Michael Schuman writes for the latest Bloomberg Businessweek on recent changes that show positive signs for India in its efforts to close an economic gap with China.

That gap is, to a great degree, a creation of politics. After China cracked open its Soviet-style economy to private enterprise and foreign investment in the early 1980s, India began liberalizing its state-dominated economy in 1991 by dismantling what was called the License Raj, an impenetrable web of regulations that allowed the government to control business. But the reforms didn’t go far enough. Many of India’s squabbling politicians continued to distrust the free market and foreign companies and held up reform in interminable debates and protests.

That set the two economies on very different courses. In China, factories and skyscrapers rose with authoritarian efficiency; in India, major investment projects were stalled by the bureaucracy. While China became the Workshop of the World, India missed out on the mass manufacturing that generates jobs and exports. As reform in India faltered earlier this decade, growth slumped, and confidence in the economy deteriorated. India’s policymakers, meanwhile, were often too politically paralyzed to repair the problems.

Now, however, a fresh, can-do spirit has captivated New Delhi. In May voters kicked out the ineffective Indian National Congress-led coalition and ushered the Bharatiya Janata Party into power in an overwhelming landslide. Prime Minister Narendra Modi has restarted India’s free-market reform program with the aim of spurring a China-like investment surge. In September he launched a “Make in India” campaign, with a roaring lion as its logo, intending to turn the country into a manufacturing powerhouse to rival China. To get there he loosened convoluted land acquisition laws that held back big projects and streamlined the cumbersome process of obtaining government approvals. He increased the limit on foreign ownership in the insurance sector and other industries.

Government policies that expand freedom have positive economic benefits? Hmm. There’s an interesting concept.