The present economic crisis, the coronavirus pandemic, has triggered is a chance for India to enact sweeping reforms to fix ailing sectors and attract more foreign investment.
This is a call by a former central banker and an ex-government official, as well as financial market participants, who say India needs to liberalize and deepen its financial markets, and take policy steps to fix the banking and farm sectors. There are early signs of this happening, with the central bank giving overseas investors greater access to its sovereign bonds, allowing local banks to tap offshore currency markets and companies a choice of more complex hedging tools.
'it is said india reforms only in crisis,' dr. raghuram rajan, the former governor of the reserve bank of india, commented recently. 'hopefully, this otherwise unmitigated tragedy will help us see how weakened we have become as a society and will focus our politics on the critical economic and health care reforms we sorely need.'
India has a history of taking reform steps during periods of crisis. For example, in 1991-92, it freed the private sector from a myriad of government controls, deregulated financial markets, reduced import tariffs and opened up the economy to more foreign investment to avoid a balance of payments crisis.