2018 Index of Economic Freedom


overall score54.5
world rank130
Rule of Law

Property Rights55.4

Government Integrity47.2

Judicial Effectiveness54.3

Government Size

Government Spending77.7

Tax Burden79.4

Fiscal Health13.2

Regulatory Efficiency

Business Freedom56.4

Labor Freedom41.8

Monetary Freedom75.9

Open Markets

Trade Freedom72.4

Investment Freedom40.0

Financial Freedom40.0

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Quick Facts
  • Population:
    • 1.3 billion
  • GDP (PPP):
    • $8.7 trillion
    • 7.3% growth
    • 6.8% 5-year compound annual growth
    • $6,616 per capita
  • Unemployment:
    • 3.5%
  • Inflation (CPI):
    • 4.9%
  • FDI Inflow:
    • $44.5 billion
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India’s economic freedom score is 54.5, making its economy the 130th freest in the 2018 Index. Its overall score has increased by 1.9 points, led by improvements in judicial effectiveness, business freedom, government integrity, and fiscal health. India is ranked 30th among 43 countries in the Asia–Pacific region, and its overall score is below the regional and world averages.

India is developing into an open-market economy, but traces of its past autarkic policies remain. Economic liberalization measures, including industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment, that began in the early 1990s accelerated growth. More recently, the government reformed one of its more opaque operational practices to make the auctioning of rights to exploit state-owned resources more transparent. Corruption, underdeveloped infrastructure, a restrictive and burdensome regulatory environment, and poor financial and budget management continue to undermine overall development.



India is a stable democracy. It is 80 percent Hindu but also home to one of the world’s largest Muslim populations. Prime Minister Narendra Modi, leader of the Bharatiya Janata Party, took office in 2014 and is credited with reinvigorating India’s foreign policy. Modi also promised sweeping economic reforms, but reforms thus far have been modest. India’s diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Services account for nearly two-thirds of India’s output but employ less than one-third of its labor force. India has capitalized on its large, educated English-speaking population to become a major exporter of information technology services, business outsourcing services, and software workers.

Rule of LawView Methodology

Property Rights 55.4 Create a Graph using this measurement

Government Integrity 47.2 Create a Graph using this measurement

Judicial Effectiveness 54.3 Create a Graph using this measurement

Although land titles in some urban and nearly all rural areas remain unclear, real property rights in large metropolitan areas are generally well enforced. The judiciary is independent, but Indian courts are understaffed and lack the technology necessary to clear an enormous backlog. Although officials are often caught accepting bribes, a great deal of corruption goes unnoticed and unpunished.

Government SizeView Methodology

The top individual income tax rate is 30.9 percent (including an education tax). The top corporate tax rate is 32.4 percent. The overall tax burden equals 7.2 percent of total domestic income. Over the past three years, government spending has amounted to 27.3 percent of total output (GDP), and budget deficits have averaged 6.9 percent of GDP. Public debt is equivalent to 69.5 percent of GDP.

Regulatory EfficiencyView Methodology

In 2016, India made getting electricity faster and cheaper by streamlining the process for getting a new commercial connection in Delhi. Employment is difficult to measure because of the large informal economy. The government is transforming its subsidy regime by linking payments directly with people’s bank accounts to prevent “leakages” and allow the authorities to cut out intermediaries.

Open MarketsView Methodology

Trade is moderately important to India’s economy; the combined value of exports and imports equals 40 percent of GDP. The average applied tariff rate is 6.3 percent. Nontariff barriers significantly impede trade. Government openness to foreign investment is below average. State-owned institutions dominate the financial sector, and foreign participation is limited. In public-sector banks, troubled assets account for about 10 percent of total assets.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Hong Kong90.20.4
3New Zealand84.20.5
6Malaysia 74.50.7
7South Korea73.8-0.5
12Thailand 67.10.9
16Brunei Darussalam64.2-5.6
18Kyrgyz Republic 62.81.7
25Sri Lanka57.80.4
26Solomon Islands57.52.5
28Papua New Guinea55.74.8
29Bangladesh 55.10.1
31Pakistan 54.41.6
43North Korea5.80.9
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