Happy Independence Day

At the red fort yesterday, PM Manmohan Singh gave a great speech. He delays loan payments for farmers because of the drought. Promises of capital expenditure to raise India's growth back to an unrealistic 9%, even though we grew at a magnificent 7% last year while world economies were shrinking.

Prime Minister Manmohan Singh won re-election in May with a mandate to keep India's economy humming, and now the question is whether he'll enact an agenda that can do it. One early sign is worrying.

The Right to Education Act that passed parliament this month is the most significant piece of legislation to come up since the election, and touches on an issue that will be key to India's economic success. The state-run school system, notorious for its absentee teachers and poor results, is badly in need of reform. But Mr. Singh abandoned bold thinking in favor of a return to New Delhi's statist traditions.

The law bespeaks a strong instinct to centralize and regulate. It sets national standards for things like school libraries and playgrounds, and tries to solve the absentee teacher problem by limiting the ability of even reliable teachers to tutor students after hours.

The centerpiece of the law is a requirement that private primary schools set aside 25% of their places for socially or economically disadvantaged children. Similar "reservations" based on caste already are in place in higher levels of the education system. The new law at least is an improvement in some ways because in addition to caste-based set-asides the quota will include low-income students regardless of caste—i.e., the students who lack access to any alternatives to failing state-run schools.

For that reason, optimists are calling the law a backdoor voucher program. But it's a poor substitute for real school choice. More money will flow to state-funded schools no matter what, removing the incentive for improvement that an exodus of voucher students would create. Because the government will cap its per-student payment while still requiring schools to fill 25% of their spaces via this reservation, it will squeeze some school budgets. A voucher that followed a student to any school, without setting quotas on the schools themselves, would have been simpler and more efficient.

Instead, the plan Mr. Singh's government put forward is reminiscent of the tangle of interventionist policies Indian governments have woven in the past. Children stuck in bad schools will be the primary victims. It also sends a bad message about the government's inclinations to investors at home and abroad looking for reforms in other areas.