Is it time for India to pop the champagne yet? Hardly, it would seem, though there is plenty of room for cheer. The country has emerged as the leader of the ‘BRIC pack’ in the World Economic Forum’s Global Competitiveness Report 2006. India is ranked 43rd overall, up two notches from last year, out of 125 countries evaluated on nine criteria, and ahead of Russia, Brazil and China. India’s emergence in competitiveness is no longer a surprise, as it builds global companies like Infosys and Ranbaxy on the back of its world-class pool of researchers, scientists, managers and software experts in a context backed by economic reforms and a free flow of capital. It also reflects in the way firms use and absorb technology.
India also has enabling institutions for market economics, rule of law and political legislation, aiding a quest for efficiency and trust for foreign investors. Having said all that, what pulls down India’s overall performance is equally evident — the grossly inadequate provision of health services and education, poor infrastructure and the large public sector deficit, which is one of the highest in the world. According to the UNDP’s Human Development Report 2005, India had 51 doctors per 100,000 people during 1990-2004. According to Unesco, almost 40 per cent of Indians still cannot read or write. This lack of basic health and education facilities severely limits citizens’ chances of participating in the labour market, in the development process and in civil society activities. It reduces their employability as well as their possibility of seeking a better quality of life. Given that India’s rise has been fuelled primarily by the knowledge-driven services sector, the government must invest more in its human resources to keep the growth curve rising and to narrow the dangerous gap between the haves and the have-nots. According to the UNDP, in 2003, the share of India’s income accruing to the poorest 10 per cent was 3.9 per cent as against the richest 10 per cent’s share of 28.5 per cent.
Poor infrastructure and public sector deficit form a vicious circle that the government is trying to break through its much-publicised public-private partnership schemes and by taking steps like setting up special economic zones. The results will, of course, take a while to show. Meanwhile, India would do well to remember that there is cause for cheer, but there is a long way ahead yet.