India ranks below Bangladesh, Nepal in inclusive development index

With a score of only 3.38, India ranks 60th despite the fact that its growth in GDP per capita is among the top 10

GN Bureau | January 17, 2017


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India has fared worse than its neighbours: Nepal, Bangladesh, Pakistan and China, in an inclusive development index.

World Economic Forum’s Inclusive Growth and Development Report 2017 said that India, with a score of only 3.38, ranks 60th among the 79 developing economies on the IDI (inclusive development index), despite the fact that its growth in GDP per capita is among the top 10 and labour productivity growth has been strong. 
 
China is placed 15th; Nepal is 27th, Bangladesh 36th while Pakistan is at 52nd place on the index.
 
The report said that poverty has also been falling, albeit from a high level. On the other hand, its debt-to-GDP ratio is high, raising some questions about the sustainability of government spending. With regard to framework indicators, educational enrollment rates are relatively low across all levels, and quality varies greatly, leading to notable differences in performance among students from different socioeconomic backgrounds.
 
It added that while unemployment is not as high as in some other countries, the labor force participation rate is low, the informal economy is large, and many workers are in vulnerable employment situations with little room for social mobility.
 
A more progressive tax system would help raise capital for expenditure on infrastructure, healthcare, 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.
 
Efficient markets and macroeconomic stability are essential for economic growth. But how well growth benefits society as a whole depends on the framework of rules, incentives, and institutional capacities that shape the quality and equity of human capital formation; level and patience of real-economy investment; pace and breadth of innovation; effectiveness and flexibility of worker protections; coverage and adequacy of social insurance systems; quality and breadth of access to infrastructure and basic services; probity of business and political ethics; and breadth and depth of household asset-building.
 
The report goes on to say that this recognition and the rebalancing of policy priorities it implies is what is required for governments to respond more effectively to decelerating growth and rising inequality – to take seriously the social frustrations increasingly being expressed through the ballot box and on the street. Such frustrations have an essential validity. The implicit income distribution system within many countries is in fact severely underperforming or relatively underdeveloped, but this is due to a lack of attention rather than an iron law of capitalism. Inequality is largely an endogenous rather than exogenous challenge for policymakers and needs to be recognized and prioritized as such in order to sustain public confidence in the capacity of technological progress and international economic integration to support rising living standards for all.
 
A coordinated global initiative along these lines is what is required to transform inclusive growth from aspiration into action – into a new global growth agenda that places people and living standards at the center of national economic policy and international economic integration.
 
The report adds that after generating the majority of global growth since the financial crisis, the BRICS countries and other major emerging market economies are experiencing a marked slowdown, with the possible exception of India.
 
 
 
 
 
 
 

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