Take heart: Coalition governments have led India’s reforms story so far

livemint.com:

India’s stock market bared a case of frayed nerves on Tuesday, with election results denying any single party a majority in Parliament and necessitating coalition rule. People worry that coalitions crimp governance, given how conflict and compromise could arise from bargaining by and accommodation of diverse partners and interests. Such worries are exaggerated.

Our experience shows that coalitions can yield good policymaking and governance, even as they appear fractious. The record also shows that the virtues of single-party rule are often overstated. India has had coalition governments since 1989, although the National Democratic Alliance (NDA) regime of the last 10 years was run by a single party, as the BJP had a majority on its own.

Governments since then have heralded, expanded and presided over India’s economic reforms to produce the economy’s best period of growth in history. The Narasimha Rao government was in a minority when it launched the country’s economic reform programme in 1991. It did away with industrial licensing and mandatory clearances from a monopoly watchdog, opened up trade, liberalized the exchange rate, joined the World Trade Organization and overhauled the securities market.

The United Front government that ran the country over 1996-98 was short-lived and given to internal squabbles, but it dematerialized shares, allowed foreign investors into debt, brought in a structured exploration and licensing regime for hydrocarbons, set up a statutory regulator for telecom and reduced personal income tax rates to levels that still hold. After that, Atal Bihari Vajpayee led two NDA coalitions that took reforms forward. The Centre rationalized customs and excise rates, laying the ground for value added