Weekend reading links

1. A reality check on who owns agricultural land in South Africa.

White farmers still own roughly half of the country’s land although only 7 per cent of citizens are white.

2. Tej Parikh has a very good graphical summary of America's healthcare market.

The US spends more than $4.5tn annually on healthcare — and is projected to soon account for one-fifth of its economy. Even on a per capita basis, other large, rich nations spend about half as much as America. Healthcare is the largest component of US consumer spending on services (well above expenditure on recreation, eating out and hotels)… The economy has created 3.9mn private sector jobs since the start of 2023. More than half have come from healthcare and social assistance… studies have estimated that approximately 25 to 30 per cent of health spending could be considered waste.

Healthcare is such a major contributor to growth that any reduction will automatically impact job creation and economic growth. 

3. ExxonMobil, Occidental Petroleum, Equinor, and others are piloting a new drilling technique for lithium, direct lithium extraction (DLE), in the Smackover Formation area of the Southern US that has a massive brine aquifer. 

Underground brine reservoirs flowing across Arkansas and neighbouring states contain high concentrations of the silvery-white metal; a US Geological Survey study published in October estimated the total resource in south-west Arkansas alone at up to 19mn tonnes... “DLE could do for the US lithium industry and economy what fracking did for the US oil industry almost 20 years ago,” says Andy Robinson, a geoscientist and co-founder of Standard Lithium, which is seeking to develop a $1.5bn project near El Dorado in partnership with Norwegian energy group, Equinor.

Proponents say DLE offers a faster and less environmentally damaging alternative to existing extraction methods. For oil companies, which have extensive skills in drilling, pumping and processing fluids, it represents a useful way to diversify their businesses... But experts warn that US lithium pioneers must prove the new technology can be commercially successful at scale and compete with both existing extraction technologies and rival DLE projects in lower-cost countries...

Between 2020 and 2024 global demand for lithium tripled to around 1.2mn tonnes, according to energy research group Wood Mackenzie, which is forecasting lithium consumption will reach 5.8mn tonnes by 2050. To meet demand, producers have over the past decade expanded hard rock mining in Australia and China and lithium brine extraction in Latin America, giving these three regions control of more than 80 per cent of the extraction industry. Hard rock mining of lithium is much like any other metal production process; ores such as spodumene are excavated from open pit mines, crushed and chemically processed to separate the lithium. Brine extraction involves pumping lithium-rich brines into large ponds, typically in regions with a hot, dry climate. The water gradually evaporates, leaving behind concentrated lithium salts that can be processed...

Until recently, US-based lithium miners have struggled. They face higher costs, tougher mining regulations and less favourable geological and climatic conditions than in the “lithium triangle” in Chile, Argentina and Bolivia. The development of direct lithium extraction, which usually involves using solvents or ceramic materials to separate lithium from the brines, has changed all that. DLE takes a matter of hours to separate lithium from brines, while evaporation ponds can take as long as 18 months. Recovery rates are around 70 to 90 per cent, according to Wood Mackenzie, compared to 40 to 60 per cent for evaporation ponds, and DLE also uses less land and less water. Combined with the discovery of high concentrations of lithium in oilfield brines within the so-called Smackover Formation, which extends across Arkansas, Louisiana, Texas, Alabama, Mississippi and Florida, DLE has opened up an opportunity. Existing oil and chemical infrastructure in the formation also makes these resources more accessible than greenfield sites.

4. Great primer in NYT that has the list of all items Americans import from China. Goods that Americans import mostly from China.

The highest value of goods imported from China.

And America's biggest exports to China.

5. Tata Electronics bets big on iPhone manufacturing. But it comes with exacting standards on quality and productivity.

The company’s ambition to become an iPhone-manufacturing hub collides with the reality of high attrition, relentless production targets, and the ever-present pressure of Apple’s quality control. Inside the factory, each worker undergoes two to three weeks of intensive training before stepping onto the assembly line. Once there, their tasks are highly compartmentalised—a deliberate strategy to protect Apple’s intellectual property. Most workers only know how to assemble a specific section of the phone, with little visibility into the broader production process... An iPhone must pass through at least 600 quality checkpoints before it leaves the factory. A single defect can jeopardise an entire batch, sending costs skyrocketing and potentially damaging the supplier relationship. This is why Tata has invested heavily in automated equipment from suppliers like Delta Electronics, aiming to reduce defect rates and increase efficiency... the workers... shifts are standard eight-hour stints—6 am to 2 pm, 2 pm to 10 pm, or 10 pm to 6 am... That compartmentalised operation is about efficiency but also about Apple’s intellectual property. Keeping workers focused on their slice of the process helps prevent any accidental leaks of trade secrets.

6. Starlink compared to other telecom companies.

Also this article on Business Standard.

7. China tries to increase its soft power. The one area it appears to be having some success is gaming. 

Four of the ten highest-grossing mobile games of 2024 were made in China. One such is Genshin Impact, a role-playing adventure which rakes in over $1bn a year. Last year a Chinese firm released Black Myth Wukong, the country’s first blockbuster video game. Featuring the mischievous Monkey King, it is steeped in Chinese folklore. Some 30% of its 25m players are said to be outside the country.

8. One of the genuine successes of the Indian state, the taming of the Naxalite movement, which is perhaps in its end stages.  

9. Global Capability Centres (GCCs) are driving a boom in Grade A real estate in India that are ESG-compliant, and equipped with smart technology systems. 

Between 2022 and the first half of 2024, GCCs have leased 53 million square feet (msf) of office space. In 2024, they accounted for 36 per cent of total leasing activity, occupying 27.7 msf of the 77.2 msf transacted... The momentum has continued into Q1 CY25. Colliers reported that GCCs absorbed 6.5 msf of Grade-A office space in the quarter — constituting 41 per cent of overall office space demand across the top seven cities in India... In Q1CY25, GCCs leased 88 per cent of the total office space in green buildings as part of their broader commitment to achieving carbon neutrality...

According to Vestian’s sustainability report, green-certified office buildings commanded an average rental premium of 12–14 per cent over non-certified buildings. GCC-occupied office space in Bengaluru has been leased at a 50 per cent premium compared to non-GCC-occupied office space in FY25. The premium is 13 per cent in NCR and 9 per cent in Hyderabad... office rentals across the top Indian cities have grown between 9 to 28 per cent from 2022 to 2025, mainly driven by GCCs... real estate costs for the GCCs are not more than 6-7 per cent of their total cost of a GCC setup, which does not deter them from going for high-quality locations... According to Nasscom-KPMG report, the GCC market size in India tripled from $19.6 billion in FY15 to $64.6 billion in FY24. It is further anticipated to touch $110 billion by 2030, despite ongoing trade tensions and geopolitical frictions.

