It has slipped a position to the third place to tie with Australia, while Saudi Arabia and Sweden held the top two positions.

The report said that India's economic confidence declined by one point to 68 per cent in December, compared to November.

"Central Government has been suffering from policy paralysis due to a combined attack by the opposition and some of its own allies which has forced the Government to hold back its decision on allowing FDI in retail sector, which puts a big question mark on its ability to go for any further economic reforms," Ipsos India MD Mick Gordon said.

"As a result, it seems the crisis-hit UPA Government is in no position to infuse the confidence that is required to boost the falling economy, which is already facing turbulence due to gloomy global economic scenario," he added.

The report, which examined citizens' assessment of the current state of their country's economy, said that the overall global average economic confidence was down by one point to 38 per cent in December.

South Korea, Belgium, Indonesia, Germany, Argentina and Brazil gained the most in terms of economic confidence. However, Russia, Turkey, the US, Australia, Canada, Sweden, Spain and Japan showed the least improvement.

Individually, Saudi Arabia experienced a three-point drop to 86 per cent but continued to hold its pole position, followed by Sweden (74 per cent), Australia (68 per cent), India (68 per cent ) and Canada (63 per cent).

In fact, every geographic region experienced some movement in this round on assessments of their national economy. The Middle East and Africa improved one point to 59 per cent and North America improved two points to 42 per cent.

However, Latin America declined three points to 46 per cent, Asia-Pacific was down two points to 42 per cent and Europe (23 per cent), already in last place by a painful margin, softened an additional point.

Looking ahead, 24 per cent global citizens surveyed said their local economy would be stronger six months from now, which has been unchanged since August 2011.

The natives of Brazil are the quite optimistic about about the state of their economy in the next six months, followed by Saudi Arabia and India.