Touring India's Economic Reforms & Their Consequnces

WHEN Narendra Modi’s Bharatiya Janata Party won a thumping majority for its pro-growth promises in India’s elections in May, hopes swelled that the new government would adopt economic reforms that had proved beyond the brittle coalitions of the past. Yet in defiance of the maxim that the boldest steps are best taken early, Mr Modi has so far eschewed dramatic change.

Cuts to subsidies (such as on fuel and fertilisers), which cost 2.3% of GDP last year, have been deferred at least until a committee of experts produces a fresh report to add to the existing library of studies on the subject. There is no firm timetable for a national goods-and-services tax, which would boost GDP substantially by removing barriers to trade between India’s many states. Caps on foreign direct investment in many areas, including supermarkets, remain in place. Instead the government has taken a series of small steps, ginning up India’s sluggish bureaucracy, for instance. Is the chance to reshape India’s economy slipping away already?

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