Death by overuse: Let’s refrain from using the term ‘reform’ for every policy change that’s announced

The term ‘reforms’ became a permanent fixture of the universal policy lexicon during the early 90s, when, after the fall of Berlin Wall and break-up of the Soviet Union, there was a sweeping economic policy overhaul in parts of East Europe, Asia, Africa and South America.

The changes implemented had a common thread running through them, with some variations in the degree of implementation across individual nations; the focus was primarily on reducing the role of government in business, relaxing cross-border investment rules and transferring state-run enterprises from public to private ownership. Thereafter, the word ‘reforms’ has become a placeholder to denote any and all changes. Much like its universal acceptance, there is widespread misapplication as well.

India is not immune to this affliction. The term’s random and frequent use seems to be diluting its meaning. In fact, it is now often employed as an external stimulus in the hope of generating a spontaneous, positive response from market operators and media platforms.

This is typically seen around times of economic despondency and, interestingly, the use of ‘reforms’ almost always manages to elicit a favourable response from the target audience. This reflexive response to the word has become a bit too predictable.

Take the example of recent changes in the goods and services tax (GST), which were first announced by Prime Minister Narendra Modi in his customary Independence Day speech and subsequently formalized as a policy on 4 September at the 56th meeting of the GST Council.

The GST rate changes—in conjunction with lower inflation, rock-bottom interest rates and revised income tax rates—were viewed as a major stimulus for private consumption, which had been flagging over the past few quarters and was partially responsible for dampening economic growth impulses. The announcements were met with an overwhelming response and rekindled hopes of a rejuvenated growth momentum. True to form, these changes were universally termed as ‘reforms.’

Under the bonnet, though, most of the changes constituted what everybody has been demanding for more than seven years. The GST changes are in reality a rate rationalization that collapsed a multi-tiered tax structure into a two-layered structure, with a special 40% demerit rate reserved for some select items.

The multi-layered GST structure had spawned confusion, inefficiency and added compliance costs. Industry and tax experts had been clamouring for simplification.

The 2024 Article IV consultations report from the International Monetary Fund had observed: “Currently India has four main non-zero rates, an outlier among countries with a GST. Simplification can be achieved by moving towards a single rate and rationalizing the items that are exempt or zero-rated… A single GST rate applied on a broad base can improve compliance, facilitate enforcement, and reduce the risk of evasion (for example, from misclassifying the good or service to take advantage of a lower GST rate)."

And yet, the government’s press release of 4 September on the rate rationalization used the word ‘reform’ five times in its text. Even the Reserve Bank of India (RBI) has fallen prey to the temptation and has been using the word repeatedly for rate rationalization in all its communications.

The central bank’s October 2025 Monetary Policy Report used the word ‘reform’ 11 times and the governor’s statement used it twice. The State of the Economy article in its September 2025 bulletin employed ‘reforms’ 12 times to denote GST rate rationalization.

This then begs the unavoidable question: does the government’s 21 November announcement bringing into effect four contentious labour codes, which seek to rationalize 29 existing labour laws, also count as a major reform?

The codes do envisage sweeping changes and have the potential to alter the country’s industrial relations landscape. But here’s the nub: the government may have been a bit hasty in announcing the implementation of the codes because the eventual execution of the codes will depend on the finalization of rules. The draft rules are expected to be announced soon, and will then be put in the public domain for 45 days for stakeholder inputs before being finalized. Till then, it is status quo.

But, there’s even a larger problem: labour relations are a concurrent subject and states get to have a say on how the codes are implemented through state-specific rules. They may even refuse to accept the codes.

Currently, eight large states are ruled by opposition parties—Tamil Nadu, Kerala, Karnataka, West Bengal, Jharkhand, Telangana, Punjab and Himachal Pradesh—and it will be interesting to see which ones do not consider the labour codes as a major reform.

There is also a distinct possibility that the entire policy framework could become an electoral issue, especially in states that have elections scheduled next year.

There is a commonly accepted touchstone for categorizing any policy change as reform: change when it lacks any element of improvement cannot be termed a reform. The consolidated labour codes can thus be rightfully termed as reforms once it ushers in all-round improvement for all stakeholders: labour, industry and the consumer. Till then, let’s hold our horses.

The author is a senior journalist and author of ‘Slip, Stitch and Stumble: The Untold Story of India’s Financial Sector Reforms’ @rajrishisinghal