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Better infrastructure and less government waste the recipe for improving Indian competitiveness
Leaders debate the future of India in the global economy on the opening day of the World Economic Forum’s India Economic Summit

27 November 2005 - New Delhi, India

Improving India’s competitiveness in the global economy will depend on improving basic infrastructure and reducing waste in government spending, according to the results of an interactive “Town Hall” meeting held on the first day of the 21st India Economic Summit.

The meeting heard from the World Economic Forum’s Chief Economist, Augusto Lopez-Claros that “an inadequate supply of infrastructure is rated by business as the biggest obstacle to operating in India. Improving basic infrastructure would drive up foreign direct investment.”

India ranked 50 out of 117 economies in the World Economic Forum’s recently released Global Competitiveness Report 2005-2006. While India has achieved remarkable economic growth in recent years, it now needs to attain 8% annual growth in order to alleviate poverty and regional inequity.

Key to achieving this is more investment by the government in infrastructure, instilling a ruthless efficiency to accelerate the completion of projects, Palaniappan Chidambaram, Minister of Finance of India, told participants. In agriculture, he said, the government needs to invest in irrigation, but corporations can help by investing in bringing crops from the field to the shelves. More money also needs to be invested in research and development. And to promote both services and industry, the government needs to interfere less, opening more sectors to competition and allowing more foreign direct investment. “Government should leave as far as possible entrepreneurial activity to entrepreneurs,” he said.

To devise additional recommendations for improving the country’s performance, the World Economic Forum and the Confederation of Indian Industry (CII) commissioned a nationwide survey by Indian broadcaster NDTV, which polled 1,076 people across India to gauge their views on what areas of improvement hold the most promise. The Town Hall meeting was organized to augment those findings with observations from among the 600 leaders from the business, government, media and civil society leaders participating in this year’s Summit.

The Town Hall concept was first introduced at the Forum’s Annual Meeting in Davos last January and was used at the World Economic Forum in Jordan meeting in May to help the Middle East’s decision-makers develop an action agenda.

Electronic voting captured participants’ opinions, which were then compared instantaneously with the results of the NDTV poll. Each survey was administered in person (1,076 in total). The five-question survey was conducted across the country in Delhi, Mumbai, Chennai, Kolkata, Hyderbad, Lucknow, Bangalore and Ahmedabad. The survey is available on http://www.weforum.org/india Respondents, both male and female, were professionals aged between 25 and 50. Based on the two results, participants divided into smaller groups to identify what actions business and government should take.

Almost two-thirds of the participants in the Town Hall meeting identified excellent infrastructure as the most important factor to improve India’s competitiveness, while roughly 18% said effective government spending is key. Reducing corruption received 11% of the votes, while slightly more than 3% of participants said easy access to information and communications technology is the top priority.

Participants said the government needs to open infrastructure investment further to public-private partnerships to encourage transparency, share risk and reduce bottlenecks.

The Town Hall results were echoed by 1,076 respondents from a wider business community surveyed across India by NDTV. They identified reducing corruption (34%) and improving infrastructure (23%) as the top priorities for policy-makers and businesses.

Both groups expressed confidence in the government’s ability to improve basic infrastructure. But a quarter of Town Hall participants said they have no confidence that New Delhi will be able to solve any of the issues needed to increase competitiveness.

Slightly more than half of participants said business needs to play a bigger role by investing in the nation’s roads, airports, water and power supplies. Roughly a quarter said businesses should focus on reducing corruption.

To increase access to information technology, the government must increase the effectiveness and number of public-private partnerships to deliver affordable access to rural areas as a driver for skills and job creation, Town Hall participants advised, while business should streamline processes, push through transparency and collectively refuse to pay bribes.

“There is a new mindset in India, when coupled with the opportunity for action, that can propel India into the top ten ranks of globally competitive economies,” said Lee Howell, Director for Asia at the World Economic Forum, responsible for the Town Hall meeting. “What is critical is for the country to begin this journey with all of its stakeholders enthusiastic about what can be achieved by focusing on a few important goals.”




















Photos of this event can be downloaded free of charge for journalists. For more information about the India Economic Summit 2005, please visit: http://www.weforum.org/india/programme, http://www.weforum.org/indiaindepth; photographs 2004 http://www.pbase.com/forumweb/india2004; photographs 2005 http://www.pbase.com/forumweb/india2005; press kit http://www.weforum.org/india/presskit

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