B.A. (Hons.

) Political Science Semester-VI

Discipline Specific Elective (DSE-3)

Public Policy in India
Study Material : Unit 2, 5

SCHOOL OF OPEN LEARNING

University of Delhi

Editor : Dr. Mangal Deo

Dr. Shakti Pradayani Rout
Department of Political Science
 Graduate Course

Discipline Specific Elective (DSE-3)

Public Policy in India

Contents
Pg. No.
Unit-2 : The Analysis of Policy in the Context of Theories of State Dr. Deepika 01

Unit-5 : Ideology and Policy: Nehruvian Vision, Economic Liberalization

and Recent Developments Priya Dahiya & Rinki 13

Edited by:
Dr. Mangal Deo
Dr. Shakti Pradayani Rout

SCHOOL OF OPEN LEARNING

UNIVERSITY OF DELHI
5, Cavalry Lane, Delhi-110007
 Unit-2

The Analysis of Policy in the Context of Theories of State

Dr. Deepika

Structure
2.1 Introduction
2.2 Learning Objectives
2.3 Policy Analysis
2.4. Distinction between Policy Analysis and Related Concepts
2.4.1 Policy Analysis and Policy Advocacy
2.4.2 Policy Analysis and Policy Management
2.5 Types of Policy Analysis
2.6 Process of Policy Analysis
2.6.1. Identification of Problems and Objectives
2.6.2 Specification of Alternatives Policy
2.6.3 Evaluating Policy Alternatives
2.6.4 Recommending Policy Action
2.6.5 Monitoring Policy Outcomes
2.7 Policy Analysis in context of the Theories of State
2.8 Summary
2.9 Questions
2.10 References

2.1 Introduction
Public Policy, as a subject or a field of inquiry has a long past, though the contemporary
policy analysis has emerged in twentieth-century. After second world war the subject of
policy sciences, has emerged as a new discipline to offset such problems in the process of
policy making. It can be stated that policy sciences is a body of knowledge which enhances
the efficiency of public policy-making and also the effectiveness and efficiency of
implementation and evaluation of policies.
Public policies are basically governmental decisions or the course of activities that the
government takes up to achieve certain goals and objectives. The major function and role of
public policy is to shape the society for its betterment. Public policies involve augmenting the
democratic or political aptitude of the citizenry and not simply provide improved services.1

1
T.A. Smith, Post- Modern politics and the case for constitutional renewal, Political Quarterly, summer 1994, p-
128-137.

1
Earlier, study of public policy was dominated by institutions of state and philosophies
followed by the government. It may be noted that even though the policies are not the main
focus, yet public policy is an important element of political process. Dye says:

“……institutional studies usually described specific government institutions …. without

systematically Inquiring about the impact of institutional characteristics on policy outputs….
However, the connection between institutional adjustment and content of policy remained
mostly unexamined”.2
Dye mentions that how public policy has become the central focus of political science.
Nowadays, Policy analysis play an important role in the improvement of polices and hence
forms a major part of policy sciences. Primary objective of Public Policy analysis is to assist
policymakers in making informed decisions while choosing policies by providing an
expected outcome of these policies. It is pertinent to note here that predicting how a policy is
going to unfold and what intended and unintended consequences may follow its
implementation becomes more arduous owing to the political and socio-economic
complexities. Moreover, Policy analysis as a process of multi-disciplinary inquiry designed to
create, critically assess and communicate information that is useful in understanding and
improving policies. Therefore, this Unit, will discuss the concept of policy analysis in detail.
In addition, an attempt will also be made to explain the changing conceptualisation of policy
analysis in the context of theories of State in the subsequent sections.
2.2 Learning Objectives
After studying this Unit, you should be able to:
 Explain the meaning, nature and scope of policy analysis;
 Discuss and distinguish between policy analysis, policy management and policy
advocacy.
 Understand the various types of policy analysis;
 Describe the process of policy analysis, and
 Examine the theoretical framework of policy analysis with an emphasis on the various
contemporary state theories.
2.3 Policy Analysis
Policy Analysis is as old as the State itself. As the State developed and intellectual
technology became more available, the nature of analysis of the choices and strategies for
policies changed. In this changed context, there has been considerable growth in the research

2
Thomas Dye, Understanding Public Policy, 10th ed. (New Delhi: Pearson Education, Singapore, Indian Reprint
2004, p.13.

2
and training in policy analysis since the early 1970s in many developed countries.3 In these
countries, policy analysis has been substantially stimulated by the government’s increased
concern for public policy problems.

Public policy analysis is thus nothing more than estimating the impact of public policy
on the government programmes. The salient aspects of policy analysis as explained by some
experts of the subject are mentioned below.
The Dictionary of Public Administration defines policy analysis as: systematic and data-
based alternative to instinctive judgements about the effects of policy or policy options. It is
used:–
(a) for problem assessment and monitoring
(b) as a ‘before the fact’ decision tool and
(c) for evaluation.4
William Dunn explains, that the policy analysis is an applied discipline. In his words,
“Policy analysis uses multiple methods of inquiry and argument to produce and transform
policy-relevant information that may be utilized in political settings to resolve public
problems”.5
According to Patton and Sawicki, policy analysis is a “systematic evaluation of the
technical and economic practicability and political viability of alternative policies, strategies
for implementation, and the consequences of policy adoption”.6
Jacob B. Ukeles observes that policy analysis as the systematic investigation of
alternative policy options and the assembly and integration of the evidence for and against
each option. It involves a problem-solving approach, the collection and interpretation of
information, and some attempt to predict the consequences of alternative courses of action.
Dye describes policy analysis as the ‘thinking man response’ to demands. He further
observes that public policy analysis specifically involves:
(a) A primary concern with explanation of policy rather than the instruction of policy.
(b) It is a careful search for the causes and consequences of public policies through the use
of the tool of systematic inquiry.
(c) An effort to develop and test general propositions about the causes and consequences of
public policy and to accumulate reliable research findings of general relevance.7

3
See for example, E. Stokey and R. Zeckhauser, A primer for policy analysis (New York: W.W. Norton, 1978).
4
Ralph C. Chandler and Jack C. Plano, The Public Administration Dictionary (New York: John Wiley, 1982),
p-88.
5
William Dunn, Public Policy Analysis: An Introduction (New Jersey: Pearson, 20054).
6
Carl Patton and David Sawicki, Basic Method of Policy Analysis and Planning (New Jersey: Prentice- Hall.
1993).
7
Thomas R Dye, Understanding Public Policy, 10th ed. (New Delhi, Person Education (Singapore), Indian
Reprint 2004) p-6-7.

