New Delhi: India and China, the two fastest growing major economies of the world, may be hot investment destinations globally, but they are placed abysmally low on a list of nations in terms of their economic freedom.
While India ranks 115th, China is even lower at 126th in the Economic Freedom Index compiled by US-based think-tank Heritage Foundation.
Hong Kong, which prides itself on its laissez-faire economic policy, emerged as the Asian giant and was ranked world's freest economy on Tuesday for a 14th straight year.
Singapore – which was ranked No. 2 – is catching up fast. Ireland, Australia and New Zealand are among the top five.
Other countries in the top ten include the US, the UK, Chile, Switzerland and Canada.
Heritage Foundation said in its annual review of economic freedom across the world that India's economy is 54.2 per cent free, which makes it the world's 115th freest economy.
A score of 50-59.9 per cent reflects "mostly unfree", it said.
"Its (India's) overall score is 0.1 percentage point higher than last year, partly reflecting improved labour freedom. India is ranked 21st out of 30 countries in the Asia-Pacific region, and its overall score is lower than the regional average," Heritage Foundation said.
India has no significantly strong economic institution, and the few areas that score better than the world average are smaller government size, labour freedom, and property rights. Government expenditure is relatively lower, it noted.
The study said India could improve in several areas, including freedom to do business, engage in trade, invest and freedom from corruption.
The United States fell to fifth place from fourth last year, and was set back by relatively high tax rates following tax cuts in other advanced economies and by government spending amounting to more than a third of gross domestic product.
Countries like China could grow even faster and in a more sustained manner if they embraced financial liberalisation, the foundation said.
Mauritius and Bahrain made it into the top 20 freest economies, while Mongolia, jumped 16 places to 62nd place and into the "moderately free" economy category, from "mostly unfree" last year, following trade liberalisation and fiscal reforms, including a flat tax.
Hong Kong was rated slightly less free than a year ago due to a pick-up in inflation which resulted in less monetary freedom. Arch-rival Singapore saw a slight improvement from last year's survey and was rated the freest market for business and labour.
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