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    • A Seminar on “Economic Freedom Index of India” on  23rd November, 2006.

Title - Curtain Raiser for the Seminar on “Economic Freedom of India”


For more than a decade Fraser Institute, Canada has been compiling Economic Freedom Index of the world.  Although in India, the exercise has become active at the national and sub-national levels in India during the past 3 years, economic freedom rating for states sponsored by Friedrick Naumann Stiftung and published by Rajiv Gandhi Institute for Contemporary Studies, has the principal objective of capturing economic freedom in terms of economic, social and political freedom.  The Heritage Foundation which brings out a cross country index of economic freedom defines it as the absence of government coercion or constraint on the production, consumption and distribution of goods and services beyond the extent necessary for citizens to protect and maintain liberty itself.  Although most economic freedom ratings are cross country, sub-national attempts have been made in the US, Canada, China and, India is latest one to join. 26 variables under various heads of size of Govt.,legal structure, security of property rights and regulation of credit, labour and business.

International Rankings:

In this year’s index , Hong Kong retains the highest rating for economic freedom, 8.7 out of 10, closely followed by Singapore at 8.5.  New Zealand, Switzerland, and the United States tied for third with ratings of 8.2.
The United Kingdom and Ireland are tied for the 6th place, Canada receives a score of 8.0 and ranks 8th.  Inceland and Luxembourg are tied for 9th place.
The rankings for other large economies are Germany, 17; Japan, 19; France, 24; Italy, 45;
Mexico, 60; India, 53; China, 95; Brazil, 88; and Russia, 102.

The Composite Economic Freedom of India ranks Andhra Pradesh as No.2 in 2005.  This index helps State’s access Foreign Direct Investments and Foreign Investment Institutions (FDIs & FIIs) with considerable ease because it measures the ability of the State to facilitate investments.  Government Revenue expenditure, Administrative GDP and large employment in the public sector are indicators of the size of the Government.  Power subsidy to domestic consumers, taxes on income, commodities and services, property and capital transactions and other duties are indicative of the extensive role played by the Government in the economy.  These have been factored into the economic freedom index of the State.

Efficiency of Government in protecting human life and property and quality of legal infrastructure measured by availability of judges and in the settlement of cases by the Courts and police are the second category, reflecting legal structure and security of property rights.  The other more important area is in relation to enabling environment for entrepreneurs to take decisions relating to investment and employment; high transaction costs are well know deterrents of trade and economic activity.  The ability of the State to restructure such high transaction costs in terms of effective policies of regulating credit, labour and business is an important measure to economic freedom.
The Seminar proposes to discuss all these aspects applicable to the State of Andhra Pradesh. 

Indian Institute of Economics partnering with Rajiv Gandhi Institute for Contemporary Studies, New Delhi for holding this seminar by Friedrick Naumann Stiftung.  Dr.P D Kaushik from Rajiv Gandhi Foundation, Mr.Subodh Kumar from Friedrick Naumann Stiftung and Dr.Mrs.Simrit Kaur, Economist from the University of Delhi would be making presentations in proposed Seminar.



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