Page 350 - DECO502_INDIAN_ECONOMIC_POLICY_ENGLISH

Indian Economic Policy

Notes (d) practice of abortion.
(e) quality and safety of products.
27.3 Summary

• 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;
• In the ultimate analysis, this kind of State failure is. essentially related to State character, State
capacity and State-society relationship in a historical perspective is pretty obvious but is often
lost right of.
• There is an implicit assumption in most policy studies that once a policy has been formulated
the policy will be implemented. This assumption is invalid for policies formulated in many
Third World nations and for types of policies in Western societies.
• For our purpose of discussion on implementation, we can take the case of tax policy. This
policy tried to raise, resources by a combination of direct and indirect taxes to finance a large
part of increasing public expenditure.
• The fiscal crunch arising from inept and weak implementation of tax laws made the Indian
State reduce its normal responsibilities, leaving large gaps in the provision of minimum essential
services in areas like socio-economic infrastructure, education, health services and move in the
direction of either abdicating many pressing social tasks or hope to achieve them by privatisation.
• There are several factors ranging from population pressure, political, bureaucratic and business
elite values and modes of behaviour, legacy of colonialism and the domineering policies of the
rich countries, national character, etc.
• It may be noted that even a major policy shift like the one towards globalisation liberalisation
and privatisation in the early 1990s appears to have become stuck in the deep-seated morass of
cozy, crony relationships and partial, unrealistic analysis of the underlying reality.
• Although there is substantial expansion of the role of the State and economic policies, the
lingering, influence of the outdated theories of economic policies is seen in the form of neglect
of implementation issues.
• It may be noted that this parallel economy imposes high, unnecessary or avoidable costs on
business, or increases the transactions cost of business by imposing rent of authority on private
business i.e., illegal gratification extorted or collected from or paid to the people enjoying and
exercising State authority to permit the market players to operate according to their own lights.
• Black money or unaccounted money circulating in the parallel economy is a big menace to the
economy. It is also a cause of big loss in the tax-revenues for the Government.
• Black money may be defined as the money that is generated by activities that are kept secret in
the sense that these are not reported to the authorities. As such this money is also not accounted
to the fiscal authorities i.e., taxes are not paid on this money. Contrasted to this is the white
money that is shown in relevant accounts and tax paid, if due.
• It is the High Networth Individuals (HNWIs) and private companies that were the primary
drivers of illicit flows from the private sector in India rather than the common man.
• The country must evolve a new concept, theory, strategy and policy framework of development.
It may be noted that these are long-term and uncertain tasks, depending on mega socio-economic
factors of both the national and global politics.
• Over the time India would move towards a genuine, honest pro-people State, economy and
society and in the process the black economy and policy perversions would become marginal
instances of deviant behaviour.

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