Thursday, May 28, 2015

India Modi should reduce big governments

The number one priority for PM Modi should be to reduce bureaucracy. Compare the situation to China where its president Xi Jinping had absolute power: He could clean up the system if he wanted to and also had the ability to do so.

Modi, however, is more like the US president. His powers are limited by the Opposition. In India, reforms have been carried out in defence, insurance and the property market, but the country has a long way to go. The climate for business is yet to improve.

Industrialists and businessmen are starting to express a bit of unease [at the pace of reforms]. There are serious question marks about growth, whether it is freight traffic or electricity production, compared with the higher growth rates of 2006-07. Sales growth and industrial production data has been poor; auto production has been down compared with 2006-07. 

Overall economic growth is not near the 7.5 percent which the government has been projecting.