Global economic freedom up slightly- India’s rank falls to 105 from 79

New Delhi: India ranks 105 out of 162 countries and territories included in the Economic Freedom of the World: 2020 Annual Report, released today by Centre For Civil Society in conjunction with Canada’s Fraser Institute. Last year, India ranked 79. Hong Kong and Singapore once again top the index, continuing their streak as 1st and 2nd respectively. New Zealand, Switzerland, the United States, Australia, Mauritius, Georgia, Canada and Ireland round out the top-10. The report, based on 2018 data (the most recent comparable data), warns that recent events in Hong Kong will likely cause its score to fall as data become available for 2019 and 2020.

It measures economic freedom (levels of personal choice, ability to enter markets, security of privately owned property, rule of law, etc.) by analysing the policies and institutions of 162 countries and territories. The 10 lowest-rated countries are African Republic, Democratic Republic of Congo, Zimbabwe, Republic of Congo, Algeria, Iran, Angola, Libya, Sudan and Venezuela. Countries such as North Korea and Cuba have not been ranked due to lack of data. Other notable rankings include Japan (20th), Germany (21st), Italy (51st), France (58th), Mexico (68th), Russia (89th), India (105th), Brazil (105th) and China (124th).

Research shows people living in countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties, and longer lives. For example, countries in the top quartile of economic freedom had an average per-capita GDP of $44,198 in 2018 compared to $5,754 for countries in the bottom quartile. Moreover, in the top quartile, the average income of the poorest 10 percent was $12,293 compared to $1,558 in the bottom quartile. Interestingly, the average income of the poorest 10 percent in the most economically free countries is more than twice the average per-capita income in the least free countries.“Where people are free to pursue their own opportunities and make their own choices, they lead more prosperous, happier and healthier lives,” McMahon said.

The Fraser Institute produces the annual Economic Freedom of the World report in cooperation with the Economic Freedom Network, a group of independent research and educational institutes in nearly 100 countries and territories. It is the world’s premier measurement of economic freedom, ranking countries across five areas—size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally and regulation of credit, labour and business. See the full report at www.fraserinstitute.org/economic-freedom.

India reports marginal decreases in each of the components of economic freedom. A score closer to 10 indicates a higher level of economic freedom:

Size of government: changed to 7.16 from 8.22 in the last year’s report.
Legal system and property rights: changed to 5.07 from 5.17.
Access to sound money: changed to 8.34 from 8.37.
Freedom to trade internationally: changed to 5.71 from 6.08.
Regulation of credit, labour and business: changed to 6.53 from 6.69.
“The centre and state governments have initiated business process re-engineering to simplify business registration and compliances. No doubt some of these efforts have had a bearing on India’s score”, says Dr Parth J Shah, President; Centre for Civil Society. He continues, since the ranking is based on 2018 data, many of new restrictions on international trade, tightening of the credit market due to NPAs and Covid’s impact on debt and deficits are not reflected in India’s score. The government still continues to play an overbearing role in many areas of economic life. The prospects for increasing economic freedom in India depend on next generation reforms in factor markets and in greater openness to international trade.”

 

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