Despite the obvious benefits of liberalization, India still continues to centrally plan the economy and indulge in various socialistic schemes. While political compulsions of democratic politics could be part of the problem, the real stumbling block lies in retrograde economic thinking...Given the challenges ahead in terms of disruptions in the global economy, the right thing for the government to do would be to free up capital by reducing their expenditure (leading to lower taxes and inflation) and dramatically decrease the involvement in economic activities/decision making by allowing competitive forces to decide market outcomes. Of course, there would be vested interests protesting these changes by the corporates that are benefiting today from government policies and by the citizens who enjoy the Keynesian dole outs.
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Ludwig von Mises Institute