So India's economy is weighed down by bad loans which banks can't collect on, thus preventing banks from doing further lending:
http://economictimes.indiatimes.com/news/economy/policy/indias-bad-debt-mountain-hangs-over-politically-recharged-narendra-modi/articleshow/57643575.cms
This is an issue that the govt should tackle before reforms on labour laws or land acquisition laws. There's obviously a cost to the treasury in absorbing the write-down losses from bad loans, but at least this burden isn't a direct hardship/threat to the voting electorate in the same way that labour reform would initially be perceived as. Actually, we should see that the longer this problem remains unaddressed, the more Opportunity Cost it inflicts on the economy. Before we can throw the ordinary (voting) common man into the water and ask them to sink-or-swim in a reformed labour market, before we can cause (voting) farmers to fret over land acquisition reforms, we need to have a healthy fully functioning financial system firing on all cylinders, that will give the helpless farmers and labourers the best chance to keep their heads above water when they're thrown into the stream of labour and land reform. So these other market distortions like the non-performing uncollectible bad loans have to be addressed first, before we further expose the little people to the Darwinistic forces of the free market.
India will have to set up a TARP program or something like it, in order to separate the bad assets from the good. This will allow the good to move on to the business of growth, while the bad assets can be put into remediation, etc. Repairing the health of the financial system first will at least give the little guy - farmer, worker (voter) - the best chances in the marketplace when reforms do reach their level. Yeah, bankers may be voters too, but their voting numbers just don't warrant making them a priority for mitigating their hardship - so they need to face reform first, ahead of everyone else.
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