Institutional Dynamics of Governance Reform in India (1991–2016)

Publication Date01 March 2017
AuthorAmitabh Rajan
Indian Journal of Public
63(1) 41–62
© 2017 IIPA
SAGE Publications
DOI: 10.1177/0019556116689765
1 Former Home Secretary, Government of Maharashtra, India.
Corresponding author:
Amitabh Rajan, Former Home Secretary, Government of Maharashtra, India.
Institutional Dynamics
of Governance Reform in
India (1991–2016)
Amitabh Rajan1
Loss of governance reform efficacy is an identified entrenched institutional
problem in systems. Reform, anywhere, is a sticky material because holders of
powers and their cronies have rarely shown altruistic intentions of relaxing their
profiteering grips over resources. Instead, they have done their best to retain,
defend and preach status quo; howsoever ossified or inhuman in form. Under
these circumstances, governance reforms surface under fiscal compulsions, public
order implications and/or interventions from the judiciary. This article takes up the
case of India, a country where power holding, too, has been a compulsive exercise
of mediation on such matters. To examine efficacy, it goes into the institutional
dynamics of textual politics in course correction and process implementation. The
case is built up on the strength of evidence from economic reforms, administrative
reforms, police reforms, devolution strategies and corporate governance reforms
during the past 25 years. The article highlights discourse ethics and concludes with
a heuristic intent.
Neoliberalism, governance, reforms, institutional dynamics, India
Action was taken on the following ten major reform initiatives in India during
the past 25 years: (i) Economic Reforms, 1991; (ii) 73rd and 74th Constitutional
Amendment Acts, 1992; (iii) Electricity Act, 2003; (iv) Malimath Committee
Report on Criminal Justice, 2003; (v) Right to Information (RTI) Act, 2005; (vi)
Supreme Court Directives on Police Reforms, 2006; (vii) Right to Public Service
Delivery Acts; (viii) Companies Act, 2013; (ix) 14th Finance Commission Report,
2014 and (x) Constitutional Amendment on Goods and Services Tax (GST), 2016.
42 Indian Journal of Public Administration 63(1)
To what extent are the outcomes satisfactory? What support have decision-
making and implementing institutions given to the reform proposals in terms of
public interest analytics, just procedures, systems integration and change manage-
ment? To what extent has sovereign will asserted on the loss of governance reform
efficacy? Let us examine sequentially to understand the ethical dynamics of insti-
tutional power in a country that still has a modicum of civic and social cooperation
left towards the norms of constitutional law and democracy.
Economic Reforms 1991
There is a little doubt that economic reforms of India 1991 got triggered as a
sequel to macroeconomic crisis of a type described in the budget speech of its
finance minister (dated 24 July 1991):
The origins of the problem are directly traceable to large and persistent macroeconomic
imbalances and low productivity of investment, in particular the poor rates of return on
past investments...The increasing difference between the income and expenditure of
the Government has led to a widening of the gap between the income and expenditure
of the economy as a whole. This is reected in growing current account decits in the
balance of payments.1
In precise terms, India’s foreign exchange reserves in June 1991 were barely
sufficient for 2 weeks of imports, and there was an imminent threat of default on
external payments. Lender of last resort, under these circumstances, was the
International Monetary Fund (IMF), which had an aggressive set of neoliberal
conditionality clauses under its structural adjustment and stabilisation programmes.
Loans were negotiated and subsequently paid off, but the executive wing of the
government in power also got a space for crafting a major policy shift towards (i)
fiscal discipline, (ii) removal of interest rate distortions, (iii) transparent regulation
of capital markets, (iv) deregulation of industry and trade, (v) rationalisation of
exchange rates and (vi) foreign investment promotion. Ideological paradigm
of the entire reform set was pro-market, and the policy thrust guided by the triple
missions of liberalisation, privatisation and globalisation. India became a member
of the WTO in 1995.
How did the legislature take up the whole thing? It passed the Budgets put up
before it after voicing concerns on human development index, poverty, joblessness
and inequalities of several kinds. Amidst all concerns was a dominant liberal faith
nurtured by the improved statistics on GDP, tax collection, investment and foreign
exchange reserve on the one hand, and a spurt of entrepreneurial spirits on the
other hand. Welfare also trickled into the legislature, piece by piece, as statutory
examples of rights-based moralities—right to education, right to information,
right to public service delivery and rural employment guarantee. Simultaneously,
however, cases of criminal misconduct also came up in the houses of legislature,
illustrating sufficiently that the State in India cannot leave the market as free as it
wants and that crony capitalism is a definite social anxiety to worry about.

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