India is currently the world’s most populous democracy and is soon going to be the most populous country in the world. Considering that every sixth person in the world is an Indian, freedom in India—because it could lead to poverty or prosperity for 1.3 billion people—matters to the world. India is a lower-middle-income country (LMIC), with a per capita income of US$1,920 (the global average is US$13,312). India has an income score of 2.05 on the Atlantic Council’s Prosperity Index (the global average is 15.8). 

So what is not working well for India? The Atlantic Council’s recent work suggests that three freedoms—legal, political, and economic—lead to prosperity.¹Dan Negrea and Matthew Kroenig, “Do Countries Need Freedom to Achieve Prosperity? Introducing the Atlantic Council Freedom and Prosperity Indexes,” Atlantic Council, accessed February 9, 2023, https://www.atlanticcouncil.org/in-depth-research-reports/report/do-countries-need-freedom-to-achieve-prosperity. We assess India’s position on the Freedom Index to identify the pain points. This will help prioritize the reform agenda that India should pursue domestically, as well as an agenda for multilateral organizations to follow to support India’s efforts to better the lives of its people. This paper is limited to diagnosis and does not undertake any investigation of root causes or offer any policy prescriptions. It is critical to identify the challenges that India faces in an objective, evidence-based manner and build a consensus around this before embarking on a potential reform agenda. A wider consensus on the pain points is a must for enabling a sustained effort for reforms. 

Indian exceptionalism 

A consensus on the challenges is particularly important in the Indian context. International comparisons—and any suggestions or lessons for India resulting from them—are generally dismissed with a universal claim of Indian exceptionalism.²In recent years, international comparisons have also been dismissed by invoking a conspiracy to demonize the current Indian government. Some of the indexes that compare quality of democracy, rule of law, or press freedom have been accused of such behavior. It is important to note that these indexes are generally based on the opinions of international “observers” selected by the organizations that put together the indexes. They are subjective assessments of the selected obser-vers and so rightfully challenged by countries that perform poorly on these indexes. In this context, it is important to base our diagnosis of India’s challenges on objective data and evidence. The Atlantic Council’s Indexes are constructed with third-party data, so there is little room for subjective judgements on the part of the team that conceptualized and constructed them. In this age of fake news, the quality of data is of preeminent importance Depending on the context, this exceptionalism is based on several different arguments: No country is as large and as diverse as India. India has been one of the most prosperous countries in the world. India has twenty-one official languages and several hundred dialects in active use. India’s class, caste, ethnic, and religious diversity is unparalleled. India is a vibrant and noisy democracy with more than one hundred political parties. India has been ruled and exploited by outside forces for more than a thousand years, and so on. Each of these statements is indeed true. However, as anyone who has engaged in policy debates knows, it is impossible to convince the other side that though the statements are true, they are irrelevant to the issue at hand. 

Methodology 

To address this concern, in this paper we eschew the more common “distance to frontier” approach—drawing comparisons with the top five or ten performers globally, or even regionally. We have tried instead to use careful comparisons to identify the lowest-hanging fruits, the commonest denominators across the Freedom Index, to find parameters for improvement.  

We compare India’s score with three other average scores—global average; average of countries in the same income category of LMICs; and the South Asia regional average—focusing on those areas in which India underperforms. Within this comparison we focus on identifying parameters on which the Indian score is below all three comparator averages. These are the “lowest-hanging fruits”: issues on which India’s score is “very poor” (see the shaded rows in Table 1), but that can be tackled, not through exceptionally bold reforms, or reforms at high political cost, but through mostly incremental changes and tweaks in its normal business of governance.  

Any given indicator in the Atlantic Council’s Freedom Index is typically constructed by aggregating several components and even sub-components. To provide as granular a view as possible, we dig into the components and sub-components.  

Calculating the average for the comparison scores requires a list of LMIC countries and South Asian countries, for which we rely on the World Bank definitions. The World Bank defines lower-middle-income economies as those with a gross national income (GNI) per capita between US$1,086 and US$4,255; this equates to fifty-four countries in the LMIC category. The World Bank places eight countries in the South Asia region.³“World Bank Country and Lending Groups,” World Bank, accessed March 21, 2023, https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups.  

However, the number of countries varies from component to component. The reason is that the Freedom Index derives its data for each component from multiple indexes. Not all of these indexes have data for all countries, or all LMIC countries. For example, some of the indicators under the Index’s Legal Freedom sub-index, such as Civil Justice and Criminal Justice, are derived from the World Justice Project’s Rule of Law Index, which has data available for 139 countries globally, thirty-seven countries under the LMIC category, and six countries in the South Asia region.⁴“World Justice Project: Rule of Law Index 2021,” World Justice Project, accessed March 21, 2023, https://worldjusticeproject.org/sites/default/files/documents/WJP-INDEX-2021.pdf The scores for Efficient Judiciary under the Legal Freedom sub-index, and for Political Rights and Civil Rights under the Political Freedom sub-index, are based on Freedom House’s Freedom in the World 2021 index, which has data for 195 countries globally, fifty-four under the LMIC category and seven at the South Asia level.⁵Sarah Repucci and Amy Slipowitz, “Freedom in the World 2022: Democracy Under Siege,” Freedom House, February 2022, https://freedomhouse.org/report/freedom-world/2021/democracy-under-siege.  

