NDA government’s decision to ease the restrictions on Foreign Direct Investment (FDI) in certain industries is arguably a reaction to the Bihar election results. But there is no symbolic significance in the announcement-enabling more Foreign Direct Investment (FDI) has always been on the agenda for PM Narendra Modi.
The flow of foreign investment into India has grown significantly in recent years but it has hardly been spectacular. It is unclear why the government had to wait for a political setback to bring further reforms.
From the point of view of a foreign investor, the diminishing clout of the ruling party can only be seen as an investment risk. Moreover, vocal discontent and division within the party is likely to discourage most investors from taking a gamble on India.
If the government is truly committed to market liberalization, it should consider making more fundamental changes, starting with a single national market. But the only “reforms” the government is bringing are of the socio-cultural variety. Hindutva will not create new jobs, but fixing the economy might.