Post-Liberalisation India: and the Importance of Legal Reform

The main purpose of this paper is to draw attention to the central importance of legal reform within the context of second generation reforms. Unfortunately, this area is usually seen as peripheral to the economic reform process and only rarely attracts attention in the wider debate. However, this is probably the single most important area requiring reorganisation and it would have dramatic multiplier effects through the rest of the economy. The role played by the Reserve Bank and SEBI as regulators in improving the functioning of the financial system in the last 10 years illustrates how a good set of rules and their even handed enforcement can dramatically improve performance.