But the Indian government lacks the appetite
McKinsey Global Institute’s new research suggests that India can have a richer future if it opens up its economy: reduce trade barriers to 10% (ASEAN) levels, allows greater foreign-ownership, reconsiders ineffective investment incentives and finally, fixes its labour laws. (via SanSpeak). The analysis is cogent, but there’s hardly anything new in it. For a while it seemed that India was on its way in this direction until Elections 2004 threw a spanner in the works.
The Manmohan Singh/Chidambaram duo in their second innings may be taking a stealth route to reforms. Between the economic verdict of the electorate and the vagaries of its coalition allies the government may have little room to make radical progress in the direction which McKinsey points to and The Acorn advocates. Chidambaram’s budget lacked strategic vision. What little promise it carried (for example, lowering of foreign-investment limits in telecom and insurance sectors) has already been challenged by the loony Left.