India has negotiated a change in the investment treaty the country has with Mauritius. The net effect of this will be that foreign investment into India will fall and in the future the wages of the average Indian worker will be lower than they would have been without this change. This is not what we might call good public policy: but that’s the way governments tend to think about these things. Far more important that they get their slice of tax money than that the economy in general be encouraged to grow. It’s important to note that this analysis is not as the result of some strange neoliberal or right wing theory. This is the absolutely standard view about the taxation of capital investment. The more it’s taxed, and especially the more foreign capital is taxed, then the greater the effect on domestic wages.
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