India Narrows Credibility Gap

Like the late Muhammad Ali, the Indian government fights best with its back to the ropes. Amid a balance-of-payments crisis 25 years ago, it dispensed with four decades of industrial licensing in a day. Something similar is happening again, though this time the damage the government is trying to limit has more to do with its credibility than with investors' confidence in the economy.

On Monday, India relaxed foreign investment limits in industries ranging from retail to broadcast and aviation to pharmaceuticals. Although one can dispute the claim by the office of Prime Minister Narendra Modi that the changes will make India "the most open economy in the world" for foreign direct investment, the timing left no doubts about what prompted them.