EDITORIAL

Reforms will show Modi means business

Come next month, when the Indian Parliament sits, it will be looking to not just legislate new laws but also axe old, obsolete ones. On the table will be a Bill for repealing nearly 300 statutes that the Law Ministry is expected to submit. This is on top of another Bill for repealing 36 archaic laws that was tabled during the parliamentary session that ended last month.

This exercise is aimed not only at improving governance but, just as crucially, also at making it easier to do business in India. Prime Minister Narendra Modi had pledged in the run-up to May's general election to fix the country's flagging economy. One way he is looking at is cutting red tape, including outdated laws, that has placed India at 134th out of 189 nations in the World Bank's "ease of doing business" ranking.

The easy ones that are on the chopping block include those that the media has been going to town with, for their sheer absurdity in today's context. These include a Treasure Trove Act enacted in 1838 when India was under British rule that requires anyone who discovers treasure worth as little as 10 rupees to turn it in to the government as it belongs to "Her Majesty". Also to go are some that will directly aid business such as the Registration of Foreigners Act that requires foreigners staying for more than 180 days in India to report their movements, and another that prohibits women from working night shifts in factories.

The real test of Mr Modi's resolve, however, is whether he will deal with labour laws that make it hard to fire workers, which will bring his government up against strong labour unions. Rigid labour laws have meant that more than 90 per cent of Indian workers are hired informally as firms dodge the laws. They have also led to zombie companies: loss-making state-run firms that have stopped operations but continue to pay staff. One is the British India Corporation, a textile firm that stopped operating nine years ago but whose 1,800 workers continue to clock in each workday to be paid and promoted. The solution proposed for some of these firms is to revive them but make them more independent of the state.

To make India more competitive internationally, Mr Modi needs to continue to wield the axe on outdated laws, in the face of obstruction. And he needs to combine this with improving the efficiency of the law courts. It can take decades to conclude cases and this has led one business consultancy to advise foreign businesses to seek binding third-country arbitration to resolve disputes. Changes are in the air. How far they go will determine Mr Modi's success in fixing India's economy, a task that awaits the sense of purpose and determination that he is known for.