The Economic Consequences of India's Institutions of Governance

This paper examines the functioning of India's institutions of governance, namely, the legislative and executive branches of government, the judiciary, and the bureaucracy. An economist's view of the role of government is adopted, i.e., as a provider of public goods and corrector of externalities. Governance is analyzed along three dimensions: (1) the degree of commitment or durability of laws and rules, (2) the degree of enforcement of these laws, and (3) the degree of decentralization of jurisdictions with respect to local public goods. It is suggested that India's experience of governance reflects insufficiencies in all three dimensions: of durability, enforcement, and decentralization, with adverse consequences for economic efficiency. The paper concludes with a normative discussion, including a consideration of the possible roles of nongovernmental action and of civil society, as well as alternative structures of institutions of governance. The Economic Consequences of India's Institutions of Governance Nirvikar Singh Department of Economics University of California, Santa Cruz