Financial Development Report and India’s Status

What is Financial Development Report

The Financial Development Report measures and analyses the factors enabling the development of financial systems in a number of economies around the world. It aims to provide a comprehensive means for countries to benchmark various aspects of their financial systems and establish priorities for improvement. It is published annually so that countries can benchmark themselves and track their progress over time. The Report presents the rankings of the Financial Development Index, developed by the World Economic Forum in collaboration with the academic community, multilateral organizations and business leaders

India’s Status

According to the fifth edition of the World Economic Forum’s Financial Development Report 2012, India has been ranked 40th in the 2012 Index — four-spot decline from last year (36 rank). India has slipped because of poor enforcement of contracts and low levels of liberalisation, says the report. The report highlighted a poor record in enforcing contracts, low levels of liberalization, inadequate IT and communications infrastructure and general high costs of doing business. India has been ranked 9th out of the 15 Asia Pacific economies that were surveyed in the report. India’s comparative strength in the area of non-banking financial services was recognized in the report. It was ranked quite high in non-banking financial services (9th), but in terms of banking financial services it was placed in the 45th position.

Whereas the country about which people are boasting these days for having great degree of similarities with India is really doing a great job. Israel has risen to 24th place in the  report among 62 countries, two places up from 26th in the 2011 rankings. The slight progress is positive news given that the report’s authors say that the global financial system is stagnating, which poses challenges for global economic recovery. And here is the big lesson for India. “Over the past year, Israel exhibited improvement across several pillars, including financial stability (26th), non-banking financial services (36th), and financial markets (20th),” says the report.

Hong Kong, the US, and the UK top the rankings. Israel is ranked second in its region (the Middle East and North Africa), after Kuwait.

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