GLOBAL COMPETITIVE INDEX  BRICS++ AND INDIA

Pillar 1: Institutions
India and Indonesia come out as best of the bunch. Both on same upward path.
Between 2017-2018 - India is up 2.4 points to 57.9.

Pillar 2: Infrastructure
India is in the middle between Russia and Indonesia. India is flat in ranking and scores, but others are improving. China is way ahead.
Subsection: Transport infra has India placed second, just behind China (63 vs 68 score)
It is near the top in railways, airways, and waterways efficiency. China is way ahead in waterways liner shipping (1st rank overall), though India is 2nd among BRICS+ and gained points in 2016. India is improving rapidly in road quality (up 2.2 to 57.35) and now close to the top nation (China at 59.7). In Road connectivity India (at 62.0) is middling and trails the top nations China (89.0) &  South Africa (94.0) by a distance! 
-- Road connectivity - a focus area of the Govt - should see big gains in physical infra, but perhaps not in GCI scores
-- Rail efficiency - a focus area of the Govt. State-of-art signalling, digitization, artificial intelligence will have immediate impact on efficiency. Complete electrification and BG conversion (by 2022) will reduce changing-trains bottlenecks, expand services, increase train utilisation, improve speeds, reduce costs, etc. Completion of DFCs (2022) & other doubling projects will separate freight and passenger traffic on highly congested routes, thus increasing speeds & punctuality, raise freight-carrying capacity and lower rates. Repair to bridges, removal of level crossings, fencing of tracks, up-to-date track maintenance, higher powered locos, etc can eliminate speed restrictions and increase efficiency. Other DFCs and various link routes (eg port-rail connectivity) have been approved. 

Subsection: Utilities infrastructure puts India (at 74.3) at the bottom, way below leaders at 88 -89 & others at 80-83. In electrification rate, India has progressed to near 100% coverage, so it will join the top nations. In reliability of water supply, it is middling, not improving but marginally behind China (61.0 vs 65.0). In AT & C losses and unsafe drinking water it is far behind and improving only slowly. 
-- Safe Drinking water -- a key focus area for Modi 2.0
-- AT & C losses: Discom investment (eg. smart meters), reforms and efficiency. Govt started UDAY scheme a few years ago, but it has not been easy as states are reluctant to do the right thing. Conglomeration of state discoms into national or regional PSUs, is a good option.
-- Reliable piped water supply - a key focus area for Modi 2.0. Also, Govt should look at drought proofing including building water networks, maintenance, and desalination plants.
Bonus:
-- Irrigation projects for agriculture: micro-irrigation and ponds will be successful. Large scale dams and river-linking will be less so, due to difficulties of scale, likelihood of delays and corruption.

Pillar 3: ICT adoption
India is placed last - which is a result of starting late & low per capita incomes. India's scores are rising but other nations are also improving, and new technologies are adding new challenges. The disruptive improvement in Indian ICT has given the world's least-cost internet access to India, so subscriber rates will catch up. Rapid uptake of ICT has created capacity constraints and quality issues, whilst lack of telecom profits has meant less spectrum is deployed, and there is little appetite for new investment.  Next-gen infrastructure is taking a little longer to build, but this is normal for a large project. There is enough money in dedicated funds, and enough unsold spectrum, to meet the objective of least-cost, universal access at full 4G performance.
-- Cellular coverage: correct 40,000 unconnected villages and lesser tower density in conflict areas
-- Fibre network and public wifis: Bharatnet and nationwide rural broadband are behind target
-- Fibre from Bharatnet to cellular towers: Private firms are unwilling to add this on their own
-- Quality of 4G & calls: Private investment has dried up, so public sector BSNL must be given spectrum, to increase capacity and improve speeds in less well-served regions. PSUs must rationalise costs to flourish.
-- Fixed broadband or fibre to home: not a starter for operators, though Jio is promoting it
-- 5G: Private sector has little appetite for expensive 5G spectrum and there is not enough clarity on technologies.

Pillar 4: Macroeconomic stability
India is placed joint second, with 90.0 points and rising, against China at 98.0. India scores joint 100.00 (max) in inflation. In Debt dynamics, it is crowded with 3 others at 79.8. This consigns India to a good position but not much change.

Pillar 5: Health
India is placed lowly in 2nd from last position. South Africa is an outlier as it is coming out of a broken social system. India's value of 59 years life expectancy is very low. It should however catch up to Russia and Indonesia levels within 5-7 years, provided its new, free health insurance can save many young people and extend lives of older, poor people.
-- Ayushman Bharat PMJAY - a flagship scheme: Govt has extended cover to lowest 70%. It will assuage most dissenting states. For capacity building, Govt is ramping up medical facilities, medical education and staff training. It will now try to enrol big private hospitals that have not joined the scheme.
-- Primary health and wellness centres - a key focus area of Modi 2.0: Govt will have to implement it correctly. By starting with the most deprived districts, Govt is hoping to maximise the positive impact on health.