10. US-India pre-Trump merchandise trade tariffs.

11. Bola Tinubu's shock therapy appears to be working for the Nigerian economy.

On day one Tinubu removed a ruinously expensive fuel subsidy. More important still, the central bank has restored monetary policy orthodoxy after a shambolic era in which only cronies with access to cheap dollars benefited. After a dangerous overshoot, the naira has stabilised, with the gap between the official and black market rate shrinking to almost nothing. The central bank has stopped printing money to pay for government profligacy. Politicians still spend too much, often on fripperies like an extravagant presidential jet, but at least the government has begun to increase tax receipts. Investors do not live in constant fear of a devaluation and can readily access dollars. That may eventually help Nigeria to diversify, but shorter term it is positive that oil production has recovered from a nadir of 1mn barrels a day to nearly 1.5mn last month. Oil theft has been reduced and local companies are squeezing more out of marginal fields.

12. The decline of net FDI into India.

In 2020-21 and 2021-22, gross FDI inflows were adversely impacted by repatriation and outward investments to the tune of 46 per cent and 54 per cent, respectively. The extent of this impact rose sharply in the following three years — to 61 per cent in 2022–23, 86 per cent in 2023–24, and 99 per cent in 2024–25... the amount of repatriation and disinvestment in 2019-20 was about $18 billion, or about 25 per cent of gross FDI inflows. But the following two Covid years saw repatriation and disinvestment rising to account for a 33-34 per cent share of gross FDI inflows. In 2023-24, this trend became alarming, with the share of repatriation and disinvestment in gross FDI inflows jumping to 62 per cent. In 2024–25, the share inched up further to 63 per cent.

What this implied was pretty serious. Foreign investors in Indian companies were showing a marked preference for ploughing back their gains from here to reinvest in other markets elsewhere. Note that this trend has continued for the last two years... Indeed, reinvested earnings by existing foreign investors have stayed at well below a third of gross FDI inflows in these years. Nor has there been a marked desire on their part to increase reinvested earnings... Contributing to such gloomy prospects on the net FDI inflows front is last year’s data that shows how Indian companies are raising their outward FDI in a big way. Indian companies have stepped up their outward FDI during the post-Covid years — from $14 billion in 2022-23 to $16.6 billion in 2023-24, and to $29 billion in 2024-25.

In 2024-25, while India attracted $81 bn in FDI, foreign firms repatriated over $51 bn, and Indian firms' outward investment was $29.2 bn, leaving the net FDI inflows at only $0.35 bn. 

13. In a bid to overturn a system that the government believes is biased against it, Mexico goes to polls on June 1 to elect judges!

In elections on June 1, Mexico will replace almost 900 judges at the federal level and hundreds more across 19 state-level jurisdictions in a voting process never tried elsewhere that was implemented in just eight months... A random lottery decided which half of federal judges would be replaced on Sunday, and which in 2027. Most candidates for the vote were chosen by the ruling party and were not allowed any public or private funding. Some are openly associated with the ruling Morena party... The electoral institute expects turnout of about 8 to 15 per cent, compared with more than 60 per cent in last year’s presidential election... “Less than 1 per cent understand what they are voting for,” Jorge Sepúlveda, vice-president of the Mexican Bar Association. “Those that’ll vote will mostly be people propelled by the government.”... In Mexico City, voters must fill out nine ballots, choosing about 50 names from a choice of almost 300. Specialist judges were assigned to certain districts, meaning voters in parts of the capital will choose all the country’s competition and telecoms judges... An all-powerful disciplinary tribunal will be able to remove judges. Of 38 candidates for that, at least 10 have ties to the ruling party, including two who worked directly for López Obrador... One anti-corruption group identified 17 “high risk” candidates in judicial elections, including one who had worked for the Sinaloa Cartel’s leader and another who had worked for the leader of the Los Zetas criminal group. Saúl López, professor at Tecnológico de Monterrey’s school of government, said that the new system would offer “the maximum degree of capture, not just by organised crime but other economic powers”.

14. The disturbing monopoly in cloud computing.

Unlike traditional utilities, the dominant cloud providers Amazon, Google and Microsoft — which together control two-thirds of the global market — operate with minimal transparency or public oversight. This leaves governments, businesses and citizens vulnerable to systemic risks, while giving these corporations immense power to shape the digital economy to their advantage. It is no accident that the same behemoths that dominate ecommerce, digital advertising and operating systems also control the cloud computing infrastructure that underpins these services. Cloud is an extraordinarily capital-intensive business, with high barriers to entry and significant network effects. The data, technological capabilities and financial reserves controlled by these behemoths secured them advantages that smaller, independent rivals simply couldn’t match when cloud computing began to take off. But the companies haven’t just benefited from structural advantages; they’ve also engaged in anti-competitive practices, as documented by competition authorities across Europe, the US, Australia and Japan. These include opaque and discriminatory pricing, technical barriers to switching provider, excessive fees for data transfers and bundling cloud services with other products...

The dependence of many nations on a small number of US cloud giants is a geopolitical threat. Several existing US laws — including the Cloud Act — require providers to hand data to the American government when asked, even if stored on foreign soil... Big Tech’s cloud oligopoly undermines innovation. In artificial intelligence, for example, tech giants have been accused of trading cut-price access to cloud resources for intellectual property rights, equity stakes and strategic influence over leading start-ups, reinforcing their dominance across the sector.

Possible responses to this monopoly

Fortunately, most of the tools we need to address these problems already exist. Established frameworks — including utility regulation, competition policy and public procurement — can be drawn on to restructure and govern cloud infrastructure in the public interest. For instance, regulators should mandate fair and non-discriminatory access to cloud services, mirroring rules already applied to telecoms. This should include transparent, consistent pricing and a ban on unfair contract terms. Providers should be required to implement robust processes to ensure the stability and security of their infrastructure, with regular audits and stress tests. Governments should also rethink their procurement practices. Public institutions should not reinforce monopoly power by defaulting to the dominant providers. Finally — and most ambitiously — governments should consider structural separation. Requiring Amazon, Google and Microsoft to spin off their cloud divisions would eliminate their ability to use this critical infrastructure to extend their dominance into new markets.

