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Indian Economic Policy Hitesh Jhanji, Lovely Professional University

Notes Unit 27: Governance of the Economy—Implementation of
Economic Policies

CONTENTS
Objectives
Introduction
27.1 Governance of the Economic Policies: Implementation of Economic Policies
27.2 The Parallel Economy: Concept, Nature and Effects on Policy Processes
27.3 Summary
27.4 Key-Words
27.5 Review Questions
27.6 Further Readings

Objectives

After reading this Unit students will be able to:
• Understand the Governance of Economy.
• Discuss the Implementation of Economic Policies.
Introduction

Although there have been many far-reaching and notable achievements in India but the country is
still very far from achieving the objectives of our freedom struggle, Constitution and the plans.
Combining continuity with change, the private enterprise-market economy was allowed to continue
and expand. This was done by enabling and active assistance of the State for overcoming our age-old
problems of poverty and stagnation. For the purpose, India went in for a non-laissez faire, active role
of the State beyond the conventional, universal functions of the State. Gradually, the State and the
political sphere became important, large and decisive, facilitated and legitimised by the adoption of
plural democracy. This model, based on very sound insights, could not deliver the desired positive
results and we call policy or State failure in Indian context. There are many studies available to
document these failures of policy and planning. However, there are vast differences of opinion
concerning whether or what kind of policy or State failure it is. Against this backdrop, we throw light
on how the policy implementation has been poor in India. Further, its consequences and implications
have also been discussed. For instance, one of the severe consequences is the emergence and flourishing
of the parallel economy. Thus, the concept, nature and effects of parallel economy have been discussed.
27.1 Governance of the Economic Policies : Implementation of
Economic Policies

The situations regarding policy failure have been given below :
(i) Only partial or inadequate attainment of the objectives of public policy or in a distorted manner;
(ii) Counter-productive results;
(iii) Costs are disproportionate to positive;
(iv) Policy outcomes are related to or generate heavy present and future negative externalities; and
(v) The State’s capacity to initiate course-correction measures gets weakened and failure of policy
gives rise to domestic or external forces posing problems before the policy objective.

340 LOVELY PROFESSIONAL UNIVERSITY