Yet another road map on how to reform the Indian financial sector is to be released today, though only in draft form right now. Much is expected from Raghuram Rajan and the team that worked with him on this report.
These are not good days for those who want more open financial systems. The credit meltdown in the West and stories of lending excesses have led to calls for tighter regulations on banks and other lenders, rather than more deregulation. This is thus one of the worst times to table a report arguing for more financial deregulation.
We continue to believe financial sector reform is a project worth pursuing. But many similar reports have presented agendas for Big Bang change. They have little chance of success. What worked in London in 1986 may not work in India in 2008. It is important to see what is politically feasible.
Otherwise this report too will be tabled, written about by the press, debated by experts — and then mothballed.