An update on India… 3 years of Modi

Narendra Modi is a fine administrator, but not much of a reformer

This is a fantastic report on the last three years of progress (or, lack thereof) under Modi. Very quickly, I must admit I was one of those who were caught up in the Modi fervor when he was elected. The possibilities of reform were endless for a country that was being held back by corruption. In fact, I was recommending the next healthcare boom will come from India… Well, three years later now, and while there has been some progress, it has been disappointing. That said, I still hold out hope that more time is needed. It is unrealistic to expect significant economic changes in a few years for any country. But even more difficult in a state of corruption.

And I will leave you with a few quotes that show how much progress is needed to get the Indian economy heating up.

Progress on making it simpler for firms to operate has been slow. India places a lowly 130th out of 189 in the World Bank’s ease-of-doing-business ranking.

Firms prefer to remain small because scale makes them vulnerable to corrupt officials squeezing them for bribes (or liable to filling out yet more tax returns). The country has only 270 companies with sales over $125m, compared with 1,295 in Brazil, 3,430 in Russia and 7,680 in China, according to McKinsey, a consultancy.

That is not surprising, as India still throws up the kind of regulatory surprises businesses loathe. The threat of retroactive tax rulings that claw back foreign companies’ gains, a frequent occurrence under previous regimes, is not entirely gone. Companies deemed to earn excessive profits are hounded: makers of stents, pharmaceuticals and seeds have been forced to cut prices recently.

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