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 | India's Competitiveness | | 24.11.2003 | | India Economic Summit 2003 | José María Figueres, Co-Chief Executive Officer, World Economic Forum, welcomed participants and said that sustainable competitiveness is necessary for India. Augusto Lopez-Claros, Chief Economist and Director, Global Competitiveness Programme, World Economic Forum, said that it is necessary to understand why some countries grow on a sustained basis while others go into prolonged periods of stagnation. The World Economic Forum’s Global Competitiveness Report 2003-04 has tried to answer this question. An executive opinion survey was conducted in 102 countries, with the results used to formulate an index. Eastern and Central European countries emerged among the strongest performers. As for India, there has been universal recognition of the country’s achievement in the 1990s. Many challenges remain. The macroeconomic situation, particularly the persistent and large fiscal deficits, is taking its economic toll in terms of forgone growth. Other problems include inadequate infrastructure, bureaucracy, labour issues and corruption. Lopez-Claros predicted that if reforms are sustained, by 2032 India’s GDP will be greater than that of Japan and by 2050, India will be the third largest economy in the world behind China and the United States.
Paul A. Laudicina, Managing Director, A.T. Kearney, USA, spoke of the need to reconcile India’s low score on the World Competitiveness Index with its high score on FDI rankings. Last year, India rose from 15th to sixth on A.T. Kearney’s list of most attractive investment destinations. However, the flows have been disappointing. Three factors needing attention are the size of the market, the robustness of market conditions, and the efficiency of the bureaucracy and the ease of moving through the market. There has been a drop of 11% in total manufacturing jobs in the last five years due to improvements in technology. India has an opportunity to make gains in line with investor expectations.
Carol Bellamy, Executive Director, United Nations Children's Fund (UNICEF), New York; Co-Chair of the India Economic Summit 2003, said that the goals of competitiveness should include increasing the standard of living and reducing poverty. India has a large number of malnourished children, while people in many areas still do not have access to adequate health infrastructure and schools. The number of HIV-infected people has risen to worrying levels in some states. Material progress has overshadowed social issues, which will impact future productivity, absenteeism and economic growth.
Jairam Ramesh, Secretary, Congress Party, India, said that the enclaves of competitiveness will expand and the question is whether India will grasp the opportunities. Four essential issues, which are crucial to set the stage for India’s growth, are economic sustainability, social equity, the country’s federalist political structure and cultural harmony. He said that India is on a trajectory of economic competitiveness.
Although acknowledging that India is growing and many Indians are becoming prosperous, Palaniappan Chidambaram, Former Minister of Finance of India, asked whether India is becoming more competitive. India can assure quality, which gives it an edge over other countries, but why is India unable to become more competitive overall? The country has large resources, but they are not put to productive use. These include, for example, unavailable public sector assets, foreign exchange reserves that need better management, and bank funds that should be better utilized. India further has technology, institutional and regulatory strengths and human resources that also need attention. The government must be asked to account for the progress made on the use of these resources, he said.
Rajat Gupta, Senior Partner Worldwide, McKinsey & Company, USA, identified four important questions – why FDI is not open to all sectors; although India is strong in services, why the use of services within India is poor; why healthcare is inadequate; and how the HIV-AIDS situation can be tackled.
In his concluding remarks Figueres commented that India is poised to take advantage of its situation and the onus is on its leadership to take the country forward.
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