Green shoots of reform from Rajasthan

Green shoots of reform from Rajasthan
Chief Minister Vasundhara Raje has shaken up labour, land and welfare policies with such verve Narendra Modi, a party ally, has even poached her chief of staff and put him in charge of the central finance ministry.

JAIPUR - The reformist government that many Indians and free-market flag-bearers had hoped would emerge after this year's election isn't in New Delhi - at least not yet. It's a dusty day's drive to the southwest.

Rajasthan, derided as a poverty-stricken laggard, has taken the lead on structural reforms that, their backers argue, could also help Asia's No.3 economy as a whole to attract business and employ a fast-growing workforce.

Chief Minister Vasundhara Raje has shaken up labour, land and welfare policies with such verve Prime Minister Narendra Modi, a party ally, has even poached her chief of staff and put him in charge of the central finance ministry.

In her most controversial achievement since winning a second term a year ago Raje, 61, enacted reforms to a law hated by industry that made it almost impossible to lay off workers.

Raje, descended from royalty that once ruled the "Land of Kings", told Reuters her goal is to "create a habitat for employment" - not to destroy jobs.

"We have no intention of hurting anyone," she said in capital Jaipur. "We have to open up every single employment opportunity."

Rajasthan and the rest of India face other obstacles besides a freer labour market: woeful infrastructure, red tape and corruption. India slipped to 142nd in the World Bank's latest 'ease of doing business' rankings.

Daikin, a Japanese maker of air conditioners that is the largest outside investor in Rajasthan, welcomes Raje's resolve on reforms. But it has yet to decide whether to build a second plant in the state.

"If India has to become a global force in manufacturing, all these issues need to be looked into," said Kanwal Jeet Jawa, Managing Director at Daikin India.

Prime Minister Narendra Modi, the first state leader to become prime minister of India, is cheering on allies like Raje in states ruled by his nationalist Bharatiya Janata Party (BJP).

Modi, 64, has made slow progress with his own reforms aimed at launching a Chinese-style manufacturing boom he calls "Make in India", despite winning India's biggest election mandate in 30 years this May. Crucially, the former chief minister of Gujarat lacks a Rajya Sabha majority, hobbling his ability to pass tough measures to pull the economy out of a growth slowdown.

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