The reformist government that many Indians and free-market flag-bearers had hoped would emerge after this year's election isn't in New Delhi — at least not yet. It's a dusty day's drive to the southwest.

The desert state of Rajasthan, derided as a poverty-stricken laggard, has taken the lead on structural reforms that, their backers argue, could also help Asia's No. 3 economy as a whole to attract business and employ a fast-growing workforce.

Chief Minister Vasundhara Raje has shaken up labor, land and welfare policies with such verve that Prime Minister Narendra Modi, a party ally, has even poached her chief of staff and put him in charge of the federal Finance Ministry.