3
2.4 Distinction between Policy Analysis and Related Concepts
The discipline of policy analysis can be better appreciated when compared with other related
concepts.
2.4.1 Policy Analysis and Policy Advocacy
Public policy analysis is the study of how governmental policies are made and implemented,
and the application of available knowledge to governmental policies for the purpose of
improving their formulation and implementation. Policy analysis is a technique to assess
organizational effectiveness by means of examination and evaluation of the effect of a
programme. Policy analysis is a systematic and data-driven tool to study the effects of a
policy to be implemented.
Policy advocacy involves research and arguments which are intended to influence the
policy agenda inside or outside the government. Also, it primarily involves what governments
are supposed to do, or suggesting changes in what they actually do by means of discussion,
organization and involvement. Moreover, policy analysis examines the impact of policy by
using tools and techniques and studying the policy systematically. Policy analysis is not the
same as prescribing what policy government ought to pursue at a given situation. Rather,
government analyse the situation when there is a need for government intervention in the
form of a policy.
2.4.2 Policy Analysis and Policy Management
Policy analysis deals with the substantive examination of policy issues and the identifying
alternatives by following systematic approaches and applying explicit methods. It covers
various methods and concepts, some of which are quantitative, including social
experimentation, game simulation and contingency planning etc. On the other hand, policy
management deals with the general administration of policy- making and the process of
preparing policies so as to produce high quality policies.
2.5 Types of Policy Analysis
While studying Policy Analysis the following questions are required to be answered. These
are:
i) How was the existing problem tackled?
ii) Were the objectives of the policy achieved?
iii) What should be the future courses of action?
On the basis of these fundamental questions various types of policy analysis tools are used.
Some of them are mentioned as follows:
Empirical/Evaluative approach of Policy Analysis
The Empirical approach is based on analysis of the previous policies of the past. Under this
approach, we are required to analyse the causes and effects of public policies. For example,

4
we may analyse the expenditure of the government in primary health sector over a certain
period and predict its future trends.
Evaluative approach on the other hand lays emphasis on programme evaluation. This
approach seeks to find the worth or value of a policy that is chosen. For instance, a study of
state’s expenditure on primary healthcare may focus on a certain objective, such as the
percentage, whether a given target was met or not?
The normative policy analysis involves highlighting future courses of action for a certain
issue. Here, the type of information provided is advocative in nature. It can be understood by
an example that the government may have a policy on women empowerment, therefore to
properly implement the same it may be required to recommend to states and local authorities
the necessary steps to encourage participation of women in various activities and to safeguard
their rights.
Retrospective/Prospective Policy Analysis
Retrospective policy analysis approach involves historical analysis and interpretation of
previous policies. This approach is often used to confirm the major aspects of historical
policy research available on the problem at hand. For instance, study on the growth of small
and marginal businesses in an economy that has changed its economic policy from
conservatism to liberalisation, such a study would require retrospective analysis. This
approach is also known as ex-post or post-hoc policy analysis.
Prospective policy analysis focuses on the future course of events in case a certain policy
is implemented. For e.g., government wishes to conduct a vaccination drive in a state, it
needs to decide where to establish vaccination camps, which health agencies to involve
among other policy options available to them. Such an approach is often termed as ex-ante,
pre-hoc, or anticipatory policy analysis.
Retrospective policy analysis provides information, that is used directly in the decision-
making process. That’s because of development of scientific methods that prevents
manipulation of data by the policy makers. Whereas, prospective policy analysis often creates
a large gap between the preferred solutions to the problem and the efforts made by the policy-
makers to resolve them.
Predictive/Prescriptive/Descriptive Policy Analysis
Predictive policy analysis involves predicting the future course that may result from
implementation of a certain policy alternative. This approach recommends actions that shall
result in a specific outcome. When the policy-makers are not confident a solution to a certain
problem or there is no pre-defined way to choosing a certain solution over other alternatives
available, then they may go for prescriptive policy analysis approach. In this approach policy
maker’s attitudes, preferences, and beliefs have a major impact on choosing a certain policy
option over other alternatives. For instance, if we conduct a study to check the impact of