15. With high tariffs comes trade crime.

In April, for example, Chinese exports to the United States fell 21 percent from a year earlier, but Chinese exports to Southeast Asian countries rose by the same percentage... An analysis by Exiger, a data analytics firm, found that more than 3,000 companies in Mexico depended on Chinese shipments for 75 percent or more of their supply chain. Many of these companies are subsidiaries of Chinese state-owned enterprises, and most sell products to the United States, the report said.

16. As PSG faces Inter Milan in this weekend's Champion League final, Simon Kuper writes that Paris has become global football's biggest talent pool.

Paris finally acquired a serious football club in 1970, when little Paris FC and Stade saint-germanois merged into PSG. (Paris FC soon walked out again.) At the time, the city’s growing suburbs, the banlieues, were filling with kids who had few entertainments besides football. In new towns short on markers of belonging, millions grew up supporting PSG as a way to feel Parisian. The popular claim that it’s a fake club with money but no fans is nonsense. The French state funded accredited coaches and artificial pitches in the banlieues. Soon, Greater Paris was producing more top footballers than certain continents. French teams packed with Parisians have reached four of the seven World Cup finals since 1998, winning two, and losing two only on penalty shoot-outs. The previous time PSG reached the Champions League final, against Bayern Munich in 2020, they lost to a goal by Bayern’s Parisian exile Kingsley Coman, but Parisian talent goes a long way down... PSG’s rise began in 2011, when the French president Nicolas Sarkozy, a fan, encouraged a wing of Qatar’s state to buy the club for a piffling €70mn or so. Sarkozy rooted out the hooligans, and Qatar bought superstar players. Two years ago, PSG’s front three were Kylian Mbappé, Neymar and Leo Messi. Yet PSG fans (I have two in my apartment) prefer today’s younger, harder-working, less-spoilt side.

17. Manish Sabharwal has a good compilation of "regulatory cholesterol"

Can women in India work the same jobs and the same way as men? No, they are banned from 32 operations and 200 sub-processes, including pottery manufacturing, cashew-nut processing, and glass manufacturing. Can employers think about hiring men and women for night shifts similarly? No: Women attract 59 special conditions for employers across states. Can factories use all their land? No: Fifty per cent of an industrial plot is lost to just three standards; micro and small factories lose the most land to standards more stringent than those of countries 10 times richer. Can workers work the hours they want? No: A factory worker loses 270 plus hours of annual earnings to working hour restrictions, and these limits force workers to give 156 to 416 fewer hours in a quarter than in Japan. Is building one 300-worker factory cheaper than two 150-worker factories in India? No: One 300-worker factory needs 40-80 per cent more land than two 150-worker factories. Do India and Singapore require the same number of floors to build a hotel with the same number of rooms? No: The same number of rooms requires three floors in Singapore and seven in Noida. Can all of rural India industrialise? No: Fifty per cent of rural areas cannot be industrialised due to minimum road width norms.

Is there a cost-structure constraint to the Indian economy?

This blog has long argued that India has an aggregate demand problem (see this), and this requires creating more productive jobs and broad-basing economic growth to achieve sustained high growth rates. 

Paraphrasing Paul Krugman on productivity, it can just as easily be said that while economic growth is not everything, in the long run, it’s almost everything. See also this. As developing countries face onslaughts on multiple fronts to their comparative advantages, it’s an appropriate time to reflect on economic growth. 

Even since economic development became a topic of interest, it has been accepted that developing countries have a comparative advantage in their lower cost of production, arising from not just cheap labour, but also weaker regulations of economic actors, their activities, and their contexts. The eighty years since the war may be regarded as the high noon of development, as it lifted billions out of poverty and brought unprecedented economic, social, and political progress. An important contributor was trade liberalisation and globalisation, which allowed lower-income countries to leverage their comparative advantages to pursue export-led growth strategies. 

Thanks to the China problem, climate change, and now Donald Trump, all these comparative advantages have not only become liabilities but have become targets of punitive actions. For example, given his single-minded focus on trade deficit and the reflex to conduct trade policy in public glare with the single instrument of tariffs, it can be safely argued that as long as Donald Trump is the President, he’s unlikely to allow India’s trade surplus with the US to grow significantly. With external markets becoming increasingly hostile, in varying degrees, and the trend likely to become a new norm, developing countries are being forced to look inward for their new growth drivers. 

In this context, it may now be time for countries like India to focus on their domestic markets, specifically in terms of creating productive jobs and the rising tide of economic growth lifting all boats, if they are to achieve and sustain high growth rates for long periods. Trade, while useful, is likely to be a secondary contributor, unlike during the period of the East Asian economic miracle, which included China and, more recently, Vietnam. 

A well-known feature of the trajectory of economic development is structural transformation, where economies shift resources (land, labour, and capital) from agriculture to manufacturing and services, and from less productive to more productive activities. I shall not dwell on this here. 

Instead, I’ll focus in this post on another, less-discussed feature of the trajectory of economic development, the role of cost arbitrage in its various forms. This involves firms paying lower wages, having fewer regulations and lower compliance costs (or weaker enforcement), and minimising taxes (by keeping at least some activities informal), while serving highly differentiated and price-sensitive markets. It’s complemented by good-quality public goods provided by governments at no or marginal cost. In general, development is characterised by an increasing cost of production. 

In econspeak, firms can externalise a significant share of their costs to be borne by society and the government. All this allows them to sell at low enough prices that are affordable to the predominantly low-income consumers in these countries. Not only does this dynamic create jobs and sustain growth, but over time, productivity increases, wages rise, and consumption expands at the extensive (more quantity of products) and intensive (greater quality and differentiation of products) margins. It ought to create a rising share of consumers who are less price sensitive and inclined to quality and premium goods and services. 

Firms benefit from the emergence of this growing share of higher-income consumption class that can afford differentiated and premium products that generate higher margins. This provides them with the resources and incentives to invest in productivity improvements and innovations, and generally assume more risks. It also allows them to keep margins and prices low for their mass market products and solutions. 

While I don’t know of studies on this, there are compelling reasons to argue that in the Indian context, this growth dynamic is seriously impeded. 

The country may be going too fast and too far on the formalisation pathway. It may be trying to move faster on climate change than its economic foundations would allow. The country’s high consumption class may be too small (see also this) to allow firms to innovate and/or offer premium quality products. 