Pillar 6: Skills
India is placed bottom and unlikely to rise fast enough to catch up. Its a very mixed bag for India, as it does very poorly in Mean years of schooling, School life expectancy and Pupil-to-teacher ratio in primary schools. But notwithstanding these "structural" issues, skills outcomes are near the top!!
Subsection: Current Workforce puts India at 50.2 up 1.7. Others are ranged between 56.0 to 63.0.
Besides the Mean years to school, India scores very high in Skills of current workforce, increasing 3.4 points to 60.5, and likely to claim 1st rank in BRICS+ from Indonesia. India is rising in all categories, and emerging as top in Quality of vocational training, Skill-set of graduates and Ease of finding skilled employees. It lags a bit in Digital skills but is improving fast. In Extent of staff training, it is second (up 0.9 points to 59.4) to Indonesia (at 61.8).
Subsection: Future Workforce puts India joint last at 58.7. Others are centred around 72.5
It may catch up in School life expectancy, where is placed last, in a few years. In Skills of future workforce, India is under-performing due to Pupil to teacher component. Here its score is falling from the bottom (down 9.3 to 37.0)!!  In the other component Critical thinking in teaching, India scores 1st (up 2.0 to 60.6).
-- Primary and Secondary schooling: India probably has a mix of good and bad, with regional variations. It is time for Govt to drive up standards, for achieving consistently good learning outcomes, by using qualified teachers, proven leadership and third-party inspections. State education systems must be improved and named-and-shamed if they are below average.
-- Syllabus: review the content and take out the nonsense that has been added over the years. It is worth finding out the kind of adults the school content produces, and avoid those that produce intellectuals who despite their education are blasé about propagating hate and fake stories.
-- Physical, social and extra-curricular activities: It is worth spending more money on these.

Pillar 7: Product Market
India is placed near the bottom and declined by 0.55 to 50.9 in 2018. Other nations are at +/- 57.0. Mexico and Turkey were added to the comparison. Subsections show two distinct impressions.
Subsection: Domestic competition has India at 1st rank, up 2.7 to 60.2, and only Indonesia and China are close at 57-59. India tops in Distortions of taxes and subsidies on competition and Extent of market dominance. It overtook China in the latter, and others are far behind. In Competition in services it has improved 2.5 points to 63.9. This puts India above China (61.9) & Brazil and just behind Mexico (66.5). Others are in range of 71.5.
Subsection: Foreign competition is where India is rock bottom and declining
Out of 5 components, India is top in Prevalence of non-trade barriers, along with Mexico & China. But it is rock bottom in Trade tariffs at near zero. China and Brazil are nearby at 20 odd. In complexity of tariffs, it is in the middle at 65, while Brazil, China and Mexico are at 89-94. India is doing well in Efficiency of clearance process albeit a sharp 5.4 point drop in 2018. In Service trade openness, it is flat-lining, very far at the bottom. 
-- Competitive domestic markets (realising ongoing improvements): A competitive marketplace is the hallmark of developed countries like US, UK, Europe, etc. Ongoing efforts will see India's competitiveness at home grow. GST has just started and will make a strong impact in the coming years (greater inter-state volumes, large warehouses & new multi-modal hubs, scaled up production at efficient locations). Improved logistics and higher ICT penetration will help bring greater efficiencies and opportunities for better price realisation. 
-- Cold chains: Govt's efforts in building cold chains will lower food waste, lower the need for local storage and realise better prices (ie. reduce local over-supply). They will also increase domestic competition and increase markets for processed foods.
-- Government e-marketplace: Suppliers will get to know what public sector want and plan cost-efficient production whilst facing tougher domestic competition.
-- Competitive domestic markets (new initiatives): India's large marketplace bestows much bigger economic rewards for improving domestic competition. Commerce ministry is working on reducing domestic, logistic bottlenecks through policy changes, efficient goods processing, better logistics infra, IOT tracking, mechanisation and staff training. For example, a switch to Just-in-time (a more efficient method of ordering/ stocking) works well when there is timetabled freight services, higher capacity throughput, computerised goods processing with remote tracking, and very reliable manpower.
-- Low-cost domestic production and exportable surplus: Commerce ministry has hinted that rewarding larger-scale or lower-cost domestic production, which will automatically translate into cheaper exportable goods. This will reduce the need for high import tariff barriers. 

