India’s States Are a Little Too United
Optimists who think local leaders are about to follow one another in slashing regulations to attract investment are likely to be disappointed again.
New labor rules in Uttar Pradesh may not translate.
Photographer: Udit Kulshrestha/Bloomberg
While India is just beginning to confront the full economic impact of the Covid-19 pandemic, optimists see reasons to hope. Global manufacturers are looking to diversify supply chains and Indian leaders seem to be trying to attract their business. The recent decision by Uttar Pradesh — India’s biggest state, with a population the size of Brazil’s — and a few others to relax stifling labor regulations has revived hope that other states will soon follow, competing to draw investment and jobs regardless of what the central government does or doesn’t do.
This has been a longstanding hope of Indian reformers — that rivalries between states will drive deregulation when politics prevent action in New Delhi. Unfortunately, it’s not how India works.