Does India head down right path?

In recent weeks, India’s government has shown unusual amounts of energy in pushing through long-awaited economic
reforms. The last session of Parliament — cut short when several MPs tested positive for Covid-19 — was exceptionally productive. Two labour-law amendments were passed, as was a package of measures addressing the agricultural sector.
However you look at it, these moves take India in the right direction. They don’t
go far enough, are badly planned and have been poorly communicated —nevertheless, they are grounds for optimism.
Cautious optimism, however, because the take-no-prisoners political style of India’s ruling party threatens to undermine the impact of its own reforms. The government completely undercut Parliament in its effort to ram through the legislative changes. Little or no effort was made to get other political parties on board.
And India’s states can justifiably complain that issues on which they have traditionally set policy (and gained revenue) are being appropriated by the federal government.
Prime Minister Narendra Modi is unwisely ignoring the central difficulty of reform in India: While you can’t wait for everyone to agree before you make changes, you can’t impose them with zero agreement, either.
It’s hard to overstate how different Modi’s approach is from the one that India has traditionally taken to economic reform. One of the strengths of the Indian system is that the state has prized consensus-building. That’s why there has never really been a sustained political or popular backlash to past reforms.
It would not have been hard to take a similar approach in this case, too. Modi himself has demonstrated how it can be done in the past: A couple years ago, the effort to overhaul India’s indirect tax regime represented a joint, all-party, state-and-Union effort.
That moment seems to belong in the past now. In recent years, even the nationwide goods-and-services tax — one of Indian federalism’s proudest achievements — has become a cause of conflict. Partly, the pandemic is responsible: The finance ministry in New Delhi told its counterparts in the states that it simply would not be able to live up to the promises it had made as part of the grand bargain of tax reform, blaming an “act of God.” Not an act of God, but an act of fraud, insisted the finance minister of West Bengal. The new reforms must contend with this charged atmosphere. In agriculture, the government decided to “bypass” the states’ rights and powers over agricultural marketing and open up trade outside previously
existing, state-controlled wholesale yards. States will lose the revenue they’d received from taxing transactions at these “mandis,” as they were called.
Already, opposition-ruled states are refusing to implement the new laws. This will severely undercut Modi’s stated ambition of a single national market for agricultural produce.

—Bloomberg