The World Economic Forum report said India is 'still a long way' from realising its potential as a major global economy. Photograph: (AFP)
India's ranking on the Global Competitiveness Index noted an improvement of 16 places, moving it to the 39th spot
Monetary and fiscal policy reforms, that provided a major impetus to India's economy, have placed the country among the most competitive economies in the world.
India noted a jump of 16 places from last year's 55th place, the highest for any economy in 2016, according to the World Economic Forum.
It ranked 39th on the Global Competitiveness Index prepared by the Forum. And the second-most competitive among BRICS nations behind neighbouring China, which is at the 28th position.
India's "competitiveness has improved across the board, in particular in goods market efficiency, business sophistication, and innovation".
"Thanks to improved monetary and fiscal policies as well as lower oil prices, the Indian economy has stabilised and now boasts of the highest growth among G20 countries," according to WEF's Global Competitiveness Report 2016-17.
Switzerland, with a score of 5.81 on the index, topped the list for the eighth straight time as the most competitive economy.
Singapore and the US are at the second and third positions, respectively. India has a score of 4.52 on the index.
The WEF said, India still needs to work on opening the economy to foreign investors and international trade and increasing transparency in the financial system.
"Declining openness in the global economy is harming competitiveness and making it harder for leaders to drive sustainable and inclusive growth," WEF founder and executive chairman Klaus Schwab said.
He added that businesses still face rigid labour regulations in India and infrastructure also remains a bottleneck.
The rankings are based on the Global Competitiveness Index (GCI) from country-level data covering 12 categories.
The Forum assessed 138 economies for their competitiveness this year, while there were 140 economies in the 2015-16 rankings.
(WION with inputs from agencies)