India slips to 40th slot in WEF's financial development index
New Delhi: India has slipped four places to 40th position, out of 62 leading financial systems and capital markets, because of poor enforcement of contracts and low levels of liberalisation, says a World Economic Forum report.
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).
The report highlighted a poor record in enforcing contracts, low levels of liberalisation, inadequate IT and communications infrastructure and general high costs of doing business.
"Weak results in the institutional and business environment pillars continue to be driven by an inability to enforce contracts, a low degree of financial sector liberalisation, inadequate infrastructure, and a high cost of doing business" were largely responsible for the decline in India's ranking in the Index, the report said.
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 recognised 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.
The index was topped by Hong Kong for the second consecutive year, followed by the US, the UK, Singapore, Australia, Canada. There was no change in the ranking of the first six places this year as against last year.
"Globally, the Report found that a general stagnation in financial development, posing serious challenges to a global economic recovery," WEF said.
The general stability of the Index is further highlighted by Singapore, Australia and Canada maintaining their positions at 4th, 5th and 6th place, respectively.
The Netherlands fell two spots from 7th to 9th because of weakness in equity market development and banking system efficiency, while, Sweden jumped into this year's top 10 because of an improvement in retail access to capital.
"The Financial Development Report shows that financial systems in advanced and emerging economies are stalling," said Giancarlo Bruno, Senior Director at the World Economic Forum.
"Macroeconomic uncertainty, as well as concerns related to regulation, contributes to inhibiting the financial industry from funding much-needed growth," Bruno added.