Why India's ranking in Global Competitiveness Index has improved

The recently released Global Competitiveness Index report by World Economic Forum gave a thumbs up to the Narendra Modi led BJP government's economic reforms agenda with India climbing 16 places on the Global Competitiveness Index. 

The report said India's GDP per capita in PPP terms almost doubled between 2007 and 2016, from $3,587 to $6,599. The country's competitiveness score was sluggish between 2007 and 2014. Ever since the Modi led BJP government took office in 2014, India climbed back up the rankings to 39th in this edition of the report, from 48th in 2007-2008.

Here's what the report said:

• India's health and basic education improved throughout the decade. Improvement in infrastructure, by contrast, was small and faltering during most of the period, but picked up after 2014 when the government increased public investment and sped up approval procedures to attract private resources.
• The institutional environment deteriorated until 2014, as mounting governance scandals and seemingly unmanageable inefficiencies saw businesses lose trust in government and public administration, but this trend was also reversed after 2014.
• Macroeconomic conditions followed a similar path, as India managed only in recent years-thanks also to the drop in commodity prices-to keep inflation below the target of 5 percent while rebalancing its current account and decreasing public deficit.
• Financial market development has also improved since 2014, but-unlike the case of institutions and the macroeconomic environment-not enough to recover to 2007 levels.
• Thanks to the 2015 and 2016 rebound, India's overall competitiveness score in this period increased by 0.19 points. The two most significant improvements are in infrastructure and in health and primary education: for example, India almost halved its rate of infant mortality (62 per 1,000 in the 2007-2008 edition of the GCI versus 37.9 today).
• Life expectancy increased to 68, up from 62 10 years ago, while primary education has become almost universal (up to 93.1 percent from 88.8 percent). Macroeconomic environment is another basic requirement where India's performance has improved significantly (+0.34).
• Financial market development is the pillar most dragging down India's competitiveness compared to 10 years ago. Here the efforts of the Reserve Bank of India have increased transparency in the financial market and shed light on the large amounts of non-performing 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 recapitalizations.
• The efficiency of the goods market has also deteriorated, resulting from India's failure to address long-running problems such as varying goods and services tax (GST) levels within the country (this is set to finally change as of 2017 if the Central GST and Integrated GST Bills currently in Parliament are fully implemented).
• 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.
• India outperforms countries in the same stage of development, mostly those in sub-Saharan Africa, in all pillars except labor market efficiency.