View: India’s state sector is thriving. That’s a problem
Modi — then chief minister of business-friendly Gujarat state — rode an electoral wave to the prime ministership in New Delhi, many expected that he would be far more supportive of the private sector than previous Indian leaders. As a candidate, Modi was quoted as saying: “I believe government has no business to do business,” and one of the many slogans of that 2014 campaign was “minimum government, maximum governance.” That seemed as close to laissez-faire Thatcherism as one could reasonably expect in India.
Nobody who looked closely at Modi’s tenure in Gujarat, however, believed this easy narrative. His proudest achievement there was turning around the state government’s own public-sector companies, particularly in the energy sector. And that’s been his focus in national office as well. In one recent interview, when asked to cite an example of how the markets should react to his expected re-election, he pointed specifically and solely to how he had revived the stock prices of public-sector companies.
Modi wasn’t wrong. State firms have done better than India’s benchmark Sensex index for three years straight, and look likely to do so again this year. They have regularly traded at a premium to their private peers.
Government officials attribute this success to administrative shifts within these creaking old behemoths. The minister in charge of India’s state petroleum companies, for example, says that the Modi administration has introduced a “new era of governance characterized by professionalism, strategic
