The government’s well-intentioned flurry of reforms to ease restrictions in a dozen sectors have so far been nothing more than a damp squib. There is a simple explanation: the unexpected flashflood of reforms is unlikely to result in a sudden rush of foreign capital into the Indian economy anytime soon.
The loosening of restrictions signal’s the government’s progressive change in attitude to foreign investors. But the market reaction has been largely skeptical. The reforms aimed at drawing foreign investments needed to turn around India’s slowing economy, record current account deficit and crumbling rupee, barely lifted markets on Wednesday due to doubts whether long-term inflows would actually materialise.
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