Public Policy 1

1
What is public policy?

Concepts, trends and issues
In recent years, three distinct fields of enquiry have developed that contribute
to our understanding of public policy. The first of these is the field of policy
sciences that grew in response to a call by Harold Lasswell in the 1950s, to
overcome the weaknesses of conventional disciplines in understanding the
poor record of development policy. This evolved as an inter-disciplinary field,
drawing on several disciplines. Contributions to this field came to be organised
around the journal Policy Sciences. The second was the field of policy studies,
that emerged as a sub-field of political science; contributions to this field of
enquiry were organised around the journals Policy Studies Review and Policy
Studies Journal. The third was the field of policy analysis, further developed by
a Ford Foundation grant in the 1990s, which began as a group of institutions
doing applied micro-economics, later broadening under the Journal of Policy
Analysis and Management. Policy analysis was an applied extension of micro-
economics to the study of public policy.
Each of these fields retains a distinct approach to the study of public policy.
However, they suffer from several weaknesses in terms of their applicability
to a context beyond the one in which they developed. Policy sciences, in
particular, emerged as a very inter-disciplinary field, drawing on several
concepts across disciplines. However, the large bulk of this literature is rooted
in western contexts and has been developed by western scholars. There remains
a question of whether these terms and concepts can be used to understand
public policy processes in the global South. Within the international public
policy scholarship, there is a burning question of whether tools, theories and
concepts that explain policy change developed in the north can be used to
understand policy processes in the South.
In general, efforts to understand the relevance and application of these
concepts and theories to a Third World context are lacking. There remains a
critical challenge of integrating public policy literature developed in the global
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2 Public Policy
North with the policy experience of the global South. The large number of
books on public policy available to Indian students are written by western
authors and cater to a western context; they use examples and cases from
Britain and the USA. This is of little relevance to Indian students, who need
something tailored to or drawing upon an Indian context.
This gap is glaring as over the last decade, many Indian institutes, such as
TERI School of Advanced Studies, New Delhi, IIM Ahmedabad, and IIM
Bangalore, have launched programmes on public policy. These programmes
have been targeted at mid-career civil servants. Participants are exposed to
theories of the policy process that have developed in the west, but are unable
to contextualise them in a Third World or Indian context. At the same
time, though there are books on the public policy process in India, they
predominantly describe the processes empirically. This is a valuable insight
and contribution; however, the practice and theory of public policy remain
disconnected.
This book seeks to bridge this gap in public policy literature; we draw upon
concepts, theories and tools of public policy literature and use them to analyse
the public policy experience in India. The approach is inter-disciplinary,
drawing on various disciplines in the social sciences. The book does not
necessarily or completely belong to any one or more of the above cited three
intellectual traditions, but draws on them (and other literature that has not so
far been integrated with the literature on public policy) to explain different
approaches, tools, concepts and theories that are relevant to the study of public
policy. These include approaches to explaining policy choice, the processes of
policy formulation, implementation and evaluation.
In my experience with teaching mid-career civil servants at Management
Development Institute (MDI) Gurgaon, I found that they have rich experience
with public policy formulation and implementation, but need analytic or
conceptual frameworks to integrate their understanding. This book is intended
to give them the necessary analytic skills to accomplish this. Besides, the vast
majority of participants in these programmes has a background in engineering
and the natural sciences and feels uneasy with social science jargon. With no
prior orientation or exposure to the social sciences, they need a reference book
that can demystify the study of public policy. Public policy literature needs to
be presented in a way that participants get comfortable with and enthused to
learn the subject. This book is inspired by that larger objective. In the book, I
also draw upon the experience of mid-career civil servants as shared in class
over the last ten years of my course delivery.
What is public policy? 3
Personally, this book is a reflection of my own journey and engagement

with the subject of public policy. Several years of immersion in public policy
literature, interface with Masters and Doctoral level students and my own
experience with policy processes in the field have shaped the contents of this
book. It is enriched by nuances that were brought out through my efforts at
teaching this course at MDI Gurgaon, and the stimulating, and sometimes
controversial, insights and debates generated in the class room; finally, it is
shaped by my own research and field experiences around this fascinating
subject especially in the area of water resource governance and access.
With this backdrop, this chapter provides the conceptual groundwork
for the analysis of public policy and institutions. In essence, it unpacks the
language of public policy and provides a review of the terms and concepts to
which we revert in subsequent chapters of this book.
1.1 What is policy?

We start by asking ourselves a fundamental question: what is policy? The word
‘policy’ can be quite confusing since it is used loosely by different segments
of society, such as academicians, practitioners, NGOs, students and policy-
makers themselves, to mean different things. When we use the word ‘policy’,
it is important to define explicitly what we mean by it and to state in what
context the term is being used. A very practical implication of this is at the
stage when students of public policy choose a subject for their assignments or
dissertations. An understanding of what all could be taken to constitute policy
is essential to understand what all might make a potential subject of research.
An understanding of the various dimensions of public policy and the types of
policy studies can enable students better to define the scope of their study. A
discussion of the various models and theoretical frameworks for the study of
policy processes can help structure such studies as well. There seems to be a
(mis) understanding that all kinds of policy research should culminate in some
policy prescription. It is of value for students of public policy to be aware that
prescription is only one of the goals of such studies; these studies can also be
policy relevant in many other ways.
Anderson (1975) defines policy as a purposive course of action followed
by an actor or set of actors in dealing with a problem or matter of concern.
Policy comprises decisions taken by those with responsibility for a given
policy arena, and these decisions usually take the form of statements or
formal positions on an issue, which are then executed by the bureaucracy
(Keely and Scoones 2003).
4 Public Policy
The term ‘policy’ is indeed a confusing one. As noted by Hogwood and

Gunn (1984), the word is used rather loosely in many different ways. First, the
word ‘policy’ is used as a label for a field of activity. This is perhaps the broadest
sense in which this word is used. This is the case when we refer to a country’s
health policy, foreign policy, or economic policy. The reference here is not to
any specific policy statement or course of action, but to a broad field of activity.
Likewise, when we refer to India’s policy towards Pakistan, the reference is
not necessarily to any specific statement, law, or resolution, but to a broad
area or field of activity. Within this broad area or field of activity, there might
be several initiatives, thrusts or changes from time to time. When we talk of
a policy shift, we refer to changes in the manner in which a specific issue is
approached by policy-makers over time.
The second use of the term ‘policy’ is as an expression of general purpose.
This use occurs when we refer to a desired state of being projected in the future.
Examples are party manifestos and speeches inundated with such rhetoric as
‘we shall endeavour to…’ or ‘we shall see to it that…’ or ‘our policy will be to…’.
This use of the word becomes very common, for instance, at election time, when
political parties try to appease voters with their professed statements of intent.
A third use of ‘policy’ is with reference to a specific proposal, or means
to achieving an end. When a Chief Minister asserts ‘…we shall provide
subsidised rations in order to promote food security,’ the reference is to a
specific means to achieving an end. This use of the word ‘policy’ is different
from the previous one, in that it is more specific. A fourth use of the term
may be in reference to a specific programme. This often appears as a package
of legislation, organisation and resources committed to a particular activity. If
we go to a village, we may find the inhabitants referring to as ‘policy’ what is
actually a new programme initiated by the government. Examples include a
mid-day meals’ scheme or a primary education programme. The words ‘policy’
and ‘programme’ are sometimes used interchangeably. In the Indian context,
interventions such as the Sarva Shikska Abhiyaan or Indira Awas Yojana would
fall in this category.
A fifth use of the term is when referring to an authorisation. This is the
case, for instance, when we refer to legislation – a specific act of parliament
or a statutory instrument. Law is a form of policy.1 It is a form of policy with
certain characteristics that define its legitimacy.
1 More specifically, it could be seen as a policy instrument. We revert to this later in the
chapter when we define the various types of policy instruments.
Finally, policy could refer to specific decisions of a government encapsulated

in specific statements, such as, in the Indian context, the National Water
Policy of 2002 or the National Forest Policy of 1988. These are not necessarily
decisions in the sense that they are binding legally or otherwise, but may
simply provide guidelines or directives. In a federal structure like India’s, they
provide a framework for state governments to make their own plans and
policies modelled on them. They are specific statements of intent, describing
desired states of being. These policy statements or resolutions are intended
to be directives or wish-lists of what policy-makers would like to see on the
ground. In essence, they are prescriptive in nature, and typically use finely
crafted language and words. These words and phrases express desired states of
being. Often, they are an embodiment of certain development narratives and
discourses on which policy interventions are based.2 They tend to be overly
prescriptive to the point of sounding utopian and idealistic. They may often
also be developed to appease the international or donor community or to
attract financial resources on the strength of the state’s apparent intention to
implement certain reforms promoted or deemed appropriate by them.
Schneider and Ingram (1992) provide a seemingly comprehensive
definition of policy, when they state policies are revealed through texts,
practices, symbols and discourses; these discourses define and deliver values
including goods and services as well as regulations, income, status and other
positively or negatively valued attributes. This definition means that policies
are not only contained in laws and regulations; once a rule or law is made,
policies continue to be made as the people who implement the policy (that
is, those who put those policies into effect) make decisions about who will
benefit from those policies and who will shoulder burdens as a result. In
studying policy, therefore, we look at the broader sweep of politics, not
simply the written rules and laws themselves (Birkland 2005). This point
will become clearer in subsequent chapters of this book as we look at the
role that various actors play in the policy process, that is, in the processes of
public policy formulation, as well as implementation. Policies are moulded
and remoulded in the course of their implementation as different actors
bring to them their own perceptions, interests and agenda.3
2 A discussion of narratives and discourses and how they shape public policy is provided
in Chapter 3.
3 See, in particular, the discussion on the interactive model of the policy process in
Chapter 2.
6 Public Policy
1.2 What is public policy?

A policy becomes a public policy when it is adopted, implemented and
enforced by the institutions of the State (Dye 2002). Essentially, public policy
is policy that gets its legitimacy from the State. A public policy must to some
degree have been generated or at least processed within the framework of
governmental procedures, influences and organisations (Hogwood and
Gunn 1984). It comprises a series of patterns of related decisions to which,
nevertheless, many circumstances and personal, group and organisational
influences may have contributed.
It is important to note that the institutions of the State essentially provide
a source of legitimacy to public policy. That is, public policy has the backing of
the institutions of the State. In practice, however, many actors outside the State
may have contributed to its formulation. Many more, of course, as we shall see
in subsequent chapters of this book, will contribute to its implementation.
Perhaps it is from this perspective that Birkland (2005) defines public
policy as an expression by the government of what it intends to do or not
to do, such as a law, regulation, ruling, decision or order or a combination
of these. Fischer (1995) defines public policy as a political agreement on a
course of action (or inaction) designed to resolve or mitigate problems on
the political agenda–economic, social, environmental, and so on. Whether
public policies are arrived at through political deliberation or formal vote,
they involve a specification of ends or goals to be pursued and the means (or
instruments) for achieving them.
Dye (2002) expands the scope of the term ‘public policy’ to refer to the
description and explanation of the causes and consequences of government
activity. Public policy is about what governments choose to do or not to do. As
Dye puts it, public policy ‘…is concerned with what governments do, why they
do it, and what difference it makes (Dye 2002: 1).’ The analysis of public policy,
therefore, involves a description of the content of public policy; an analysis of
the impact of social, economic and political forces on the content of public
policy; an inquiry into the effect of various institutional arrangements and
political processes on public policy; and, an evaluation of the consequences of
public policies on society, both expected and unexpected.
A consensus definition of public policy: what makes policy ‘public’?

‘...There is no standard definition of public policy (Fischer 1995: 2).’ Birkland
(2005), however, asserts that while reaching a consensus on a definition of
public policy may be difficult, the many variants of a definition of public
policy suggest that public policy-making is public; that is, it affects a greater
variety of people and interests than do private decisions and this is what
makes government decisions sometimes so controversial and frustrating,
but nevertheless important. However, since it is ‘public’ that is the source of
political authority – that is, the authority to act on the public’s behalf – it is
clear that the government is at the centre of efforts to make public policy.
Reviewing various definitions of public policy, Birkland (2005) identifies
certain attributes that make a policy ‘public’, namely, that
1. The policy is made in the public’s name
2. Policy is generally made or initiated by the government
3. Policy is implemented and interpreted by public and private actors
4. Policy is what the government intends to do
5. Policy is what the government chooses not to do
Public policy gets three distinctive characteristics from the government