Pillar 8: Labour Market
India has improved its ranking from 85th to 75th, and is catching up China (69th), Russia (67th), and S Africa (55th). It is up 1.85 points to 58.3, whereas top nations are at 59-61 points. India is leading in Flexibility of Labour subsection, up 1.7 points to 61.74, and middle scoring on Skills matching subsection, up 2.0 to 54.8. 
Subsections Analysis: India is a top 3 nation in 8 out of 12 indicators. It is top in Labour relations, Hiring & firing and Professional management and is a good 2-3rd in Redundancy costs, Active labour policies, Hiring foreign workers, Labour mobility and Pay & productivity. It is increasing points - often strongly - in all indicators except Workers rights. India can improve from middle place in Flexibility of wage determination and Workers rights. It is doing very poorly in Female participation in Labour force (at just 11 points). This places India last by some distance. Social norms, religion and perhaps female safety are factors.
-- Contract work and flexibility in hiring & firing: Govt has already relaxed rules on contract workers. In its place, it will ensure higher workers rights (as required). Many state laws have relaxed hiring & firing rules based on firm size, so helping medium-sized firms. Centre may legislate on it, perhaps after broadening the safety net. We shall see.
-- Consolidated Labour legislation: Govt is set to introduce new legislation, which is touted to improve workers rights and reduce conflicts in interpreting labour laws. It will extend minimum wage rules to informal workers. Subsidised pensions will ensure informal workers are not priced out, yet receive long-term benefits. Other social security benefits are expected in next 5 years (NB. benefits also given to self-employed).
-- Availability of specialist skills: Govt has scrapped many engineering colleges and is opening teacher training, medical and nursing education, railway skills courses and improving training other labour-shortage vocations. Rural placement is emphasised to meet shortages there. Govt is upgrading post-grad medical courses and giving higher research grants in IITs. Industry is given freer hand designing and asking for training courses in Skills institutes. Govt is imparting holistic skills, eg. workers in merchant shipping are given additional course by MEA. Not sure on progress regards designs of new industry specific courses or % uptake of skills courses. Agricultural development boards, all under Centre (eg. silk), are training new workers or retraining others. New fisheries & livestock board will likely do the same. All independent company directors must do a short course to comply. 
-- Female employees: Maternity benefits & lower female employment costs, MUDRA loans, CCTV & women in-public-places protection, women-only employment units (eg railway stations) & women in military are some innovative steps. Triple Talak will enhance social status and may imbibe aspirations for financial independence
-- Female employees (new): Govt plans for a three-fold increase in number of childcare facilities for working women.

Pillar 9: Financial System
India is let down by four indicators, namely Domestic credit to private sector, Soundness of banks, Non-performing loans and Bank regulatory capital ratio. The latter is probably not so important.
Subsection: In Depth subsection, it is up 1.1 at 58.6 points. Only China (65.4) and South Africa (75.7) are ahead. India does well in financing SMEs & Venture capital, but does not do so well in providing domestic credit generally. It is worth improving financing a little more to match Chinese levels.
Subsection: In Stability, India's scores are near the bottom and falling (down 1.5 to 83.2). China (80) is below but making progress. Turkey (88) is falling like India. Major concern is the non-performing loans, where India is down 6.7 to 82.45. This is way below peers, China (97.5) and others (95-97). In Soundness of banks, a wide divergence is seen. India is uninspiring (60.3), just above China (58), but far below S Africa, Mexico & Brazil (69-79).
-- Soundness of banks: PSU banks are turning profitable, as provisioning for bad loans falls away and NPL overhang subsides (higher recovery from new insolvency procedures). Most PSBs are out of RBI scrutiny. Bank ROCE is now positive, and this will improve further as PSBs catch up with private banks. 
-- Business credit: Healthier banks are more willing to pass on recent interest rate cuts, eg. SBI is offering Libor+ loans. Commerce ministry wants higher credit to private sector exporters (at expense of export subsidies, which have WTO issues). RBI is asked to use FX reserves for availing $25-50 billion FX credits to exporters. RBI is also being urged to use its substantial capital reserves to pump equity into PSU banks. If agreeable, this can boost PSU banks' capacity to lend for the expected surge in growth (also, higher credit will lead to growth). It will dovetail with Govt's plans to ramp up infra and social sector spending.
-- Business credit to MSME (new): Commerce ministry wants 50 regional industrial clusters, which will house the entire value chain - aimed at substituting electronic and other imports - and can be fully supported with low-cost finance, etc.
-- Non-bank financing crisis: These previously unregulated by RBI, shadow-banks, were prone to corruption. Better independent directors, accountable auditors and possibly RBI regulations will help. PSU banks will take over vital gaps created in infrastructure & business finance.