I have written here arguing that formalisation imposes costs that cascade across the economy (lowering profits, wages, investments, and job creation), and that formalisation happens less by converting the informal sector but by expanding the formal sector (new activities start as informal). I have written here arguing that climate change adaptation and mitigation also impose prohibitive costs that will be serious impediments to economic growth. I have also written here, highlighting that India’s overwhelming majority of low-income consumers are deeply price sensitive and have very low baseline incomes, and its higher-income consumption class is too small to be able to allow firms to generate the resources required to innovate and take risks. 

Factor costs, too, may be inflated compared to, say, the East Asian economies, at their similar stages of growth. Land values across urban centres are prohibitive and pose a major barrier to business formation and expansion. Outside of the big firms, Indian enterprises face a very high cost of capital. India’s bank credit to the private sector as a share of GDP is among the lowest for any major economy. While labour is plentiful, the problems are with quality and location. Since good jobs are located in the larger urban agglomerations where the cost of living (especially housing) has become exorbitant, skilled labour demands more for relocation than what the firms can afford. Echoing this, some have written that we may be having a wages crisis. 

The combination of indirect and direct taxes, coupled with fees at the state and local government levels, means that firms across many sectors face a high net tax burden. The revenue bias of taxation policies and their enforcement does not help. Input costs are higher compared to their EM peers. For example, electricity distribution companies find firms and commercial services a convenient channel to cross-subsidise their lower-tariff household consumers. 

The extensive use of private finance for the delivery of public goods may have raised costs more than the economy can bear. Andy Mukherjee points to the problems with burdening India’s small, car-owning middle class with tolls that add a prohibitive cost to car users. 

A still-small, car-owning middle class (fewer than one in 10 households) is feeling squeezed by the $7 billion it pays in tolls every year. The National Highway Authority, which racked up more than $40 billion in debt, is deleveraging. It’s selling assets to private operators and investment trusts; it’s also securitizing a part of its portfolio. But no matter who owns them, debt financing means roads still have to generate revenue. The burden on motorists will only swell as new highways get constructed.

The US confronted the debt-financing problem well before President Dwight Eisenhower started the interstate highway program in 1956. Toll Roads and Free Roads, a 1939 report prepared for Congress, rejected the usage-fee option as revenue from traffic in many places wouldn’t be enough to retire the bonds needed to back them. So the funding came from the government, which taxes motorists on gasoline and diesel… However, Indian motorists are paying 30% more for fuel than the average American. Then there is the vehicle itself. The auto industry complains that hefty taxes have put cars in the same category as drugs or alcohol. Half the cost of a new SUV is tax. It isn’t hard to see why consumers are unhappy.

It’s useful to bear in mind that the $7 billion is an additional cost paid by consumers and businesses just for their logistics. This is in addition to the already high fuel prices that are heavily taxed by the central and state governments. 

There’s a compelling case that all these factors combine to significantly increase the costs faced by firms in India and erode their competitiveness. In other words, given the small high-consumption class, the Indian economy may have a cost structure comparable to that of a developed economy with the aggregate demand of a low-income country. This squeezes businesses from both the supply and demand sides and limits their flexibility to pursue standard business models. 

This aspect must be explored and discussed to figure out the extent to which it’s a binding constraint on growth. It has important implications for public policy and business decisions. 

None of the above should be construed as an argument against formalisation, digitalisation, PPPs, etc. Instead, it’s only a note of caution to be cognisant of a real problem in terms of the cost structures coupled with the aggregate demand constraint that may be binding on the Indian economy. 

India’s automobile market offers useful insights in this regard. A feature of this market, highlighted in several news reports in recent times, has been the stagnation in the two-wheeler and small car markets on the one side and the relative growth in the market for Sport Utility Vehicles (SUVs). The problems are nicely captured in a Business Standard article

While the middle class is increasingly unable to transition from two-wheelers to entry-level cars, the sport utility vehicle (SUV) segment is recording a rising share of first-time buyers… Regulatory changes — including tighter safety and emission norms —have pushed up car prices, while salaries have largely stagnated. A Maruti Celerio that sold for ₹2.8-4.4 lakh in 2016 now costs between ₹5.6 lakh and ₹6.7 lakh. Unsurprisingly, many buyers are turning to the used car market, which has been growing at a double-digit pace over the past two-three years…with small cars and sedans accounting for the bulk of the sales… India’s used car market, growing at 10–12 per cent annually, is projected to hit $40 billion by FY26… Shantanu Rooj, founder and CEO of TeamLease Edtech, said fresher salaries have been stagnant for 5–7 years, mostly hovering between ₹2 lakh and ₹4 lakh annually. With annual pay hikes of just 5–7 per cent, many young earners are struggling to keep pace with inflation. Furthermore, jobs are concentrated in a few major cities, meaning those who relocate often have less disposable income, Rooj said.

The article points to the observations of Mr RC Bhargava, the Chairman of Maruti Suzuki, the country’s largest automaker, who has argued that only 12% of the households that earn over Rs 12 lakh per year can afford a car priced above Rs 10 lakh. 

For Bhargava, the solution lies in making small cars more affordable. “That requires lower taxes and a reduction in the cost of regulations,” he had said… the rising regulatory cost — such as the mandate to include six airbags in cars — and high taxes as a reason for small cars being priced out of the market… tax them at 29-31 per cent (including surcharge)… Indeed, today, there is no small car priced below ₹3 lakh, with on-road starting prices touching ₹4 lakh… The link between GDP growth and PV sales is weakening. From 1999-2000 to 2009-2010, GDP grew at a compound annual growth rate (CAGR) of 6.3 per cent, while PV sales grew at 10.3 per cent. Between 2010-2011 and 2019-2020, GDP CAGR rose slightly to 6.6 per cent, but PV sales slowed to 3.6 per cent. In FY25, PV sales grew just 2 per cent, even as GDP expanded by 6.5 per cent.

A senior industry executive noted a troubling trend. India has 213 million two-wheelers on the road, of which 100 million were sold in the past 5–7 years. “There are at least 113 million two-wheelers which are older than that and the owner can consider an upgrade. However, we don’t see these buyers in the market. The first buy for a two-wheeler upgrader is almost always a small car,” the executive explained. He cited data from People Research on India’s Consumer Economy, which showed that in households earning up to ₹7 lakh annually, car penetration fell from 13.9 per cent in FY16 to 9.4 per cent in FY20, while two-wheeler ownership rose from 57 per cent to 66.3 per cent. The composition of the PV market has shifted accordingly, with SUVs and multi-purpose vehicles now accounting for 65 per cent of sales… A senior company executive attributed the shift to changing aspirations and easier access to vehicle finance. 

