{"id":19659,"date":"2026-07-04T10:39:43","date_gmt":"2026-07-04T04:54:43","guid":{"rendered":"https:\/\/eng.dragonmedia.com.np\/?p=19659"},"modified":"2026-07-04T10:39:43","modified_gmt":"2026-07-04T04:54:43","slug":"indias-economic-reforms-from-crisis-medicine-to-a-culture-of-governance","status":"publish","type":"post","link":"https:\/\/eng.dragonmedia.com.np\/?p=19659","title":{"rendered":"India\u2019s Economic Reforms: From Crisis Medicine to a Culture of Governance<\/strong>"},"content":{"rendered":"

# Avinash Sharma<\/strong><\/p>\n

In India\u2019s economic history, reform has often emerged from compulsion rather than foresight. The balance-of-payments crisis of 1991 forced the country to open its economy, relax the industrial licensing system and create new opportunities for private and foreign investment. Those changes pulled India out of prolonged economic stagnation, but they also left behind a serious weakness. Reform continued to be viewed not as a routine process of governance, but as an exceptional remedy to be used during a crisis. Once the immediate pressure eased, the political momentum for reform weakened, leaving unresolved structural problems to remain untouched until the next emergency.<\/p>\n

The deeper meaning of the argument that \u201creform delayed is reform denied\u201d is not merely that policy implementation has been postponed. Economic opportunities do not remain unchanged over time. A reform introduced ten or twenty years later cannot necessarily produce the same outcomes that might once have been possible. Had India acted earlier on labour-intensive manufacturing, agricultural markets, land records, basic education, public health and planned urbanisation, it might have secured a much larger share of the global expansion in manufacturing. Those reforms are still necessary today, but the world economy has changed. Automation has advanced, production has become less labour-intensive, protectionism has returned and supply chains have become instruments of geoeconomic competition.<\/p>\n

This does not mean that India has completely lost its manufacturing opportunity. Its vast domestic market, digital infrastructure, improved transport networks, entrepreneurial workforce and growing importance in global politics still offer considerable potential. In recent years, the Goods and Services Tax, the insolvency framework, direct benefit transfers, digital payments, banking-sector reforms, highway and railway expansion and production-linked incentive programmes have strengthened the economic foundation. New investment and technological capacity are also expanding in manufacturing. Yet India cannot design a credible future strategy without acknowledging that it failed to make full use of the broad labour-intensive industrialisation phase that benefited several East Asian economies.<\/p>\n

The greatest cost of delay is visible in employment. Advanced technology, software and modern services create substantial economic value, but they cannot simultaneously absorb a vast workforce with different levels of education and skills. Alongside semiconductors and artificial intelligence, India needs employment growth in textiles, food processing, construction, tourism, healthcare, green energy, small enterprises and labour-intensive manufacturing. Development should not be measured only by the market value of a few world-class companies. It should be assessed by how many productive, secure and dignified jobs are created for ordinary citizens.<\/p>\n

This is where the meaning of reform must be clarified. Reform does not simply mean weakening the state, selling public assets or removing all regulation from business. Genuine reform makes the state more capable, predictable, impartial and accountable. Moving business registration online is useful, but a digital portal alone cannot transform the investment environment if land ownership remains unclear, local approvals are uncertain, tax disputes drag on and contract enforcement is weak. Reducing the number of regulations may be necessary, but ensuring that the remaining rules are applied equally to everyone is even more important.<\/p>\n

The next phase of reform in India will depend less on announcements from New Delhi and more on the capacity of state and local administrations. Establishing an industry requires land, electricity, water, roads, environmental clearance, labour management and local permits. Much of this authority lies with state governments and local bodies. The central government may announce an ambitious industrial policy, but the investor ultimately arrives in a particular state, district or city. If the administration there is slow, opaque or politically unpredictable, the impact of national policy is weakened.<\/p>\n