(Dye 2002). First, the government lends legitimacy to policies. Government
policies are generally regarded as legal obligations that command the loyalty
of citizens. People may regard the policies of other groups and associations in
society, but only government policies involve legal obligations. Second, only
government policies involve universality, in that only government policies may
extend to all people in society. Finally, government policies monopolise coercion
in society: only government can legitimately imprison violators of its policies.
It is for these reasons that individuals are encouraged to work for enactment
of their preferences into policy. This explains why different groups lobby with
the government to formulate policies to serve their interests and to translate
their intentions into specific statements of public policy. This is an activity
that assumes prominence, for instance, at budget time when many interest
groups lobby with the government in order to translate their preferences into
public policy through the budget; the budget is an important tool of public
policy that seeks to allocate financial resources in specific directions and give
incentives and signals to producers and consumers to act in specific ways to
pursue development goals deemed appropriate by the government.
For a policy to be meaningful, acceptable and enforced, it must have a source
of legitimacy. Legitimacy refers to a system or basis of sanction or authority.
It is a measure of political acceptability or perceived fairness. As noted above,
public policy is authoritatively determined, enforced and implemented by the
institutions of the State. Public policy has its legitimacy in the State; this could
be contrasted, for instance, with customary law and practices that work on a
8 Public Policy
system of social sanction. They derive their legitimacy from a system of social
organisation and relationships. This discussion will assume greater significance
in Chapter 4 of this book, when we examine the relationship of statutory and
non-statutory institutions. Statutory institutions draw their legitimacy from
the state while non-statutory institutions could have their legitimacy outside
the institutions of the state, for instance, in social practices, norms, customs or
religion. Often, this may lead to a situation of conflict; at other times, they may
be mutually supportive and strengthen each other. Very often, non-statutory
institutions may take precedence over statutory institutions on account of
their greater social acceptance and legitimacy.
Public policy, can, of course, be implemented through different kinds of
policy instruments – law, economic instruments (pricing, taxes and subsidies)
as well as specific policy statements or resolutions. Each of these could be
called the tools of public policy. They are specific, more concrete, forms through
which the intentions of the government are expressed. They provide a more
concrete operationalisation of government intent. State intent manifests itself
through these tools. Policy choice concerns itself both with choosing among
a menu of policy options as well as deciding what the most appropriate tools
would be. The goals of public policy can be attained using one of these tools
or a combination.
To conclude this discussion, public policy emanates from the corridors
of the government, even though many actors outside the government may
have a role in its shaping or coming into being, and most certainly in its
implementation. In fact, a hallmark of contemporary public policy is the
increasing role of non-state actors, both in the formulation as well as in the
implementation of public policy. In the Indian context, this corresponds both
to the pluralisation of the state (Shylendra 2004) and the rise of what is called
network governance (Mathur 2008). This is an important theme discussed in
Chapters 3 and 4 of this book.
Policy space
The term policy space can be taken to be an area or space within which
governments have the freedom or autonomy to choose among a number
of policy options. It could be seen as representing a menu of options from
which policy choices can be made. The concept of policy space serves as an
analytic construct that helps us examine the menu of options that policy-
makers have to choose from and the factors that influence these choices. The
concept assumes relevance when global or international commitments and
pressure compel governments to make certain policy choices, curtailing their

autonomy. In this case, we say that the policy space has been constrained. For
instance, in Chapter 3, we demonstrate how the globalisation of governance,
manifest for instance, in the rising role of international institutions, has led
to an erosion of policy space in the developing world (see also Chang 2006).
When nation-states lose autonomy of policy choice, we say that their policy
space has been constrained. Likewise, development narratives and discourses
impact upon the policy space by focusing the attention of policy-makers on
specific options for action to the exclusion of others, and influence the choices
for action. By presenting certain ways of intervening as superior to others,
narratives and discourses eliminate certain policy options and narrow down
the policy space. This concept assumes greater relevance in Chapters 2 and 3,
when we explain the process of policy choice.
The expression ‘crowding of policy space’ on the other hand could be used
to denote the existence of several policy options in a particular area of public
policy formation. If we find the emergence of several policy options within
an area of public policy formation, we say that the policy space has become
‘crowded’. Why certain policy spaces get more crowded than others is an
important issue for researchers and students of public policy.
Mainstreaming policy
Mainstreaming policy can be taken to mean making one area of public
policy-making an integral part of another. Mainstreaming the environment
into development policy-making, for instance, means that environmental
considerations are considered in the design of policies for development.
This has indeed been the major thrust of several international meetings and
conferences on the environment, such as the UNCED (United Nations
Conference on Environment and Development) at Rio in 1992 and the many
others that have followed in its wake.
The word mainstream represents a ‘dominant’ mode of thought. Thus the
word ‘mainstreaming’ is used in the public policy literature to make an issue
more central to public policy and to align it with the dominant mode of thinking
about the issue. Perhaps the most widespread use of the term ‘mainstream’ is
in the context of mainstreaming gender into public policy. This means that
we make a conscious effort to look at how men and women are impacted
differently by public policies. Lately we have been talking about mainstreaming
environmental education into school curricula. Likewise, the National Aids
Control Organization (NACO), works at mainstreaming AIDS awareness into
10 Public Policy
various state level programmes.4 The rationale behind mainstreaming initiatives

is that initiatives that are of a standalone nature are much less effective than
when part of larger initiatives. The effectiveness of certain initiatives can be
increased if they are made part of larger initiatives. But of course, what should
be mainstreamed into what is a question of perspective and value judgement!
1.3 Why study public policy?

This brings us, then, to an important question, namely, why should we study
public policy? The reasons for this are many, and obvious. Policies are seen as
central to the development effort, particularly in the context of developing
countries.5 They are seen as crucial for directing the pace and direction of
economic development and improving human well-being as well as for
mobilising and allocating resources. Further, they involve and affect several
actors in different capacities; this is an important reason for the wide level of
interest in them. Public policies, as noted above, tend to be very wide in their
reach and sweep. Besides, new laws and policies seem to serve as a ‘magic
charm’ that provide a way out of society’s ills; while existing policies serve as
‘scapegoats’ for poor development (von Benda-Beckmann 1989). We elaborate
on each of these points below.
Steering development
Policies are seen as essential to the development effort. In particular, public
policy has been seen as central to development in the context of developing
economies. In the economics literature, the case for public policy is built
on several grounds; for correcting market failure, protecting and enforcing
property rights, maintaining law and order and mobilising and securing
equitable distribution of resources (material, financial and natural) in the
pursuit of economic development.
In the Indian context, especially in the earlier phases of planned economic
development, State intervention was seen as being crucial for sectors having
large resource requirements or long gestation periods, or for strategic
and security reasons. The State was seen as an agency that would attain
4 I thank Ritu Shukla, participant of the third batch of the Post-Graduate Diploma
Programme in Public Policy and Management at MDI Gurgaon, for bringing this
observation to my notice.
5 This explains the important role assigned to the State in India and other developing
countries that began their course of development after attaining independence from
colonial rule. See also Narayanan (2008).
‘commanding heights’ in the Indian economy. Further, several of the ideals

enshrined in the notions of a welfare state as well as the Directive Principles
of State Policy provide a context in which public policies are understood to be
formulated and which could be seen to provide a source of justification for the
genesis and formulation of certain public policies.
Starting with a phase of economic reforms in 1991, that was influenced
by a neo-liberal paradigm emphasising fewer controls and restrictions and
a greater integration of India with the global economy, the role of the State
has been subjected to both debate as well as transformation. There has been
what is called in popular parlance ‘a rolling back of the boundaries of the
State’. However, few would question the important role of public policy itself
in the changing political, social and economic environment. It is often stated
that after the phase of economic reforms was initiated in 1991, the role of the
State has changed from being a controller of development to its facilitator.
While some of this may be little more than jargon and rhetoric, the point that
needs appreciation in this context is that, in essence, the role of the State is
being redefined. The contours of State involvement in economic and political
activity are being reconstituted. This means that the thrust of public policy in
India is gradually undergoing a change (or at least, seemingly so!)6
Scapegoat and magic charm

Law and policy are seen as both a ‘scapegoat’ and as a ‘magic charm’ (von
Benda-Beckmann 1989). Policies are seen as a way of correcting social and
economic evils–a law or policy is perceived as a ‘magic charm’ with that
potential. At the same time, an undesirable situation in society is blamed
on poor laws and policies. Thus, policy serves as a ‘scapegoat’ for social ills.
Undesirable situations are blamed on poor policies, till a new policy or
law – a new ‘magic charm’ – comes along. The tendency to treat law and
policy as both scapegoat and magic charm lends a great prominence to, and
interest in, thinking about policy. This can be seen quite commonly in the
way we articulate our interest in public policy; when things go badly, we
blame them on ‘poor policy’, and reinforce our faith in ‘new policies’ that are
needed to correct the situation, as if the mere announcement of new policies
would do much to take us closer to where we desire to be. The ‘magic charm’
potential of public policy can also be seen at election time when incumbent
6 For a more detailed and recent exposition of the changing role of the Indian State in the
context of globalisation and liberalisation, see Nayar (2009).
12 Public Policy
governments draw attention to new policies that were launched, or new

initiatives undertaken during the period of their tenure, that (they claim
to have!) produced miraculous results. When new governments come into
power, they often blame the previous government’s policies for the current
state of affairs, once again seeing them as ‘a scapegoat’.
Affect several actors

Another reason why there is considerable interest in public policy, and perhaps
the most important, is that policies involve (and affect) several actors. This
includes bureaucrats, non-government organisations (NGOs), multilateral
organisations, politicians, civil society, corporations and governments. Each
of these actors has strong, and often divergent, interests in the policy process.
As we shall see in subsequent chapters of this book, the divergence of these
interests is an important factor in shaping the outcomes of public policy.
In fact, the policy process is seen as a complex political process in which
there are many actors (Hill 2005). Keely and Scoones (2003) go to the extent of
describing the policy process as a ‘policy drama’ that unfolds through a cast of
characters. Each of these has a different role in the policy process and has the
potential of affecting policy processes both in terms of their formulation and
implementation as well as outcomes. These actors influence policies through
their varying roles and capacities: as people who influence the direction and pace
of policy change in processes of policy formulation, as people who are involved
with policy implementation or as people who are affected by these policies (the
so-called ‘beneficiaries’). As we shall see in subsequent chapters of this book,
several theories and models of the policy process seek to explain the interface of
policy with various actors, both in the processes of public policy formulation and
implementation. This, in particular, is the focus of Chapters 3 and 4. In Chapter
2, when we examine the interactive model of the policy process, we will see how
policy outcomes can be extremely variable, depending upon the motivations,
intentions and actions of those involved in their implementation.
Essential in a democracy
It could be argued that an understanding of policy is essential for the exercise
of informed discretion by citizens in a democracy. An understanding of what
the current range of public interventions is, and what its impacts are likely
to be, is an essential characteristic of a vibrant democracy. Informed choices
about the nature of polity and political processes can only be made in an
environment where awareness and understanding of public policy is strong.
1.4 Understanding public policy processes

India is considered by many to be a policy rich country. In the over six
decades of planning, we have seen policy developments in several sectors–
health, education, food security, the environment and natural resources,
and many others. As a matter of fact, there seems to be no dearth of policy
prescription. Society, at least seemingly, knows solutions to a wide range
of societal, environmental and economic problems. Much of this policy
prescription takes the form of rhetoric – ‘encourage civil society participation’,
‘price goods and services to reflect their scarcity value’, ‘empower citizens’,
‘institute accountability’, ‘promote decentralisation’, and so on. These policy
prescriptions are advocated by a wide range of actors (academics, NGOs,
multilateral organisations and the media). But why then are the commonly
understood solutions to problems not implemented? In other words, why do
we continue to see some disenchantment with the state of affairs as regards
public policy implementation?
Answering this question requires an understanding of the processes
through which policies are implemented. There is often a gap between the
intended and actual outcomes of policy. Models and concepts developed in
the public policy literature, and discussed in subsequent chapters of this book,
particularly in Chapters 2 and 3, provide a set of tools through which policy
change can be analysed, and when possible, processes improved.
The analysis of policy processes acquires a new dimension in the context
of emerging trends worldwide. In particular, we notice parallel trends
towards internationalisation and localisation. Along a continuum between
the local and global, a wide range of coalitions, networks, alliances, and
connections exist, that are created by knowledge and power relationships
(Keely and Scoones 2003). Policy is seen as being co-constructed across
space through such particular networks and connections linking global
and local sites. Policy processes are understood as being located in certain
contexts shaped, for instance, by the interactions between bureaucrats
and farmers. Certain forms of knowledge become embedded within
organisational and institutional contexts. Understanding policy processes
requires an understanding of these dimensions.
At the same time, there is a need for a critical understanding of what
drives policy change. Where does policy change come from? Whose interests
and agenda does it represent? Why is it that some areas see more policy
developments than others? Why do some policy spaces get more ‘crowded’
than others? It is important for students of policy to ask not only how policies
14 Public Policy
are framed, but also to examine who is included and who is excluded in the
process, which actors and interests dominate, and how policy changes over
time (Keely and Scoones 2003).7
In the Indian context, despite the presence of prominent economists to
guide policy-making, a well functioning democracy that was ruled by single
party governments almost uninterruptedly for about five decades and an
established governance structure at the central, state and local levels, the
results on the ground in terms of social and economic development have been
rather disappointing ( Jalan 2006). One explanation for the below expectation
performance of the Indian economy has been that political priorities have
tended to be distinct from those laid down by economists and experts. The
reasons for this are that economic plans have not reflected political realities
and aspirations. The political decision-making in our country, according to
Jalan, has been driven more by special interests than by the common interests
of the general public. These special interests tend to be more diverse in India
than in other more developed and mature economies.
Jalan (2006) notes the existence of special regional interests not only
among states but also within states, depending upon the electoral strength
of the party in different parts of the state. Economic policy-making at the
political level is further affected by occupational divide (e.g., farm vs. non-
farm), the size of enterprise (e.g. large vs. small), caste, religion, political
affiliations and other divisive factors. Thus, most of the economic benefits of
specific government decisions have tended to flow to a special interest group
or to distributional coalitions. These coalitions have been more interested
in influencing the distribution of wealth and income in their favour rather
than in the generation of additional output which has to be shared with the
rest of society. These special interest groups are much more united in their
approach for the protection of their interests, though they are in a minority
compared to the majority who are fractured along lines of caste, class, religion,
location or occupation. This, according to Jalan, is why policy development has
been skewed in favour of the elite minority which has been able to influence
policy development to further their interests. This makes a case for a deeper
understanding of the politics of policy. Models and theories of the policy
process, described in Chapters 2 and 3 of this book, give us a set of tools or
conceptual lenses to understand these dynamics.
7 For a discussion of these issues in the water sector across the globe, see Huitema and
Meijerink (2009). See also Mollinga (2008).
While this may be an important factor explaining the course and trajectory
of public policy formulation in India, many failures of public policy can
actually be seen to be located in the manner in which policies are implemented.
Understanding policy processes, therefore, is crucial for improving the
effectiveness of policy implementation. This builds a strong case for the
analysis of policy processes, which is one of the key areas of focus in this book.
1.5 The policy sciences