5
increasing government’s expenditure on girl child education female literacy ratio, this is an
example of prescriptive policy analysis.
Descriptive policy analysis both understanding and evaluating past policies as well as a
new policy as it is implemented. In this approach, policy analysis is done after the
implementation of a policy. The main objective is to understand the problem rather than to
resolve it. Descriptive analysis is also often incorporated with prospective policy analysis.
Once a policy is implemented, it is checked and evaluated to recommend its continuation in
current form or with some modifications. This information is often used while choosing
policies for problems arising in the future.
2.6 Process of Policy Analysis
Edward Quade,8 identified five elements of the policy analysis process and stages such as the
following:
1. Identification of Problems and Objectives
2. Specification of Alternatives Policy
3. Evaluating Policy Alternatives
4. Recommending Policy Action
5. Monitoring Policy Outcomes
2.6.1 Identification of Problems and Objectives
This is quite easily the most crucial stage of policy analysis as it is often observed that the
objectives of the problem analysis are not clearly laid down, rather in other cases they are
even contradictory to each other. Proper identification of the problem is a fundamental
requirement in policy analysis as it lays a strong foundation for an efficient and effective
analysis. Defining the problem involves moving from mundane descriptions to a more
focussed, conceptual plane. For example, an institution which is investigating policy
alternatives for control of pollution in the river Ganges will necessarily need to identify the
source of this pollution i.e. the industrial and human waste being draining into the river.
Once the context of the problem is identified, the next logical step would be to define the
objectives of the mission. Too often, the rational objectives which require careful attention
are overlooked. For example, promoting e-vehicles alone will not work if we continue to
generate majority of our electricity from non-renewable sources of energy.
2.6.2 Specifying Policy Alternatives
After the identification of the policy problem, generation of policy alternatives comes up as
the next task for the policy analyst. This requires a clear understanding of the problem. Often
it is seen that combining various policy alternative may reveal newer dimensions of the
problem, which were not envisaged earlier. Here, policy analyst may also utilize other’s past
8
Edward Quade, Analysis for Public Decisions, New York: Elsevier, 1975.

6
experience facing similar problems for a more thorough analysis and understanding of the
problem. This approach immensely helps in generating an robust policy alternative.

Determining policy alternatives is a difficult task as several additional options are also
available. It must be noted here that this process shall not treated merely as a mechanical
exercise as doing so many attractive policies may be ignored and desired results are not
achieved. We can hardly jump directly from the identification of problem to choosing a
preferred policy. All the alternatives should be considered before settling on a desired
solution.
2.6.3 Evaluating Policy Alternatives
Once a policy problem has been clearly stated, and alternatives for policy choice have been
determined, it is important to forecast the consequences of each of the alternatives. Thus,
evaluating the policy alternatives is another step in the sequence of policy analysis. In order
to have a rational policy choice it is pertinent to compare the relative merits and demerits of
all alternative options.
However, the distinction between analysis of policy and evaluation of policy is not well
demarcated. The evaluative studies of policy feeds into analysis of problems and the policy
issues involved. Whereas, policy analysis includes analysis which takes place before and after
a decision is taken, so as to assess or evaluate a policy.
An evaluative criterion shall be chosen which effectively measures, compares and helps
in selecting among various alternatives. Therefore, in this context there are different
techniques and approaches for evaluation analysis aimed at providing a more rational basis
for decisions: such as,
1. Cost-Benefit Analysis Techniques
Cost-Benefit Analysis Approach involves policy-makers to identify and measure the cost and
benefits of policies and programmes by using various economic concepts. The quantitative
outcomes show whether the gains exceed the total costs or not. This approach is also used to
estimate the impact of existing policies and comparing them with proposed policies while
ranking their effectiveness. This is the most reliable, simple and clear-cut system of analysis
but it was incapable of evaluating policies of the intangibles, like the impact of the free meal
policy for children upon their performance; at the loss of environment due to mining; or the
impact of oil refinery on the coastal marine and human life. In general, the cost- benefit
analysis is incapable of assessing all these complex variables in public policy.
2. Performance Measurement Techniques
This method is applied to assess how efficient the use of given resources has been i.e. how
much should have been achieved and how much was actually achieved.

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3. Impact Assessment Techniques
An impact evaluation is done at the post- implementation stage of the policy cycle. It seeks to
measure how the policy or programme has actually impacted upon the problems to which it
was addressed. It is a comparative mode of inquiry, that is comparing the situation before and
after such an intervention. In impact evaluation, an experimental approach may be used.
4. Experimental Techniques
In this technique, experiments are conducted to test the impact of a programme on a group or
an area against what has happened to a group or an area which has not been target of
intervention. For comparative analysis, certain variables of a group is examined at each stage
i.e. before, after and during the programme period, in order to find out the impact of the
policies. Subsequently, the data derived is test for its significance levels using various
statistical methods.
2.6.4 Recommending Policy Action
The next stage in policy analysis relates to making the preferred choice. At this point, the
policy makers need to analyse pro and cons for each alternative and recommend the one
option that is best suited. In contrast, the situation may also arise due to various complexities
that one may have to think of preferences among the various possible outcomes.
2.6.5 Monitoring Policy Outcomes
Generally, the policy analyst is not involved in the implementation and monitoring of
policies. However, for better policies, it is important that policy analyst be consulted in the
maintenance, monitoring, and also the evaluation of the implemented policy. In this context,
Patton and Sawicki observes:
Even after a policy has been implemented there may be some doubt, whether the problem was
resolved appropriately and even whether the selected policy is being implemented properly.9
These concerns require that the policies and programmes are regularly monitored and
evaluated during implementation stage. Overall evaluation of the programme is important to
improve the quality of programme analysis. It must be realized that success of a policy
depends on whether the programme is implemented as it was meant to be, or is able to
produce the intended results, because the under-lying assumptions during the planning stage
were either incorrect, exaggerated or ignored.
Thus, it can be established that the strategy which frames rational policy analysis has its
own complexity of exercises in each stage. Presently there are several criticisms to the use of
analytical work in real policy decision-making. The idea policy analysis as involving a series
of logical stages, problem identification, setting objectives, analysing alternatives, decision-
making, and implementation, appears to be weak vis-a-vis political and bureaucratic