As this editorial in Business Standard writes, businesses have responded to India’s market structure with various jugaad.

The airline industry, which operates on wafer-thin margins, mastered the art of low-cost fares and dynamic pricing to expand a market that was traditionally considered premium. Makers of consumer goods learnt that smaller packs (such as shampoo sachets) or additional value (iodised salt) could bring in lower-income consumers, who would otherwise avoid such products. Per-second billing and bundled handsets changed the dynamics of mobile telephony.

I’m not sure such jugaad can surmount the constraints arising from a predominantly low-income consumption market with a small share of higher-income consumers, the low margins faced by Indian companies, and the relatively high-cost structure of the Indian market. 

In summary, four big takeaways are especially relevant to India. One, the potential of exports as a driver of economic growth has shrunk significantly in recent months compared to what was available to the East Asian economies. Two, countries like India must primarily rely on their internal markets to drive economic growth. Three, such growth can be sustained at high rates only if it creates good, productive jobs and is broad-based, such that it creates the critical mass of higher-income consumers to support a growth cascade. Four, apart from the other factors, such growth may be constrained by the high cost structure of the Indian economy and the low baseline of higher-margin sales.

Weekend reading links

1. AI is already starting to bind on hiring decisions of Indian IT firms.

Salaries have been stagnant at the starting levels for years.

2. A reality check on private finance mobilised by multilateral and bilateral lenders in sub-Saharan Africa

By their own reckoning multilateral and bilateral lenders mobilised $88bn of private finance for low- and middle-income countries in 2023, only a belated jump after years of stagnation (see chart). Just $20bn went to sub-Saharan Africa, of which $10bn reached the poorest countries. By comparison, the region received $62bn of aid that year... In 2018 a task-force launched at Davos, the annual gathering of the World Economic Forum, envisaged that every public dollar could whip up two or more from the private sector. Such ratios are rarely achieved. A forthcoming study by odi Global, a think-tank in London, examines a subset of investments called “blended concessional finance”, where some of the capital comes at below-market rates. It finds that by 2021 each dollar was attracting about 59 cents of private co-financing in sub-Saharan Africa, and 70 cents elsewhere.

3. President Trump's Executive Order on pharmaceutical prices should draw attention to the practices followed by Big Pharma. This is a good illustration.

Take the example of Keytruda, a cancer treatment from Merck, which is manufactured in Ireland. According to Jefferies, an investment bank, Merck holds the intellectual property (IP) for Keytruda in the Netherlands. The arrangement allows the firm to book profits at a tax rate of 10.5%, roughly half what it would pay if the ip resided in America.

4. Mexico is taking democracy to the judiciary.

On June 1st Mexicans will vote to elect judges to 850 federal posts, nine Supreme Court seats, 22 powerful tribunal jobs and thousands of roles in lower courts. In 2027 a second vote will see the rest of Mexico’s judiciary filled. A few countries elect a handful of judges, mostly to lower courts. Mexico will become the first country in the world where every judge on every court is chosen by popular vote. Mexico’s Congress passed the constitutional changes required for this upheaval in September last year. It was Andrés Manuel López Obrador’s final act as president, achieving one of his most cherished goals. His successor, Claudia Sheinbaum, has followed in his footsteps. Their party, Morena, argues that the election of judges will make the judiciary more democratic, purge corruption and nepotism, and widen access to justice.

There are several cocnerns.

The only place where judges are currently elected to higher courts is Bolivia. Its Supreme Court judges have been elected since 2011. The selection mechanism has been a disaster, with the court’s authority undermined by an endless political squabble to control it. Two-fifths of Bolivians who voted in the most recent judicial election spoiled their ballots. In Mexico, judicial elections pose a graver danger than mere chaos: control of the justice system by drug gangs. Criminal gangs are happy to kill or threaten public officials to get what they want. The gangs already field their own candidates in local elections. More quotidian corruption of judges by businessmen and officials, also endemic, will probably expand. It is hard not to see the elections as a final step that entrenches Morena as Mexico’s political hegemon...

Institutional knowledge will be lost. Only a minority of sitting federal judges are standing for election. Just three of the current 11 Supreme Court judges are running. A study by Mr Ríos found that it took an average of 24 years to become a magistrate. From June, cases on constitutional law and million-dollar commercial disputes will be heard by people who may have never set foot in a courtroom.

5. The emergence of the UAE, a country with less than a million citizens, as a major investor in Africa.

Persian Gulf investments in Africa, primarily by the Emirates, have exploded in recent years. Since 2019, $110 billion worth of deals — mostly by firms tightly aligned with the ruling powers — have been announced, dwarfing amounts pledged by any other country... Like other oil-producing nations in the Persian Gulf, the Emirates is looking to diversify its economy away from fossil fuels, and it sees Africa as an essential part of the plan... Powerhouse Emirati corporations based in Dubai and Abu Dhabi with political connections are in dozens of countries across Africa... 

AMEA Power is already building or operating clean energy plants in Burkina Faso, Djibouti, Egypt, Ethiopia, Ivory Coast, Kenya, Morocco, South Africa, Togo, Tunisia and Uganda and has plans to expand. Abu Dhabi National Energy Company has projects in Morocco, Senegal and South Africa and is participating in a project to invest $10 billion in renewable energy in sub-Saharan Africa. DP World, the gargantuan government-backed ports and logistics operator, has invested billions of dollars in ports and economic free zones from Algeria to Zambia, including in the Berbera port city in the breakaway republic of Somaliland, where the Emirates also has a military base. Last summer it announced that it would spend another $3 billion on African ports over the next three to five years. Last year, the Emirati International Holding Company invested more than $1 billion for a 51 percent share in the Mopani Copper Mines in Zambia. Spending in Egypt has also soared. Last year, the Emirates agreed to invest $35 billion to develop a new city and tourism destination on Egypt’s Mediterranean coast.

Emirati investment in Africa has ramped up as China’s has tapered off. Once the biggest foreign investor on the continent through its Belt and Road Initiative, China still has a large presence, but Beijing has pulled back in recent years after a series of debt crises in Africa and economic problems at home. In 2022 and 2023, the Emirates announced a total of $97 billion in investments in Africa — three times China’s total, according to fDi Markets, a database of foreign investments. U.S. investment in 2023 was about $10 billion... The U.A.E.’s total foreign assistance in Africa exceeded $1 billion in 2023-24... Meanwhile, Mr. Trump has fast-tracked America’s exit from Africa, ending billions of dollars in funding, dismantling the U.S. Agency for International Development and ending all contributions to the African Development Bank. The State Department’s reorganization plan also calls for the elimination of most operations in the region.