Policy sciences is an umbrella concept and includes both knowledge of the
policy process as well as knowledge in the policy process; in other words, it
includes studies of both the descriptive and prescriptive dimensions of policy,
respectively.
Laswell (1970) stated that policy sciences include both knowledge of the
policy process as well as knowledge in the policy process. When we refer to
knowledge of the policy process, we refer to knowledge about how policies
are formulated and implemented. Knowledge in the policy process refers to
knowledge that leads to the formulation of policies. In other words, knowledge
of the policy process conforms to the descriptive dimensions of public policy,
while knowledge in the policy process conforms to the prescriptive dimensions
of public policy.
Knowledge in the policy process

Knowledge in the policy process refers to studies that focus on the
prescriptive dimensions of policy. These studies typically take the form of
research projects that culminate in some kind of policy prescriptions for
governments and policy-makers to act upon. These studies are normally
carried out by think-tanks that provide services in the form of advisory
support to governments and policy-makers in terms of the kinds of
interventions they should initiate to accomplish societal or developmental
goals. They take place before the formulation of a policy so as to provide
inputs into the formulation of public policy.
Placed in this category could be the research done by a number of
research institutes and think-tanks in the country such as TERI (The
Energy and Resources Institute, New Delhi), IGIDR (Indira Gandhi
Institute for Development Research, Mumbai) and IEG (Institute of
Economic Growth, New Delhi). At the international level, falling in
this category is research being done by a host of institutes constituted
under the CGIAR (Consultative Group on International Agricultural
16 Public Policy
Research), such as IWMI (The International Water Management

Institute, Colombo) and IFPRI (The International Food Policy Research
Institute, Washington, D.C.). In much of this research, the focus is on
studies that give some kind of policy recommendations. This is, in fact,
the usual understanding of policy analysis, namely, that it must result
in some kind of policy advice or recommendations. 8 One weakness of
this kind of research is that it does not unpack the process dimensions
of policy, that is, the processes through which policies are formulated
and implemented. Processes, so to say, remain a black box. 9 Thus, these
policy prescriptions remain little more than wish-lists, in the absence of a
realistic assessment of the social and political realities in which they will
be implemented or the government machinery through which they will
reach the intended beneficiaries.
Knowledge of the policy process

Knowledge of the policy process refers to studies of public policy that
describe how policies are made and implemented. Such studies capture the
process dimensions of policy. These studies can be methodologically quite
challenging since they require an insiders’ perspective on what drives policy
change and implementation. These studies are predominantly descriptive
(or qualitative) in nature, as against the prescriptive studies mentioned
above. Methodologically, they may require ethnographic approaches to be
employed to obtain an analysis of the processes through which policies are
formulated and/or implemented.
Gordon, Lewis and Young (1997) argue that in every government, there
are deep structures of policy: the implicit collection of beliefs about the
aims and intentions of the departments and about the relevant actors who
influence or benefit from the policy. Policy analysts are in the position of
either having to accept the deep structures and the assumptions made about
the problem definition and the range of possible solutions or trying to stand
outside the organisational consensus and policy-makers themselves, but the
8 Among students of public policy, this may lead to an unhealthy obsession with
making some (hurried) policy recommendations from their study. This may also
lead, unfortunately, to a tendency among students as well as researchers and faculty
to discount other types of studies of a policy orientation as not being policy studies,
unless they result in some kind of policy prescription. This is precisely the reason why a
complete understanding of the different types of studies of public policy is needed.
9 See also Mollinga (2008).
major potential contribution of social scientists lies in challenging the deep

structures of policy-making. In order to realise this potential, they argue, it is
important that policy studies engage in the analysis of policy processes, systems
and content; a narrowly utilitarian approach to funding policy research will in
itself, in the long run, be self-defeating.
It must be noted that the literature on understanding policy processes is
relatively underdeveloped in the Indian context and provides an opportunity
for further research, investigation and analysis. In fact, Mooij (2003) notes
that interest in the study of policy processes is relatively recent. She notes
that the study of policy processes in developing countries has been generated
largely by interest among donors and by research institutions linked with
development agencies and donors. The literature on policy processes happens
to be dominated by work produced in the US and Britain, and less so by
work produced in developing countries. The Overseas Development Institute
(ODI), London and the Institute of Development Studies (IDS), Sussex, UK,
are two academic institutes that have been engaged in producing literature on
policy processes.10 This sub-discipline draws upon several disciplines such as
sociology, anthropology and political science.
As noted above, perhaps the most obvious distinction in varieties of policy
analysis is in terms of explicit purpose and/or client, separating analysis ‘of ’ policy
from analysis ‘for’ policy (Gordon, Lewis and Young 1997). Analysis ‘for’ policy
leans towards the prescriptive dimensions of policy; analysis that is carried out to
inform policy-making. Such analysis, as we have noted above, is directed at policy-
makers and governments. This type of analysis usually seeks to answer the ‘what’
question. What should governments do in order to address a certain issue or social
problem? This type of analysis is carried out before a policy has been formulated
and is intended to serve as an input in the policy-making process.
Analysis ‘of ’ policy, on the other hand, refers to analyses of policy processes,
impacts and outputs. It is typically carried out after a policy has been formulated
and/or implemented. It answers the ‘how’ question: how has a certain policy
been received by the concerned stakeholders? While analysis for policy is
prescriptive in nature, telling governments what they should do, analysis of
policy tends to be descriptive in nature, describing what has actually happened
on the ground.
10 This is borne out by the large number of working papers produced by these two institutes
on different dimensions of public policy processes. As examples of this output, see Mooij
(2003) and Sutton (1999).
18 Public Policy
Hogwood and Gunn (1984) emphasise that the distinction between

description (how policies are made) and prescription (how policies should be
made) is necessary, but should not be taken too far. The defining characteristics
of policy analysis as well as its novelty and value lie in its prescriptive aspect: it
was the applied, socially relevant, multi-disciplinary, integrative and problem-
directed nature of policy analysis that attracted many social scientists in the
US and Britain in the 1960s and 1970s.
The distinction between the two is relevant, however, as a starting point for the
design and conduct of studies of public policy. Thus, when we wish to carry out
a study of public policy, it helps to ask ourselves this fundamental question: are
we interested in the prescriptive dimensions of public policy or are we interested
in the process dimensions? That is, what is our approach to engaging with the
study of public policy? Conventional researchers and academics would tend to
dismiss studies of policy processes as ‘narrative’, ‘qualitative’ or ‘descriptive’, and
with limited generalizability. However, these studies are necessary to understand
why policies that may be based on sound logic and theoretical foundations could
be so difficult to implement. It is also worthwhile to note that these studies are
likely to be engaged with by researchers of different intellectual inclinations.
Economists and political scientists tend to be more interested in the prescriptive
dimensions of policy while sociologists and anthropologists tend to engage
more with the process dimensions.11 Both these types of studies can usefully
complement each other. The ‘prescriptive’ type studies are needed to understand
what needs to be done while the ‘process’ studies help us understand why it
may be so difficult to do that. The ‘process’ studies can give us useful insights
into how the prescriptions advocated by policy scientists can be more effectively
implemented, and sometimes, why they can never be so! They can also help us
understand why policies fail on the ground even though they may be based on
sound prescription!
Hill (2005) notes that often it may not be possible or perhaps desirable to
distinguish between both of them and the two are more closely related than is
conventionally thought. Besides, one may feed into another; the important issue
perhaps is only to bear in mind that the two are conceptually different. This
distinction, further, is useful since it may help a policy researcher or analyst to identify
his own orientation and interest in or towards a particular kind of engagement with
the subject of public policy. As noted above, it helps researchers and students of
11 For an interesting discussion of how economists and anthropologists approach policy

and development issues from different perspectives, see also Bardhan (1989).
public policy to identify what kinds of studies of public policy they seek to engage
with: the prescriptive dimensions of policy or the process dimensions of policy?
Are we interested in analysis for policy? Or, are we interested in analysis of policy?
Finally, how can the two analyses complement each other?
1.6 Types of studies of public policy

Within this broad framework of the types of policy studies, there can be
different sub-types of policy studies. That is, we can further categorise the
different types of policy studies as follows:
Studies of policy content

Policy content focuses on the origins, intentions and operation of policies.
Analysis of policy content includes studies that have been carried out within
the policy and social administration fields, of the origins, intentions and
operations of specific policies (Gordon, Lewis and Young 1997). They are
usually conducted for academic advancement rather than for public impact.
Their goal is not usually to inform policy-makers.
Studies of policy content help us understand what the basic thrusts and
contents of a policy are: what are the basic provisions, what does a law or
policy postulate and what does it allow citizens and governments to do,
or not to do. Note that one reason for poor implementation of a policy
may simply be that it is flawed in its content, when actually the blame
may be put on its implementation. There is little that can be accomplished
by implementing a policy that is poorly drafted, or ambiguous. A good
example of this is represented by the model groundwater bills that have
been in circulation in India for over four decades. These bills essentially
focus on creating a technocratic authority for imparting clearances for
the installation of tubewells. Critics of this approach argue that not only
is this approach difficult to implement but also fundamentally flawed in
that in the absence of a property rights structure for limiting groundwater
withdrawals, such an approach would not succeed in arresting the problem
of groundwater depletion (Narain 1998; Saleth 1996; T. Shah 1993). 12
Given the nature of the development of groundwater, which has been mainly
through the autonomous efforts of millions of individual groundwater users
geographically spread over lakhs of hectares, law may not be a very potent tool
12 For a critique of the model groundwater bills and the general approach to limiting
groundwater withdrawals in India, see Vani (2009). See also Narain (1998).
20 Public Policy
to regulate groundwater extraction. That is, even if the model groundwater

bills were enacted and implemented, they would attain little in terms of
addressing the problem at hand. Content analysis can give us insights into
what certain policies seek to do and whether they are appropriately designed
to accomplish the task at hand.
Policy monitoring and evaluation

Another form of analysis of policy is policy monitoring and evaluation that
frequently takes the form of post hoc analysis of policies and programmes
(Gordon, Lewis and Young 1997). Monitoring and evaluation can be
aimed at providing direct results to policy-makers about the impact and
effectiveness of a specific policy. Post hoc review of policy impact may be
used for feasibility analysis in future policy design, via the specification of
a feasible set of actions. Within this broad category, there could be studies
of policy outputs and outcomes. Policy outputs refer to the physical results of
a public policy delivery process while outcomes refers to the impacts of the
policy in question. While monitoring policy outputs is the easier and more
common practice, this means little in the absence of efforts at monitoring
policy outcomes. We come back to this point in Chapter 5 of this book,
where issues surrounding the monitoring and evaluation of public policy are
discussed at greater length.
Policy processes
As noted above, studies of policy processes focus on the processes through
which policies are formed and implemented and involve a study of the politics
of policy, envisaging the balance of power among the concerned actors, in
terms of who drives processes of policy change and implementation or
whose interests a particular policy represents. Such studies could be useful in
throwing light on why policies fail in their objectives. These kinds of studies
are methodologically far more challenging and complex to undertake, and
that is perhaps one reason that they are relatively underdeveloped. As noted
above, studies of policy processes in India provide a fertile ground for further
research and enquiry not only because such studies are needed to enhance the
effectiveness of public policy implementation but also because they can be
methodologically challenging and interesting. Studies of policy formulation
processes can help distil who the dominant actors in the policy process are,
and what strategies they employ to pursue their interests in the policy process.
Studies of policy implementation can throw light on the challenges and
constraints to policy implementation, and hence give direction to improving

the effectiveness of public service delivery.
Policy advocacy
Policy advocacy refers to any research that terminates in the direct advocacy
of a single policy, or of a group of related policies, identified as serving some
end taken as valued by the researchers (Gordon, Lewis and Young 1997). Such
research may be aimed at policy-makers, or may serve to challenge existing
policies and appeal to rival groups or public opinion at large. This style of
policy analysis is carried out by reformist pressure groups.13
Essentially, policy advocacy refers to a process wherein individuals or
organisations lobby for certain kinds of policy change. Those engaged in
policy advocacy draw the attention of governments to certain social, economic
or environmental issues and press governments for action. Policy advocacy
requires the skills of rhetoric, persuasion, organisation and activism (Dye
2002). It can be carried out at different levels (local, national and international).
Many civil society organisations (CSOs) in India and abroad are engaged
in policy advocacy. As we shall see in Chapter 3, in recent years there has
been an increase in the role of large transnational NGOs that engage with
policy advocacy around a large number of humanitarian and environmental
issues. This constitutes an important aspect of the trend corresponding to the
globalisation of governance, altering the balance of power among the State,
markets and civil society at a global level.
In India, particularly over the recent years, we notice a growing role of
NGOs lobbying for policy change with the government, especially around
natural resource and environmental management. The kind of work done
by NGOs such as Centre for Science and Environment (CSE), New Delhi
under the leadership of Anil Agarwal earlier, and now Sunita Narain, would
stand out as illustrations in this regard. At one stage during the writing of this
book, a group of activists comprising eminent academics, environmentalists,
journalists and authors had been lobbying for several months to prevent
the use of the Yamuna flood-plains near Delhi for the development of the
Commonwealth Village for the Commonwealth Games, scheduled to be held
in the year 2010, on the grounds that it would harm the ecological health of
13 Individuals or organisations that engage in policy advocacy and through their efforts
seek to bring about policy transitions are called change agents or policy entrepreneurs.
See the discussion in Chapter 3. See also Huitema and Meijerink (2009).
22 Public Policy
the region. 14 Medha Patkar, Anna Hazare and Aruna Roy are other names
that stand out in the Indian context of people who have engaged in policy
advocacy around certain societal issues.
Process advocacy
Process advocacy refers to lobbying for the adoption of certain processes of policy
formulation. There is an implied assumption within policy analysis that developing
policy scientific knowledge about the forces shaping public policy is itself a socially
relevant activity and that such analysis is a prerequisite to prescription, advocacy
and activism. In India, for instance, NGOs have lobbied to make processes for
policy formulation for Participatory Irrigation Management more participatory
(Narain 2003a; Mollinga 2001). This resulted in the creation of platforms for
dialogue between the farmers on the one hand and state governments on the
other, such as Sahayog, founded in the state of Karnataka.
Information for policy

