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India ranks 77th in Economic Freedom Index: Report

Posted by Yogesh on Sunday, 21 September, 2008

Indian Economy

NEW DELHI: India’s ranking in the index, which scales prosperity of the whole society, is down by 8 notches to 77th position among 141 countries in 2006, with uneven pattern of economic reforms widening gap between the rich and the poor, a latest report says.

However, India fared better among the BRIC countries where China was ranked at 93, Brazil (96) and Russia (101).

Hong Kong bagged the first position scoring 8.94, followed by Singapore (8.57), New Zealand (8.28), Switzerland (8.20) and UK (8.07).

The annual report called Economic Freedom of the World (EFW) released by Centre for Civil Society (CCS), compares the level of accesses to sound money in 141 countries. It measures the money growth in the country, the rate of inflation and freedom to own foreign currency.

Although, India is better post 1991 economic liberalisation when it was ranked 80, India’s position is continuously sliding from 69 in 2005 and 60 in 2004 to the 77 in 2006.

“Rich are getting richer and poor are becoming poorer! is now a common refrain in India in any discussion on economic reforms. Since 1991, India has undergone a great deal of liberalisation internally and externally. Many feel that the gains of this liberalisation and globalisation have not accrued to the poor,” CCS said in its release.

“Unequal distribution of Economic Freedom is at the basis of India’s uneven development. The reason is simple, the areas in which the middle and upper classes make their living have seen the highest degree of liberalisation, while the areas in which the poor earn their livelihood have seen the fewest reforms,” it said. The rating on a scale of 10 declined from 6.6 to 6.59.

As a global index, it measures the degree to which policies and institutions of these countries are supportive of economic freedom, which includes elements like personal choice, voluntary exchange, freedom to compete and security of privately-owned property.

Among the five components of the EFW index, the largest decline for India is in ‘Sound Money’ where its score decreased to 6.70 in 2006, with the country ranking at the 113th position, from 7.0 in 2005.

The other four criteria for measuring the degree to which the policies and institutions of countries are supportive of economic freedom are size of the government, legal structures, freedom of trade internationally and regulation of credit.

“Countries with high levels of economic freedom enjoy higher levels of prosperity and greater individual freedoms. Countries at the bottom of the index are often mired in poverty, and governed by totalitarian regimes and have few individual rights or freedoms,” the report stated.

It further shows that 8 of the 11 worst performers in economic freedom are African countries, where people continue to suffer from poverty.

The report indicates that there is a strong connection between economic freedom and common well-being. Countries with higher economic freedom have higher average per-capita GDP and average per-capita economic growth.

“As the higher level of economic freedom is sustained and the more rapid growth persists, poverty rates will fall …,” the report added. Source Economic Times

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