6. Germany's unique labour market problem - highest labour force participation rate and low unemployment rate, coupled with the lowest number of hours worked.

7. Ramesh Chand has an excellent op-ed drawing attention to the success of expansion of soyabean crop cultivation for edible oils in India. The growth story is amazing.

Soybean started spreading in India with the introduction of the Barag variety in the early 1970s. It was brought from Mississippi, United States (US), by scientists of Illinois University. The area under soybean reached a reasonable base of 100,000 hectares in the mid-1970s and kept increasing in leaps and bounds. The area crossed 13 million hectares in 2022-23, and it is still rising. With 99 per cent of the area being rainfed, it did not put any stress on water resources. Soybean output increased from 130,000 tonnes during the mid-1970s to 13.6 million tonnes during 2021-22 to 2023-24, ie more than 100 times increase in less than five decades. Production doubled every four years between 1975-76 and 1999-2000. No crop in India has increased so much in less than 50 years after reaching a comparable base. Such examples are rare even abroad and almost absent in a rainfed situation.

But the story of stagnant productivity raises concerns.

On the flip side, the yield of soybean in the country has remained flat and fluctuated around one tonne per hectare for 45 years. It rose above 1 tonne in some favourable years but again returned to 1 tonne. There is another distinguishing feature of soybean that its output witnessed a 100-fold increase in 48 years without any appreciation in productivity, except an initial edge in yield through the introduction of an exotic germplasm... What role did domestic research & development (R&D) play after the initial introduction and adaptation of exotic soybean seeds in the 1970s, which brought a big one-time jump in yield? Domestic agricultural R&D has at best ensured sustaining productivity by checking any decline in yield over time. However, it is baffling that the National Agricultural Research System could not bring any improvement in yield in 50 years despite reasonable expenditure. But the rest of the world has moved on. In the mid-1970s the yield in the US was two times and the world average was 60 per cent higher than that of India. The recent yield of soybean in the US and Brazil is 3.3 times and the world yield is 2.6 times the soybean yield in India. 

The main reasons for stagnant productivity are: One, an absence of collaboration and germplasm transfer from US universities after the initial introduction; two, India’s policy of a ban on genetically modified (GM) food crops (GM varieties now occupy 75 per cent of the area under soybean in the world); and three, the inability of national agricultural research systems to achieve any breakthrough in soybean productivity. If the soybean yield in India had kept pace with that in the US or Brazil, our production would have doubled and India’s import dependence would have been 40 per cent lower than what it is now.

8. Steven Pinker's thoughtful essay on Harvard. 

According to its critics, Harvard is a “national disgrace,” a “woke madrasa,” a “Maoist indoctrination camp,” a “ship of fools,” a “bastion of rampant anti-Jewish hatred and harassment,” a “cesspool of extremist riots” and an “Islamist outpost” in which the “dominant view on campus” is “destroy the Jews, and you’ve destroyed the root of Western civilization”... 

Most of my colleagues, too, follow the data and report what their findings indicate or show, however politically incorrect. A few examples: Race has some biological reality. Marriage reduces crime. So does hot-spot policing. Racism has been in decline. Phonics is essential to reading instruction. Trigger warnings can do more harm than good. Africans were active in the slave trade. Educational attainment is partly in the genes. Cracking down on drugs has benefits, and legalizing them has harms. Markets can make people fairer and more generous. For all the headlines, day-to-day life at Harvard consists of publishing ideas without fear or favor...

A poll of my colleagues on the academic freedom council turned up many examples in which they felt political narrowness had skewed research in their specialties. In climate policy, it led to a focus on demonizing fossil fuel companies rather than acknowledging the universal desire for abundant energy; in pediatrics, taking all adolescents’ reported gender dysphoria at face value; in public health, advocating maximalist government interventions rather than cost-benefit analyses; in history, emphasizing the harms of colonialism but not of communism or Islamism; in social science, attributing all group disparities to racism but never to culture; and in women’s studies, permitting the study of sexism and stereotypes but not sexual selection, sexology or hormones (not coincidentally, Hooven’s specialty)...

Harvard, too, is not a monastic order but part of a global network. Most of our graduate students and faculty members were trained elsewhere, and go to the same conferences and read the same publications as everyone else in academia. Despite Harvard’s conceit of specialness, just about everything that happens here may be found at other research-intensive universities. Finally, our students are not blank slates which we can inscribe at will. Young people are shaped by peers more than most people realize. Students are shaped by the peer cultures in their high schools, at Harvard and (especially with social media) in the world. In many cases, students’ politics are no more attributable to indoctrination by professors than are their green hair and pierced septums... 

Harvard, as I am among the first to point out, has serious ailments... But Harvard is an intricate system that developed over centuries and constantly has to grapple with competing and unexpected challenges. The appropriate treatment (as with other imperfect institutions) is to diagnose which parts need which remedies, not to cut its carotid and watch it bleed out.

9. Graphic on how Chinese solar panel makers drove down prices.

In 2023, Chinese-headquartered companies produced 84 per cent of the world’s solar modules and 92 per cent of solar cells, according to BloombergNEF… Chinese-made panels are still dirt cheap at about $0.09 per watt, on BloombergNEF data, down from $1/watt at the start of 2012.

10. FT has an article on China's dominance of rare-earth minerals and the export controls it placed in early April on the export of seven rare earth elements and permanent magnets made from them (which are also used in fighter jets like US F-35s). 

The controls, which require exporters to gain licences from commerce ministry officials for shipments of the seven targeted rare earths and of permanent magnets that are made from them, highlighted the geopolitical leverage conferred by China’s dominance over global mineral supply.

More on the latest restrictions

Rather than raw materials in bulk they involve finished articles, particularly magnets, made by only a few Chinese companies and traceable through the supply chain. Unlike previous export controls, they are executed via end-user licensing requirements for materials with dual military and civilian use, which restricts foreign companies selling them on. If China really does maintain and enforce a ban on sales to the US, it could affect the manufacture of F-35 fighter jets as well as electric vehicles. The materials involved are so-called medium and heavy rare earths, which are harder to extract and process. Industry experts say that increasing supply from elsewhere is likely to take years, as is retooling EV or other supply chains to use other technologies. Prices of heavy rare earths such as dysprosium shot higher after the controls were announced.