In this mode, the researcher’s task is to provide policy-makers with information
and perhaps advice (Gordon, Lewis and Young 1997). It assumes a case for
action, either in terms of the introduction of a new policy or review of an
existing one. It may be carried out within the research branch of a government
department; by outside researchers funded by that department; or, by
independently funded researchers who may choose to address their research to
policy issues. As noted above, this corresponds to the prescriptive dimensions
of policy and the role of the policy researcher here is akin to that of a think-
tank, in terms of offering policy advice.
Studies of these different dimensions of policy are all relevant. Besides,
these different categories are not necessarily water-tight compartments. They
are closely related and one could precede or form a basis for the other. In fact,
each of these may become relevant at a certain stage of the policy process. In
a chronological sequence, for instance, process and/or policy advocacy may
precede information for policy. Studies of policy content may precede studies
14 An important issue here is the difference between policy advocacy and lobbying. The
difference is conceptually a bit thin; however, the word lobbying is generally used when
certain groups try to protect their own interest by pressing governments for action. Advocacy
is usually used to refer to a context when the urge is to push for policy change to further a
larger societal goal. But, of course, one can question the motivation of those who engage in
policy advocacy and if that serves to further their own interest or ideologies in some way, but
that is how the two can be understood to be conceptually different.
of policy processes, policy impacts and evaluation studies. Each of these

analyses could, further, serve as an input into another. 15
1.7 Types of policies

In 1964, Theodore Lowi developed the classic policy types that were
updated later by Ripley and Franklin (Birkland 2005). Lowi divided policies
into three categories: distributive, redistributive and regulatory. Ripley and
Franklin updated the typologies by further dividing regulatory policies into
two categories: protective regulatory and competitive regulatory. Again, these
typologies are not necessarily watertight; however, they serve as useful analytic
tools in talking about the intentions of public policy. They facilitate thinking
about policy in terms of the overall motivation behind it; the motivation
behind these policies is the basis of their classification.
Distributive policies
Distributive policies involve the granting of some sort of benefit to a particular
interest group or other well-defined, relatively small group of beneficiaries.
Examples of distributive policies include agricultural subsidies and state
spending on local infrastructure projects like dams, flood control systems,
aviation and highways and schools. They often become a subject of debate
with regard to whether their benefits reach the target beneficiaries. This has
been a subject of great interest, for instance, with regard to irrigation and
fertiliser subsidies in India.16
Regulatory policies
Regulatory policies are in general terms policies that are intended to govern the
conduct of business. Competitive regulatory policies involve policies designed to
limit the provision of goods and services to one or a few designated deliverers,
chosen from a larger number of potential deliverers. These include the grants
of licenses or franchises to operators in specific sectors. Protective regulatory
policy, on the other hand, is intended to protect the public at large from the
negative effects of private activity, such as consumer protection, environmental
protection and public interest litigation. The telecommunication and electricity
sectors, have, for several years now, been witnessing important changes with
15 For a further detailed analysis of the types of public policy studies, see Hogwood and
Gunn (1984).
16 For a review of subsidy issues in Indian agriculture, see Gulati and Narayanan (2003).
24 Public Policy
regard to the regulatory policy environment in India, and have been the subject
of much interest and debate.
Redistributive policies
Redistributive policies seek to reallocate or manipulate the allocation of
wealth, resources and opportunities. Examples include welfare, civil rights for
racial, religious or social minorities, aid to poor cities or schools, and the like.
Redistributive policies could involve the transfer of goods and resources from
the less well-off to the better-off. For this very reason, many redistributive
policies tend to be controversial, since they involve a redistribution of resources.
They raise important issues as well, such as those pertaining to their targeting.
Substantive and procedural policies

An alternative typology of policy is developed by James Anderson (1990) in
terms of substantive and procedural policies. He defines the distinction between
substantive and procedural policies in terms of what the government does vis-
a-vis how it does it. Substantive policies refer to specific actions or policy
statements by the government while procedural policies refer to policies that
set the rules for policy-making.
Material and symbolic policies

Finally, one could distinguish between material policies, that provide a material or
tangible benefit to people, and symbolic policies, which simply appeal to people’s
values without any resources or actual effort behind them though they do not
deliver any tangible good or service. A very good example of this is provided in
the work of Arora (2008) who studied the problem of groundwater depletion
in the Kurukshetra belt of the state of Haryana.17 Farmers in this region had
taken to the cultivation of saathi, a variety of paddy that matures in 60 days. In
the absence of any successful effort at limiting groundwater withdrawals, the
Agriculture Department simply intervened by burning the saathi crop on a large
scale. Apart from the destruction of the paddy crop, this intervention had some
symbolic meaning for the farmers as well; namely, it was meant to give a strong
signal to them that the State would not tolerate further cultivation of this crop.
17 Kurukshetra saw a massive groundwater boom to support the Green Revolution that
took off in the mid-1960s. The stress on groundwater was further aggravated when
farmers started cultivating saathi between the rabi harvest (usually around April) and
the sowing of the kharif paddy crop that starts in July. This aggravated the stress on
groundwater and accentuated the fall in the water table.
1.8 Institutions
Institutions refer to regularised patterns of interaction by which society
organises itself: the rules, practices and conventions that structure human
interaction. The term is wide and encompassing, and could be taken to
include law, social relationships, property rights and tenurial systems, norms,
beliefs, customs and codes of conduct as much as multilateral environmental
agreements, international conventions and financing mechanisms. When
certain practices, or patterns of interaction among individuals get regularised,
we refer to it as the institutionalisation of those practices. For instance, in
each culture, there are specific practices for greeting people when they meet
and specific practices at the time of birth, death and marriage. These provide a
stability to social interaction and some measure of certainty about what needs
to be done on specific occasions. These practices are said to be institutions.
Institutions could be formal (explicit, written, often having the sanction
of the State) or informal (unwritten, implied, tacit, mutually agreed upon
and accepted). Formal institutions include law, international environmental
agreements, bye-laws and memorandum of understanding. Informal
institutions include unwritten rules, codes of conduct, beliefs and value
systems.18
This understanding of institutions may be applied in specific contexts to
denote or to refer to the principles of social organisation in that context. For
instance, when this understanding of institutions is applied in the context of
natural resources, the reference is to conventions and practices that structure
human interaction with nature. Agarwal (1999) defines institutions as sets
of formal and informal rules and norms that shape interaction of humans
with each other and with nature; without them, social interaction would not
be possible. Institutional arrangements could thus be defined as rules and
conventions, which establish people’s relationships to resources, translating
interests into claims and claims into property rights.
Similarly, in the context of access to global resources such as financial
resources, global technology, oceans or the atmosphere, institutions could be
seen as referring to the rules, regulations and mutually accepted and understood
conventions among nations that regulate access to and the use of such resources.
Institutions for the management of global commons refer to rules and regulations
18 An alternative classification might simply be in terms of statutory and non-statutory

institutions, to avoid a debate on what is ‘formal’ and ‘informal’. See the discussion on
legal pluralism in Chapter 4.
26 Public Policy
that regulate and guide access to global commons or transboundary resources

such as marine and fishery resources, transboundary rivers and atmosphere (as
in the context of climate change).19 Institutions for the management of local
common property resources refer to institutions that guide and regulate access
to such resources as village tanks, grazing lands and pastures.
Rules and norms could both be considered to be part of the umbrella concept
of institutions. While the distinction between rules and norms is a bit thin,
rules could be considered to be directions for behaviour, which can be explicit
or implicit. A norm, on the other hand, is an accepted standard or a way of
behaving or doing things that most people agree with. Rules tend, more often
than not, to be written or explicit while norms tend to be implied or unwritten.
An interesting aspect of the use of the term ‘institutions’ is that it is used
across different disciplines, though the usage and meaning tend to converge.
We briefly review these below.
Institutions in the New Institutional Economics

New Institutional Economics developed as a body of work to integrate a
theory of institutions with neo-classical economic theory. As against the old
institutional economics that emphasised the role of institutions in economic
development while failing to provide a coherent theory to this effect, the
new institutional economics emphasises the institutional context in which
economic decisions and choices are made.
In the New Institutional Economics, institutions are defined as rules of the
game in society that structure human interaction (North 1990); they could
be formal as well as informal. Institutions include law, property rights, social
relationships (social capital), values and belief systems. Institutions are seen
as a mechanism for structuring human interaction of a repeated nature. They
provide a measure of predictability to human interaction. Without institutions,
social settings would be fraught with unpredictability and uncertainty.
From a new institutionalist perspective, institutions are seen as a way of
reducing transaction costs inherent in human exchange. Transaction costs are
the costs of information, contracting and enforcement; in other words, they
are the costs of dealing with the market (North 1990). By providing a structure
and predictability to human interaction of a repeated nature, institutions
reduce the transaction costs inherent in such interaction.
19 A detailed discussion of institutions for the governance of the global commons is

reserved for Chapter 3, when we talk of the context of the globalisation of governance.
Several examples of this can be found in our day-to-day lives. For instance,
the reason one may want to enter into a contract with a taxi agency to drive
to the office daily is to avoid the costs of having to deal with the market
recurrently, in terms of searching for vehicle hire agencies (seeking information),
negotiating recurrently on the terms (contracting) and making sure that the
terms are honoured (enforcement). Likewise, we often hire contractors to build
houses for us, or to organise parties, or approach travel and tour operators
to arrange holidays for us. The basic rationale is that it saves us the hassle of
organising the many activities that each of these may comprise. In other words,
we lower transaction costs (the costs of dealing with the market) that we would
have to incur if we were to organise these activities on our own. From a new
institutionalist perspective, therefore, institutions emerge to bring stability
to human interaction of a repeated nature. From this perspective, efficient
institutions are those that keep transaction costs low.
Another good example of transaction costs is brokerage in real estate. At any
point of time, there is a market for real estate; there are buyers and sellers. However,
it can be difficult for individual buyers to look for a property on their own; this
entails enormous effort in locating potential sellers, negotiating a good price,
entering into a deal and then making sure that the deal is honoured. Potential
sellers also face the same challenges. That is why we enter into real estate dealings
through a broker. There is a market for real estate but there is a cost of dealing with
the market. This cost represents the transaction cost. And the brokerage paid to
property dealers and real estate agents is a measure of this transaction cost.
For a public resource agency or management organisation, transactions costs
are related to its coordinating function: data collection, analysis, design and
implementation of regulations, communications and conflict resolution (Hanna
1995). For individual resource users, the transaction costs of resource management
may be related to participation in group activity: the cost of work time lost to
meetings; time required to acquire information and communicate to other users;
and, direct monetary expenditures for information, travel and communication.
The relevance of this concept to the analysis of public policy is that some
policies may become less attractive once we consider the transaction costs
inherent in their implementation. For instance, policies for collection of
irrigation fees may not be justifiable if the costs incurred in their collection
are higher than the collections themselves.20 The challenge, then, is to find
20 This, in fact, turned out to be an important reason for the discontinuation of collecting
irrigation fees in states such as Bihar and Odisha (Saleth 1996).
28 Public Policy
ways of lowering or subsidising the transaction costs. Alternatively, some

policies may have to be abandoned when the transaction costs do not
justify the gains from those policies. To what extent the transaction costs of
implementing certain policies are considered in the design of public policies
is, of course, an empirical question. To what extent such costs should guide
the framing of public policies is a question of value judgement, and one that
has no clear-cut answer(s).
This literature further uses concepts of marginal analysis used in traditional
micro-economic theory to explain whether individuals will contribute to a
collective good. The other focus in this literature, thus, is on the costs and
benefits of participation and the resulting incentives for participation. It is
argued that individuals make decisions with subjective assessment of the
benefits they are likely to receive and the costs they are likely to bear over a
reasonable period of time (Brewer et al. 1999). Benefits come through improved
access to services or reduced costs of organising supplies. Organisational
costs are comprised of consensus building, organising and maintaining costs.
Consensus building is necessary to make members agree that an improvement
in the current situation is possible and desirable, and the means to achieve it
are appropriate.
In moving to a new institutional arrangement, or in forming a collective
institution, transaction costs are incurred in terms of evolving consensus,
convincing potential users of the benefits of participation, negotiating
with the bureaucracy and establishing norms, rules and rights and
obligations. Leadership, community organisers and external agents can
subsidise transaction costs of collective action (Meinzen-Dick 1996). The
involvement of a charismatic or trusted individual reduces the transaction
costs of organising and provides assurances that make people more willing
to participate in collective action (Gulati, Meinzen-Dick and Raju 1999).
In reviewing some experiences from farmer participation in Indonesia,
Thailand and the Philippines, for instance, Bruns (1993) views the
reliance on community mobilisers to organise farmers as a state subsidy
for the transaction costs of collective action. When leaders or community
mobilisers bear this role, we say that the transaction costs get subsidised and
participation in collective action institutions becomes more attractive.
There is a direct relationship between group size and transaction costs. Often
larger groups may become financially viable; however, the transaction costs of
monitoring group behaviour tend to increase as size advances (Meinzen-Dick
1996). As the size of user groups increases, the transaction costs within the
group increase but transaction costs in dealing with the bureaucracy tend to
diminish (Gulati, Meinzen-Dick and Raju 1999). Finding the appropriate
balance between the two may often be an important issue.
New institutional economists have devoted much of their intellectual
energies towards studying the relationship between institutions and economic
growth. The focus of their research and contributions is on how such factors
as institutional frameworks (law, property rights and systems of rules and
regulations) influence the pace and pattern of economic development. Property
rights and transaction costs are understood to be fundamental determinants
of economic growth (North 1990). Institutional frameworks characterised by
complexity have high transaction costs and retard economic growth.
According to North, economic change depends largely on ‘adaptive
efficiency’, a society’s effectiveness in creating institutions that are productive,
stable, fair, and broadly accepted and, importantly, flexible enough to be changed
or replaced in response to political and economic feedback. Understanding the
process of economic change accounts not only for past institutional change but
also for the diverse performance of present-day economies. These propositions
are summarised as follows (North 2005):
1. there is a continuous interaction between institutions and organisations
in the economic setting of scarcity; hence, competition is the key to
institutional change
2. competition forces organisations to continually invest in new skills and
knowledge to survive
3. the institutional framework provides the incentive structure that dictates
the kinds of skills and knowledge perceived to have the maximum pay-off
4. perceptions are derived from the mental constructs of the players
5. the economies of scope, complementarities and network externalities
of an institutional matrix make institutional change overwhelmingly
incremental and path dependent
North (2006) has argued that humans have a ubiquitous drive to make their
environment more predictable. Understanding economic welfare requires that
we cast a net much broader than purely economic change because it is a result
of changes in the quantity and quality of human beings, the stock of human
knowledge particularly applied to the human command over nature and the
institutional framework that defines the deliberate incentive structure of a
society. A complete theory of institutional change, would, therefore, integrate
theories of demographic change, stock of knowledge and institutional change.
30 Public Policy
Management of common pool resources