9
Carl Patton and David Sawicki, Basic Method of Policy Analysis and Planning (New Jersey: Prentice- Hall.
1993).

8
interests.10 Political realists view policy analysis as a threat to politics. Analysis is not a
substitute for politics or ‘anti-political”, but essentially supplementary and subordinate to the
political process.11
There is a criticism that analysis inhibits political initiatives. It is also argued that it
reduces the impact which political participation may have on the decision taken by the
government. In certain contexts, it appears to be more of a form of democratic distortion than
enlightenment. It is also argued that in situations where there is lack of general consensus
identifying and defining the problems, policy analysis is neither effective in providing
solution to such nor is it capable of resolving societal value conflicts. At its best policy
analysis can provide guidelines on how to achieve certain set of end values. Although its
important to note that it doesn’t determine what those end values should be. Moreover, its
impossible to have social science research to be completely value-free. Today the
government is constrained by many forces, sauch as population growth, patterns of family
life, religious beliefs, class structure, cultural and linguistic diversity, financial resources and
much more – all these variables cannot be easily managed by the government. Moreover, the
policy analysis cycle ignores the real world of policy-making which involves multiple levels
of government and interacting forces.
2.7 Policy Analysis in Context of Theories of State
Generally, policy analysis is a means of explaining the actual essence of public action
because policies are interpreted as revealing its nature. Thus, in contemporary society there
are different schools of thought which describe the questions concerning policy making in
context of the emergence and nature of the state. Scholars like Jobert and Muller locate their
work on ‘The State in Action’ in the matter of bridging the gap that today still separates
research on policies.12 Similarly, Meny and Thoenig define their approach in terms to ‘the
essence of politics’ and classify their arguments on the basis of three theoretical approaches13:
The first one is a pluralist theory of state which conceives the state as a ‘service hatch’
whose purpose is to respond to social demands. From this perspective, public policies are
conceived as responses to social demands and their analysis is in turn located in a perspective
based on the optimisation of collective choices, the rationality of the decision-making
processes and the behaviour of bureaucrats as augmented in theory of limited rationality.
Specify, it believes that group interest and attitude are influential factors in determining
public policies and all issues concerning the nation are decide by multiple and competing
groups. According to this concept, the lack of policies in the area of sport, for example, is a
reflection of the fact that there is no public problem to be resolved. However, this absence
could also be interpreted as the result of corporate actions which are aimed at controlling this
sector despite the existence of significant public problems like drug use, corruption etc.

10
R.A. Heineman et al., The world of the policy Analyst (New Jersey: Chatham House, 1990), p-62-64.
11
T.A. Smith, Anti- politics: Consensus, Reform and Protest in Britain (London: Charles Knight, 1972).
12
Jobert and Muller, Theoretical perspectives on policy analysis, 1987, p. 9.
13
Meny and Thoenig, Policy analysis, 1989, p.67.

9
 The second interpretative theory places the emphasis on the state as an instrument at the
service of either a social class or specific groups. This theory is similar to neo-Marxist
approach which was mainly developed in the 1970s by urban German sociologists. It
suggested that the analysis of public action makes it possible to demonstrate the weak
autonomy of the state with respect to capitalist interests or the private actors and
organisations of which it consists. Seen in this way, a social problem can only become a
public problem if its resolution serves the interests of the dominant classes. As stated by
society is often divided into the few, who have power, and the many, who do not. Only a
small minority of influential people allocate values for society, whereas the masses do not
decide public policy. It believes that people are passive, apathetic and ill- informed about
public policy. consequently, the incentivise for public policy does not come from masses. The
elites belong to the upper strata of the society. They know what is good for the society in
general. In this situation the polices flow downwards towards the masses.
Moreover, a public policy can be considered as the preferences and values of the
governing elite. Although it is often asserted that public policy reflects objectives or demands
of the people in reality, this is not so in most of the cases. Thus, it is the responsibility of the
elites to frame proper policies that are in the interests of the society as a whole.
Finally, the third neo-institutionalist approach stresses the distribution of power and
interaction among and between actors, either through the representation of different sector-
based or category-base interests or through the organisations and institutional rules which
frame these interactions, as also suggested in neo-corporatist approach. Seen from this
perspective, public sector employees are the most important part, which maintain privileged
and exclusive relationships in the exercising of public power. A policy becomes a public
policy only when it is authoritatively determined by the government institutions. Government
gives legitimacy and universalistic character to a policy. Today in the complex industrial
societies, the technicality and complexity of policy matters and lack of time and information,
among others, have led to the delegation of much discretionary authorities to the
administrative agencies.
In this context, policy analysis makes it possible to understand how the state and, more
broadly, public authorities work. Presently the winds of globalization have been sweeping
across in different countries making a profound impact on the social, political, economic and
cultural relations. Under these circumstances, the role of the government has come under the
scanner. The role of the state in the past was limited; it was a mere ‘regulator’ and not an
‘initiator’ of socio-economic development. But in the changed scenario the role of state
remarkably shifts and it becomes the biggest change-agent in shaping society. Now it is the
responsibility of the government to enhance its capacity for policy formulation, policy
execution and policy analysis in the face of global onslaughts.

