Hours before PM Narendra Modi showcases India before the global investors’ community at Davos, Switzerland, the nation was ranked at 62nd place among the emerging economies on an Inclusive Development Index, a World Economic Forum (WEF) report said. India ranks much below China’s 26th position and even Pakistan’s 47th.
India had been ranked 60th among 79 developing economies last year. Norway remains the world’s most inclusive advanced economy, while Lithuania again tops the list of emerging economies, the WEF said.
The IDI is essentially based on the notion that most people base economic progress by changes in their standard of living rather than published GDP growth. The index namely has three pillars of growth for global economies: growth and development; inclusion, intergenerational equity and sustainability. The report says that the IDI is ‘designed as an alternative to GDP that reflects more closely the criteria through which people evaluate their respective countries’ economies’.
According to the report, India ranks second last among the G20 economies ahead of only South Africa and trailing behind Russia (19), China (26) and Brazil (37). Even in the inclusive emerging and developing economies, India couldn’t make it to the top 10, with China, Nepal, Bangladesh and Sri Lanka making a mark. Other South Asian economies such as Malaysia, Thailand, Indonesia and Philippines also ranked far better than India.
The report, however, says that India is an ‘advancing economy’ as compared to China and Bangladesh which are ‘slowly advancing’ and Sri Lanka which is ‘slowly receding’.
The index, which measures progress of 103 economies on three individual pillars has been divided into two parts. The first part covers 29 advanced economies and the second 74 emerging economies.
The index has also classified the countries into five sub-categories in terms of the five-year trend of their overall Inclusive Development Growth score — receding, slowly receding, stable, slowly advancing and advancing. Despite its low overall score, India is among the 10 emerging economies with "advancing” trend.
According to the report, the incidence of poverty has declined in India over the past five years, despite 6 out of 10 Indian still living on less than $3.20 (Rs 204) a day.
The report also notes that both labor productivity and GDP per capita have had strong growth rates over the past five years, while employment growth has slowed. Healthy life expectancy also increased by approximately three years to 59.6.
Although global economies like India still rely on GDP as a measure of growth, this method leaves out many qualitative aspects such as social inequality and living standards. This is one of the reasons why WEF developed the new metric that factors in social inclusion to measure development of economies in a more wholesome manner.