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India 119 in index of economic freedom

BS Economy Bureau in New Delhi

India has been ranked 119th in the "2003 Index of Economic Freedom" released recently by The Heritage Foundation and the Wall Street Journal.

While the country has improved its score from 3.8 in 2000 to 3.5 in 2003, it is still ranked below Sri Lanka placed at 80 and Pakistan at 99.

Corruption has been identified as a major problem with the country. "Corruption so pervades some countries, such as Laos, Burma, India, Indonesia and Bangladesh, that foreign investors stay away," the report says.

"Economies that are doing well have little or no corruption and have cracked down on the black market. Elsewhere, countries suffer from a thriving market for software piracy and black markets that hold significant amounts of their economies. Such nations also suffer from extensive corruption in politics," it adds.

The index ratings reflect an analysis of 50 different economic variables, grouped into 10 categories-banking and finance, capital flows and foreign investment, monetary policy, fiscal burden of the government, trade policy, wages and prices, government intervention in the economy, property rights, regulation and black-market activity.

Countries are rated between one and five in each category, and the ratings are then averaged to give the overall index score.

Nepal has been ranked on a par with India. All the South Asian countries fall under the "mostly unfree" category.

Of the 30 countries in the Asia-Pacific region, 15 have improved their economic freedom, while 9 have become less free. The rest stay at their previous ranks.

Economies in the region, however, continue to fall short of their potential because of pervasive corruption and cronyism, the study says.

The index ranks 156 countries across the world, of which 15 have been classified as free, 56 as mostly free, 74 as mostly unfree and 11 as repressed.

While Hong Kong retained the top spot as the world's most free economy followed by Singapore, Luxembourg and New Zealand tied for the third place, while the US was ranked 6th.

In 2003, economic freedom has improved around the world, with 74 countries reporting better scores, the study says.

Countries enjoying the highest economic freedom have higher long-term growth rates and prosper more than those with little economic freedom, the report finds.

The latest data available from the World Bank shows that per capita income for "mostly unfree" or "repressed" economies averaged only about $3,400 in 2000, about a third of the average of $12,569 for "mostly free" economies. Free economies on an average, had a per capita income of $26,855.

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