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2.8 Summary
Policy analysis consists of the study of the action of public authorities within society from
different perspectives. (Meny and Thoenig, 1989, p. 9). It may not be able to provide
solutions to all the society’s problems but it is a valuable tool in dealing with policy
questions. Policy Analysis helps us to understand the reasons and consequences of public
policies. In broader terms, this framework does allow us to analyse the complexities of the
real world.
In an era of globalization, with the increasing complexity of the society, public policy
analysis has gained considerable importance. Today it is influenced by too many elements
which made the process more complex as it facilitated the entry of numerous players into
policy -making.
2.9 Questions
1. What is meant by policy Analysis? Discuss the nature and scope of policy analysis?
2. Distinguish between policy analysis and policy advocacy?
3. How would you relate policy analysis with the process of policy management?
4. Analysis different types of policy analysis?
5. Describe the steps involved in the process of policy analysis?
6. Discuss the importance of qualitative and quantitative methods and techniques in
policy evaluation?
7. Examine policy analysis in the Context of numerous theories of State?
8. The impact of globalization on policy analysis can never be absolute. Do you agree
with this view? Elaborate your response.
2.10 References
Dunn, William N., 2004, Public Policy Analysis: An Introduction, Upper Saddle, N.J.:
Pearson.
I Patton, Carl V, and David S. Sawicki., 1993, Basic Methods of Policy Analysis and
Planning, Prentice-Hall, Inc. New Jersey.
Weimer, D. and Vining, A. ,1998, Policy Analysis: Concepts and Practices, Prentice Hall,
New Jersey.
Jenkins, B. (1997) ‘Policy Analysis: Models and Approaches’ in Hill, M. (1997) The
Policy
Process: A Reader (2nd Edition). London: Prentice Hall, pp. 30-40.
Dye, T.R. (2002) Understanding Public Policy. Tenth Edition. Delhi: Pearson, pp.1-9, 11-
31, 32-56

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Sapru, R.K. (1996) Public Policy: Formulation, Implementation and Evaluation. New
Delhi:
Sterling Publishers, pp. 26-46.
Dunleavy, P. and O’Leary, B. (1987) Theories of the State. London: Routledge.
Simmie, J. & King, R. (eds.) (1990) The State in Action: Public Policy and Politics.
London: Printer Publication, pp.3-21 and 171-184.
Agnihotri, V.K. Public Policy Analysis and Design. New Delhi: Concept Publishing
Company, 1995, p-177.
Bidyut, C. and C. Prakash. Public Policy- concept, theory and practice. New Delhi: Sage
Publications, 2016.
Skocpol, T. et al (eds.) (1985) Bringing the State Back In. Cambridge: Cambridge
University Press, pp. 3-43 and 343-366.
Hogwood, B.W. and L.A. Gunn, 1984, Policy Analysis for the Real World, Oxford
University Press, London.
Parsons, W, 1995, Public Policy: An Introduction to the Theory and Practice of Policy
Analysis, Edward Elgar Cheltenham.

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 Unit-5
Ideology and Policy: Nehruvian Vision, Economic Liberalization and
Recent Developments
Priya Dahiya & Rinki

Structure
5.1 Introduction
5.2 Learning Objectives
5.3 Independence and Challenges
5.4 Nehruvian State –Directed Model
5.5 Failure of State led Model of Development
5.6 Economic Liberalization Model
5.7 New Economic Policy 1991
5.8 Issue of Contention
5.9 Summary
5.10 Questions
5.11 References

5.1 Introduction
Ideology is a set of principles, ideas, beliefs or symbols of an institution that explains how
society should work and offer some political and cultural blueprint for a certain social order.
It is commonly felt that political ideology has an important role to play in the determination
of public policies.
In normal parlance, public policy is an important component of the democratic
government, in response to the increasing complexity of the society. It is actually a purposive
course of actions that the government takes up to achieve certain goals and objectives. It can
be stated that any government activity having wider ramifications for the people is considered
a public policy. Every government in the process of delivering goods and services to people
enunciates certain policies in various fields. Such policies have a long life and even if the
governments change, such policies do not change. Keeping this concern as a central point,
this unit primarily deals with the changing trends and models of public policy in the post-
independent India. It also explains the Nehruvian vision, economic liberalization - market-
based model of development and the role of globalization in the policy making process in
India.
5.2 Learning Objectives:
After reading this unit, you should be able to:

13
 Explain the theoretical and practical understanding about India’s political economy.
 Describe the essence of Nehruvian model of development.
 Analysis of the main characteristics of economic liberalization model.
 Discuss about the shifts in development discourses in India.
 Examine the impact and importance of liberalization, privatization and globalization on
national policy agenda.
5.3 Independence and Challenges
Policy- making is not done in a vacuum. Issues related to policy making are directly
dependent upon the perceptions and vision of the policy makers on development. It has to
take into account the existing socio- political realities of a nation. At the time of
Independence in 1947, India was one of the poorest countries in the world. It was the great
hope and aspiration of the newly independent Indian republic to relieve this crushing burden
of poverty, agriculture and industrial backwardness, lack of capital and technological
backwardness. In order to achieve socio-economic development and global of nation-
building, policy makers adopted and experimented with various models of development.
It is widely acknowledged that the success of the first plan in Soviet Russia during 1928-
33, in sharp contrast to the crisis of the Great Depression in the capitalist world, made the
entire world plan – consciouses. That success led many of the non-socialist nations to take up
planning as a serious measure to develop their economy and to attempt to solve their
economic problems through planned state intervention.
In this background, planning in India was also treated as an economic exercise which
could help maintain the stability of the nation. Although the idea of planning emerged as
central to the Indian nationalist economic thought with M. Visvesvaraya’s report named
“Planned Economy for India” in 1934 –which is claimed as the ‘pioneering effort’- and then
goes through the national planning Committee, formed by the Indian National Congress in
1938 and the ‘Bombay Plan’ of the Indian capitalists in 1944.
Opting for a state- led economic model of development with planning as the prime
mechanism was not a sudden decision. In fact, it was a logical culmination of the informed
principles and deliberations by the political leadership as well as indigenous capitalist bodies
that evolved within the last two decades of colonial rule. Contrary to Mahatma Gandhi’s
explicit opposition to ‘planned development’, Nehru showed ample interest in socialistic
means, including planning and heavy industrialization as essential to make revolutionary
changes in the present economic and social structure of society and to remove gross
inequalities. He acknowledged that planning was to be guided by what he characterized as
‘integrated planning’. Hence, he observed:
The planning commission has performed an essential task; without which it could not
have progressed. We are a federal structure, and it has served to bring the various states
together and have integrated planning. If it had not been there, the central government could

