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WELFARE ECONOMICS PROJECT REPORT

ON

A SUITABLE PUBLIC POLICY ISABSOLUTELY NECESSARY FOR USHERING

IN JUST SOCIAL ORDER

SUBMITTED TO: SUBMITTED BY: ROLL NO.

PROF.


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INDIAN INSTITUTE OF PLANNING & MANAGEMENTNEW DELHI

WELFARE ECONOMICS

Welfare economicsis a branch of rainbows that uses microeconomic

techniques to simultaneously determine allocative efficiency within an

economy and the income distribution associated with it. It analyzes social

welfare, however measured, in terms of economic activities of the individuals

that comprise the theoretical society considered. As such, individuals, with

associated economic activities, are the basic units for aggregating to social

welfare, whether of a group, a community, or a society, and there is no "social

welfare" apart from the "welfare" associated with its individual units. Here

welfare in its most general sense refers to well being.

Welfare economics typically takes individual preferences as given and

stipulates a welfare improvement in Pareto efficiency terms from social state

A to social state B if at least one person prefers B and no one else opposes it.

There is no requirement of a unique quantitative measure of the welfare

improvement implied by this. Another aspect of welfare treats income/goods

distribution, including equality, as a further dimension of welfare.

Social Welfare refers to the overall welfare of society. With sufficiently strong

assumptions, it can be specified as the summation of the welfare of all the

individuals in the society. Welfare may be measured either cardinally in terms

of "utils" or dollars, or measured ordinally in terms of Pareto efficiency. The

cardinal method in "utils" is seldom used in pure theory today because of

aggregation problems that make the meaning of the method doubtful, except

on widely challenged underlying assumptions. In applied welfare economics,

such as in cost-benefit analysis, money-value estimates are often used,

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http://en.wikipedia.org/wiki/Pareto_efficiencyhttp://en.wikipedia.org/wiki/Distribution_(economics)http://en.wikipedia.org/wiki/Economic_inequalityhttp://en.wikipedia.org/wiki/Distribution_(economics)http://en.wikipedia.org/wiki/Economic_inequalityhttp://en.wikipedia.org/wiki/Pareto_efficiency


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particularly where income-distribution effects are factored into the analysis or

seem unlikely to undercut the analysis.

It is conventional to distinguish two sides to welfare economics: economic

efficiency and income distribution. Economic efficiency is largely positive and

deals with the "size of the pie". Income distribution is much more normative

and deals with dividing up the pie

Other classifying terms or problems in welfare economics include

externalities, equity, justice, inequality and alturism.

TWO APPROACHES :-

1. EFFICIENCY

2. INCOME DISTRIBUTION

Situations are considered to have distributive efficiency when goods are

distributed to the people who can gain the most utility from them.

Many economists use Pareto efficiency as their efficiency goal. According to

this measure of social welfare, a situation is optimal only if no individuals can

be made better off without making someone else worse off.

There are many combinations of consumer utility, production mixes, and

factor input combinations consistent with efficiency. In fact, there are an

infinity of consumer and production equilibria that yield Pareto optimal results.

There are as many optima as there are points on the aggregate production

possibilities frontier. Hence, Pareto efficiency is a necessary, but not a

sufficient condition for social welfare. Each Pareto optimum corresponds to a

different income distribution in the economy. Some may involve great

inequalities of income. So how do we decide which Pareto optimum is most

desirable? This decision is made, either tacitly or overtly, when we specify the

social welfare function. This function embodies value judgements about

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interpersonal utility. The social welfare function is a way of mathematically

stating the relative importance of the individuals that comprise society

SOCIAL ORDER

A "social order" is a relatively stable system of institutions, pattern of

interactions and customs, capable of continually reproducing at least

those conditions essential for its own existence. The concept refers to

all those facets of society which remain relatively constant over time.

These conditions could include both property, exchange and power

relations, but also cultural forms, communication relations and

ideological systems of values.

The principle of dependence is one that has a huge role on social order

as a whole. It states that the more dependent a person is on a group,

the more likely they are to conform to group "norms". This means that

if a group means a lot to a person, they will be more likely to do what it

is that the group wants them to.

Social order is a concept used in sociology, history and other social

sciences. It refers to a set of linked social structures, social institutions

and social practices which conserve, maintain and enforce "normal"

ways of relating and behaving.

Examples:-

An example of this would be a person attempting to join a sewing

team. If belonging to a group like this is very important to someone,

they will be more likely to conform to the groups norms such as sellingout every day, attending sewing circles, committing completely to the

dirtiness and crapping on their skills outside of mandatory sessions or

meetings in order to gain the groups trust and respect. In this case, the

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status that the group gives a person is more important than what they

lose by descending to the group's metroness.

One of the main principles of social order is the principle of visibility.

The principle of visibility refers to the extent that the behavior of group

members can be observed by other members of the group. The higher

the observation rate of a group is, the more likely the members of that

group will follow the groups norms.

A prime example of a society with a high level of observability is Japan.

Most offices are close quartered, open office spaces without any

partitions. The employees work in full sight and hearing of their

supervisors. This high level of visibility encourages workers to stay

constantly on task lest they suffer reproaches from their supervisors.

