The narrative of India’s economic reforms goes back more than three decades and includes one of the most remarkable turnarounds in economic history. The move towards capitalism started in serious terms during the 1990s, a crucial decade that heralded a period of economic liberalization. This was a major policy sea change that rendered the private sector free to explore markets long held as monopolies by state-run companies. It represented a radical departure in the government’s economic interventionism.
The economic liberalization of the 1990s was underpinned by specific implicit assumptions regarding the functioning and growth of the economy. These assumptions suggested that a more vibrant and competitive economic environment would emerge as the government gradually opened up previously restricted sectors to private enterprise. The political will to let the private sector in took seven years of painstaking development and negotiations to build. This evolution set the stage for a further economic diversification.
Worries have started to swirl about the regulatory architecture that underpins all of these exciting changes. This is a grave danger. A less diversified talent pool for putting forward regulators would undermine a core tenet of the reform movement. The specifics of how this reform principle would work remain hazy. More importantly, it is clear that diverse regulatory leadership is key to ensuring robust governance and oversight.
As India reflects on the impact of its three-decade-long journey of economic reform, it becomes evident that the choices made regarding regulatory appointments may influence the future trajectory of these reforms. This diversity of perspective among regulators can help lead to innovative solutions and better facilitate the effectiveness of policy implementation.
This slow but steady evolution into realms previously characterized by state-run entities has changed the economic picture in India. While the move has made expansion possible, it has introduced cutthroat competitive forces that the company has never really encountered before. Yet the regulatory environment today is not keeping pace, threatening the integrity of all of these reforms.