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Indian economy becoming more competitive: WEF

India is becoming more competitive on a global scale and the stalling of its privatisation drive is a "hiccup" on the road to economic reform, the World Economic Forum said on Thursday.

India's strong economic performance had boosted its ranking by nine points on the WEF's growth competitive index to 48, it added.

The index comprises three variables -- technology, the quality of public institutions and the macroeconomic environment -- that drive medium and long-term growth.

"The economy is doing well and there are a lot of positive indicators," WEF director Colette Mathur said ahead of a meeting of business leaders from India and abroad on ways to boost economic growth to meet a government target of eight per cent.

The country's performance was expected to improve further as cost-conscious global firms increased outsourcing from cheaper places such as India, she told a news conference.

India's economy grew by 5.4 per cent last year, which still put it among the world's fastest-growing economies, up from 4.0 per cent the previous year. This year, growth is expected to be 5.0-5.5 per cent, depending on the impact of a bad drought.

But the government says India's economy, the world's 12th largest, needs to achieve at least eight per cent growth to make any dent in widespread poverty amongst its one billion people.

Mathur said she did not believe the central coalition government's decision to cave in to opposition from key allies and defer the privatisation of two cash-rich oil firms was a lasting setback to India's reform drive.

"Coalitions have problems all over the world. It's not something special to India. Naturally there will be hiccups and there will be people who feel that its not right to privatise, it's a part of the evolution," she said.

"We (foreign investors) look at India for the long term and so as far as we're concerned, we're very optimistic," she said.

The summit organised by the WEF and the Confederation of Indian Industry, a major business lobby, starts on Sunday in New Delhi and is expected to draw 400 participants from 25 countries.

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