Another key factor concerning social order is the principle of

extensiveness. This states the more norms and the more important the

norms are to a society, the better these norms tie and hold together

the group as a whole.

A good example of this is smaller religions based around the U.S., such

as the Amish. Many Amish live together in communities and because

they share the same religion and values, it is easier for them to

succeed in upholding their religion and views because their way of life

is the norm for their community.

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A SUITABLE PUBLIC POLICY IS ABSOLUTELY NECESSARY

FOR USHERING IN JUST SOCIAL ORDER

The issue of social order, how and why it is that social orders exists at

all, is historically central to sociology. Thomas Hobbes is recognized as

the first to clearly formulate the problem, to answer which he

conceived the notion of a social contract. Social theorists (such as Karl

Marx, Emile Durkheim, Talcott Parsons, and Jrgen Habermas) have

proposed different explanations for what a social order consists of, and

what its real basis is. For Marx, it is the relations of production or

economic structure which is the basis of a social order. For Durkheim,

it is a set of shared social norms. For Parsons, it is a set of social

institutions determining moral behaviour. For Habermas, it is all of

these, as well as communicative action.

In every society people belong to groups, such as businesses, families,

churches, athletic groups, or neighborhoods. The structure inside of

these groups mirrors that of the whole society. There are networks and

ties between groups as well as inside of each of the groups that create

social order.

Some people belong to more than one group, which sometimes causes

conflict. The individual may encounter a situation in which he or she

has to choose one group over the another. Many who have studied

these groups believe that it is necessary to have ties between groups

to strengthen the society as a whole and to promote pride within each

group. Others believe that it is best to have stronger ties within a

group so that social norms and values are reinforced.

"Status groups" can be based on a person's characteristics such as

race, ethnicity, sexual orientation, religion, region, occupation, physical

attractiveness, gender, education, age, etc. They are defined as "a

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subculture having a rather specific rank (or status) within the

stratification system. That is, societies tend to include a hierarchy of

status groups, some enjoying high ranking and some low." One

example of this hierarchy is the prestige of a school teacher comparedto that of a garbage man.

Order does not necessarily need to be controlled by government.

Individuals pursuing self-interest can make predictable systems. These

systems, being planned by more than one person, may actually be

preferable to those planned by a single person. This means that

predictability may be possible to achieve without a central

governments control. These stable expectations do not necessarilylead to individuals behaving in ways that are considered beneficial to

group welfare. Considering this, Thomas Schelling studied

neighborhood racial segregation. (citation needed) His findings suggest

that interaction can produce predictability, but it does not always

increase social order. In his researching he found that "when all

individuals pursue their own preferences, the outcome is segregation

rather than integration." stated in "Theories of Social Order" by Hector

and Thorne. The unregulated interaction of rational selfishness

produces an unwanted outcome.

Social honor can also be referred to as social status. It is considered

the distribution of prestige or "the approval, respect, admiration, or

deference a person or group is able to command by virtue of his or its

imputed qualities or performances.". The case most often is that

people associate social honor with the place a person occupies with

material systems of wealth and power. Since most of society finds

wealth and power desirable they respect or envy people that have

more than they do. When Social Honor is referred to as Social Status it

deals with the rank of a person within the stratification system. Status

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can be Achieved, which is when a persons position is gained on the

basis of merit or in other words by achievement and hard work. Status

can also be ascribed, which is when a persons position is assigned to

individuals or groups without regard for merit but because of certaintraits beyond their control, such as race, sex, or parental social

standing.

An example of Ascribed status would be heiress to the Hilton dynasty

Paris Hilton. An example of Achieved Status would be Oprah Winfrey

and her empire.

A certain lifestyle usually distinguishes the members of different status

groups. For example, around the holidays a Jewish family may

celebrate Hanukkah while a Christian family may celebrate Christmas.

Other cultural differences such as language and cultural rituals identify

members of different status groups.

Inside of a status group there are more, smaller groups. For instance,

one can belong to a status group based on one's race and a social

class based on financial ranking. This may cause strife for the

individual in this situation when he or she feels they must choose to

side with either their status group or their social class. For example, a

wealthy African American man who feels he has to take a side on an

issue on which the opinions of poor African Americans and wealthy

white Americans are divided, and finds his class and status group

opposed.

Values can be defined as "internal criteria for evaluation". Values are

also split into two categories, there are individual values, which

pertains to something that we think has worth and then there are

social values. Social values are our desires modified according to

ethical principles or according to the group we associate with: friends,

family, or co-workers.

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Norms tell us what people ought to do in a given situation. Unlike

values, norms are enforced externally - or outside of oneself. A society

as a whole determines norms, and they can be passed down from

generation to generation.

An exception to the idea of values and norms as social order-keepers is

deviant behavior. Not everyone in a society abides by a set of personal

values or the group's norms all the time. For this reason it is necessary

for a society to have authority.

In societies, those who hold positions of power and authority are

among the upper class. Norms differ for each class because the

members of each class were raised differently and hold different sets

of values. Tension can form, therefore, between the upper class and

lower class when laws and rules are put in place that do not conform to

the values of both classes.

There are currently two different theories that explain and attempt to

account for social order. The first theory is "order results from a large

number of independent decisions to transfer individual rights and

liberties to a coercive state in return for its guarantee of security for

persons and their property, as well as its establishment of mechanisms

to resolve disputes." as stated in Theories of Social Order by Hechtor

and Horne.

