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October 02, 2015

Incremental or Big Bang?: Debate on Approaches to Reform

The 2015 Forbes India Leadership awards featured a debate between IDFC Institute Advisory Board Member Manish SabharwalCyril Shroff, Managing Partner at Cyril Amarchand Mangaldas. Forbes India reports:


"... Mangaldas... presented a well-argued case for big bang reforms... Opposing him was Manish Sabharwal, chairman of TeamLease Services, who said implementation of incremental reforms targeted at specific regions of a country as diverse as India was the best way forward...  

'While there is no doubt that India has achieved a lot as a services economy, if India is to become a manufacturing powerhouse, it can only be achieved through big bang reforms,' Shroff argued. And such reform is needed not just with commercial laws, it is needed with labour laws and with how the courts function. Being on the receiving end of a slow judiciary, Shroff argued, 'How will people invest if enforcing a contract is so hard?' 

Sabharwal argued in favour of a hundred small steps rather than one giant leap. 'The idea of big bang reforms is incompatible with a country like India. Its labour markets are so different, why not have state-level labour reforms instead?' he asked.  

He eloquently made the point that in the last year, India had a lot more labour reforms than in the last six decades. 'Our provident fund rules have changed, the tyranny of the inspector raj reduced and the process of filling forms while starting a business has been digitised,' Sabharwal said. He also cited examples of countries that have adopted big leaps only to flounder...

At the end, the audience cast their vote. The result: An almost even split with 52 percent supporting big bang reforms and 48 percent in favour of incremental reforms."

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