Home / Opinion / Views /  India’s policy impact challenge: Why it exists and how to meet it

In the history of India, there have been critical junctures when the policy terrain saw significant reforms. The past few years make up a transformative period due to a series of major policy initiatives. The policies have spanned various socio-economic and legislative areas, some of the highlights being the implementation of Goods and Services Tax (GST), Jan Dhan-Aadhaar-Mobile (JAM) trinity and Make in India initiative, among others. The country witnessed reforms aimed at invigorating entrepreneurship, streamlining regulatory processes and even re-imagining the education system (through the National Education Policy). These initiatives have been driven by certain overarching goals, such as self-sufficiency, inclusivity in growth and maximizing good governance. A range of measures has led to landmark achievements on various economic parameters. While inclusivity has been a key feature of these policy reforms, there still is scope for their benefits to reach far and wide across various segments of the Indian population. According to the State of Inequality Report, 2022, earnings of the top 10% are approximately equal to those of the bottom 64%. India’s efforts toward creating shared prosperity must take into account the importance of having an efficient policy implementation architecture. It is important to dig deeper into this question: Why do some reforms have a greater impact than others? Our discussion around an answer must keep policy implementation a central point. While it takes time for reforms to fully manifest their effects, their impact in the future depends on policy implementation in the present. A policy rehaul is complete only once it reflects in the form of an improvement in implementation as well.

In order to correctly assess the policy challenges that India faces, especially at the implementation level, one must attain a thorough understanding of our past policy choices that play a significant role in explaining the emergence of today’s India. In the post-independence period, India pursued economic policies that limited the operation of private businesses to the domestic sphere, regulated labour markets, and nationalized banks. At the same time, there was a focus on social policies, the “green revolution" in agriculture, and investments in capital-intensive industries. After the 1991 reforms, the economy opened its doors to the global market and witnessed a removal of various other barriers on product and service markets. However, a singular focus on opening up markets provides incentives for growth and productivity enhancement for those able to compete, while it might discourage those not able, due to a lack of investment in enhancing their capabilities. The period post-2014 has seen a major push in the spheres of skill enhancement and ease of doing business, along with a further opening up of domestic markets. A policy implemented in one period has a continuing effect that shapes the terrain for the next phase of reforms. Policy reforms shape outcomes for firms and individuals over time. The implementation of today’s reforms will shape millions of trajectories of businesses as well as people, and of society at large.

Effective execution of policies requires the effective engagement of all stakeholders involved in bringing the measures to bear on the ground. It is an oft-repeated statement that India’s policy impact challenge can be better addressed through greater coordination and coherence across the multiple tiers of government machinery. However, the imperative of getting into the nitty-gritty of this and probing ways to make the engagement of all stakeholders in charge of policy execution work, cannot be overstated.

For India’s ambitions to come to fruition, we must design a reform agenda with a clear focus on the implementation architecture, especially the interplay of the Union government and states. There must be a greater focus on how policies play out at the ground level, for which the dialogue between the Centre and states, and even within and among states, warrants attention. Additionally, as highlighted by the Competitiveness Roadmap @100, a collaborative endeavour between the EAC-PM and The Institute for Competitiveness, the operational drivers of a policy may fall within the ambit of one part of the government, but its impact on the government’s larger goals (such as job creation) ultimately depends on complementary policy actions undertaken by other parts as well. A dialogue on improving policy implementation must use an all-of-government approach.

India is bringing policy implementation to the fore, as can be seen in the recently announced National Logistics Policy. Along with the launch of this policy, significant initiatives were launched, including the Unified Logistics Interface Platform (ULIP), Ease of Logistics Services platform, an e-handbook on warehousing and training courses on PM GatiShakti, to ensure that the action agenda for its on-ground implementation reaches people. This highlights how the significance of on-ground policy implementation has gained emphasis. Well informed and enabled implementation across different parts of the government will translate well-meant policies into real benefits for the country even more.

Amit Kapoor & Bibek Debroy are, respectively, chair, Institute for Competitiveness, India and lecturer at Stanford University; and chairman, Economic Advisory Council to the Prime Minister

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