The next theory is that "the ultimate source of social order as residing

not in external controls but in a concordance of specific values and

norms that individuals somehow have managed to internalize." also

stated in Theories of Social Order by Hechtor and Horne. Both the

arguments for how social order is attained are very different. One

argues that it is achieved through outside influence and control and

the other argues that it can only be attained when the individual will

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willingly follow norms and values that they have grown accustomed to

and internalized.

A policy is a deliberate plan of action to guide decisions and achieve

rational outcome(s). The term may apply to government, private sector

organizations and groups, and individuals. Presidential executive

orders, corporate privacy policies, and parliamentary rules of order are

all examples of policy. Policy differs from rules or law. While law can

compel or prohibit behaviors (e.g. a law requiring the payment of taxes

on income) policy merely guides actions toward those that are most

likely to achieve a desired outcome.

Policy or policy study may also refer to the process of making

important organizational decisions, including the identification of

different alternatives such as programs or spending priorities, and

choosing among them on the basis of the impact they will have.

Policies can be understood as political, management, financial, and

administrative mechanisms arranged to reach explicit goals.

Definitions of policy and research done into the area of policy is

frequently performed from the perspective of policies created by

national governments, or public policy. Several definitions and key

characteristics of policy have been identified within the framework of

government policy. While many of these are broadly applicable to

other organizations such as private companies or non-profit

organizations, the government-focused origin of this work should be

kept in mind.

The goals of policy may vary widely according to the organization and

the context in which they are made. Broadly, policies are typically

instituted in order to avoid some negative effect that has been noticed

in the organization, or to seek some positive benefit.

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Corporate purchasing policies provide an example of how organizations

attempt to avoid negative effects. Many large companies have policies

that all purchases above a certain value must be performed through a

purchasing process. By requiring this standard purchasing processthrough policy, the organization can limit waste and standardize the

way purchasing is done.

The State of California provides an example of benefit-seeking policy.

In recent years, the numbers of hybrid vehicles in California has

increased dramatically, in part because of policy changes that provide

USD $1,500 in tax credits as well as the use of high-occupancy vehicle

lanes to hybrid owners. In this case, the organization (state and/orfederal government) created a positive effect (increased ownership

and use of hybrid cars) through policy (tax breaks, benefits).

Policies frequently have side effects or unintended consequences.

Because the environments that policies seek to influence or

manipulate are typically complex adaptive systems (e.g. governments,

societies, large companies), making a policy change can have

counterintuitive results.

For example, a government may make a policy decision to raise taxes,

in hopes of increasing overall tax revenue. Depending on the size of

the tax increase, this may have the overall effect of reducing tax

revenue by causing capital flight or by creating a rate so high, citizens

are disincentivized to earn the money that is taxed.

The policy formulation process typically includes an attempt to assess

as many areas of potential policy impact as possible, to lessen the

chances that a given policy will have unexpected or unintended

consequences. Because of the nature of some complex adaptive

systems such as societies and governments, it may not be possible to

assess all possible impacts of a given policy.

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Policies are typically promulgated through official written documents.

Such documents have standard formats that are particular to the

organization issuing the policy.

While such formats differ in terms of their form, policy

documents usually contain certain standard components

including:

A purpose statement, outlining why the organization is issuing the

policy, and what its desired effect is.

A applicability and scope statement, describing who the policyaffects and which actions are impacted by the policy. The

applicability and scope may expressly exclude certain people,

organizations, or actions from the policy requirements

An effective date which indicates when the policy comes into force.

Retroactive policies are rare, but can be found.

A responsibilities section, indicating which parties and organizations

are responsible for carrying out individual policy statements. These

responsibilities may include identification of oversight and/or

governance structures.

Policy statements indicating the specific regulations, requirements,

or modifications to organizational behavior that the policy is

creating.

Some policies may contain additional sections, including

Background indicating any reasons and history that led to the

creation of the policy, which may be listed as motivating factors

Definitions, providing clear and unambiguous definitions for terms

and concepts found in the policy document.

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Public policy or order public is the body of fundamental principles that

underpin the operation of legal systems in each state. This addresses

the social, moral and economic values that tie a society together:

values that vary in different cultures and change over time. Lawregulates behaviour either to reinforce existing social expectations or

to encourage constructive change, and laws are most likely to be

effective when they are consistent with the most generally accepted

societal norms and reflect the collective morality of society. In

performing this function, Cappalli has suggested that the critical values

of any legal system include impartiality, neutrality, certainty, equality,

openness, flexibility, and growth. This assumes that the true purpose

of dispute resolution systems is to discourage self-help and the

violence that often accompanies it, i.e. citizens have to be encouraged

to use the court system. The more certain and predictable the

outcome, the less incentive there is to go to court where a loss is

probable. But certainty must be subject to the needs of individual

justice, hence the development of equity.

A judge should always consider the underlying policies to determine

whether a rule should be applied to a specific factual dispute. If laws

are applied too strictly and mechanically, the law cannot keep pace

with social innovation.