The New Institutional Economics explains behavioural and economic
outcomes in terms of incentives generated by institutions as ‘rules in use’. These
institutions generate incentives for individual and group behaviour, which
affect behavioural outcomes. Thus, the key to moving to an alternative set of
outcomes is to alter the incentive structure facing individuals and groups. Poor
outcomes are thus explained in terms of ‘perverse incentives’.
These premises of new institutional economics have found wide application
in the analysis of the governance and management of common pool resources,
wherein institutions as ‘rules in use’ are seen as necessary for averting the
‘tragedy of the commons (Hardin 1968).’ It is argued that rational self-seeking
individuals will try to maximise their gains from the use of a common pool
resource (Ostrom and Gardner 1993). Given the subtractability of the resource
and the difficulty of exclusion, common pool resources will be overexploited
in the absence of effective rules that regulate the use of the common pool
resource. Thus, the crucial determinant of a community’s success in managing
a resource is its ability to build institutions that internalise the externalities
and the consequences of individual actions.
This idea is expressed most clearly by Ostrom and Gardner (1993) when
they note that ‘…if exclusion is not accomplished by the design of appropriate
institutional arrangements, free-riding related to the provision of the common-
pool resource can be expected. After all, what rational actor would help to
provide the maintenance of a resource system, if non-contributors can gain
the benefits as well as contributors (Ostrom and Gardner 1993: 93).’ Further,
‘…the resource units…that one person appropriates from a common-pool
resource are not available to others. Unless institutions change the incentives
facing appropriators, one can expect substantial over appropriation (Ostrom
and Gardner 1993: 94).’
Ostrom and Gardner (1993) note, for instance, that maintaining an irrigation
system over the long term requires immediate and costly contributions of
labour or fees while benefits are hard to measure and dispersed over time and
space. Whatever allocation rules that officials and/or farmers establish for an
irrigation system, there is the temptation to cheat by taking more water than
authorised, by taking water at an unauthorised time or by contributing less
inputs than required for provision of one’s given water allocation.
Under these circumstances, the case of the provision of the collective good
is likened to the classic ‘Prisoners Dilemma’ in game theory; each user of the
common-pool resource is likely to benefit as much as the other from the provision
of the good. However, not being sure of whether the other user will cooperate by
contributing labour and/or funds, each user feels better off not contributing and
the collective good ends up being not provided, or being over appropriated. This
gives rise to what is called the ‘tragedy of the commons (Hardin 1968).’
Thus, the New Institutional Economists maintain that institutions or rules
structuring human interaction are needed to curb opportunistic behaviour.
Such behaviour may take the form of rent seeking, corruption or free riding
(Ostrom 1992). In particular, there could be a strong temptation to free ride
(Ostrom 2000; Tang 1991).
Ostrom (1992) identifies three levels of rule making. These include (1)
Operational rules that serve as a guide to day-to-day activities; (2) Collective
choice rules that regulate decision-making and conflict resolution processes;
and, (3) Constitutional rules that regulate membership and define user rights.
The emphasis on rules is used to explain the crafting of effective institutions.
Ostrom (2000, 1996, 1990) applies these design principles to the governance
of common pool resources in general, while Ostrom (1992) focuses more
specifically on crafting irrigation institutions.
Further, it is argued that rule setting should be the domain of users and not
just the government alone (Cernea and Meinzen-Dick 1994). When users of a
common-pool resource organise themselves to devise and enforce some of their
own basic rules, they tend to manage local resources more sustainably than when
rules are externally imposed on them (Ostrom 2000). It is, therefore, important
to involve farmers in crafting their own operational and collective choice rules.
Without considerable confidence about the ability to affect outcomes, farmers
will have little incentive to participate in collective efforts.
The concepts of incentives and rules are used further to explain
accountability and the appropriateness of community managed irrigation
systems over bureaucratically managed ones. Ostrom (1996) explains the poor
performance of government-managed irrigation systems in Nepal in terms
of the absence of correct incentives among bureaucrats and the staff at donor
agencies. In the same setup, farmer-managed irrigation systems were found
to perform better because they built in better accountability mechanisms. The
results in Taiwan and Korea have been found to be different largely because
the system of operations and maintenance reward engineers for drawing on
local knowledge and working directly with farmers.
Tang (1991) argues that the reliance on bureaucratic systems is less effective
than community managed irrigation systems that are more sensitive to local
conditions. In a sample of 36 irrigation systems, it was found that rule conformance
32 Public Policy
and maintenance were better in community systems than in bureaucratic

systems. Similarly, they were higher, within bureaucratic systems, in those that
had local farmers’ organisations than those that did not. Tang’s explanation of
this phenomenon is that bureaucrats do not face direct accountability to the
users and do not have direct access or proximity to local information. Besides,
bureaucratic systems tend to impose a uniform set of operational rules on different
irrigated areas regardless of specific circumstances. Community organisations,
on the other hand, are characterised by a wider diversity of operational rules;
furthermore, the collective choice rules in community organisations are more
conducive to rule formulation, rule enforcement and official accountability than
bureaucratic organisations.
Tang (1992, 1991) takes this analysis further and argues that collective
outcomes depend on the physical attributes of the resource, attributes of
the community and institutional arrangements. Together, these generate
incentives for collective action and influence the management of common
pool resources. By changing the set of rules, we change the incentive structures
facing the resource users. By doing so, we influence their ability to manage
the common pool resource. Also used widely in this body of work are game
theoretic approaches that focus on the conditions under which cooperation is
likely to take place (Bac 1998; Ostrom 2000; Seabright 1993).
A major achievement of this body of work, that grew in understanding and
recognition in the 1990s, was in its emphasis on a shift from participation in natural
resource management that became an important paradigm in natural resource
management during the 1970s and 1980s to self-governance (Narain 2004). This
literature becomes more meaningful in the broader context of the debate surrounding
Hardin’s ‘tragedy of the commons’ (Hardin 1968). While most prescriptions
advocated privatisation of natural resources or their nationalisation (for a review,
see Singh 1997) as a way of averting the tragedy, the New Institutional Economists
emphasised the distinct possibility of effective self-governance. ‘Considerable
empirical evidence from field and experimental settings holds that appropriators
frequently do constitute and enforce their own rules, and that these rules work
(Ostrom and Gardner 1993: 96).’ Through the study of community-based natural
resource systems in several parts of the world, Ostrom and her colleagues furnished
evidence that communities were indeed capable of crafting appropriate institutions
or ‘rules in use’ to avert the tragedy of the commons. Other than the state and
the market, there was an effective third possibility, that of community-based self-
governance. This became the basis for policy prescriptions to build community-
based natural resource management institutions.
Elinor Ostrom was awarded the Nobel Prize in Economics in recognition

of her contribution to studies of economic governance, i.e. application of the
tools and concepts of micro-economic analysis to the study of institutions
for governance. Throughout the 1990s, the IAD framework (the Institutional
Analysis and Development) framework dominated thinking on institutions
and provided the basis for policy prescriptions for institutional reforms
(getting the ‘incentives’ right by correcting the institutional structure). The new
institutionalist school of thought, namely, that institutions affect incentives
and outcomes, led to efforts at institutional (re)design and development, on
the assumption that institutions could be (re)designed to affect outcomes and
performance in favourable ways.
Post-institutionalism
In more recent years, however, a view has emerged that viewing institutions
as a cure for poor performance can be simplistic. These criticisms come from
a school of thought that has come to be called Post-institutionalism. Post-
institutionalism argues that the process of institutional design has limitations
because its assumptions are inadequately informed of social and political
complexities. Consequently, the real outcomes of these designs do not coincide
with designers’ anticipations.
Essentially, Post-institutionalists argue that in assuming that institutions or
‘rules in use’ can correct development failures, New Institutional Economics
neglects the socio-cultural and political embeddedness of institutions and the
relevant actors. In other words, it ignores the social and political context in
which the institutions are embedded, the wider political dynamics within the
system and the social and power relations that influence institutional outcomes
(Cleaver 2002; Mehta et al. 2001).
Simplistic design principles of common pool resources, for instance, often
overlook ecological uncertainties, social heterogeneities and unbalanced
power equations (Agrawal and Gibson 1999; Leach et al. 1999). A number
of more specific criticisms of this approach to the management of common
pool resources came to be noted. These include the limited view of human
agency, the treatment of technology as a black box and the bracketing of social
relationships of which collective action is an expression. 21
The design school assumes the instrumentality of actors, i.e., that they
‘construct’ or ‘design’ institutions to achieve specific outcomes. Pierson
21 See Narain (2004).
34 Public Policy
(2000), on the other hand, notes that in practice, actors seeking conscious
design of institutions may get more influenced by the conceptions of
‘appropriateness’ than those of ‘effectiveness’. This is because actors are
not only the ‘resource users’ but have multiple social-political identities,
which influences their knowledge-base, decisions and actions (Cleaver
2002; Robbins 2000). That is, they simultaneously belong to different
social and normative orders, each of which places some demand on them
and their behaviour. Institutions specifically designed for a particular
resource management purpose, for instance, do not remain aloof from
other social norms, markets and other institutions, and this may seriously
influence institutional outcomes (Kant and Berry 2005; Meinzen-Dick
and Pradhan 2001).
Institutional interplay
Some insights into a critique of new institutionalist approaches come from
the concept of institutional interplay.22 Institutional interplay can be described
as interaction between institutions. The concept is founded upon the premise
that institutions do not work in isolation with their environment and their
environment often includes other institutions.
King (1997) and Young (2000) define institutional interplay as the
interactions occurring between institutions operating at the same or at
different levels. Oberthür and Gehring (2003) insist that such interaction
must influence the performance of at least one of the participants to
differentiate it from mere co-existence of multiple institutions. They
argue that institutional interaction is a cause–effect relationship between
a source institution and target institution/s. Accordingly, further analysis of
an interplay case must involve identification of source institution, target
institutions and the causal pathways between the two through which these
actions (and interactions) takes place.
Institutional or legal pluralism

Sociological and anthropological approaches to institutions focus on the
regularisation of practices and codes of conduct. Giddens (1984) defines
institutions as regularised practices performed over time. Institutions are seen
22 I thank Vrishali Ramakrishna Chaudhary, doctoral candidate at TERI School of

Advanced Studies, New Delhi for bringing this concept to my notice and for directing
me to this literature.
as regularised patterns of behaviour between individuals and groups in society