And the shocking reality that even as Trump wages war, America appears to have done very little to prepare for it by, for example, stockpiling rare earth reserves. 

11. Sweden's paradox of social democracy coexisting with a surge in billionaire wealth. Ruchir Sharma writes.

Sweden saw billionaire wealth rise by 4 points to 31 per cent of GDP — the biggest increase, and to the highest level, of the 20 major economies in my analysis. Sweden has 45 billionaires, about 1.5 times more per capita than the US, which is often said to be enjoying a new gilded age. The richest American ever was John D Rockefeller in around 1910, when his fortune surpassed 1.5 per cent of GDP... A functioning economy will generate a balanced billionaire class, with more “good” wealth from industries like tech or manufacturing than “bad” wealth from sectors such as real estate or commodities. Not that real estate or commodities are inherently bad. But they contribute less to productivity and are less likely to be held in high popular esteem than, say, cars or software. In Sweden, the “good” billionaires are outnumbered two to one by the “bad” ones... At just 12 per cent, the “good” share of billionaire wealth is third lowest among my top 10 developed countries... Nearly 70 per cent of Sweden’s billionaire wealth comes from inheritance, third highest on my list after France and Germany... The country taxes capital much less heavily than salaries, and sometimes taxes capital regressively... Sweden has also held interest rates well below the European average, and low rates tend to inflate asset prices, while making it easy for the rich to borrow money to make more of it.

12. Finally, Simon Kuper points to some ideas to be a great thinker - read books; don't use screens much so that you have time for other things; do your own work, not the world's; be multi-disciplinary; be an empiricist who values ideas; always assume you might be wrong; keep learning from everyone.

Deregulation is rarely a stroke-of-pen reform

There’s a widespread belief that deregulation, as the name appears to suggest, is about the elimination of certain regulations. Eliminate those restrictive provisions with the stroke of a legislative order or an executive decree, and you are all set in the new deregulated world. Unfortunately, while there are some strokes-of-pen deregulations, the vast majority are far from that easy and require sustained engagement. 

Urban planning is a fertile ground for stillborn deregulation. The three commonly discussed planning variables are FAR, height restrictions, and land-use restrictions. Deregulation, as is perceived by commentators, would involve raising FAR and height limits, and promoting mixed-use construction, coupled with measures to ease the process of getting the requisite permissions. But this overlooks several layers of small detail that have the potential to derail any deregulation. 

For illustration, this is the common building rules of a state government. Even without the Annexures, the Government Order itself runs into 26 pages with several details on setbacks, minimum road width, minimum plot size, parking provisions, open spaces, amenities, fire safety and other compliances. This is a consolidation of all the relevant documents and is more than 370 pages long. As can be imagined, the devil is in the details.

It’s therefore not surprising that some Indian cities that claim to have implemented urban planning reforms, including higher FAR and Transit Oriented Development (TOD), have achieved little in substance. One study of a metropolitan city found that onerous details (in terms of minimum plot size and road width requirements) meant that very few sites were able to utilise the liberalised norms on FAR and height. As aforementioned, given the highly detail-oriented context of the reform, notwithstanding its high-minded objectives, it was dead on arrival.

Another example is the Ease of Doing Business (EoDB) rankings. Its biggest failure was its excessive focus on stroke-of-pen changes to laws/rules. The mere enactment of a legislation or issuance of an executive order to change a process was enough to improve rankings, often significantly. The net result was that EoDB resulted in a lot of performative enactments and decrees, with far less substantive improvements in the actual ease of doing business. 

Take the example of the Insolvency and Bankruptcy Code (IBC), hailed as ushering in dramatic improvements in the insolvency restructuring process and contributing to a step change in India’s EoDB ranking. But as the recent Supreme Court judgment on the takeover of Bhushan Steel by JSW shows, effective implementation of the IBC requires addressing the serious deficiencies at the levels of Resolution Professionals (RPs), Committee of Creditors (CoC), NCLT, NCLAT, and the Supreme Court itself. 

The form of an IBC does not automatically translate to the substance of an effective and expeditious bankruptcy resolution. It requires painstaking, long-drawn engagement that complements the iteration and refinement of the law itself with the building of capabilities and ecosystem to ensure effective implementation. 

In general, while there are some such stroke-of-pen reforms, for most changes, the statutory order is often only the first step in a long journey. 

This is a global problem. 

Consider two examples from the UK of the challenges with the effective implementation of deregulation. The Labour government in the UK came to power promising to build aggressively and expand the affordable housing supply. One area of focus is the redevelopment of blighted sites. 

Britain’s cities contain large tracts of brownfield (ie, underused, previously developed) land, thanks to rapid deindustrialisation at the end of the last century. London alone has some 3,500 hectares (8,650 acres). That is around 25 times the size of Hyde Park, and enough space for more than 400,000 homes (London has a target of around 80,000 new homes a year). Clustered by the canals and rivers that were once industrial arteries, the sites are pretty much the only available land in the city. And yet few are being taken on by developers. Building work for just 1,200 new private housing units started in London in the first quarter of 2025, the lowest since 2009 and just 5.5% of the city’s quarterly target, according to Molior, a consultancy. 

But the challenges of building in these sites are immense.

Many borough councils, which largely wield permit power, insist that as many as half of homes in a given development are “affordable”, which immediately rules out smaller sites. At the same time developers are hemmed in by height restrictions and minimum room and unit sizes. From 2026, any building over seven storeys will have to have a second staircase… Some sites, like the former gasworks, require extensive remediation… Ironically, a big problem with ex-industrial plots is biodiversity… Developers must prove that existing biodiversity levels will be increased by 10%, and maintained for 30 years… Such rules illustrate how incentives are skewed. Brownfield developers must go to great lengths to raise the ecological value of derelict, inaccessible sites, often by offsetting. Meanwhile, less environmentally friendly greenfield developments in the suburbs face far lower hurdles.

Another area of focus has been to speed up planning decisions and build on the green belts. But tens of thousands of houses are “stuck in a pipeline because the new Building Safety Regulator is imposing complex design requirements and delaying construction by as much as 18 months.” Then there are mandates on solar panels on all new homes in the spirit of “everything bagel liberalism”. 