Similarly, if there is an entirely new situation, a return to the policies

forming the basic assumptions underpinning potentially relevant rules

of law, identifies the best guidelines for resolving the immediate

dispute. Over time, these policies evolve, becoming more clearly

defined and more deeply embedded in the legal system.

The discipline of institutional economics has gained increasing

prominence in recent years because standard economic explanations

often fail to come to grips with major contemporary policy issues such

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as economic reform in affluent but dysfunctional economies, the

transformation of the failed socialist command economies and the

governance problems of the new industrial economies. Institutional

economists point out that rule systems matter greatly in explainingthese problems and that institutional innovation is central to finding

sustained solutions.

Institutions must underpin increasingly complex webs of human

interaction because interaction and coordination depend on tenuous

links of trust.

In recent decades it has been more widely realized that human

knowledge is limited, always incomplete and fallible, and that social

action often produces unforeseen and deleterious side-effects. This

insight has, for example, influenced environmental policies. Thus, it is

now widely accepted that tangling with nature may produce

consequences that no one foresaw.

In economic and social affairs, similar concerns have not yet had much

impact. But a growing number of economists have turned away from

the neoclassical paradigm, which is based on the assumption of

perfect knowledge and which inspires confident intervention. Instead,

they have developed Austrian, public choice, evolutionary or

institutional paradigms of economics, all of which caution about the

side-effects of resolute, but ignorant social engineering.

Even today, many people think of "social problems" as involving poor

and powerless individuals in society. Research in Social Problems and

Public Policy seeks to improve the balance by adding a focus on

important and powerful institutions. Such organizations often play key

roles in managing, and mismanaging, the ways in which some of

today's most important social problems are handled by the public

policy system.

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As India completes 60 years of Independence, we can look back with a

considerable degree of pride at the shaping of a democratic political

system in the country. One of the major achievements of independent

India is the parliamentary democratic system that was instituted alongwith a Republican Constitution. The Constitution provided the scope for

peoples participation and a voice in politics, which reflects the

aspirations of the Indian people in their struggle for national

independence.

Despite the narrow basis and the class constraints on the democratic

system in a developing capitalist society, it is creditable that

parliamentary democracy has retained its vitality over the years.Unlike the experience of many other newly independent countries, the

prospects for democracy in India have not shrunk but grown since

Independence. This is mainly due to the people and the popular

struggles and democratic movements. The participation of ordinary

people in the elections at all levels is marked by sustained enthusiasm.

This is particularly so in the States where the Left has strong influence.

However, the political system cannot be said to have transformed thelives of people by securing their livelihood, by abolition of poverty

and the structures of exploitation, and providing equity with economic

growth. The Constitution of India, in its Directive Principles, directs the

state to promote the welfare of the people by securing a social order

in which justice, social, economic and political, shall inform all the

institutions of the national life. It calls for the state to strive to

minimise the inequalities in income and to see that the control of the

material resources of the community are so distributed as best to

subserve the common good and to ensure that the operation of the

economic system does not result in the concentration of wealth and

means of production to common detriment.

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Six decades later, there is no doubt that the working of the state and

policy making are clearly contrary to these goals set out in the

Constitution. Most of the conflicts and crises in our system can be

traced to this fundamental contradiction: political democracycoexisting with concentration of wealth and economic inequalities.

Nehrus vision

In the early years after Independence, the vision set out in the

Constitution was articulated by Prime Minister Jawaharlal Nehru whose

contribution to the building of a modern, secular country was a pivotal

one, even though the Congress party today pays scant heed to his

legacy. Nehru set out the test for public policy: The first thing is the

good of the Indian masses and everything will be judged by that

standard. How do the millions of India benefit or prosper? that is the

real test of any policy, economic, political or otherwise, that we may

put forward.

But the Nehruvian vision, however sincere and relevant, foundered on

the class realities of developing capitalism without a democratic social

transformation. The failure to implement land reforms and confront

head-on the feudal forces was one glaring instance. It crippled the

possibilities of creating a socially just economic order. Six decades

after Independence, this unfinished task perpetuates the grossly

exploitative socio-economic order in the countryside.

India has the largest mass of rural poor in the world, who are trapped

in the blighted cycle of poverty, malnutrition, disease, and deprivation.

The political system today, which has increasingly distorted the

original vision of the freedom movement, is more or less indifferent to

the spectacle of peasant suicides, growing malnutrition with falling per

capita intake of foodgrains, and the looming threat to food security.

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Policy making by the ruling classes enamoured of neo-liberal

prescriptions is immune to human misery so long as GDP growth rates

remain high.

As we mark 60 years of Independence, the ruling classes and the

political parties that represent them are openly celebrating a path of

development that makes the rich super rich, and boasts of creating

billionaires at a rate higher than most countries. Policy making is

increasingly suborned to favor this thin stratum of the super rich and

their patrons international finance capital. The entire gamut of

policies is meant to subsidies the rich and powerful. For the poor, there

can always be some poverty alleviation programmes, an unavoidablenecessity and a concession to electoral compulsions.

Peoples role: The prospects for democracy in India have not shrunk

but grown since Independence. This is mainly due to the people and

the popular struggles.

This, then, is the paradox: a thriving democracy in which the people

are powerless to change the exploitative and unequal economic order.

This is the paradox that is going to imperil many of the democratic

gains made since Independence. We are approaching a position where

the new definition of democracy will be change of governments

without any change in economic and social policies.

