India has slipped 10 places to the 88th spot, way below neighbouring China, in the World Prosperity Index due to poor healthcare and education systems coupled with weak entrepreneurial infrastructure.
While last year, India stood at 78th position, according to London-based Legatum Institute that compiled the index.
China is ranked 58th in the list of 110 countries, which is topped by Norway. Other countries in the top five are Denmark (2), Finland (3), Australia (4) and NewZeland (5).
The prosperity index is based on 89 variables over 110 countries, grouped into eight sub-indices, and claims to comprehensively rank the level of prosperity in 110 nations of the world.
It is done by taking into account both economic growth and citizens' quality of life, drawing on data from various sources, including the Gallup World Poll 2009 and UN development Report.
The country ranked low on education ground (89th in the Index), health (95th), entrepreneurship and opportunity (93rd), and social Capital (105th).
"The prosperity Index finds that India has extremely poor healthcare, failing to prevent systemic diseases or malnourishment, it has a weak entrepreneurial infrastructure, a poorly-developed education system, and extremely low levels of social capital," the report noted.
Besides, economy (44th) and governance (41st) are two measures on which India ranks highest.
According to the Institute, both scores are high as a result of high levels of public optimism with three-quarters of Indian citizens approving the government and also have high confidence on the country's financial institutions.
China ranks 30 places higher than India in the overall global rankings and outperforms India on the economy sub-index, where the Asia's second largest economy spots at 24th position.
While India trails in 44th position; and in the social Capital sub-index where China ranks 27th.
"The Legatum Prosperity Index is the world’s only global assessment of wealth and well being. It uses a holistic definition of prosperity, which includes factors ranging from economic growth to health and education, to personal freedom and governance," Legatum Institute Senior Fellow Ashley Lenihan said.
Meanwhile, on the lower end of the rankings were Zimbabwe (110), Pakistan (109), Central African Republic (108), Ethiopia (107) and Nigeria (106).
The Prosperity Index presents a broad view of wealth, happiness and prospects of the world's nations and citizens captured in eight sub-indexes.
The idea behind the Index is that material wealth alone does not make for a happy society, but happy citizens are produced as much by democracy, freedom, social cohesion and entrepreneurial opportunity as they are by a growing economy.