Even well-intentioned reforms get caught in the regulatory quagmire that ends up stifling or even killing them. In their book Abundance, Ezra Klein and Derek Thompson write,

“In California broadly, and San Francisco specifically, dozens of pro-housing bills have not led to the construction of more homes, in part because those bills are layered with additional requirements and standards that builders must meet in order to take advantage of the newly streamlined processes. For developers we spoke to, the added costs of compliance weren’t worth it, so the legislation hadn’t led them to build any new homes at all, much less build them faster. The breakneck deployment of wind and solar infrastructure and battery manufacturing has been slowed by outdated permitting and procurement rules that split the Democratic coalition.”

If deregulation is (mostly) not about high-level legislative or regulatory enactments, not one-off enactments, and involves detailed executive orders and painstaking iteration, it’s important that the spirit of deregulation must be imbibed by officials. 

Governments make laws/rules to govern certain activities that must be regulated in the public interest. In terms of the nature of activities being regulated, regulations broadly cover the issue of statutory certificates, payments and benefits (household cash transfers to industrial policy incentives), municipal and utility services (property tax assessment to electricity connections), licenses and permissions (driving licenses to running a school or hospital to consent for establishment of an industry), procurement processes (eligibility requirements to contract enforcement), and generally compliance with existing laws and regulations (Labour Codes to Companies Act). 

These laws/rules have two broad parts: technical guidance and implementation safeguards. The former can consist of a standard (on, say, a technical aspect like safety or efficacy), identification, an eligibility qualification (technical and/or financial) to perform the activity, a legal requirement, or a combination of some or all of these. The latter consists of provisions to prevent abuse of the implementation of the technical guidance (multiplicity of validations). It also includes compliance reporting. While not alone in culpability, many hassles and accessibility problems arise from the latter (implementation safeguard), which applies to the implementation of the enactment. 

I blogged earlier here on many of these issues in brief. 

Every day, government agencies are issuing orders and notifications across central, state, and local governments. Some norms and principles must restrain this process. All such new orders must be examined with respect to these norms and principles. I’ll present a few below whose spirit must be individually and collectively imbibed within the bureaucracy and polity:

1. The first requirement for any new regulation or condition should be a clear and simple articulation of its objective, identification of the stakeholders impacted, and the manner they will be impacted (in terms of their compliance and reporting). It’s not uncommon to find extra layers of regulation creeping in due to a lack of focus on the objective or trying to cover multiple unrelated objectives. . 

2. The second requirement is prudence on the extent of regulation required, which involves a trade-off between objective and practical considerations. 

Consider a product or a technology or a process in the private sector. Their regulatory validation is contingent on meeting some threshold for success. Any increase in the threshold would entail significant incremental costs. The cost-benefit assessment deems this threshold acceptable. This also assumes a certain acceptable likelihood of failure, false negative or false positive. 

However, in public policy, government agencies often tend to frame guidelines to eliminate any abuse. This leads to tight gatekeeping and access requirements that invariably end up detracting from the objectives. It manifests in the form of enhanced eligibility requirements, additional documentation and certifications, physical verifications, etc. To prevent the likelihood of abuse by 1%, the remaining 99% are penalised with the additional implementation safeguards. 

One way to address this problem would be to have a mechanism that requires officials formulating the safeguard to necessarily examine and trade-off between the elimination of abuse and harassment of the stakeholders in an explicit manner, and then make a choice. 

3. A third requirement should be that the compliance criteria should be defined with clarity, without leaving it open to interpretation. The flexibility to exercise discretion in the interpretation of a regulation, especially in high-stakes issues, is a recipe for harassment and corruption. 

4. A fourth requirement is that the regulation must be formulated with the least burdensome and lowest cost path to achieve the objective. So if there’s an alternative formulation that meets the objective and is less burdensome (or invasive), the same must be preferred. 

5. If a regulation/condition is difficult to define and/or monitor and/or enforce, it’s better to eliminate it (if existing) or not enact it at all (if newly proposed). For example, the assessment of the income of a household to issue an income certificate is fraught with problems. Similarly, the requirement of setbacks on small plots (say, less than 200 sq yards) is most often violated and engenders perverse incentives.

6. If a criterion or compliance requirement is so onerous as to be impossible for compliance by all but a few, it’s best avoided. It should be replaced with a second-best compliance requirement. 

So, for example, if testing facilities are too few, it’s impractical to mandate the criterion/standard. Or, where compliance reporting burden/cost is prohibitive in terms of transaction costs and can be monitored with reasonable certitude through governance interventions like random sample audits, they should be preferred. Another option is to accept self-certifications and supplement them with random sample audits to ensure deterrence, depending on the stakes involved. 

7. The uniform application of a regulation that’s primarily intended for a subgroup must be avoided. For example, if one subgroup poses a risk, it’s best to confine regulation to that group rather than have it applied to everyone. It’s best to have targeted regulations, or have differentiated regulations appropriate for each subgroup, or use governance mechanisms to regulate the subgroup. 

8. Governments tend to respond to emerging reports of abuse of the provisions of a law by incorporating additional safeguards that act as a new layer of regulation. This should be done with caution, since while the new safeguard will likely limit the abuse by those few, it will also increase compliance burdens for everyone. 

Therefore, as a default, the abuse of a system should be addressed through better governance instead of regulation. Such governance would involve more rigorous monitoring, use of data analytics, digital workflows etc., without adding a new regulatory/compliance layer. 

9. On a related note, in general, a very high standard of scrutiny must be applied for any proposal to add to or tighten an existing condition/regulation. They should have a compelling justification that’s recorded by the competent authority. 

10. If there are significant and quantifiable costs associated with the regulation, it’s useful to quantify and undertake a cost-benefit assessment. If the stakeholders must bear these costs, it’s useful to also examine how it would impact them (for example, in the case of a business, its business model). 

11. Finally, as a principle, the incorporation of any new regulatory/compliance requirement should be accompanied by the easing out of two old requirements.

All of the above can be consolidated into a checklist that can be applied to screen any new regulation/condition that imposes a compliance on an individual or company. Foremost, can the objective be achieved by some other mechanism, which is less invasive or burdensome? Can compliance be monitored and enforced? Is the process for compliance easy and simple? Is the reporting of compliance easy and simple? Are the abuse safeguards onerous? And so on. 

On the same lines as for new compliances, any reform involving deregulation should be subject to a similar test on implementation. Does the deregulation achieve its objective in practice? Are there implementation details that are likely to derail its applicability? And so on. 

It may be useful for governments to consolidate these principles and issue them in the form of executive directives to guide the formulation and implementation of regulations.