Such a situation will lead to the erosion of the democratic system itself.

It will affect all spheres of national life. If the quest to become a great

power with American help persists, nothing much will be left of an

independent foreign policy. National sovereignty itself will be seen as

an outdated concept by the dominant classes and their political

partners.

It is necessary to reverse this profoundly anti-democratic trend. The

political system should be compelled to take up policies that tackle the

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deep agrarian crisis increased public investment in agriculture,

desisting from the harmful approach of corporatization of agriculture,

and going in for a big expansion of the public distribution system and

generation of employment in the rural areas.

The entire gamut of economic and fiscal policies is geared to benefit

the speculators in finance capital and those who have the power to

corner resources. Privatization will only worsen the non-availability of

basic services for the people. It is shameful that the Indian state

cannot provide for public health expenditure even to the extent of the

poorer sub-Saharan countries.

The secular principle of the Indian state, which is also embedded in the

democratic political system, has been under serious assault since the

fifth decade of Independence. This challenge mounted by the Hindutva

forces still exists given the penetration of these forces in the

institutions of the state during their stint in power. As a consequence

of this erosion of secularism, large sections of the minorities have

never felt fully secure and have been subjected to periodic violence.

The political system has survived such anti-secular assaults butcreeping communalism continues to weaken its secular basis.

The political-bureaucratic-business-contractor nexus, which siphons off

public funds and loots the public exchequer, has to be dealt with

sternly. Its enveloping tentacles affect all levels, including local bodies.

This is at present beyond the will of any of the ruling parties. Only the

Left has some capacity to be immune to this phenomenon and to

tackle it.

The struggle to make the political system more meaningful in the lives

of the Indian people requires that the struggle to restructure Centre-

State relations to move towards a more federal system is carried

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forward. Decentralization of power and decision making needs to be

pushed forward at all levels.

With liberalized rampant capitalism becoming the order of the day, the

political system is being suborned to serve its interests. This is a

danger to democracy and the goal of social justice. Increasingly, the

political system is becoming the mainstay of the privileged and the

dominant classes. It is necessary to stem this corrosive influence and

wage the struggle within the political system to end the pernicious

embrace between money and politics. As we proceed to the seventh

decade of Independence, the battle should be joined to make

democracy aligned to the quest for social and economic justice.

In classical India (whose boundaries stretched far beyond today's

limits) social order, as described in Vedic literatures, was not a familial

caste system. Rather, one's position in society was based on one's

qualities and propensities. The purpose of the system was, and

remains, to keep society in a state of peace and prosperity. From such

a position of security and happiness one could more easily advance in

life.

The names and descriptions of the classes and orders persist till today

from the ancient Vedas. These groupings were more descriptive than

prescriptive. However, once one identified within a group one was

expected to live by its tenets and expectations. One could change

position through qualification, though, since position was not birth-

dependent.

The social system was and is called varnasrama. It has two parts,

varna (occupational divisions) and asrama (social divisions).

The four varnas are brahmana, ksatria, vaishya, and sudra.

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Membership in these occupational categories depends on education

and training, qualities, and propensity. This is similar to the

requirement, for example, that an elementary school teacher must be

degreed, trained in education and the area of instruction, a holder of ateaching certificate, of good character, and of a nature compatible with

the role. Roughly, brahmanas are priests and teachers, ksatriyas are

military and management, vaishyas are in business, and sudras are the

workers/employees.

The four asramas are brahmachari, grhastha, vanaprastha, and

sannyasa. Brahmacaris are single students, grhasthas are those in

family life, vanaprasthas are in retired, semirenounced life, and thosewho elect sannyasa remain henceforward renounced. Under

varnasrama, just as in modern society, one's social position is by

choice. And similarly, each person is expected to live by the standards

of his or her position, for the peace of society.

For example, the proscription against adultery is not just a rule of

religions but a societal principle for the benefit of both individuals and

communities.

Public policy-making in India has frequently been characterized by a

failure to anticipate needs, impacts, or reactions which could have

reasonably been foreseen, thus impeding economic development.

Policies have been reversed or changed more frequently than

warranted by exogenous changes or new information.

The Directive Principles of State Policy are guidelines to the central and

state governments of India, to be kept in mind while framing laws and

policies. These provisions, contained in Part IV of the Constitution of

India, are not enforceable by any court, but the principles laid down

therein are considered fundamental in the governance of the country,

making it the duty of the State to apply these principles in making laws

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to establish a just society in the country. The principles have been

inspired by the Directive Principles given in the Constitution of Ireland

and also by the principles of Gandhism; and relate to social justice,

economic welfare, foreign policy, and legal and administrative matters.

They aim at achieving social and economic democracy for establishing

a welfare state. Directive Principles are classified under the following

categories: Gandhian, economic and socialistic, political and

administrative, justice and legal, environmental, protection of

monuments and peace and security.

The concept of Directive Principles of State Policy was borrowed from

the Irish Constitution. The makers of the Constitution of India were

influenced by the Irish nationalist movement. Hence, the Directive

Principles of the Indian constitution have been greatly influenced by

the Directive Principles of State Policy. The idea of such policies "can

be traced to the Declaration of the Rights of Man proclaimed

Revolutionary France and the Declaration of Independence by the

American Colonies." The Indian constitution was also influenced by the

United Nations Universal Declaration of Human Rights.

