Economic Freedom in India has deteriorated as per analysis of Heritage Foundation, a US based think tank. The 2017 Index of Economic Freedom puts India at rank 143 out of 180 economies with a score of 52.6 against a world average of 60.9 and regional (Asia-pacific) average of 60.4. India still remains in the category of ‘mostly unfree’ ever since 2002 with a dip of 3.6 points from 56.2 and a rank of 123 in 2016.
“More than half of these people live in just two countries, China and India, where advancement toward greater economic freedom has been both limited and uneven,” the report says about the two Asian giants.
This comes as a surprise when the current government who came into power with a mandate of development and job creation, is all set for making India the manufacturing hub of the world. The government, who held high the reports cards of the global competitiveness index and corruption perceptions index which marked an improvement, remains silent about the fall in economic freedom.
As per Heritage Foundation, economically free societies are those in which government permits free movement of labor, capital and goods and ensure the existence of liberty. The index measures economic freedom based on four broad policy areas of law, government size, regulatory efficiency and open markets under which 12 aspects of freedom are evaluated.
Source : Heritage.org
Despite all subjectivity in the score determination, it has to be noted that India falls behind the rest of the BRICS economies and the Asia-Pacific average of 60.4.
Note : Lower the rank number, higher the economic freedom
Source : Heritage.org
Neighbouring countries like Bangladesh (128), Pakistan (141) and Sri Lanka (112) are ranked better than India in 2017. The comparison points out that if India intends to be an important player in the international arena, we need to be addressing issues of economic freedom.
Released in 2017, the rank captures data of June 2015 to June 2016 and thus, does not include the effects of demonetisation and other recent developments in India. However, the report points to a poor fiscal health, judicial effectiveness and labour freedom. The government may not be interested in taking this report at face value, attributing to a dip in the ranking. However, paying attention to these aspects and accepting it as broad guidelines could in fact help solve the puzzles in India’s path to development.