14
not have done its job because immediately difficulties would have arisen that the Central
government was encroaching the rights of the States.14
It was almost natural that planning was envisaged as ‘a pre- condition’ and was based on
the assumption that spontaneous development cannot be expected. 15
Thus, the path of development that India adopted after Independence can never be
conceptualized in a straight – forward manner. The preamble to the Constitution of India laid
the foundation of the socialistic pattern of society in which the state remained the most
critical player. Accordingly, the Directive Principles of State Policy (Part IV of the
constitution) emphasize that the goal of the Indian polity is not unbridled laisses faire but a
welfare state where the state has a positive duty to ensure to its citizens social and economic
justice with dignity of the individual consistent with the unity and integrity of the nation.
5.4 Nehruvian State –Directed Model
Independence in 1947 provided the policy makers a chance to translate their ideological
vision into concrete development programmes in which the role of state was hailed as a prime
mover. They opted for centralized planning as the core strategy adopted for the economic
development of the nation. The basic premise was that a faster and sustained socio-economic
development of the people could be brought about only through conscious planning that
aimed at eradicating poverty, illiteracy, unemployment and regional backwardness through
the promotion of assured availability of basic necessities of food, employment, health,
education and other sectors of growth.
At the same time, the practical utility of state planning was also evident in the resource-
starved countries, like India where the state control of economy was needed to regulate the
economic behavior of people and consumption in order to accelerate capital formation and
productive investment, checking unnecessary imports, investing in social and economic
sectors, monopolistic practices, arranging loans from the governmental and private
organizations of the other countries and ensuring that the drive for private profit does not
produce gross inequalities amongst the different sections of the population.16
The new institutional matrix that the state- led development programmes provided
consisted of ‘a regulatory regime’ comprising (a) public sector expansion - The government
directed to investment primarily into key public sector industries with protectionist policies.
Whereas on the other hand, market was assigned a subsidiary or subordinate role in the grand
project of nation building and strengthening economic prosperity of the people, (b)
discretionary controls over markets and private economic activities and (c) stringent foreign
exchange and import controls. The first two had their roots in the ideology of socialism while
14
Jawaharlal Nehru, “Planning (A press Release),” Hindustan Times, 17 August 1963.)
Gunnar Myrdal, Asian Drama: An Inquiry into the Poverty of Nations, Vol. II (New York: Pantheon, 1968), 739.)
15
16
Gunnar Myrdal, Asian Drama: An Inquiry into the Poverty of Nations, Vol. II (New York: Pantheon, 1968),
739.)

15
the last one had its roots in economic nationalism. Taken together, they articulated ‘activism
of the newly established nation- state’ to guide the economic system ‘in a desired direction by
means of intentionally planned and rationally coordinated state policies.17
Underlining the ideological commitment of the nation, the Industrial Policy Resolution
(1948), begins by stating that the nation has now set itself to establish a social order where
justice and equality of opportunity shall be secured to all the people. For this purpose, careful
planning and integrated efforts over the whole field of national activity is necessary; and the
government proposes to establish a National Planning Commission to formulate programmes
of development and to secure its execution. In addition, several wide-ranging policies were
initiated, and many statuary agencies came into being for the welfare of the people.
According, the 1948 Industrial Policy Resolution insisted that the state should play an
active role in the development of critical industries, which were divided into four broad
categories, such as (a) industries manufacturing arms and ammunition, production and
control of atomic energy and the ownership and management of railway transport. (b) basic
industries, namely iron, coal and steel, aircraft manufacture, ship building, mineral oils. (c)
the third category included the basic industries like automobiles, tractors, fertilizers, sugar,
paper, cement and cotton. (d) the fourth category included the leftover industries, which were
managed by industrial, private and joint enterprise. This resolution was reiterated in the 1955
Avadi session of the congress by underlining that in view of declared objective being a
socialist society, where the state shall play an important role in planning and development.
The next landmark event confirming the intention of an activist state was the Industrial
Policy Resolution of 1956 that was adopted after the parliament had accepted in December
1954 a socialist pattern of society as the objective of social and economic policy and the
Second Five Year Plan (also known as Mahalanobis Plan) articulated this ideological goal in
formal terms.18
The Mahalanobis strategy of economic development allowed the state to take a leading
role in industrialization and scale up the economy. The principal components of this
development strategy were:
 Restructuring economic dependency on metropolitan capitalism into independent
economic development;
 State emerging as a capitalist, encouraging capitalist developments in the urban sector
and
 Transformation of semi-feudal agriculture to capitalist farming. It was argued, that for
industrialisation to be viable, it needed a supportive agrarian economy and a small-