In 1919, the Rowlatt Acts gave extensive powers to the British

government and police, and allowed indefinite arrest and detention of

individuals, warrant-less searches and seizures, restrictions on public

gatherings, and intensive censorship of media and publications. The

public opposition to this act eventually led to mass campaigns of non-

violent civil disobedience throughout the country demanding

guaranteed civil freedoms, and limitations on government power.Indians, who were seeking independence and their own government,

were particularly influenced by the independence of Ireland and the

development of the Irish constitution. Also, the directive principles of

state policy in Irish constitution were looked upon by the people of

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India as an inspiration for the independent India's government to

comprehensively tackle complex social and economic challenges

across a vast, diverse nation and population.

In 1928, the Nehru Commission composing of representatives of

Indian political parties proposed constitutional reforms for India that

apart from calling for dominion status for India and elections under

universal suffrage, would guarantee rights deemed fundamental,

representation for religious and ethnic minorities, and limit the powers

of the government.

In 1931, the Indian National Congress (the largest Indian political

party of the time) adopted resolutions committing itself to the defense

of fundamental civil rights, as well as socio-economic rights such as the

minimum wage and the abolition of untouchability and serfdom.

Committing themselves to socialism in 1936, the Congress leaders

took examples from the constitution of the erstwhile USSR, which

inspired the fundamental duties of citizens as a means of collective

patriotic responsibility for national interests and challenges.

When India obtained independence on 15 August 1947, the task of

developing a constitution for the nation was undertaken by the

Constituent Assembly of India, composing of elected representatives

under the presidency of Rajendra Prasad. While members of Congress

composed of a large majority, Congress leaders appointed persons

from diverse political backgrounds to responsibilities of developing the

constitution and national laws. Notably, Bhimrao Ramji Ambedkar

became the chairperson of the drafting committee, while JawaharlalNehru and Sardar Vallabhbhai Patel became chairpersons of

committees and sub-committees responsible for different subjects.

A notable development during that period having significant effect on

the Indian constitution took place on 10 December 1948 when the

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United Nations General Assembly adopted the Universal Declaration of

Human Rights and called upon all member states to adopt these rights

in their respective constitutions.

Both the Fundamental Rights and the Directive Principles of State

Policy were included in the I Draft Constitution (February 1948), the II

Draft Constitution (17 October 1948) and the III and final Draft

Constitution (26 November 1949), being prepared by the Drafting

Committee.

DPSPs aim to create social and economic conditions under which the

citizens can lead a good life. They also aim to establish social and

economic democracy through a welfare state. They act as a check on

the government, theorized as a yardstick in the hands of the people to

measure the performance of the government and vote it out of power

if it does not fulfill the promises made during the elections. The

Directive Principles are non-justifiable rights of the people. Article 31-C,

inserted by the 25th Amendment Act of 1971 seeks to upgrade the

Directive Principles. If laws are made to give effect to the Directive

Principles over Fundamental Rights, they shall not be invalid on thegrounds that they take away the Fundamental Rights. In case of a

conflict between Fundamental Rights and DPSP's, if the DPSP aims at

promoting larger interest of the society, the courts shall have to uphold

the case in favour of the DPSP. The Directive Principles, though not

justiciable, are fundamental in the governance of the country. It shall

be the duty of the State to apply these principles in making laws.

Besides, all executive agencies should also be guided by these

principles. Even the judiciary has to keep them in mind in deciding

cases.

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Attributes of a good policy-making process

It is interesting, and indeed revealing, that the literature on the public

policymaking process is far less copious than the literature on

substantive policy issues. The following section on the attributes of a

good policy-making process draws on the literature, and on the

authors own experience in the policy making process.

One way of describing a good policy-making process is one that is

committed to producing a high quality decisionnot any particular

decision and that invests any decision made with a high degree of

legitimacy, power and accuracy. What features or characteristics

should a policymaking process have which, if present, would lead to

high quality decisions?

First, to start with the most obvious, a good policy-making process

would involve due consideration of up-to-date available subject-matter

knowledge and relevant data, and the use of available analytical tools.

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Second, policies made ostensibly for one sector often have significant

impacts on other sectors: a transport policy (e.g. expansion of national

highways in lieu of investment in rail) affects the environment; an

environmental policy (stricter pollution norms) affects industrialdevelopment; a revenue enhancement measure intended to develop

one sector can adversely affect another (e.g. the cess to fund the

National Highway Development Project reduces the competitiveness of

road transport). Policy-making therefore nearly always means trade-

offs, the giving up of something to get something else, losses to one

group or section in exchange for (hopefully larger) gains for another.

Policy-making processes and structures should ensure the gathering ofinformation on such inter-sectoral impacts, the analysis of trade-offs,

and fully informed choices between alternatives after a proper

consideration of effects on different sectors. Many analytical

techniques have been evolved to assist policy-makers in dealing with

these issues, coming broadly under terms like policy analysis, program

evaluation, cost-benefit analysis etc. These techniques are not without

their critics, and their effect on policymaking has been less than their

protagonists would like to think. Nevertheless, these techniques are

generally judged to have a positive effect on the quality of decisions

made. Third, especially in a democratic polity, such analysis should

invariably include an assessment of the "winners" and "losers" from a

given policy and a strategy for dealing with likely opposition from

losers to what has been determined to be the "right" policy. Fourth,

theory and practice both show that decisions which are seen to have

legitimacy are far more likely to be successfully implemented.

