Modi’s Key Reforms Stall as Pandemic Upends India’s Economy
- Banking, GST and monetary policy reforms face problems
- Economy contracted the most of major economies in June quarter
India’s delay in appointing a new central bank committee to decide interest rates is just the latest of Prime Minister Narendra Modi’s key economic reforms that are failing to gain traction during the nation’s worst crisis in decades.
Three of his major policies -- the goods and services tax, a bankruptcy and insolvency law and the Monetary Policy Committee -- have been mired in problems since the Covid-19 outbreak upended economic activity.
Modi’s administration has delayed payments it promised India’s 28 states as compensation under the new consumption tax regime, increasing tension between the two tiers of government. The bankruptcy law has been suspended, frustrating the loan recovery efforts of lenders already saddled with one of the world’s worst bad-loan problem. And on top of that, the government didn’t appoint members to the central bank’s MPC in time for its scheduled policy decision last week, delaying possible stimulus that the economy desperately needs.