(Leach, Mearns and Scoones 1999; Mearns 1995). Radcliff-Brown (1940)
defined institutions as standardised modes of behaviour.
It is interesting to note that more than one set of rules, regulations and
institutions pertaining to a field of activity may exist at the same time.
This is referred to as legal pluralism (von Benda-Beckman, 1989). Legal
(or institutional) pluralism is a term used to denote the co-existence of
more than one legal or institutional system with regard to the same set
of activities. For instance, state law may co-exist with customary law and
practices, social relationships and local systems of property rights and
tenurial systems. It is important to note that different institutions can co-
exist at the same time with regard to the same set of activities. However,
they have different bases of legitimacy. Statutory institutions draw their
legitimacy from the institutions of the state while non-statutory institutions
draw their legitimacy from systems of social sanction, customs or religion.
To characterise a situation as being one of legal pluralism requires us to
understand the different institutions, norms and practices associated with
that activity as well as their bases of legitimacy. Legal pluralism is thus
about the plurality of legality or the co-existence of different bases of
authority or sanction.
Legal pluralism provides an analytical framework for the analysis of the
interface of statutory and non-statutory institutions. A common example
is the case of such natural resources as water or fisheries where customary
rights may co-exist with statutory rights. Often this may lead to situations
of conflict and ambiguity. Likewise, state law may come into conflict with
religious laws.
Legal pluralism is pervasive and at any point of time, we can find the
existence of more than one set of laws or institutions with regard to the same
activity. We shall return to the subject of legal pluralism in greater detail in
Chapter 4 of this book, when we examine its relevance in studying processes
of policy implementation. In that chapter, we will look at how policies
engendered by the institutions of the State may get diluted as they come
into an interface with non-statutory institutions that may have greater force
in day-to-day life. One way to understand the implementation gap is to see
how statutory laws and policies interface with non-statutory institutions and
get remoulded in the course of implementation. Non-statutory institutions
can be socially embedded and hard to penetrate; this can come in the way of
implementing statutory law and public policy.
36 Public Policy
Comparing new institutionalist and legal pluralistic perspectives on

institutions
An essential point of comparison between new institutionalist and
legal pluralist perspectives on institutions is the basic point of focus. New
institutionalist perspectives focus on institutions or rules in use, and how
they generate incentives for individual and group behaviour. That is, the focus
is on an institutional framework that is understood to provide incentives for
individual and group behaviour; the premise is that by changing the institutional
framework, we can alter human behaviour. This premise is put to question from
a legal pluralistic perspective, however, where the focus is not on the institutional
framework per se, but rather on the individual who is confronted with different
sets of rules, institutions and normative practices with regard to the same activity.
From this perspective, then, to assume that we can change human behaviour
by changing a set of rules seems somewhat simplistic. In a new institutionalist
economics framework, we focus on the institutional framework per se and how
it generates incentives for individual and group behaviour, whereas in legal
pluralistic analysis, we focus on an individual or set of activities and the norms,
practices and codes of conduct surrounding that activity or individual, the
relative significance of these, as well as their relationship with each other.
In the New Institutional Economics approach to institutions, we
see institutions or rules in use as a source of incentives that guide human
behaviour. In legal pluralistic perspectives, institutions are seen as resources
that people mobilise in the pursuit of their goals and objectives. In terms of
the conceptions of human agency, the New Institutional Economics approach
works with the rational, utility maximising postulate while legal pluralistic
perspectives focus more on the concept of power (c.f. Giddens 1984), in terms
of the capacity of individuals to act.
In terms of the relevance of these conceptual lenses for the study of public
policy, New Institutional Economics has been instrumental in the prescriptive
dimensions of public policy. The assumption that institutions generate
incentives that influence outcomes has been the basis of policy prescriptions
for institutional design and reform. A legal pluralistic analysis is more relevant
while studying the descriptive dimensions of public policy, i.e., in terms of
how the processes of policy implementation are shaped. When public policy
or state law come to the ground, how do they interface with non-statutory
institutions and how does this interface shape the policy implementation
process as well as the policy outcomes ? The key differences between these two
approaches to institutional analyses are summarised in Table 1.1.
Table 1.1 Comparing new institutional economics and legal pluralistic

perspectives on institutions
New Institutional Economics Legal Pluralism

Disciplinary affiliation Economists, political scientists Legal anthropologists,
of proponents sociologists, lawyers,
development practitioners
Perspective on Rules of the game, source of The multiple nature

institutions incentives for individual and of institutions, norms
group behaviour and practices and their
relationship with each other
Focus Institutional structure as The individual as confronted

source of incentives with different normative
systems
View of human agency Rational, utility maximisation Concepts of action and
power: the capacity to act
Role of institutions Minimise transaction costs Institutions are resources
that individuals mobilise in
the pursuit of their objectives
Key concepts and Free riding, opportunistic Plurality, normative orders,
application behaviour, rent-seeking, legitimacy, forum shopping,
marginal costs and benefits, power, legality, extra-legality
transaction costs
Sustainability of resource use, Conflicts over natural

efficiency of institutions, links resources, relationship
between institutional structure between different
and economic development or institutional structures,
outcomes resolution of conflicts
source: compiled by author
Socio-technical perspectives on institutions

When we look at institutions from a socio-technical perspective, we essentially
look at the interface of technology with institutions. This approach looks at the
different ways in which institutions and technology are related. Ideas in this
stream of thought point to the social shaping or construction of technology.
Kloezen and Mollinga (1992) provide three ways in which this relationship
manifests itself: namely, that technology has social requirements for use;
technology is socially constructed; and, technology has social effects. Within
38 Public Policy
studies of water governance, for instance, this approach has been applied to,
among other subjects, situations of irrigation management transfer (Khanal
2003; Narain 2003a); analysis of market-oriented reforms in irrigation
(Kloezen 2002); the social construction of tank irrigation technologies (Shah
2003) and of canal irrigation technology (Mollinga 2003).
This approach questions the premise that technology is socially neutral or
value free; rather that it is an embodiment of societal values and belief systems.
Further, that technologies are moulded and remoulded in the course of social
interaction. It also provides an entry point for inter-disciplinary analyses
of institutions both for social scientists and engineers. For the former, it
encourages them to consider the implications of technology for the design of
institutions; for the latter, it is an invitation to consider the social implications
of their professional training.
When we examine institutions from a socio technical perspective, we may
be interested in such issues as
1. how does the design of institutions correspond to the technology ?
2. how does technology impact upon institutions? For instance, what are the
social effects of certain technological interventions?
3. how can public policy interventions aiming at the introduction of new
technologies be made more effective by ensuring a fit between the
technologies and prevailing institutions?
This approach can be used to inform our analyses of institutions in

terms of their relationship with the technology. An important reason
for institutional failure can be its misfit with the technology. Likewise,
technological failures can result when we find them not to gel with
institutions. For instance, an important reason for the limited impact of
solar cookers was that they needed sunlight for their operation, while
women did most of their cooking during early morning. Likewise, studies
have shown that one reason for the limited use of hand-pumps among
women was that women had certain perceptions about it that prevented
them for using it for their domestic purposes (Venkateshwaran 1995).
Often when government operations are computerised, they fail to meet
clients’ needs unless the institutional framework–the system of rules,
regulations and procedures–develops to respond to and to accommodate
them. Technological change can improve processes of governance, for
instance, by lowering transaction costs. This has been an important reason
behind the thrust on e-governance in the country.
1.9 Why are institutions important?

We now look at why an understanding of institutions is necessary to understand
development and governance processes in society. Once again, we notice that
the importance of institutions is recognised across different disciplines.
Institutions in the economics literature

In development economics, there were two sets of views regarding the
importance of institutions for development (Platteau 2000). The first of
these, led by the likes of Rostow, Simon Kuznets and Gerald Meier, held that
traditional systems, structures and institutions were inimical to development,
that is, in the sense pursued by modern-day developed countries and that
developing countries needed a strong, external, big thrust to push developing
economies out of this trap. This view was contested by the likes of Hirschman
and Arthur Lewis who maintained that there was a need to build on existing
developing country institutions and structures to put them on the path to
development. These would themselves evolve over a period of time as countries
moved to higher levels of development.
Apart from development economics, institutions are dealt with in the
economics literature in the old institutional economics and the new institutional
economics. The old institutional economics took as its departure point neo-
classical economics that it criticised for its lack of attention to institutions.23
It emphasised a move from the homo economicus assumption of neo-classical
economics to homo culturalis; the economy was to be seen in light of the
political structures under which it functioned (namely, from a political economy
perspective). That is, it was considered important to understand economic
behaviour as shaped by cultural and political factors, rather than by the behaviour
purely of rational, utility-maximising consumers and profit-maximising firms.
However, the old institutional economics remained somewhat a loose body of
work sustained by the contribution of such institutional thinkers as Veblen and
Ayres, and failed to integrate a coherent theory of institutions with neo-classical
economics. In essence, what we understand as the old institutional economics
remained a set of ideas and views regarding the role of institutions in economic
development developed and advocated by several scholars that could not be
brought together as a coherent body of work, or a theory.
In contrast, the distinguishing feature of the new institutional economics is
that it seeks to integrate a theory of institutions with neo-classical economic
23 For a review, see Hodgson (2004) and Platteau (2000).
40 Public Policy
theory. The New Institutional Economics is considered to be a milestone in

the evolution of institutional thought in economics; this is largely on account
of its inter-disciplinary character and its perceived triumph over the old
institutionalism that is criticised for its lack of coherent theory (Eggertsson
1990; Lewis 1989; Nabli and Nugent 1989; North 1990, 1986). The basic
tenets of the New Institutional Economics have been discussed above; namely,
that institutions emerge to minimise transaction costs (that are positive, and on
which neo-classical economics was silent) and to structure human interaction.
Institutions generate incentives for individual and collective action (North
1990). As noted earlier, some economies are able to grow much better than
others because they have institutional structures that are more conducive to
economic growth and promote economic efficiency. From this perspective,
therefore, institutions are important because they structure human interaction
and minimise the transaction costs inherent therein.
When India embarked on a phase of economic reforms in the early 1990s,
the underlying rationale was to simplify the institutional framework and to
move towards one with fewer controls, regulations and procedures. Thus, the
implicit assumption was that we would be able to move towards an institutional
framework that would be characterised by lower transaction costs. When after
almost three decades of such reforms, foreign investors still shy from India
because of the institutional framework, it is a signal that they find the cost of
doing business in India (the transaction costs) very high. These are the costs
of dealing with the market, in terms of cumbersome rules, regulations and
procedures.
Institutions as breaks on resource degradation

This view challenges the Malthusian view about the relationship between
population and resources. According to this view, population growth itself
is not a threat if institutions exist to contain the stress on natural resources.
Natural resource systems collapse because the institutional supports that
are required to keep them in place are not up to the task (Thompson 1998).
Population growth per se may not be a problem, if the right institutions are
in place. This view, therefore, challenges the notion of carrying capacity and
presents the possibility of ‘more people, less erosion (Tiffen et al. 1994).’ In
essence, this view suggests that appropriate institutions can help avert the
‘tragedy of the commons (Hardin 1968).’
According to this view, therefore, resource degradation is not so much
a problem of anthropogenic pressure, but occurs because of inappropriate
institutions. Resource systems collapse because the institutional support

systems are not up to the mark. Resource degradation occurs because
institutions are either not in place or break down. This view is consistent with
the narrative of the tragedy of the commons described above.
Institutions and the structuration of society

Sociologists like Anthony Giddens emphasise the role of institutions in
providing stability and structure to society (Giddens, 1984). Routinised
patterns of action among actors, situated in time and space, lead to the
structuration of society. Thus, institutions like marriage, family and others
provide a structure to society. These institutions provide the rules, norms and
codes of conduct that structure human interaction and provide a measure of
stability to society.
Institutions as resources: the concept of social capital

This view emphasises the importance of institutions in shaping the access
of people to resources. That is, there is a need to look beyond the physical
availability of resources to the institutions, such as property rights and
gender relations, that shape access to them. In essence, this view holds that
institutional scarcity might be more important than physical scarcity. A classic
example of this is provided by Mearns (1994) who notes that woodfuel scarcity
in Africa is not so much a question of physical availability, but the fact that
women, who collect woodfuel for homes do not have access rights to planted
trees. Therefore, according to this view, it is not the physical availability of
resources per se that is important; instead, it is the existence of institutions
that shape access to the resource in question. That is, access to resources in
society is shaped by the prevailing institutions.24 An understanding of poverty
is, therefore, incomplete without an understanding of the institutions through
which access to resources is mediated.
An important aspect of institutions that scholars have begun to pay
increasing attention to in several disciplines in recent years is social capital.
One specific way in which institutions shape access to resources is through
the concept of social capital. Though there are varying interpretations of the
term, in general, social capital attempts to describe features of populations
such as levels of civic participation, social networks and trust (McKenzie and
24 For an exposition of how water scarcity is a manifestation of institutions much more

than the physical availability of water, see Mehta (2005).
42 Public Policy
Harpham 2006); such forces are said to shape the quality and quantity of
social interactions and the social institutions that underpin society.
Putnam (2003) lists five characteristics of social capital: 1) community
networks, voluntary, state, personal networks and density; 2) civic engagement,
participation and use of civic networks; 3) local civic identity, sense of belonging,
solidarity and equality with local community members; 4) reciprocity and
norms of cooperation, a sense of obligation to help others and confidence in
return of assistance; and, 5) trust in the community.
The concept of social capital helps us understand the role that social
relationships play in accessing resources. People mobilise social relationships
in the pursuit of their livelihood objectives. Rights may be defined by the
State, but actual access to resources may be shaped by social relationships: the
social networks in which people are located. As noted by Bourdieu (1986), an
individual’s social relationships allow differential access to resources and these
relationships define social capital.
The relevance of social capital comes out very often while researching the
strategies that resource users employ in order to improve their access to resources.
For instance, while researching irrigation practices among farmers in Northwest
India, one often comes across the concept of ‘bhaichara’ – literally meaning
brotherhood (Narain 2003b). In northwest Indian irrigation systems that are
protective in nature, farmers receive water through a system known as warabandi
that allots water to farmers only on a fixed day of the week; farmers are authorised
to take water for a fixed time of the day. However, this fixed time of the day and
period for taking water is very inadequate relative to the farmers’ requirements
for water; besides, a farmer may not need water on a day when his turn falls;
conversely, he may need water on a day that his turn does not fall. Farmers, therefore,
exchange their time slots to suit their convenience. Though these time exchanges
are prohibited under law, they are quite common and are justified on the basis of
their ‘bhaichara’, or social relationships. The word bhaichara denotes a feeling of
brotherhood (bhai is the Hindi word for brother). Thus, the term symbolises a
system of mutual cooperation based on social relations. Irrigators mobilise their
social relationships in order to make their water rights more effective. The concept
of social capital thus helps us understand the difference between the concretisation
and the materialisation of rights (Gerbrandy and Hoogendam 1996); rights may
be defined by state law, but get materialised through a number of other factors, and
social capital plays an important role in the materialisation of rights.
It is interesting to note that individuals use a number of terms to describe their
social capital; ‘bhaichara’ (meaning brotherhood), ‘len-den’ (literally meaning
give and take), ‘uth-baith’ (literally referring to the practice of being together);
in northeast Indian states, the term used is ‘jur’, literally meaning cohesion, and
referring here to social cohesion.25 In studies of irrigation in Pakistan, scholars
note the role of biradari in shaping access to water (Merry 1986 a, b). In many
societies, there is a tradition of families helping each other during times of
harvest. In parts of northwest India, this system is called ‘dangosra’.26
It is important to note, however, that social capital is a complex concept and
it is difficult to consider it a single continuous variable; areas and people cannot
be simply categorised as having high or low social capital; further, some scholars
see social capital as an ecological phenomenon embedded between individuals,
groups, and between groups and abstract bodies such as the state (McKenzie and
Harpham 2006). Many of us may find the concept of social capital somewhat
reductionistic: are our relationships reducible to a form of capital, is a question
that we may often feel prompted to ask of ourselves, and of others.
Several factors are understood to erode social capital over a period of
time. For instance, the types of urbanisation that are a consequence of
globalisation may be expected to decrease social capital (McKenzie and
Harpham 2006). Migration can break the bonds between people that are
the substrate of social capital. McKenzie (2008) notes that social capital
is easy to break down but hard to generate; rapid unplanned urbanisation,
particularly undermines the development of social capital; likewise, migration
to cities undermines existing social capital as well. ‘…if countries are to take
seriously the need to avoid the health impacts of rapid urbanisation that is
the consequence of globalisation, they could start by considering how to
promote the maintenance of existing social capital for migrants, how to
develop bridging social capital between migrant groups and how to produce
urban areas with structures that allow new city migrants to be involved in
local governance; rapid urbanisation may have an impact on the level of
structural social capital in an area. In areas where migration is prevalent
there are fewer relationships networks, associations and institutions that link
people and groups together (McKenzie 2008: 373).’
The concept of social capital acquires a renewed significance in the context of
current research on adaptation to climate change. As climate change affects the
availability of water and other natural resources and causes increasing stresses
at various levels, what role will forms of social capital play in facilitating the
25 This observation was brought to my notice by Navarun Varma, and I thank him for this.
26 See, for instance, Narain (2003a).
44 Public Policy
adaptation of people to climate change? Will social capital continue to provide