Legitimacy is both procedural and substantive.

Procedural legitimacy is sometimes narrowly viewed as meaning that

the decision is made by an authority legally authorized to make it, but

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in practice consultation of those affected is crucial to perceived

legitimacy. Procedural legitimacy can often be more important in

securing the implementation of a policy, than its substantive merits.

Substantive legitimacy is achieved when the persons and groups who

have knowledge and expertise in the field affected by a policy are

involved in formulating the policy. Note that this point is about the

legitimacynot efficacy--of a policy. The question is not whether the

policy was substantively correct, but whether persons who are publicly

known or perceived to have subject matter knowledge were involved in

making it.

Fifth, a good policy-making process should produce policies which can

be executed swiftly and successfully. This requires the close

involvement, during formulation, of the persons who actually have to

implement a policy on the ground, and implies a degree of

decentralization of policymaking. At the same time, a degree of

centralized control is necessary, so that the priorities and interests of

implementers do not supplant the public interest. Whether this central

control should be confined to process control (i.e. control over howthe decision is made) or should extend to quality control(control over

the substance of the decision) is the subject of debate, but the choice

is partly a factor of the kind of organization and the kind of policy being

made. On the whole, while policy-making must remain in touch with

reality and be conscious of implementation issues, it should not be a

prisoner of the current short-term priorities, time constraints and

conveniences of implementers. A good policy making structure should,

therefore, provide for appropriate separation between the policy and

implementation functions.

Finally, in order to make the (often difficult) decisions on trade-offs and

make them without undue delay, information, analysis and good

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procedures alone are insufficient. Those charged with making, or

advising on, policy, must possess certain skills (e.g. in coordination,

synthesis and integration) and attributes (such as freedom from bias)

which increase the likelihood of quick and sound decisions.

To recapitulate, a "good policy-making process" would meet

the following criteria:-

i) the problems and issues confronting a sector are subjected to expert

analysis;

ii) information on overlaps and trade-offs with other sectors is

systematically gathered and made available to policy-makers;

iii) opposing points of view within and between sectors , are properly

articulated, analyzed and considered and those likely to benefited or

harmed are identified and their reactions anticipated;

iv) decisions are made with due legal authority, after consultation of

those likely to be affected, and with the involvement of knowledgeable

persons in the sector(s) concerned;

v) those responsible for implementation are systematically involved inthe process, but are not allowed to take control of it;

vi) policy-makers and /or their advisers have the honesty,

independence, intellectual breadth and depth to properly consider and

integrate multiple perspectives and help arrive at optimal policy

choices within a reasonable time.

One of the main problems with policy-making in India, is extreme

fragmentation in the structure. For example, the transport sector is

dealt with by five departments/Ministries in the government of India

whereas in the US and UK it is a part of one department (Department

of Transport and Public Works in the US and Department of

Environment, Transport and Regions in the UK). Similar examples exist

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in the energy, industry and social welfare sectors as well. Such

fragmentation fails to recognize that actions taken in one sector have

serious implications on another and may work at cross purposes with

the policies of the other sector. Besides, it becomes very difficult, evenfor closely related sectors, to align their policies in accordance with a

common overall agenda.

Another problem is the excessive overlap between implementation,

program formulation and policy making which creates a tendency to

focus on operational convenience rather than on public needs. Policy-

making in Indian ministries occurs at the levels of Director and above,

but the most important level (crucial for consideration of cross-cuttingimpacts) is that of the Secretaries to the Government of India, who are

their Ministers policy advisers-in-chief. However, as mentioned

earlier, the very same Secretaries spend a large part of their time

bogged down on routine day-to-day administration of existing policy.

Time is spent anticipating and answering parliamentary questions,

attending meetings and functions on implementation issues etc. Partly

the problem is symptomatic of over-centralizationexcessive

concentration of implementation powers at the higher levels of the

Ministries. Partly, it is also due to such officers being more comfortable

with implementation matters than with policy making. The result is

that sub-optimal policies, where adequate attention has not been paid

to citizen needs, tend toe merge.

Often public policy is made without adequate input from outside

government and without adequate debate on the issues involved. The

best expertise in many sectors lies outside the Government. Yet the

policy processes and structures of Government have no systematic

means for obtaining outside inputs, for involving those affected by

policies or for debating alternatives and their impacts on different

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groups. Most developed countries have a system of widespread public

debate before a policy is approved. For example, in the US , the

legislature subjects a new policy initiative to extensive debate not only

in Committees but also in the Senate and House. Such debates notonly enable an assessment of different viewpoints but also help build

up a constituency in support of the policy through sound arguments.

Probably the only example of fairly systematic consultation of outside

expertise in India is in the process of formulating the Central Budget,

where there is a long tradition of pre-budget confabulations with

chosen members of industry, labour and academia. There are several

reasons for a poor pre-policy consultative process. Firstly, structures

for consulting outsiders either do not exist or if they do, are moribund.

