Thursday, October 29, 2020
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 Staffhttps://www.opindia.com
Staff reporter at OpIndia

Related Articles

Trending now

Watch: ‘Modi, Modi’ slogans reverberate inside Pakistan National Assembly amidst discussion on condemning ‘Islamophobia’ and Charlie Hebdo magazine

The name of PM Modi echoed on Monday as members of Pakistan's opposition members chanted 'Modi, Modi' slogans inside Pakistan National assembly

‘His legs were shivering, head was sweating fearing attack by India’: Pakistani opposition leader reveals why Imran Khan govt had released Abhinandan Varthaman

PML(N) leader Ayaz Sadiq said that Pakistani Foreign Minister had feared that India would attack Pakistan if Abhinandan is not returned

“Dawood Ibrahim administrating legal, financial and mental attack on Republic TV, Arnab Goswami may face physical attack”: Former Bureaucrat RV Subramani

RV Subramani speaks on how Arnab Goswami touched the wrong nerve of Dawood Ibrahim and many politicians by reportage on Bollywood drug nexus

TeleMedicine: Technology bridging the doctor-patient gap to strengthen public healthcare system

Telecardiology helps connect cardiologists and patients in remote areas so that they could get timely report leading to proper diagnosis.

Bihar: The shocking story of Jungle Raj hidden in voter turnouts

The shocking story of Jungle Raj in Bihar no one told you.

Munger Police deactivates its Twitter account amidst claims of SP Lipi Singh being suspended over Durga Puja violence

SP Munger had earlier defended police action on devotees during the Durga Visarjan procession, claiming they provoked the force by pelting stones

Recently Popular

Chinese state-run channel shows the portrait of Prophet Muhammad, netizens ask if Muslim nations will boycott China

Arslan Hidayat, an Uyghur Rights Activist, took to Twitter shared a video of a Chinese TV series on Twitter in which it was depicted that an Arab ambassador visiting China during the rule of Tang dynasty gifts a portrait of the Prophet Muhammad to the Chinese emperor.

Charlie Hebdo mocks Turkish President Recep Erdogan in its latest cartoons, shows him lifting a skirt of woman wearing ‘hijab’

The front-page caricature of Wednesday's edition of Charlie Hebdo that was released online on Tuesday night depicts Erdogan in a white T-shirt and underpants, drinking a can of beer and lifting up the skirt of a woman wearing a hijab to reveal her naked bottom.

Watch: Pro-India accounts disrupt Pakistan’s anti-India online meeting on Zoom, play pro-Hindu and Indian nationalistic songs

Indic social media users caused embarrassment to Pakistani authorities and diplomats after they raided their online event on zoom

Nikita Tomar murder: Taufeeq was pressurising her to embrace Islam family alleges

On Monday, 21-year-old Nikita Tomar was shot to death in broad daylight outside the Aggarwal college in Ballabgarh, Faridabad

Nikita Tomar murder: Main accused Tauseef belongs to a family of influential Congress politicians from Nuh in Haryana

The prime accused Tauseef's grandfather, uncles and cousin brothers are all infuential Congress politicians from Haryana's Nuh

French nationalist leader Marine Le Pen thanks India for support as Pakistan and Turkey lead anti-France sentiments

French Nationalist leader Marine Le Pen has thanked India in her tweet for showing support against anti-French sentiments.
- Advertisement -

Watch: ‘Modi, Modi’ slogans reverberate inside Pakistan National Assembly amidst discussion on condemning ‘Islamophobia’ and Charlie Hebdo magazine

The name of PM Modi echoed on Monday as members of Pakistan's opposition members chanted 'Modi, Modi' slogans inside Pakistan National assembly

Enforcement Directorate arrests former Chief Secretary of Kerala CM Pinarayi Vijayan, M Sivasankar, in Gold smuggling case: Details

The arrest of IAS officer M Sivasankar, the former chief secretary to the Chief Minister, is being seen as a massive setback to the CPI(M)-led Kerala government.

‘His legs were shivering, head was sweating fearing attack by India’: Pakistani opposition leader reveals why Imran Khan govt had released Abhinandan Varthaman

PML(N) leader Ayaz Sadiq said that Pakistani Foreign Minister had feared that India would attack Pakistan if Abhinandan is not returned

While appealing Muslim counties to counter Islamophobia, Imran Khan says ‘criticism or questioning of Holocaust’ is criminalised in many counties

Pakistan PM confuses between Holocaust denial and Holocaust criticism, says the criticism is criminalised many countries

Republic TV issues statement condemning Mumbai Police summons to their investors in relation to the TRP scam

Republic TV said that crime branch has asked all investors of the channel to produce all financial transactions relating to last five years

Param Bir Singh tortured me with belt, Saffron Terror allegation was Congress conspiracy to paint India as a terrorist state: Pragya Singh Thakur

Pragya Singh Thakur said that Param Bir Singh and Hemant Karkare had tortured her the most when she was in the custody of ATS

Delhi government begins crackdown on Diwali, 11 anti-firecracker squads to be formed to prevent use of crackers other than ‘Green Crackers’

Delhi govt announced that an anti-firecracker campaign will be launched on November 3 ahead of the Diwali festival

“Dawood Ibrahim administrating legal, financial and mental attack on Republic TV, Arnab Goswami may face physical attack”: Former Bureaucrat RV Subramani

RV Subramani speaks on how Arnab Goswami touched the wrong nerve of Dawood Ibrahim and many politicians by reportage on Bollywood drug nexus

Watch: Pro-India accounts disrupt Pakistan’s anti-India online meeting on Zoom, play pro-Hindu and Indian nationalistic songs

Indic social media users caused embarrassment to Pakistani authorities and diplomats after they raided their online event on zoom

Lord Ram’s effigy burnt in Amritsar on Dussehra, case registered after BJYM and VHP members held protests

In a video of the incident, some people were seen burning an effigy of Lord Ram on the occasion of Dussehra

Connect with us

245,563FansLike
470,513FollowersFollow
19,500SubscribersSubscribe