India

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A shift in India's economic policy took place in 1991 when central planning appeared to give way to market forces. The large increase in the economic freedom rating of 1.7 points during the 1990s in the Summary Rating marks that shift. But, in relative terms this improvement has barely kept pace with the liberalization of the rest of the world. India's rank only improved from 93rd (out of 115) to 86th (out of 123) in the 1990s.

The score of 4.1 on Component VI: International Exchange clearly indicates the long path India still has to travel, even though this is the area where India has seen the most improvement. The ratings for Area II: Structure of the Economy and Use of Markets and Area VII: Freedom of Exchange in Capital and Financial Markets suggest that the state control of the domestic economy through price controls, nationalized banking and insurance industry, and public sector enterprises has seen little change.

The improvement in Area V: Legal Structure and Property Rights indicates the increasing independence of the judiciary and of the agencies that supervise the government, like Central Vigilance Commission, Comptroller and Auditor General, and especially the Election Commission, which has curtailed sops given by ruling parties just before elections. The changes in the components of the Index provide reason for guarded optimism.

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Last Modified: Monday, January 10, 2000