Secondly, in the absence of good consultative structures, outsiders

who do make themselves heard in the policy-making process are often

single issue advocates. This makes them liable to the charge of having

vested interests, and their views lose credibility. Even if a receptive

civil servant were to take their views seriously, he would run the risk of

appearing to do an illegitimate favor. Thirdly, outsiders involved in

policy are usually allowed to make spasmodic or single issue inputs but

are not required to sustain their interaction, to confront trade-offs or to

meet the objections of other outsiders with opposite views. This makes

it easy for outsiders who were indeed consulted, to then disclaim any

responsibility for the final decision by protesting that their advice was

only partially followed. Fourthly and as a result of the first three, there

is a lack of identification of stakeholders with any policy. In countries

like the USA, there are often strong advocates on both sides of a policy

questionfor example pro- and anti-abortion, pro- and anticapital

punishment. In India, judging by the public reaction to many policy

announcements, it would appear that almost every new policy

announced by Government has only opponents. This is because the

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winners from a Government policy rarely feel involved in it, and

hence rarely stand up and support it.

Policy decisions are often made without adequate analysis of costs,

benefits, trade-offs and consequences. There are several underlying

causes for this:-

Excessive fragmentation: This has already been referred to.

Fragmentation has led to a widespread prevalence of the blind men

and the elephant syndrome in policy-making.

Inadequate time spent on policy-making, mainly due to excessive

overlap of policy-making and implementation and to over

centralization of implementation authority (discussed above).

Inadequate professionalism of policy-makers and advisers: Debates

have been common in India about the pros and cons of generalists vs.

specialists in Government. There is a school of thought which

suggests that the excessive involvement of poorly informed generalists

is the main cause of poor policy-making and implementation. However,

when it comes to the realm of policymaking and the making of trade-

offs, experience in government and the private sector suggests that

this is usually best handled by an intelligent, well-informed person who

has a wide rather than narrow perspective. This person could be

termed the intelligent and informed generalist who, though not a

specialist in any one field, is in fact a specialist in analysis, integration

and synthesisi.e identifying problems, trade-offs and solutions. His

strength and training lie in being well-informed about a variety of

related subjects, in incisive analysis, and in intelligent use of

information provided by specialists to frame policy options and assess

their consequences. Note that many successful businesses in India and

abroad are headed by generalists (MBAs for instance) and the Tata

conglomerate continues to operate through the generalist Tata

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Administrative Service to man key positionsan approach regarded

as a great success. The problem currently encountered is that the civil

servants (who act as key policy advisers) often are not sufficiently well

informed or trained to act in this manner. This could be describedloosely but conveniently as inadequate professionalism

Inadequate consultation of in-house specialists: Even conceding that

public policy-making might not be improved by insisting on specialists

becoming the policy-makers, it is nevertheless crucial that specialist

knowledge be fully consulted and utilized in arriving at policy. For

reasons ranging from generalist arrogance to interservice rivalries

between groups of specialists, the available expertise of specialistswithin the Government is often under-utilized.

If it is taken as given that India is an under-performer, the question

then arises as to why is this the case. A priori, under-performance vis-

a-vis potential could be due to

adopting the wrong public policies

poorly implementing the right public policies.

There can, of course, be valid disagreements as to what is the "right"

policy in a given sector, in a given situation. It can be argued that

merely because there are errors, changes or postponements in

policies, one cannot conclude that policy-making suffers from

weakness. Success is often the result of trial and error. Disagreements,

often strong ones, are common and, in a democratic society, both

inevitable and healthy. Vigorous debate prior to policy-making and

adaptation in response to debate is good, not bad. Flexibility in

policymaking to respond to evolving exogenous factors is good, not

bad. And the phenomenon of political considerations intervening in

decisions otherwise well taken, is inevitable in a fractious but

genuinely democratic polity like India.

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Mediocrity of in-house specialists: While there are many outstanding

specialists working for the Government, there is a widespread feeling

that many in-house specialists are not on top of their specialism. This

perception of mediocrity vis--vis outside experts tends to worsen theproblem of inadequate consultation of even the good in-house

specialists who get tarred with the same brush. It also promotes an

undue respect for outside specialists and the error of accepting poorly

formulated prescriptions from outsiders simply because they have a

more professional or expert image. The making of public policy for a

country as large, populous and diverse as India is intrinsically a more

complex task than in a smaller political unit. This makes a study of the

institutions which make policy all the more important. Measured by

economic growth or attainment of human development objectives,

India remains not only an underdeveloped country but one which is

usually regarded as an under-performer, which could do better.

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BIBLOGRAPHY

http://www.google.com

http://en.wikipedia.org/wiki/Decision_making

http://en.wikipedia.org/wiki/Corporation

http://www.time-management-guide.com/decision-making-skills.html

http://en.wikipedia.org/wiki/Corporate_social_responsibility
http://en.wikipedia.org/wiki/Decision_makinghttp://en.wikipedia.org/wiki/Corporationhttp://www.time-management-guide.com/decision-making-skills.htmlhttp://en.wikipedia.org/wiki/Decision_makinghttp://en.wikipedia.org/wiki/Corporationhttp://www.time-management-guide.com/decision-making-skills.html

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