One more caveat. For some components, we chose to use median scores instead of mean averages, where these were used in the source data. These include Efficient Judiciary (0–4) under the Legal Freedom sub-index, Political Rights (0–4) and Civil Liberties (0–4) under the Political Freedom sub-index, and Risk of Expropriation (1–7) under the Economic Freedom sub-index.  

India’s freedoms in the past fifteen years 

Table 1 in the Appendix provides data for 2021 only, but in the text, we highlight changes across the years for which the Atlantic Council Index has data, from 2006 to 2021. Two different political alliances have governed India in that time: the United Progressive Alliance (UPA) from 2004–14, and since 2014 the National Democratic Alliance (NDA).  

Political Freedom 

Overall, India does fairly well on the Political Freedom sub-index. Its score improved marginally from 71.2 (2006) to 72.07 (2011) and then to 74.86 (2016). Then it drops to 67.62 (2021). Overall, it has dropped by 3.58 points since 2006. The global average too declined by 2.85 points, and the LMIC average by 2.36 points. However, the regional average score improved by 6.27, as Nepal and Bhutan abandoned their constitutional monarchies and became electoral democracies.  

India fares “very poorly” only on one sub-component: 2.1.1d (Political Freedom > Constraints on Government > government officials are sanctioned for misconduct). India’s score is 0.38, while the global average is 0.47; the regional average and LMIC average are both 0.39. “Government officials” includes civil servants, members of legislatures, officers of the judiciary, and police officers. It implies an accountability deficit.  

Although India’s score on Civil Liberties dropped by a whopping 14 points between 2016 and 2021 (to 56.25), it is still above the LMIC average (46.4) and regional average (45.8).  

Legal Freedom 

Between 2006 and 2011, India’s Legal Freedom score witnessed a slight decline, from 37.58 to 36.97, before rising again to 41.62 (2016) and 42.23 (2021). Overall improvement over the fifteen years of the Index was 4.58 points. This is in line with the regional improvement on this sub-index over the same period (5.36). The global average improved by 0.62 and the average for LMICs by 0.54.  

India’s overall score on Legal Freedom (42.23), however, is not very good. Legal Freedom has five indicators: Judicial Effectiveness; Government Integrity; State Capacity; Order and Security; and Regulatory Effectiveness. Judicial Effectiveness has three components: efficient judiciary, civil justice, and criminal justice. Under civil justice, India fares very poorly on “access and affordability” (0.39) and “free from unreasonable delay” (0.20). Under Criminal Justice, India fares very poorly on “effective criminal investigation system” (0.25) and “timely and effective criminal adjudication system” (0.36). Under Government Integrity, one of the components is “public disclosure,” which concerns the legal mandate for members of parliament to make two types of disclosure: (a) values: “the values of their assets, liabilities, expenses, income, gifts, and travel”; and (b) sources: “the information needed to identify assets, liabilities, sources of income, gifts and travel, as well as parties with potential conflicts of interest.”⁶Simeon Djankov, Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer (2010). “Disclosure by Politicians,” American Economic Journal: Applied Economics 2 no. 2 (April 2010), 179–209. India’s score on this component is zero, as no disclosure is mandated; the global average is 13.77. Under Order and Security, India fares very poorly on “people do not resort to violence” (0.32), and under Regulatory Effectiveness, India scores very poorly on “effective government regulatory enforcement” (0.40) and “application and enforcement without improper influence” (0.45).  

Economic Freedom 

India’s overall score for Economic Freedom declined from 59.45 (2006) to 55.18 (2011) and then further to 53.31 (2016). It then improved to 58.37 (2021). Overall, it has dipped by 1.08 over fifteen years, as did the regional score by 0.17 points. It is pertinent to mention that the decline is steep from 2006 to 2016, as was the improvement from 2016 onwards. However, the global trend is different; the global average improved by 4.59 points over those fifteen years.  

