten advanced economies are Sweden (6th), Netherlands (7th), Australia (8th), New Zealand (9th) and Austria (10th).
IDI scores are based on a scale of 1-7. Advanced and developing economy IDI scores are not strictly comparable due to different definitions of poverty.
As per the report, while unemployment in India is not as high as in some other countries, the labour force participation rate is low, the informal economy is large, and many workers are in vulnerable employment situations with little room for social mobility.
About India, the report also noted that a more progressive tax system would help raise capital for expenditure on infrastructure, health care, basic services and education.
“India scores well in terms of access to finance for business development and real economy investment.
“However, new business creation continues to be held back by corruption, underdeveloped infrastructure, and the large administrative burden involved in starting and running companies,” it added.
According to the report, annual median incomes declined by 2.4 per cent or USD 284 per capita across 26 advanced economies between 2008 and 2013.
“Developing countries fared much better, with median incomes rising by an average of 10.7 per cent or USD 165.
“However, 23 per cent of them experienced a decline in median per capita income of 9 per cent, as compared to 54 per cent of advanced countries experiencing a decline of an average 8 per cent or USD 1,044 per person equivalent to USD 2,505 per average household,” it said.
Richard Samans, Member of the WEF’s Managing Board, said there is a global consensus on inclusive growth, but it has been far more directional than practical.
To respond more effectively to social concerns, economic policy needs a new compass setting, broad-based progress in living standards, and a new mental map in which structural reform is re-imagined and reapplied to this task, he added.