17
Myrdal, Asian Drama, 709-10.)
18
Tendulkar and Bhavani, Understanding Reforms,24)

16
 scale industrial base. Therefore, land reform policy was introduced, which abolished
giant landholdings and introduce large-scale cooperative farming.
Nehru insisted that the basic and heavy industries should remain in the public sector for
two reasons: (a) the private sector may not be able to raise adequate resources for these very
capital- intensive industries and even if it managed it would command a monopolistic control
that was deemed detrimental to social welfare and (b) by controlling allocation of output of
basic and heavy industries according to social priorities, it was certain that the government
would be able to channelize private sector growth to fulfill its ideological goal. In seeking to
achieve the objective of socialist pattern of society, the Nehru government envisaged an
expanded role of public sector and the importance of planning in all –round development of
the country.
The scene had, however, undergone changes following the adoption of the 1977
Industrial Policy Resolution, by Janata Party government. Given the failure of the past
resolution to bring about inclusive development, the new government felt the need to reframe
industrial policies and especially the role of public sector which did not fulfil the expectation
that it had generated when formed. The 1977 Industrial Policy thus insisted that public sector
would not only be the producer of very important and strategic goods of basic nature, but it
would also work of maximizing essential supplies for consumes besides contributing to the
development of small-scale sector and ancillary units.
With the collapse of the Janata Party government in 1980, the Congress returned to
power, though it also brought about significant transformation in the 1980 industrial policy.
Two issues stand out: for the first time, the public sector units were subject to severe criticism
for their inefficiency, especially in managing their affairs. The second issue which was being
raised in past relates to the liberalized licensing regulations for big industries. Thus, the
support that public sector had received from political authority was gradually withdrawn.
Although the government led by Rajiv Gandhi (1984-89) did not abdicate the socialistic
pattern of society in which public sector remained pre-eminent, changes in policy directions
were clearly visible, the government despite having underlined the importance of public
sector in economic growth opened the doors for private sector in many reserved areas which
so far remained the exclusive domain of public sector in order to reduce the burden on the
state and also urged private entrepreneurs to be creative in their approach to address the
global challenges. The change was reflected in the Seventh Plan (1985-90) which argued for
gradual withdrawal of blanket support for public sector units and the idea was also mooted
that they needed to face competition to establish their viability.
The beginning of 1990 saw a paradigmatic shift when the Congress leadership openly
advocated for economic liberalization and think beyond the age-old emphasis on public
sector as a reliable engine for growth. The change was not only due to the feeling that public
sector was not adequately equipped to bring about inclusive growth, but it was also due to the
global change following the collapse of the Soviet Union, and the disintegration of the east

17
European countries that precipitated an unprecedented fiscal crisis of the state and serious
erosion of balance of payments in India’s imports and exports.
5.5 Failure of State led Model of Development
Economic planning in South Asia is, as Myrdal argues,’ …. not the result of development but
is employed to foster development. The underdeveloped countries in this region are thus
compelled to undertake what in the light of Western history appears as a short –cut’.19
Despite the delight over planning, it left a large number of people below the poverty line.
By the late 1970s, there appeared to be a growing realization among policymakers in the
government that the state led strategy of economic development and industrialization failed to
achieve the developmental goals of India. Inefficient public sector enterprises, dismal
economic growth rate and rampant corruption in the public administration system were other
malaise in economy. Besides the inherent weaknesses of planning processes, India’s
development strategy did not yield the desired results presumably because of the failure in
evolving a broad political consensus on priorities. This is true that planning failed to evolve a
mechanism for equitable distribution of economic resource and was also detrimental to
capitalist development in India.20
Moreover, Nehruvian state directed model zeal for basic industries which led to the
neglect of other sectors and pay a little attention to minor projects to support it, like agranian
grievances (especially unfavorable terms of trade between rural and urban sectors amid
unremunerative prices for agricultural products), food deficits, famines and starvation, and
the drain on reserves of foreign exchange due to massive grain imports propelled agricultural
development to the front of economic agenda, leading to initial spurts of a Green Revolution
in some parts of the country.
Overall, the economy was deep into fiscal crisis. A host of social movements against the
deep entrenched corruption at all levels in the government, displacements and
disenfranchisements from entitlements, etc., were seeking to redefine the content and contour
of government agenda. In the face of such mass protests, the ruling elites took recourse to
authoritarian intervention in the political and social process by proclaiming Emergency
(1975-77). A part of the pattern was the repeated attempt by the ruling elites to curb the
freedom of press during and even after the Emergency. Such authoritarian measures were
retraced in the face of most determined protests and agitations in the press and the
underground against ethnic alienation, regional disparities and authoritarianism of the central
government. Ever since the Emergency, the misuse of government-controlled electronic mass
media continued, as has the tendency of the ruling parties to politicize professional neutrality
of civil service and to undermine the independence of judiciary. The elitist mentality and
wasteful lifestyles have created an enormous elite-mass gap. In these circumstances the

19
Myrdal, Asian Drama, 739.)
20
Meghnad Desai, Development and Nationhood: Essays in the Political Economy of South Asia (New Delhi:
Oxford University Press, 2005), 121.)

18
practice of politics of populism by both the ruling party and parliamentary opposition was
also emerge.
On the other side, the international political and economic environment was rapidly
transforming and there was a critical pressure on the Indian state for structural adjustments
while giving aid: to open up the economy for market and minimize its spending on the social
sector in order to reduce its fiscal deficit, as mandated by the international economic and
financial institutions like International Monetary Fund (IMF) and World Bank to secure the
requisite fiscal discipline.
It was in this backdrop that the Indian government began reforming its economy in 1991.
The opening up of economy (i.e., liberalization), allowing the market to join the economy as
the main actor (i.e., privatization) and integrating the domestic economy with the world
economy (i.e., globalization) were the consequences a new economic policy.
5.6 Economic Liberalization Model
With the adoption of the 1991 New Economy Policy the congress government led by P.V
Narsimha Rao attempted to rejuvenate India facing heavy fiscal deficit and over-
centralization and excessive bureaucratization of economic processes. When the Rao
government stepped up the policy, it was a minority one party government based on a larger
legislative coalition constituted of left parties led by the Communist Party of India (Marxist),
Bharatiya Janata Party (BIP), and other national and regional parties. But despite that the
government did not turn around even, and managed to fabricate a majority in the Parliament
in the latter half of its mandate, though at some extent it slowed the pace of economic reforms
due to a series of defeats in state elections in the meantime, which were attributed by the
party rank and file to the loss of pro-poor image of the Congress on account of association
with the policy of economic liberalisation. On the whole, it can be said that despite
opposition to the aspects and pace of economic reforms in sections of the Caste parties, RIP
and Janata Dal ideological terms, the new policies and revisions, by and large, have enjoyed a
broad consensus in the entire spectrum of the party system.
5.7 New Economic Policy 1991
The year of 1991 can thus be treated as a turning point in India’s economic growth, with the
release of wide – ranging measures to deregulate the economy, discontinuing the licence-
quota –permit raj.21 The principal objectives of the Industrial Policy Resolution 1991 were to
‘build on’ the gains already made, correct the distortions or weaknesses that might have held
back the progress, maintain a sustained growth in productivity and gainful employment and
attain international competitiveness.
The new policy was to deregulate the industrial economy in a phased manner, for those
four specific steps were recommended. First, to release the industrial sector from unnecessary

21
Government of India, Handbook of Industrial Policy and Statistics (New Delhi: Office of Economic Advisor,
Ministry of Commerce and Industry, 2001), 10.)

