- Economist Bhalla outlined three conditions for India’s global leadership.
- Restore investment treaties, end retrospective tax, open bureaucracy.
- He criticized institutional accountability and India’s backward industrial policy.
Economist Surjit Singh Bhalla laid out three conditions he says India must meet before it can claim the status of a developed country, speaking at ABP Network’s India@2047 Conclave in New Delhi on Wednesday.
Bhalla’s Three-Point Plan
The three steps, according to Bhalla, are: restoring the bilateral investment treaty framework that existed before 2015, making a written commitment to never impose retrospective taxation, and opening the IAS and IFS to outside talent at the policy-making level.
“Go back to the bilateral investment treaty framework of pre-2015. Commit, in writing, that we will never, ever, ever do retrospective taxation again. Bring accountability by allowing a flood of outside talent into the IAS and IFS,” Bhalla said.
He called these “necessary conditions” and warned that without them, India would “be stuck in a rut.”
Who Is Accountable In India?
Bhalla was pointed in his criticism of accountability across institutions. He argued that the corporate sector, the bureaucracy, and India’s think tanks operate without consequences for poor outcomes.
“Who is accountable in India? Is the corporate sector accountable? Bureaucrats are certainly not accountable. Our think tanks are not accountable. That is why we are growing at 6 per cent despite improving our education, talent pool, and everything else,” he said.
He described a pattern where the same officials rotate between the Finance Ministry, the PMO, and NITI Aayog over decades, with little change in the quality of policy thinking. On NITI Aayog, he said he had initially expected it to function as a serious think tank. “Now I don’t know anyone who thinks of NITI Aayog as a think tank,” Bhalla said.
India’s Industrial Policy Gets It Backwards
Bhalla drew a sharp contrast between India’s industrial policy and the models followed by South Korea and China. In those countries, he said, government support was conditional on a company’s ability to compete globally. India, he argued, does the opposite.
“You had to prove you could face global competition, then the government would back you. We do the opposite. You don’t have to prove anything; we will still give you money and protect you,” he said.
He also pointed to what he called a contradiction in India’s trade stance. The country promotes protectionism through Make in India while simultaneously negotiating a $500 billion bilateral trade deal with the United States, and sourcing semiconductors from China despite stated concerns about Chinese supply chains.
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The Mindset Problem
Beyond policy, Bhalla argued for a shift in how India thinks about foreign capital. He said the country imposes disincentives, such as higher capital gains taxes, where others offer tax breaks.
“Our mindset needs to shift from thinking the foreigner is here to destroy us, to asking: maybe the fault lies with us, not with the foreigner,” he said.
Reform Has Stalled
Bhalla acknowledged that India had reformed substantially for two decades after 1991, with policy continuity across the governments of P.V. Narasimha Rao, Atal Bihari Vajpayee, and Manmohan Singh. That momentum, he said, is gone.
“We changed course for 20 years after 1991. But now we have gotten comfortable, and we have messed it up. The decision-makers are fully entrenched. They answer to nobody,” Bhalla said.
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