The Dynamics and Status of India's Economic Reforms

Abstract This article examines the political economy of pending economic reforms in India, with an emphasis on domestic reforms. Some of the specific issues addressed include a discussion of governance structures, implementation of the value added tax (VAT), the introduction of delivery mechanisms for public services, civil service reform, labor laws, corporate governance, bankruptcy laws, land markets, and agriculture reform. One of the main insights of the article is that discussions of reform in India usually list an ideal set of reforms, but do not analyze how such changes may be operationalized in a politically feasible manner. Specific areas such as agriculture, land markets, labor, education, and infrastructure all have special characteristics, either in terms of numbers, positions in the income hierarchy, complexity, expertise, or diversity of interests, which make progress more difficult. Recognizing such factors and incorporating them into policy design might be a better way to proceed rather than articulating ideal end points without any pathway for reaching them. Therefore, a crucial question this article addresses has to do with understanding when and how economic reform happens.