a social glue that binds people together, enabling them to cope with adverse
circumstances and enabling people to tide over their tough times, or will social
capital break down under situations of extreme stress ? How can we build and
strengthen social capital? These are new issues for researchers of climate change
to address and will assume greater significance in the times to come.
From a perspective of governance and public policy, social capital is
significant in that one of its components is civic engagement. The extent
to which citizens are integrated with governance processes and formal
mechanisms of decision-making is an important constituent of their social
capital. Building platforms for dialogue between the state and civil society and
policies for decentralisation both build social capital in so far as they create a
social glue as well as provide voice to citizens and promote civic engagement.
To conclude this section of the chapter, as can be seen from the above
discussion on the role of institutions, they essentially provide some structure
and stability to human interaction. Without institutions, there would be chaos
and uncertainty. Thus, the importance of institutions could be summarised as
follows; institutions perform several important functions in society, and most
importantly, they serve to
• reduce transaction costs
• constrain, or facilitate, human interaction and the process of economic change
• shape access to resources
• provide a social glue
• mediate demographic environment relationships
• lead to the structuration of society
1.10 Organic and pragmatic institutions

In the sections above we spoke about the distinction between statutory and
non-statutory institutions. This distinction is on the basis of legitimacy,
i.e., state based legitimacy vis-a-vis non-state based legitimacy. Another
classification of institutions is on the basis of their genesis, namely, that of
organic and pragmatic institutions.
This distinction was introduced by Carl Menger (1883), an Austrian
economist, to denote the nature of origin of institutions. Organic institutions
are the product of spontaneous social processes and could be seen as
unintended results of behaviour. They are spontaneous; that is, they evolve on
their own as a result of social processes. Pragmatic institutions, on the other
hand, are created through social will and planned intervention. In order to
classify institutions as organic or pragmatic, we need to understand the source

or genesis of these institutions.
From a public policy perspective, the relationship between organic and
pragmatic institutions can be a stimulating subject of research, especially in
the wake of recent efforts at institutional development in a large number
of sectors. An important public policy challenge is in dealing with the
interface between pragmatic and organic institutions. Pragmatic institutions,
in settings where organic institutions are present, can lead to situations of
conflict or ambiguity. An important challenge for policy-makers engaged with
institutional development is how the effectiveness of pragmatic institutions
can be increased by mobilising organic institutions; how can we create
synergies between them and avoid conflicts and overlap? In essence, efforts
at building pragmatic institutions need to start with an appreciation of pre-
existing organic institutions, in order to create synergies and avoid redundancy
and duplication.27 Local organisational structures created as a result of State
policies for decentralisation are rendered ineffective or redundant when they
come into interface with pre-existing non-statutory institutions.
1.11 Organisations
The term institutions should be distinguished from organisations that could
be defined as bodies of individuals with a specified common objective (North
1990). Organisations could be political (political parties, governments,
ministries), economic (federations of industry), social (NGOs, self-help
groups) or religious (church, religious trusts) (North 2006, 1990, 1986).
Uphoff (1993) argues that institutions are complexes of norms and
behaviours that persist over time by serving collectively valued purposes while
organisations, whether institutions or not, are structures of recognised and
accepted roles. Institutionalisation is a process and organisations become
institutional over time to the extent that they enjoy status and legitimacy and
for having met their normative experiences.
The relationship between institutions and organisations is multi-faceted.
All organisations are governed by institutions, that is, a system of rules,
regulations and codes of conduct. These institutions, as noted above, could be
27 An important public policy issue, for instance, in debates on decentralised natural resource
management has to do with the co-existence of several local level organisations for a wide
variety of sectors. This can often lead to situations of conflict and ambiguity, more so when
they deal with the same natural resources. See, for instance a paper with a very interesting
title, called ‘How Many Committees Do I Belong To?’ (Vasavada et al. 2001).
46 Public Policy
written (explicit) or unwritten (implied). All organisations function within

an institutional framework; institutions generate incentives for organisations
to perform. At the same time, organisations are also capable of altering the
institutional framework. For instance, farmers and industrial lobbies could
pressurise governments to introduce new laws, rules and regulations. All
organisations are supported by institutions; without institutions, organisations
could collapse. However, institutions may exist in society regardless of
organisational structures around them.
North (1990) describes the difference between institutions and organisations
using an analogy of a football match. In a football match, a football team is an
organisation. However, the rules of the match are the institutions. When we refer
to G-8 as an organisation, we refer to it as a body with a certain membership
and objective(s). When we refer to it as an institution, we refer to the rules and
regulations surrounding its membership and practices of decision-making. The
judiciary is an institution, while the Supreme Court, High Court and nyaya
panchayats are organisations. Much of public policy analysis, as we shall see
in Chapters 3 and 4, concerns itself with this interface of organisations and
institutions; how various groups interface with the institutions of the state to bring
about policy change. The relationship between institutions and organisations also
provides a framework for the analysis of governance processes.28
1.12 Distinguishing governance from management

The term ‘governance’ is widely used, and in fact, loosely as well. As a matter of
fact, it is a ‘notoriously slippery term’ (Pierre and Peters 2000). It has become
an umbrella concept for a wide variety of phenomena, including policy
networks, public management, coordination of sectors of the economy, public-
private partnerships, corporate governance and good governance as reflected
in the objectives of global regulatory authorities such as the World Trade
Organization (WTO) and the World Bank.
We could define ‘governance’ to refer to the processes through which
control and power are exercised over resources. ‘Power’, in turn, is defined in
an absolute sense and in a relative sense (Giddens 1984). In an absolute sense,
‘power’ is defined as a capacity to act. In a relative sense, we speak of power
relationships as regularised relationships of autonomy and dependence.
The terms ‘governance’ and ‘management’ are often used interchangeably.
However, it is useful, both from an academic and practical perspective, to
28 See also Narain (2000).
make a conceptual distinction between the two. Governance refers to the

manner in which power and authority are exercised over the allocation and
use of resources. This should be distinguished from management, in terms
of the handling of day-to-day affairs of a country, or for that matter any
organisational unit. Thus, when we talk of governance, we refer more to the
exercise of control, or authority; when we talk of management, we refer more
to the handling of more routine matters or the nitty-gritty of different tasks.
Nevertheless, it is common for some writings to use these terms
interchangeably. For instance, the Government of India (2002) defines
governance as relating to the ‘management’ of all such processes that in any
society define the environment which permits and enables individuals to raise
their capability levels, on the one hand, and provide to realise their potential
and enlarge the set of available choices on the other. It envisages a predictable,
open and enlightened policy-making. The approach of the Government of
India (GOI 2002) to governance emphasises three aspects: 1) institutions
(formal and informal); (2) delivery mechanism; and, (3) legal framework.
A distinction is drawn between governance and governing by Kooiman
(1993): where governing refers to the totality of interactions in which public
and private actors participate and governance refers to theoretical conceptions
of governing. Stoker (1998) develops five propositions that help us articulate
thinking on the concept of governance. First, governance is defined as referring
to a set of institutions and actors that are drawn from but also beyond the state.
Second, governance identifies the blurring of boundaries and responsibilities
for tackling social and economic issues. Third, governance identifies the power
dependence in relationships between institutions involved in collective action.
Fourth, governance could be seen as being about autonomous self-governing
networks of actors. Fifth, it recognises the capacity to get things done which
does not rest on the power of government to command or use its authority.
These propositions emphasise the element of power relationships and the
exercise of authority inherent in the concept of governance. They also point to
the increasing role of actors outside the state, a point that becomes clearer as
we distinguish governance from government in the following section.
1.13 Distinguishing governance from government

Governance needs to be distinguished from government in that government is
only one of the institutions through which governance is exercised. There can
be alternative mechanisms for governance: State, markets, local institutions
and partnerships. Where an analysis of governance may have once focused
48 Public Policy
purely on the formal mechanisms of government within the State, it is now

considered increasingly necessary to look at actors and mechanisms beyond the
State. Thus government is no longer as central to governing processes as it once
was. The activity of governing is now shared between State-based institutions
and agents that extend beyond the formal boundaries of government (Higgins
and Lawrence 2005). Pierre (2000) notes that alongside the powerful changes
in the State’s external environment, the State itself has been restructuring in
ways which seem to deprive it of many of its traditional sources of power,
policy capacity, institutional capabilities and legitimacy.29
In much of the public and political debate, governance has come to refer to
sustaining co-ordination and coherence among a wide variety of actors with
different purposes and objectives as political actors and institutions, corporate
interests, civil society and transnational organisations. What previously were
roles of the government are now seen increasingly as more common, generic
societal problems which can be resolved by political institutions but also by
other actors; the main point here is that political institutions no longer exercise
a monopoly of the orchestration of governance. What is happening is less a
decline of the State and more a process of State transformation.
Drawing on the concept of network governance, Mathur (2008) notes that
governance is concerned with networks of relationships of three actors: State,
market and civil society. One institution depends on another; the monopoly of
public institutions in providing essential services is diluted, and the blurring of
boundaries between the public and the private sector is becoming more visible.
Governance, in fact, is now coming to be perceived to be an alternative to the
government, to control by the State (Hirst 2000). A more extreme position is
taken by Pierre (2000) who notes that governance is more palatable a concept
than government that has become a slightly pejorative concept.
Paradigm shifts in governance

Conventionally, governance has been understood to be carried out through
the State, market or local institutions. These correspond to the classification of
alternative systems of service delivery as proposed by Mollinga and Boulding
(1996): threat systems, exchange systems and integrative systems (polyarchy
and bargaining), respectively. Likewise, they could be seen as corresponding
29 For a more elaborate account of the changing emphasis from government to governance
in the Indian context, see Mathur (2008). For a perspective on the changing role of the
Indian State in the context of globalisation and liberalisation, see Nayar (2009).
to Hunter’s threefold classification of approaches to rural development:

administrative (state), economic (market) and political (local organisations)
(Hunter 1996). Finally, they correspond to Amitav Etzioni’s threefold
classification of organisations: coercive (state), utilitarian (market) and normative
(local organisations). Esman and Uphoff list a number of criteria along which
we could distinguish between governance through the State, markets and local
organisations. The three differ in terms of the principal mechanism through
which they work, who the decision-makers are, the guides for behaviour, criteria
for decisions, systems of sanctions and the mode of operation.
At the global level, there have been paradigm shifts in thinking on
governance, emphasising the relative roles of the State, markets and local
institutions. Till the 1980s, there was a predominant emphasis on the State.30
This was followed by a thinking in favour of an enhanced role of markets, in
wake of the neo-liberal agenda espoused by the World Bank in the 1980s.31
In the 1990s, emphasis shifted to crafting local institutions as the New
Institutional Economists argued that there is an alternative to the State and
the market, namely in the form of local institutions (see, for instance, Ostrom
1992, 1990).
At the turn of the millennium, it came to be argued that neither the State,
market nor local institutions is capable of delivering on their own. On the
contrary, there is a strong need for partnerships across different actors. These
partnerships could be seen as a mechanism for filling governance deficits
that none of the State, market or local institutions could address on their
own. At the global level, this has found emphasis in such developments as
the emergence of type 2 partnerships that received a thrust particularly after
the Johannesburg Summit of 2002.32 At the national level, this finds emphasis
in the creation of public-private partnerships that underline the strengths of
the state and corporate actors, increasingly stemming from a realisation that
30 As noted earlier, the reason for this perhaps was that as several countries emerged
from colonial rule in the middle of the twentieth century, the State was seen to have a
predominant role in mobilising and allocating resources and in steering development in
certain strategic areas. See also Narayanan (2008).
31 This shift emerged largely in response to the thinking that the State had certain
weaknesses in its manner of functioning and can be seen to be associated with the
espousal of the ‘good governance agenda’ by the World Bank. A detailed discussion of
this is reserved for Chapter 4 of this book. See also Mathur (2008).
32 For a review, see Narain and Nischal (2005). A more detailed discussion of the role
and potential of type 2 partnerships in the context of the globalisation of governance is
provided in Chapter 3.
50 Public Policy
current infrastructure challenges are of a magnitude that cannot be addressed