19
restrictions, the government basically decided to abolish industrial licensing policy for all
categories except for a short list of Industries related to security and strategic concerns, social
welfare, hazardous chemicals and overriding environment considerations. Second, the
government remove restrictions on FDI and also endorsed direct foreign investment unto
51% foreign equity in high- priority industries. Third, it was also decided to withdraw
protection of the sick public sector units to introduce liberalization with a view to integrate
the economy with the world economy. Forth, disinvestment of shares of a select set of power
public enterprises for raising resources and to encourage wider participation of general in
their ownership.
Unlike the 1956 Industrial Policy Resolution which reserved as seventeen industries
exclusively for public sector, the 1991 Regulation reduced the number to eight which are: (a)
arms and ammunition, (b) atomic energy, (c) coal and lignite, (d) mineral oils, (e) mining of
iron ore, manganese ore, gypsum, sulphur, gold and Dimond, (f) mining of copper, lead, zinc,
molybdenum and wolfram, (g) minerals, specified in the schedule to the atomic energy of
1953 and (h) rail transport.
Besides demarcating specific areas in which public sectors were allowed to operate, the
1991 Resolution also approved memorandum of understanding with other companies if that
help them in capturing the larger share in the international market. Thus, the major initiatives
towards restructuring of public sector units (PSUs) were initiated in view of their low
productivity, over staffing lack of technological upgradation and low rate of return.
5.8 Issue of Contention
There is no doubt that economic reforms brought about radical changes in India’s political
economy. Yet, the old regulatory regime remained critical in the path and processes of
liberalization in a very decisive way. Mainly that proliferates India towards state- guided
model of liberalization rather than market fundamentalism. This has resulted in an obvious
tension in the economy which is neither appreciative of market-hegemony nor full supportive
of the erstwhile state led development paradigm. In fact, here lie the roots of severe social
discontentment fuelling ideological political movements, including militant Maoist
movement, challenging the state for its failure to protect the marginalised. The situation has
thus become far more complicated because, on the one hand, there is evidence to confirm that
state has miserably failed to address genuine socio-economic grievances of the majority of
the people, especially in rural India leading, on the other hand, to the consolidation of people-
centric political movements, redrawing the contour of Indian politics that cannot be formatted
in the available theoretical discourses.
On the basis of the present state of affairs, it can be observed that India has adopted
reforms in perhaps a very guarded manner. And there are plenty of reasons that one probably
cannot simply wish away the theoretical justification of state intervention in a transitional
economy. Socialist principles may not have been forgotten, but the importance of the state in

20
social sector cannot be minimized unless a meaningful alternative is mooted. This is reflected
in the obvious distortions in India’s economy.
Still, reform is a contentious issue in India. With the consolidation of globalization, it is
true that there is no alternative to economic reforms. It is also true that without a proper
political backing, economic reforms are just mere devices without much substance.
Furthermore, the state has a crucial role to play in the changed circumstances.22
5.9 Summary
The importance of public sector has considerably declined in the post – liberalization era in
view of the failure of the state-led planned development to bring about inclusive growth in
India. In this context globalization acquired the centre place in present times. In most general
sense, Globalization is a multi- dimensional process that has unified people of the world into
a single society through a combination of economic, technological, socio- cultural and
political forces and has drastically affected the lives and living of people of developed,
developing and underdeveloped nations alike. It is irreversible in character and entails
negative as well as positive consequences for societies and their governance systems.
Today, the challenges in India are multifarious and one among them is the socio-
economic transformation. In the era of Globalisation, the overriding economic imperatives of
profitability and sustained economic growth may entail heavy social and ecological costs.
The social costs are evident in the decline in public expenditure by governments which
affects the poorer and weaker sections of society and backward regions more than the affluent
classes and communities and advanced regions. Comprehensively, India with the market
intervention in the economy, the private entrepreneurs have undoubtedly contributed to
growth though it has created economic disparities since the principles of social development
were replaces by syndrome of economic growth. As is obvious, the private investors prefer to
invest in profit making areas ignoring social development while the public enterprises remain
committed to inclusive development that cannot be attained if the desire for growth prevails
over other considerations.
Though the discussion raises serious questions regarding India’s developmental policies.
The nation needs development, but it should be sustainable, equitable and linked with the
empowerment of the common people. In the case of market model, the effected should be
compensated not only financially but also socially and culturally. Development should not be
at cost of the weaker sections of society, it has to be inclusive and equitable. Largely, India
has still a long way to go in adapting institutions and aspirations in that direction.
Questions
1. Write an essay on Political Economy of development in India.
2. Discuss the main features of Nehruvian model of development.

22
Desai, Development and Nationhood, 189.)

21
 3. Critically analyze the economic liberalization model of policy – making in India.
4. Examine the success and failure of the strategy of planned economic development of
India.
5. Analyze the reasons that led to neoliberal economic reforms in India.
6. Examine the conceptual contour of globalization. Has the globalization process
widened the gap between the rich and poor in India? Give reasons in support of your
answer.
7. Discuss about the shifts in development discourses in contemporary India.
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