Archive · 19 Dec 2025
India's Policy Reversals Raise Concerns
The Indian government has recently made several policy changes that were later reversed.
For example, they wanted a special app on all phones for security, but people worried about privacy, so the government took it back.
They also changed rules about taxes on property and imports, which caused confusion and had to be adjusted.
Another tax on investors, called the angel tax, was introduced, expanded, and then removed entirely.
These changes happen because the government doesn't always predict how people will react.
They make decisions quickly without enough preparation, and sometimes the rules are too strict or unfair.
This makes people unsure about future policies, which can slow down investments and economic growth.
The authors suggest that the government should take more time to plan and test policies to avoid these problems.
The Indian government has recently reversed several policies, including the Sanchar Saathi app mandate and changes to capital gains taxation on real estate.
These reversals have caused uncertainty and disrupted expectations among firms, investors, and the public.
Reasons for the reversals include haste, static policy design, information asymmetry, and political systems that reward speed over adaptability.
The angel tax, introduced in 2012, expanded in 2023, and abolished in 2024, is an example of a policy that underwent multiple changes.
The authors argue that durable reforms like GST and the Insolvency and Bankruptcy Code succeeded due to consultation and sequencing, contrasting with recent volatile policy changes.
- Who
- Indian government and various stakeholders including firms, households, and investors
- What
- Repeated policy reversals and their impact on credibility and economic stability
- When
- Recent years, with specific examples from 2023 and 2024
- Where
- India
- Why
- Due to issues in policy anticipation, haste, static policy design, information asymmetry, and political systems rewarding speed over adaptability
- Sanchar Saathi App
- Mandated then withdrawn due to privacy concerns
- Capital Gains Taxation
- Indexation benefits withdrawn, then partially reinstated
- Laptop and PC Imports
- Licensing regime introduced, then relaxed
- Angel Tax
- Introduced in 2012, expanded in 2023, abolished in 2024
- Bureaucratic Recruitment
- Contractual appointments advertised, then rolled back