by either on its own.33
1.14 Public policy challenges and shifts in India

We conclude this chapter with a brief review and discussion of major public
policy issues, challenges and shifts in India. Undoubtedly, in the phase of
planned economic development, there have been several achievements of public
policy. Dreze and Sen (1995) note some of these that can still be considered
relevant: the elimination of substantial famine, the functioning of a multi-
party democratic system, and the emergence of a large scientific community.
However, as they aptly point out, the task identified by Pandit Jawaharlal
Nehru, India’s first Prime Minister, of the ‘ending of poverty and ignorance
and disease and inequality of opportunity’ has been limited in its achievement.
Elementary education, nutritional characteristics and status, protection from
illness, social security and consumption levels have been important areas of
public policy that have remained unaddressed or only inadequately so.
Despite a conducive environment for the formulation and implementation
of public policy, achievements on the front of social and economic development
have been below expectations ( Jalan 2006). The recent spate of farmer suicides
in the country could be seen as evidence of the failure of public policy, as much as
the backlash against land acquisitions for the development of Special Economic
Zones (SEZs). The latter, however, speaks more of the top-down, prescriptive
nature of policy, devoid of participatory processes, that are necessary for policy
proposals to find acceptance among those affected. In my own research on the
implementation of policies for land acquisition in Gurugram, I have noticed
the resentment amongst peri-urban residents against the manner in which
policies for land acquisition have been implemented, through their complete
exclusion from the policy process (Narain 2009). The growing resentment
against policies for land acquisition has been voiced and is reported widely
in the local media as well as in much of the rest of the country. As noted
above, it speaks of the top-down manner in which policies for land acquisition
have been implemented. It is a good example of policy-making processes in
developing countries that are non-inclusive and devoid of public participation.
Current research on urbanisation suggests that policies for urban expansion
have also deepened social inequalities, pushing the marginalised further into
the periphery (Narain 2014; Roy 2004).
33 For a review, see Baxi and Narain (2007).
Though the expansion of social opportunities was very much the central
theme in the vision that India’s first Prime Minister laid out for India at the
onset of her independence, this has been perhaps the most important area of
failure of public policy. In particular, adult education has been an important
area of failure; particularly with regard to states such as Bihar, Uttar Pradesh,
Arunachal Pradesh and Jammu and Kashmir where the adult literacy rate still
remains well below the national average.
The eradication of poverty and unemployment has been another
prominent area of concern (Natraj 2002). It is widely believed that the
growth of employment has not kept pace with the growth of economic
output. As a result of the globalisation- liberalisation paradigm embraced by
India in the early 1990s, economic growth has occurred, but this has not been
consistent. There are wide differences of opinion on whether the position of
the poor has improved in the post-liberalisation era. Further, Dreze and
Sen (1995) noted that in the field of basic education, India has been left
behind by countries that have not done better than India in many other
developmental achievements, such as Ghana, Indonesia, Kenya, Myanmar,
and the Philippines. This, they point out, has to do with not only the nature
of government intervention but also the nature of public discussion. In the
era post 1991, much more energy has been spent debating the pros and cons
of liberalisation than on the expansion of social opportunities that would
enable the country’s citizens to participate in the opportunities thrown up
by the liberalisation of the Indian economy.
Public policy shifts in India

There have been several important public policy shifts in India over the last
two decades. Of these perhaps the most important has been the adoption of
the globalisation-liberalisation paradigm in the early 1990s that was made
essential partly by internal economic circumstances and partly by external
pressure and multilateral persuasion. Fiscal profligacy, populism, the lack of will
to pursue policies which would through austere measures raise the domestic
savings and a propensity to indulge the consumerist class and pampering the
big farm lobby, all these factors are known to have culminated in the economic
crisis of 1991 (Natraj 2002). The case for a dirigiste regime was further diluted
by the collapse of the Soviet Union. To this added the anxiety of the West
to ensure free trade to escape from the recession affecting those countries;
besides, there was evidence in India of affluent sections advocating that the
economy should be linked with the outside world.
52 Public Policy
Among the principal actors influencing public policy shifts today in India are
the environmental movement, the rise of NGOs and the judiciary. An important
change in terms of federal relationships has been that the locus of power has
shifted towards states; in part this is due to the virtual disappearance of one-
party, strong government at the centre, that prevailed till the first five decades
of planning. Further, the institution of the State has contributed to discredit
through corruption and inefficiency. Even the initial moves towards a more
liberalised economy led to the argument that the State ought to step aside from
the activities which it was not equipped to perform. The collapse of the Soviet
Union and the dilution of State role in the wake of the neo-liberal agenda of the
1980s led to a weakening of faith in the potential role of the State. This period
also saw in India the strengthening of the movement in favour of decentralisation
through the institution of local government and a renewed faith in the potential
of Panchayati Raj Institutions. Both these trends have been articulated since the
1980s. This has been paralleled by the emergence of a growing section of people
who question 1) state initiation and sponsorship, 2) mega scale projects, and, 3)
the primacy of science and technology. The confluence of these three has lead
to the emergence of what is called by some as the Alternative Development
Paradigm or ADP, that has questioned conventional approaches to development
and public policy formulation.
Another issue with regard to the role of different actors in the policy process
in India concerns the relative roles of the three arms of the State, namely, the
judiciary, legislature and executive. In particular, there has been some interest
in the role of the Supreme Court in policy formulation; recent years have seen
a great deal of interest in the role of the judiciary in the public policy process.
The debates have centred round how this role has tended to fill a void left in
by a weak and ineffective executive arm of the government.
The common perception, in the case of air quality improvements, for
instance, generated in large part by media coverage was that improvements
happened through air quality practices that were prescribed by the Supreme
Court and not by an institution with the mandate for making environmental
policy. Research into the policy formulation processes by Narain and Bell
(2006), however, shows that the government indeed was intimately involved
in the policy process and the Supreme Court’s role was mainly to force the
government to implement previously announced policies. The policies ordered
by the court were, as a matter of fact, suggested by the EPCA, a representative
body of the central government. EPCA’s policy recommendation, in turn, built
directly on policies formulated and announced by the Delhi Government and
the Ministry of Environment and Forests. This study made a convincing case
for understanding policy processes, in that the Delhi air quality improvement
case was cited for other State governments to follow as well.
Is public policy based on studies of public policy ?

An important issue for debate and consideration is the role that studies of
public policy play in influencing policy development. The question is: Is public
policy based on policy research? Does research on public policy play a role in
the shaping of public policy?
In the Indian context, the Constitution of India and legislation make some
policy pronouncements and our five-year plans have involved some analysis
about resource allocation and investment decisions (Ganapathy 1985).
Several committees and government statements in the form of white papers,
resolutions, and other such statements are produced by the government from
time to time that include some measure of the analysis of different policies.
Nevertheless, Ganapathy (1985) notes that historically, some major policy
issues such as exchange allocation, subsidies or prohibition have hardly
been influenced by policy analysis. In fact, evidence seems to suggest that in
practice, policy analysis has been only a minor determinant of policy-making.
Other more important determinants have tended to be the context, leadership,
the politics of the bureaucracy, legislature and interest groups, as well as the
legislative and public image generated by the media about policy issues.
Mazoomdar (1996) notes the poor capacity for policy analysis to have
been an important deficiency in India’s planning machinery. Another, more
academic but relevant concern about policy analysis is that it has tended to
become a commodity, requiring specialised skill sets that only a few are trained
to use, and who influence public policy. It has become a professionalised,
technical activity that needs to be demystified. Thus, more policy analysis in
the present context may not necessarily mean better policy-making.
The question of whether public policy formulation in India is based on policy
analysis was posed to participants in the Post-Graduate Diploma Programme
in Public Policy and Management offered by the School of Public Policy and
Governance at the MDI Gurgaon. A strong sentiment expressed in response
was that policy-making is increasingly coming to be based on policy analysis,
though the experience varies across sectors and organisations. Participants
representing organisations from such sectors as agriculture and railways as
well as the Planning Commission seemed to voice more strongly that public
policy was based on policy analysis. At the same time, it is important to keep
54 Public Policy
in mind that some areas of public policy formulation have longer gestation
periods than others and that affects the room for policy-making being based
on research. In such areas as finance, for instance, pressures to act at the spur
of the moment might be more acute and that may not allow enough time for
conducting or commissioning research to influence public policy. However,
there was also a strong sentiment that more often than not, policy research
gets side-stepped by political considerations.34
It was felt among the participants that there is a strong inclination towards
the ‘prescriptive’ dimensions of public policy, than the ‘process’ or descriptive
dimensions. There is a leaning in favour of analysis ‘for’ policy, rather than
analysis ‘of ’ policy. Analysis ‘of ’ policy seems to have been much more difficult,
not only methodologically, since it requires getting behind the scenes to
unpack underlying processes of policy formulation and implementation but
also because it may not always be politically expedient, since it involves many
stakeholders. It requires stronger political will to engage with segments of
people that may be critical of government policies. Nevertheless, over time,
one could notice a shift in favour of analysis ‘of ’ policy.
It also seemed from the responses that there appears to be a greater concern
with outlays, outputs and outcomes (in that order); this could, indeed, be cited as
an important reason for the limited impact of public policy. Outlays and outputs
are easier to map and monitor since they are tangible in the sense of being visible
physically. Policy outcomes are much more difficult to assess, since, among other
things, they have longer gestation periods. Besides, gauging policy outcomes
requires interacting with diverse stakeholders that may be difficult or politically
not expedient, with inbuilt risks of exposing failures and vulnerabilities.
An important issue raised among some of the participants was that in most
government departments, there is a mechanism in place to capitalise on policy
research, but it is not used effectively. To that extent, there is need for a greater
interface between researchers and policy-makers, both at the individual level
and the institutional level. This requires some forum where policy-makers and
researchers can interact with each other on an institutionalised basis. In other
words, there is need to institutionalise the relationship between studies of
public policy and policy-making.
34 See also the discussion on incrementalism in Chapter 3, where we note that instead of
basing policy choices on a systematic study of the available alternatives, policy-makers
may simply choose options that are marginally different from the existing ones because
it is politically expedient to do so.
1.15 Conclusion
In this chapter, we have reviewed some basic concepts that students of
public policy need to be familiar with. We started the chapter by discussing the
rationale for the analysis of public policy; in particular, the need for a deeper
understanding of public policy processes. We examined the distinction between
the process and prescriptive dimensions of public policy, while highlighting that
both are relevant and essential. We also reviewed the various types of policy
studies that scholars of public policy may engage with. An understanding of the
various types of policy studies helps students of public policy define the scope
of their work more clearly and also serves to make them more sympathetic to
different types of policy studies that may be carried out.
We reviewed the paradigm shifts in thinking on appropriate forms of
governance and the shifting emphasis from State to markets, local institutions
and partnerships. These shifts provide a context for the analysis of public policy
processes. In the latter part of the chapter, we reviewed some important shifts
within the public policy context of India, as well as the drivers of those shifts
in terms of the major actors that are influencing policy development. Finally,
we examined an important question of whether policy formation is indeed
based on policy analysis. This chapter has thus provided us with a foundation
for the study of public policy. In subsequent chapters, we pay more attention
to models, tools and concepts that help us theorise about and articulate the
policy process.
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1

What is public policy?

Personally, this book is a reflection of my own journey and engagement

1.1 What is policy?

The term ‘policy’ is indeed a confusing one. As noted by Hogwood and

Finally, policy could refer to specific decisions of a government encapsulated

1.2 What is public policy?

A consensus definition of public policy: what makes policy ‘public’?

Public policy gets three distinctive characteristics from the government

pressure compel governments to make certain policy choices, curtailing their

various state level programmes.4 The rationale behind mainstreaming initiatives

1.3 Why study public policy?

‘commanding heights’ in the Indian economy. Further, several of the ideals

Scapegoat and magic charm

governments draw attention to new policies that were launched, or new

Affect several actors

1.4 Understanding public policy processes

1.5 The policy sciences

Knowledge in the policy process

Research), such as IWMI (The International Water Management

Knowledge of the policy process

major potential contribution of social scientists lies in challenging the deep

Hogwood and Gunn (1984) emphasise that the distinction between

11 For an interesting discussion of how economists and anthropologists approach policy

1.6 Types of studies of public policy

Studies of policy content

to regulate groundwater extraction. That is, even if the model groundwater

Policy monitoring and evaluation

constraints to policy implementation, and hence give direction to improving

Information for policy

of policy processes, policy impacts and evaluation studies. Each of these

1.7 Types of policies

Substantive and procedural policies

Material and symbolic policies

18 An alternative classification might simply be in terms of statutory and non-statutory

that regulate and guide access to global commons or transboundary resources

Institutions in the New Institutional Economics

19 A detailed discussion of institutions for the governance of the global commons is

ways of lowering or subsidising the transaction costs. Alternatively, some

Management of common pool resources

and maintenance were better in community systems than in bureaucratic

Elinor Ostrom was awarded the Nobel Prize in Economics in recognition

21 See Narain (2004).

Institutional or legal pluralism

22 I thank Vrishali Ramakrishna Chaudhary, doctoral candidate at TERI School of

as regularised patterns of behaviour between individuals and groups in society

Comparing new institutionalist and legal pluralistic perspectives on

Table 1.1 Comparing new institutional economics and legal pluralistic

New Institutional Economics Legal Pluralism

Perspective on Rules of the game, source of The multiple nature

Focus Institutional structure as The individual as confronted

Sustainability of resource use, Conflicts over natural

source: compiled by author

Socio-technical perspectives on institutions

This approach can be used to inform our analyses of institutions in

1.9 Why are institutions important?

Institutions in the economics literature

23 For a review, see Hodgson (2004) and Platteau (2000).

theory. The New Institutional Economics is considered to be a milestone in