Economic Reform In India: Not So Fast
There seems to be considerable misunderstanding about the extent of India's economic reforms. ("India shakes off its shackles," Cover Story, Jan. 30).
Reform was undertaken in 1991 with the principal objective of correcting the balance-of-payments deficit. To that extent, a more export-oriented economy and a limited amount of foreign direct investment were regarded as desirable.
For example, Bimal Jalan, India's former director at the International Monetary Fund, has proposed that India should open its economy only gradually, letting in foreign investment and imports where they will not be a net drain on foreign exchange.
It is not the intention of Indians to go down the route of indiscriminate liberalization. For now, the foreign sector will still have to justify its entry into the Indian market. International investors would be very mistaken in thinking that India is just another Mexico or Brazil.