India, often referred to as the â€œsleeping giantâ€?, is emerging as the fourth largest market in the world when its GDP is measured on the scale of purchasing power parity, often a better comparison than mere output.
The year 2006 marks the third year of healthy economic growth, but the major development has been Indiaâ€™s move from a â€œworking powerâ€? based on a huge supply of low-cost labor to a â€œbrain powerâ€? comprising highly skilled and educated workers.
India has progressively improved its ability to complete as measured by the Switzerland based â€œInternational Institute of Managementâ€? (IMD) World Competitiveness Yearbook (WCY) jumping from 50th position in 2003 to 29th place in 2006. The ranking analyses the competitiveness of 61economies on the basis of over 300 criteria dealing with economic performance, government efficiency, business efficiency and infrastructure.
India boasts the worldâ€™s largest population of qualified engineers, an impressive availability of IT skills (fifth), and one of the youngest demographic profiles. But competitiveness is also enhanced with resourceful management of change, anticipating and adapting better and faster than competition. Here India again has a major asset, ranking fifth for its â€œresilience of the economy to economic cyclesâ€?.
In addition to the global ranking, where India ranks 29th this year, the WCY also gauges Indiaâ€™s performance within regional and peer rankings based on population size and GDP per capita. In the WCY 2006, for example, India ranks ninth out of 15 economies in the Asia-Pacific region, 10th out of 30 economies with populations greater than 20 million, and its best ranking: fifth out of 25 economies with GDP per capita less than $10,000.
India gained on three of the four major factors that IMD uses to measure competitiveness. In Economic Performance, India rose to an impressive five ranks from 12th to seventh, primarily due to a stronger domestic economy than last year. Indiaâ€™s real GDP growth in 2005 was a booming 8.1% and business confidence was more optimistic than in previous years. We are now starting to see the positive impact of economic reforms undertaken in the past.
Sustaining Indiaâ€™s dynamic growth will depend on its ability to address the inherent weakness in infrastructure, especially in the rural economy. The energy sector remains laggard and the poor conditions of roads and highways, transport bottlenecks and congestion remain significant obstacles.
Competitiveness also implies finding equilibrium between economic and social objectives â€“ India requires more investment to improve overall education and public health services and alleviate poverty that will continue to stigmatize the countryâ€™s potential of becoming a global leader.
However, the robust economic performance of the past few years, supported by a vibrant democracy and well-developed private sector is leading investors to be increasingly optimistic about Indiaâ€™s potential to quickly become one of the most attractive markets in the global economy.