Huge bad loans, lack of infrastructure and stagnating performance on technological readiness are among the major drags on India's global competitiveness, with even Bangladesh and Sri Lanka outscoring India on some parameters, says a WEF survey. While India moved up 16 positions - highest for any country - to 39th place on the global competitiveness index released by Geneva-based World Economic Forum (WEF), it warned that financial market development is one grey area hindering India's competitiveness.
"Another area of concern is India's stagnating performance on technological readiness," WEF said. The lack of infrastructure and ICT (Information and Communications Technology) use (120th) remain bottlenecks -- the sub-categories where the country's ranking is very low at 68th and 120th respectively. WEF noted that Bangladesh and Sri Lanka has registered significant improvement in terms of technological readiness.
"Financial market development remains poor across the entire region, as does technological readiness; this last area improves significantly only in Bangladesh and Sri Lanka, which overtook India to become the best performer in this pillar in the region," the report said. WEF noted that India is "still long way" from having in place all the competitiveness elements to realise its potential as a major global economy.
"...The efforts of the Reserve Bank of India have increased transparency in the financial market and shed light on the large amounts of nonperforming loans, previously not reported on the balance sheets of Indian banks. Banks have not yet found a way to sell these assets, and some need large recapitalisations," the report said. According to WEF, the recent reform efforts of the Indian government have concentrated on improving public institutions, opening the economy to foreign investors and international trade, and increasing transparency in the financial system.
"Still, a lot needs to be done," it said. WEF said: "Improvement has been slow in recent years and further investment will be necessary, especially to connect rural areas and make sure they can equally benefit from and contribute to the country's development." The report noted, as the country closes infrastructure gap, new priorities emerge. "The country’s biggest relative weakness today is in technological readiness, where initiatives such as Digital India could lead to significant improvements in the next years," it said adding "huge challenges still lie ahead on India's path to prosperity."