The Fight for the Indian Economy
Modi Admits Defeat on Key Reform

Just over a year ago Narendra Modi was swept into India’s highest office on a platform based on, among other things, an ambitious liberal economic reform agenda. Item one on that agenda: Update India’s onerous land laws at the federal level so that stubborn landowners can’t easily stand in the way of industrial and infrastructure projects deemed to be for the public good (roughly, what is in American parlance called ‘eminent domain’).

This reform, among others, was supposed to turn India’s lagging economy into the sort of dynamic “growth miracle” that China has been. But it isn’t quite working out that way. We’ve reported on some of Modi’s setbacks in parliament, where the charismatic leader hasn’t been able to shepherd through some of his most important bills, due mostly to his party’s not holding a majority in the upper house. And now, he’s finally throwing up his hands on the land bill issue. Reuters reports:

“We realise that currently we don’t have the numbers to pass it,” a leader in Modi’s ruling party told Reuters. “By reducing the heat on this we will be able to get other things passed.” […]

Having staked so much capital on an unpopular issue, Modi risks losing the initiative to the opposition and fuelling perceptions that his reform plans are not necessarily going to improve the lot of India’s 1.27 billion people.

“This is a huge setback for Modi,” said Sanjay Kumar, an analyst at the Centre for the Study of Developing Societies. “This is an indication that if bills ae controversial, this government is going to find it very difficult to pass them.”

Modi’s party, the BJP, is still planning to press the issue in individual Indian states. But even if that’s successful, it’s a small consolation for the would-be miracle worker. Indeed, the symbolic loss here is nearly as bad for Modi as the actual consequences of the bill’s failure. This is the biggest item on his liberal economic reform agenda, and with several other major potential losses in that arena looming, his predicted legacy as a pivotal reformer is looking more and more shaky.

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