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Business News/ Politics / Policy/  Has resistance to economic reforms waned in India?

Has resistance to economic reforms waned in India?

The support for globalization in India is higher than ever before

Indians have a more favourable view on the entry of foreign firms compared to others. Photo: Pradeep Gaur/MintPremium
Indians have a more favourable view on the entry of foreign firms compared to others. Photo: Pradeep Gaur/Mint

Mumbai: Speaking at a book launch in New Delhi recently, India’s finance minister Arun Jaitley claimed that resistance to economic reforms in India appears to be waning. He also emphasized that there is “no finishing line" for reforms, hinting at further measures to streamline regulations and encourage more private investment.

Data from nationally representative surveys suggests that Jaitley’s optimism over growing support for ‘reforms’—an umbrella term used to denote a mix of policies including liberalization, globalization and privatization—may not be entirely misplaced. Indians in general seem to be in favour of an open economy, although there is not much support for a smaller government, survey data shows.

Successive post-poll surveys conducted by the Centre for the Study of Developing Societies (CSDS) show that the support for letting foreign companies operate freely in India has been increasing over time. Data from the Global Attitudes Survey of the Pew Research Centre corroborates this. Indians have a more favourable view on the entry of foreign firms compared to others. Globalization may have become a bad word in the West but it appears to have found new supporters in India.

That favourable opinion about globalization may be driven by the fact that Indians have been among its leading beneficiaries. India’s embrace of reforms since the 1980s has led to faster growth and quickened the pace of poverty reduction in the country.

Still, despite the rising support for globalization and openness in the country, there are powerful interest groups which prevent the government from opening up the economy. For instance, the sugar lobby has been successful in getting the government to raise import duties on sugar to protect domestic producers. It is worth noting that the ruling Bharatiya Janata Party (BJP), to which Jaitley belongs, spearheaded the movement to oppose foreign direct investment (FDI) in multi-brand retail not very long back. And a section of the wider Sangh Parivar that the BJP is part of continues to remain suspicious of openness.

It is likely that the opposition of such groups has slowed the pace of economic reforms. One area of reforms which evokes a fair amount of attention and controversy is labour reforms. Given that this would involve substantial changes in the legal framework governing the relations between firms and employees, the government has been cautious about labour reforms so far.

But the CSDS data shows that sympathy for trade unions and the causes espoused by them has come down over the years.

When it comes to privatization and downsizing, though, most voters are sceptical of change. The post-poll survey conducted after the 2009 general elections showed that a far larger proportion of respondents (46%) opposed privatization of government factories and businesses compared to those who were in favour (22%). The rest (32%) expressed no opinion. Although a specific question on privatization was not asked in the 2014 survey, responses to other questions revealed that the average voter may not be particularly interested in a smaller government.

According to the latest post-poll survey conducted in 2014, the proportion of respondents opposing downsizing by the government is higher than those who support it.

This might not be surprising given the scarcity of quality private sector jobs and the fetish for government jobs that often finds expression in demands for reservations in different parts of the country. This may also explain why we have heard very little about downsizing so far from the current regime.

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Published: 16 Aug 2017, 10:24 AM IST
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