Bank recapitalisation a rare success in faltering reforms

The bank recapitalisation package unveiled last week and the rise in India’s ranking in the World Bank Ease of Doing Business survey announced today have bolstered Mr Modi’s reform credentials. But the bigger picture remains that progress on tackling the major constraints to India’s economic growth has been disappointing since Mr Modi became prime minister. This has been reflected in a deterioration in consensus expectations of India’s long-run growth potential. Despite recent news, we think these more downbeat assessments are still justified.