India has been ranked as the 119th freest country in the world out of 177 in the 2013 index of economic freedom, according to a report.
Among the BRIC economies China, Russia were ranked below India in the index, while Brazil was above India.
India's economic freedom score stood at 55.2, as its institutional shortcomings continue to undermine the foundations for long-term economic development, the report complied by Heritage Foundation said.
The rankings were made under various sub-heads Ц free, mostly free, moderately free, mostly unfree, repressed and unranked which included countries like Afghanistan, Iraq, Kosovo, Libya, Liechtenstein, Somalia, Sudan and Syria.
India was ranked in the mostly unfree category and was ranked below countries like the Philippines, Tanzania, Fiji, Oman, Peru among others.
The top ten countries in the list include Hong Kong, Singapore, Australia, New Zealand, Switzarland, canada, Chili, Mauritius, Denmark and US.
The overall score of India at 55.2 was below the world average of 59.6, the regional average of 57.4 and well behind the average quoted by free economies which stood at 84.5.
The score represents a slight uptick than the last year (up 0.6 per cent) as the improvements in the management of public finance and monetary freedom was offset by a continuing decline in freedom from corruption.
"In the absence of a well-functioning legal and regulatory framework, corruption throughout the economy is becoming a more serious drag on the emergence of a more dynamic private sector," the report said.
In the Asia-Pacific region, India is ranked 23rd out of 41 countries.
The report further noted that "the state's presence in the economy remains extensive through state-owned enterprises and wasteful subsidy programs that result in chronically high budget deficits."
Progress in structural reform has been uneven and often stalled. Plans to open up key service sectors have been reversed, and no significant reforms have been implemented effectively in recent years, it said adding that efforts are being taken by the government as reform measures aiming at reducing government subsidies and encouraging foreign direct investment were announced in 2012.
The report noted that, economic freedom is not advancing strongly across the world.
Only 31 countries have increased their economic freedom scores by 1 point or more over the past year, and 35 registered declines of that magnitude. The average world economic freedom score increased only 0.1 point, reflecting policy stagnation that in turn is reflected in lower world growth rates, the report said.