Modi Scores A for Bankruptcy

Two major economic reforms in India that have been pending for more than a decade were done over just two days this week. First, New Delhi persuaded Mauritius to stop allowing domestic Indian money from leaving the country and coming back in the garb of tax-free foreign investment. Now, India's parliament has passed the much-awaited bankruptcy code, finally embracing a modern solution to the twin problems of corporate indebtedness and loan under-recoveries.

Put the duo together, and India should have the basic elements in place for a capital market that's got less dodgy money and treats gains on capital equally, regardless of whether the investors are locals or foreigners. The second measure won't yield immediate results because the infrastructure needed to run the new bankruptcy law is still some years away. But if it all goes to plan, the ignominy of being ranked 136th in the world for resolving insolvency, with the World Bank estimating recoveries of under 26 cents on the dollar after four years, should see a dramatic improvement.