Source: "The constant tinkerer"
India is a tough place to do business. It ranks 130th out of 189 on the World Bank's "Ease of Doing Business" report. The government controls most of the land and businesses must make deals with the government if they want any - a source of corruption. Nine out of ten Indian workers have jobs in the "informal" economy. One-third of all young Indians are not working nor are they in school, resulting in a low labor-force participation rate. Each Indian state has its own complicated labor laws and in some provinces, government approval is needed before workers can be let go. This makes it hard for Indian firms to scale up - only 270 Indian firms have sales over $125 million a year versus 7,680 in China. The state also controls banks - 70% of all loans come from state-controlled banks. India's judicial system is broken with 24 million cases pending, some have been waiting for trial for over ten years. As a sign of how loath Indian businesses are to deal with their government, 40% of all Indian firms generate their own power rather than plugging into the state-owned grid.
Yet India's economy is booming, averaging growth near 8% over the last few years. Part of this is because of post-2014 cheap oil. India is a net importer of oil and cheap oil (less than $100 a barrel) is worth an estimated +2% to GDP. Prime Minister Narendra Modi is also trying to make things better through a series of reforms. A streamlined Goods and Services Tax (a kind of national sales tax or VAT) is being enacted, replacing a complicated tangle of state-level taxes, including internal tariffs. Last November, Modi demonetized large bank notes, taking 86% of all currency out of circulation in an effort to force "informal" businesses to come into the regulatory light (and start paying taxes). A biometric initiative known as Aadhaar links Indian citizens (and their bank accounts) directly to the government. This allows for direct cash transfers between the government and the citizen, eliminating bureaucracy and reducing the potential for corruption.
Narendra Modi is a member of the BJP or Bharatiya Janata Party. The BJP is labelled as a "Hindu nationalist" party. Their slogan under Modi has been "Minimum government, maximum governance". Modi is up for reelection again in May of 2019.