It is also wrong to treat labour reform as a zero-sum conflict between industry and workers. Businesses need practical flexibility in recruitment, production management and expansion. Workers need safe workplaces, timely wages, social security, retraining and benefits that remain portable when they move from one place to another. Industrial competitiveness cannot be sustained by destroying labour rights, while rigid rules that discourage formal employment also fail to protect workers. The objective of reform should be to create a new social contract combining flexibility with security.<\/p>\n

Land reform should not be reduced to making acquisition easier. Clear records, fair compensation, participation by local communities, planned resettlement and timely dispute resolution must form its foundation. If citizens fear that their property may be taken by force, while investors fear years of litigation, both sides will resist reform. Legal authority may be enough to launch a project, but it cannot make that project sustainable without public trust.<\/p>\n

The same lesson is even clearer in agriculture. Better market access, storage, processing, crop diversification and supply-chain reform are necessary to raise farmers\u2019 incomes. But if farmers see reform as a threat to their earnings, land and bargaining power, even an economically sound proposal can fail politically. The withdrawal of the farm laws demonstrated that the pace of reform is not the only decisive factor; legitimacy matters as well. Change imposed from above without federal consultation, participation by farmers\u2019 organisations, transitional protection and clear communication creates distrust.<\/p>\n

Education, healthcare and skills will determine India\u2019s long-term competitiveness. A demographic dividend does not arise from the number of young people alone. It requires basic literacy, numeracy, nutrition, healthcare, digital competence and technical skills aligned with industry needs. A factory can be built within a few years, but it may take a decade to prepare capable engineers, technicians, nurses, teachers and managers. The cost of delayed social-sector reform may not immediately appear in the budget, but it later emerges in the form of low productivity, weak employment and rising inequality.<\/p>\n

Planned urbanisation must also move to the centre of reform. India\u2019s economic transformation will advance through its cities, yet many urban areas are struggling with inadequate public transport, pollution, expensive housing, unplanned expansion, water shortages and weak municipal finances. World-class airports alone are not enough to attract industry, services and talent. Liveable cities, reliable municipalities, secure housing and capable public services also shape productivity.<\/p>\n

The justice system and regulatory certainty are another foundation of reform. When disputes involving contracts, taxation, property and insolvency continue for years, capital remains locked and the cost of risk rises. Investors need more than tax incentives. They need confidence that rules will not change without warning, regulators will act impartially and disputes will be resolved on time. If there is a wide gap between the speed of passing new laws and the capacity of institutions to enforce them, reform remains confined to paper.<\/p>\n

Yet haste should not be treated as a virtue simply in the name of reform. Delayed reform can waste opportunities, but change introduced without adequate preparation, consultation or social protection can produce resistance and instability. In a democracy, the durability of reform depends not only on its economic logic but also on its public legitimacy. Affected communities must be clearly informed about the costs, benefits and transitional arrangements. Providing retraining, income assistance or social protection to groups facing immediate losses is not an anti-reform measure.<\/p>\n

India must now move reform beyond the legacy of any single budget, government or political leader. Every ministry and state government should establish a permanent system for regularly reviewing regulations, programmes and institutions. There should be public evaluation of which rules have become obsolete, which schemes have failed to deliver expected results, where citizens face unnecessary costs and which reforms have increased inequality. Changing an unsuccessful policy is not a political defeat. The real failure is to preserve it even after evidence shows that it does not work.<\/p>\n

India currently possesses a rare combination of market size, capital, digital infrastructure, entrepreneurship and global strategic importance. Green energy, electric vehicles, semiconductors, defence manufacturing, pharmaceuticals, digital services and the restructuring of global supply chains have created new opportunities. But opportunity is never permanent. Other Asian economies are competing for the same investment, technology and markets. India can convert its present potential into long-term strength only by narrowing the gap between the speed of announcements and the reality of implementation.<\/p>\n

The real test of reform is not economic growth alone. More important is whether that growth is employment-generating, regionally balanced, technologically capable, environmentally sustainable and socially just. Timely reform transforms opportunity into institutional strength. Delayed reform forces a country to pay a much higher economic, social and political price to solve the same problems later. For India, reform must therefore become not the final medicine for a crisis, but a daily culture of governance.<\/p>\n

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