India’s economic freedom score is 54.6, making its economy the 128th freest in the 2015 Index. Its score is down by 1.1 points from last year, with modest improvements in business freedom, property rights, and freedom from corruption offset by declines in labor freedom and trade freedom. India is ranked 26th out of 41 countries in the Asia–Pacific region, and its overall score continues to be below the regional and world averages.
India’s level of economic freedom is unchanged over five years. The state’s presence in the economy remains extensive through state-owned enterprises and wasteful subsidy programs that cause chronically high budget deficits. In the absence of a well-functioning legal and regulatory framework, a weak rule of law exacerbated by corruption in many areas of economic activity undermines the emergence of a more vibrant private sector. India remains a “mostly unfree” economy.
The reform-minded Modi administration has undertaken some necessary structural adjustments with a focus on reforming the inefficient and bloated government sector, better managing public finance, and improving the business and investment environments. The first budget presented in July 2014, however, was short on detail about plans to restructure wasteful subsidy programs and reignite economic growth.