Sunday, June 20, 2021
Home News Reports Truth behind India’s slip in Global Economic Freedom ranking: Change in methodology responsible, not...

Truth behind India’s slip in Global Economic Freedom ranking: Change in methodology responsible, not what Congress party want you to believe

The report itself says that the 2020 index can’t be compared with the 2019 report due to the changes made in several components used in the calculation

Earlier this month, Canada’s Fraser Institute released the Global Economic Freedom Index 2020, where India’s rank dropped considerably. According to the index, India fell 26 spots to the 105th position in the ranking, which was 79th in the previous year’s index. City-states Hong Kong and Singapore occupied first and second spot in the index, while China ranked 124 and Pakistan was ranked 129, both below India.

Expectedly, the fall in India’s ranking gave the opponents of the Modi government ammunition to target the government. After the report was released, the Congress party tweeted on 11th September, saying that India is moving only downwards under BJP government.

The ranking measures the economic freedom, or the ability of individuals to make their own economic decisions in a country, by analysing policies and institutions of these countries. Although a fall of 26 spots in the Economic Freedom Index in a single year is worrisome, that is not the correct analysis of the report. Because a major reason in changes in rankings of the countries this year is due to several changes made to the methodology adopted in the report. Therefore, this year’s rankings are not comparable with previous years, as the methods to calculate that has been changed considerably.

The Economic Freedom Index 2020 report has been prepared using data from 2018. The degree of economic freedom is measured in five broad areas, which are Size of Government, Legal System and Property Rights, Sound Money, Freedom to Trade Internationally, and Regulation. India’s ranking decreased in all five areas, contributing to the overall decline. The 5 areas have several components and sub-components in each of them, and several changes have been in the measurements of those.

India’s rank in 2019 and 2020 in five different areas included in Global Economic Freedom Index

Within the Size of the Government Area, the ‘Government investment’ component saw the greatest decline, by 43 spots. However, the previous year had a different component ‘Government enterprises and investment’ which is replaced by the ‘Government investment’ component this year. The rating formula also is different, and now it is based on a standard maximum and minimum formula instead of the categorical rating method used earlier.

In the ‘Regulation’ Area there is a decline of 14 places. The maximum decline in rank is in the ‘Business regulations’ component. Here also, the “Extra Payments/Bribes/Favoritism” based on the Global Competitiveness Report has been replaced with V-Dem data on “rigorous and impartial public administration” which has resulted in a decline in rating of -0.33.

In the ‘Freedom to Trade Internationally’ area there are 4 components. Maximum decline is in the component of ‘Controls of the movement of capital and people’. However, this is due to a change of a sub-component in this component. Earlier Index in 2017 had ‘Foreign ownership / investment restrictions’, Where India had a rating of 5.84, while in the present index has ‘Financial openness’ where India has a rating of 1.66.

Therefore, it can be seen that there have been significant changes in the calculations for the 2020 ranking based on 2018 data, which have resulted in changes in the Economic Freedom Index. In fact, the report itself says that it can’t be compared with the 2019 report due to the changes. It says, “In this year’s report, we have made key and important changes to nine components. This means that making comparisons for these variables (and for the associated area and summary ratings) between the 2019 report and this 2020 report will be extraordinarily difficult.”

The report further adds, “it is impossible to make so many changes without an impact on the ratings and rankings of the countries in the EFW index. While most nations’ ratings and rankings change only modestly, there are a few that are affected to a fairly significant degree.”

As India has made improvements in other global economic rankings, like the World Bank’s Ease Of Doing Business ranking, the fall in the Economic Freedom Index is largely attributed to the changes in the methodology in arriving at the index. And therefore, the Narendra Modi government is not responsible for the same, as alleged by the Congress party.

  Support Us  

Whether NDTV or 'The Wire', they never have to worry about funds. In name of saving democracy, they get money from various sources. We need your support to fight them. Please contribute whatever you can afford

OpIndia Staff
Staff reporter at OpIndia

Related Articles

Trending now

Twitter rewards an Islamist org, set to be banned by India, with a verified blue tick: Here is what PFI has done in the...

It is worth mentioning that the radical Islamic organisation Popular Front of India has been accused of involving in perpetrating terrorist attacks in India and carrying large scale communal riots in different parts of the country.

Women face abuse, threats from Islamists and an FIR for dancing in front of Shahdara Sharief Dargah in Jammu, forced to issue apology

Extremists and fundamentalists abuse, threaten and send hate messages to four women for dancing outside Dargah in Jammu

Ganga Dussehra – The day River Ganga descended upon the Earth

Every year, on 10th day of Jyestha month (according to Hindu Calender) Ganga Dussehra is celebrated to mark the day on which Ganga came down to Earth

Top Chinese counterintelligence officer defected to USA, may have given info on Wuhan Lab to Biden admin

It is believed that Chinese Intelligence official Dong Jingwei gave Biden admin information on Wuhan Lab after defecting to USA

How Muslims made Periyar bend a knee, while he continued to abuse Hindus despite protests

The slightest resistance from the Indian Muslim population was sufficient to make the Dravidian movement capitulate, while the campaign of abuse and calumny against Hinduism has gone on for decades, inspite of wide spread protests.

Kerala madarsa teacher preaches “kill the ones who leave Islam” while taking online lecture for class 12 students

Kerala madarsa teacher caught encouraging class 12 students to take to violence against those who quits Islam as religion.

Recently Popular

Republic TV issues statement over Arnab Goswami’s disappearance from the news network: Here is what they said

Arnab Goswami was last seen on May 2 during a discussion on West Bengal assembly polls. He will make a return on Monday.

OBC benefits for Muslims: How WB Police’s recruitment drive has exposed how parties found a way to make religious reservations

The drive was meant to fill vacancies in the OBC-A category in the state. The list showed that apart from one or two individuals, all of them were Muslims.

Who is Vishal Jood? An Indian national arrested for taking on Khalistani extremists in Australia

Vishal Jood, the 24 yar old from Haryana, has been languishing in a jail in the down in the country for two months now.

TV9 Bharatvarsh documentary shows ISIS bride Shamima Begum holding a document with Congress party’s logo: This is how it happened

Instead of using original footage, TV9 Bharatvarsh used a digitally altered the image of Shamima Begum from a satire site

TISS research paper calls Kashmir ‘India occupied’, blames Indian Army for domestic violence in Kashmiri society

A dissertation paper by a student at TISS-Hyderabad has come under the scanner for calling Kashmir "India occupied Kashmir".

Exclusive details: Here are some of the points that the Parliamentary Standing Committee, headed by Shashi Tharoor, raised with Twitter

Indian officials of the microblogging site Twitter were questioned by the Parliamentary Panel on Information Technology on various issues.
- Advertisement -


Connect with us