Pillar 11: Business dynamism
India tops in entrepreneurship up 1.1 to 61.1, joint equal with Indonesia while China is 3rd with 58.0. India is near the bottom in Regulations, up 3.0 to 61.2. Regulations, meaning Ease of doing business (eg. Insolvency regulations, Insolvency recovery rates, Cost of starting business) was a weak area, but India has risen sharply in WB rankings, from 130th to 77th rank, in the last few years. Specifically, new insolvency regulations are working well and NCLT has doubled recovery rates. This has not shown up in 2018 GCI numbers.
Subsection: In Entrepreneurship India tops in 2 out of 4 indicators and is 2-3rd in other indicators.
In Attitude to risk (up 2.0 to 62) and Adopting disruptive ideas (up 1.5 to 59.5), India is in clear lead. In Willingness to delegate and Growth of innovative companies, India is a little behind Indonesia. Indonesia has built a good number of unicorns. 
-- Ease of doing business: State govts must be highly proactive and cooperate fully with Centre
-- Facilitating entrepreneurship: India has capable & risk-taking people, so it makes sense for Govt to facilitate these efforts by easing regulations, credit, administration, taxation relief, etc.
-- Startups: PSUs and listed companies want to invest in start-ups or support good start-ups in their business. Lets see if this happens.

Pillar 12: Innovation ecosystem
India is in 2nd position, up 0.85 to 53.75, but far below China (64.4).
Subsection: Interaction and diversity has India rising (up 2.8 to 48.55) to join China at top 
India is seen surging into leadership (State of cluster development, up 3.3 to 60.4) or 2nd position close to leader Indonesia: in Diversity of workforce (63.8) where Indonesia is 64.2 & Multi-stakeholder collaborations (59.9) where Indonesia is 60.2. In the last dimension, namely International co-inventions, India (at just 9.8) is well behind leaders China at 21.1 and Russia at 17.2. It is well ahead of Indonesia & others. Perhaps the last indicator is a choice a country makes and may not be meaningful. Overall, a good performance.
Subsection: Research is where India is 2nd (57.1) but far, far behind China (78.2)
India does well in Quality of research institutions (level to China, up 5.2 to 99.1) and Scientific publications (2nd at 91.8, along with Brazil & Russia, and well behind China at 96.5). This shows India has the wherewithal to do well in research (though it should improve and expand its research base into new geographies). India is decided below par in patent applications and doing extremely poorly (ie. falling dramatically from a low base) in Research expenditure.
Subsection: Commercialisation sees India heading group (58.6), well behind Turkey (62.4) & China (68,6)
In Buyers sophistication, India leads but is falling (down 1.8 to 58.6). China is steady at 58.2 while others are far behind. India scores below average in Trademark applications. At 57.1, it is several levels below China & Turkey (79-80), Mexico, Brazil, etc (65-73).
India is not spending enough on research. India has good institutions and many structural strengths, but it fails in the final innovative step, so it does poorly in patent applications and trademark applications. One reason is that not enough attention is paid to commercialisation. This can be addressed as below:
-- 1. Easing patent applications process
-- 2. Boost public research expenditure & effectiveness: There is a realization that indigenous products are essential for strategic and economic welfare. Public efforts in defense, space, agriculture, etc are seen as streamlining (by removing political & administrative interference) and developments of in-house technologies and products are bearing fruit. However, India is not yet close to reaching self-sufficiency.
-- 3. Make in India: If industrial R&D is to take off in a big way, India needs to be product innovators. To do this, they need commercialisation heist which comes from the making products for domestic market or fully exploiting domestic markets. Then those skills can be used to design for, break into and serve global markets.
-- 4. IIT laboratories: Govt is encouraging students to do their research in India, with Central grants and then commercialize their projects in India. Expansion of IITs - which may take some time to mature - will harness talent from different geographies and expand expertise in more fields (eg. minerals and mining).
-- 5. Startup & Angel finance: Ecosystem is being created where risk capital is available and commercialization is incentivised to happen in India. Once this happens, many potential leads will be taken up for development.
-- 6. World-class institutes: Govt will facilitate over 20 institutes for global excellence. A few will be STEM research orientated and help in doing collaborations with industry. Govt is giving greater autonomy, facilities, encouraging private sponsors and industry collaborations, etc but will this really change things in a substantial way? China is showing how to do it and perhaps India can learn from them.