Let us take a more granular view of Economic Freedom and see which components show most decline. India performs “very poorly” on one indicator and several components in the Economic Freedom sub-index. There are four indicators within this sub-index: Property Rights, Trade Freedom, Investment Freedom, and Women’s Economic Freedom. India performs very poorly on Trade Freedom. Under Trade Freedom, there are four components: “tariffs,” “regulatory trade barriers,” “black market exchange rates,” and “control of the movement of capital and people.” India does fairly well on regulatory trade barriers (6.55) and black market exchange rates (10). On tariffs (6.52), which has three sub-components, it does well on “revenue from trade taxes” and very poorly on “mean tariff rates and the standard deviation of tariff rates.” On “mean tariff rates,” India’s score is 7, while the global average is 8.16, LMIC average is 7.76, and regional average 7.18. On “standard deviation of tariff rates,” India’s score is 3.46 while the global average is 5.89, LMIC average is 5.82 and regional average 4.42. Countries with a greater variation in their tariff rates are given lower ratings. 

India’s score on component 3.2.4—“control of the movement of capital and people”—stands at 0.55, while the global average is 3.4, LMIC average is 2.03, and regional average 0.59. This component has three sub-components: “financial openness,” “capital controls,” and “freedom of foreigners to visit.” On financial openness, India’s score (1.64) is far below the global average (5.5) and the LMIC average (3.34), and equal to the regional average. On both capital controls and the freedom of foreigners to visit, India scores zero. “Freedom of foreigners to visit” measures the percentage of countries from which a visitor is required to have a visa, reflecting the freedom of foreigners to travel to the country as tourists and for short-term business purposes. Countries with values outside the range between Vmax and Vmin received ratings of either zero or 10, accordingly.⁷James Gwartney, Robert Lawson, Joshua Hall, and Ryan Murphy, Annual Report, 2021: Economic Freedom of the World, Toronto: Fraser Institute, 2021, https://www.fraserinstitute.org/sites/default/files/economic-freedom-of-the-world-2021.pdf, 257–8. 

Women’s Economic Freedom has four components: “mobility,” “pay,” “entrepreneurship,” and “assets.” Pay is the weak spot for India, and it contains four questions: Do women receive equal remuneration for work of equal value? And are women allowed to work as equals with men in night shifts? In dangerous jobs? And in industrial jobs? For India, the answer to three of the four is “no,” (the question about dangerous jobs was the only “yes”) so its score for “pay” is 25 out of 100.⁸World Bank, Women, Business and the Law, World Bank, April 2022, https://elibrary.worldbank.org/doi/pdf/10.1596/978-1-4648-1817-2, Appendix A: Data Notes, 95–106. 

Conclusion 

It is common to dismiss international comparisons and possible lessons by waving the flag of Indian exceptionalism. We addressed this challenge in two ways: First, we based our analysis on the Atlantic Council’s Freedom and Prosperity Indexes, which use third-party data and thereby remove the subjective judgements of the team involved in their construction. Second, we developed a comparison metric that identifies the lowest-hanging fruits: the areas where India performs more poorly than the global, LMIC, and South Asia regional averages. If an “average” country in the world has achieved something; and an “average” LMIC has achieved it; and other countries in the region have achieved it, then it becomes very difficult to argue that India cannot.  

There are sixteen such low-hanging fruits: 

A. Legal Freedom

1. People can access and afford civil justice
2. Civil justice is not subject to unreasonable delays
3. Criminal investigation system is effective
4. Criminal adjudication system is timely and effective
5. Public disclosure of finances and business dealings by members of parliament
6. Human rights and rule of law
7. Demographic pressures
8. People do not resort to violence to redress personal grievances
9. Government regulations are effectively enforced
10. Government regulations are applied and enforced without improper influence

B. Political Freedom

11. Government officials are sanctioned for misconduct

C. Economic Freedom

12. Mean tariff rate
13. Standard deviation of tariffs
14. Capital control
15. Freedom of foreigners to visit
16. Comparable pay for women’s work

Among the Asian and African countries that gained independence in the early twentieth century, India has consistently maintained a high degree of political freedom. Indians around the world are rightfully proud of this singular achievement. However, two common assumptions about the other two freedoms do not necessarily hold water: one, that India lacks economic freedom more than anything else; and two, that India has an effective justice system within a British common law tradition. It is certainly true that there are several areas in which India could improve its citizens’ economic freedoms, but the above list shows that India could make a tremendous difference to the prosperity of her people by improving the legal system. Ten very clear areas of legal freedom are identified by the Atlantic Council Freedom Index. One may quibble about “human rights and rule of law” as too broad a bucket and its probable reliance on subjective assessment. And in the tradition of Julian Simon, one may argue that people are a resource and not a restraint on economic prosperity and downplay the issue of demographic pressures. The remaining eight areas seem uncontroversial and would command a broad consensus across political and ideological lines in India. The Atlantic Council’s Freedom Index lays out a clear path of freedom for India’s rapid progress towards prosperity.  

Appendix

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Prashant Narang is a senior fellow at the Centre for Civil Society. 

Parth J. Shah is a co-founder of the Indian School of Public Policy and founder of the Centre for Civil Society. 

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