1

POLITICAL SCIENCE PROJECT

(PUBLIC POLICY PROCESS)

ON

POLITICS OF POLICY MAKING: A STUDY WITH SPECIFIC

REFERENCE TO BJP’s 5 YEAR RULE FROM 2014 TO 2019

SUBMITTED TO:

Mr. Aashutosh Kumar Aahire

Faculty, Political Science

SUBMITTED BY:

Sumit Sharma
Roll no. 157

SECTION C

SEMESTER VI, B.A. LL.B (HONS.)

SUBMITTED ON:

November 15, 2019.

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ii

Acknowledgements

I feel highly elated to work on the project “Politics of Policy Making: A Study with Specific
Reference to BJP’s 5 Year Rule From 2014 To 2019”. The practical realisation of the project
has obligated the assistance of many persons. Firstly I express my deepest gratitude towards Mr.
Aashutosh Kumar Aahire, Faculty of Political Science, to provide me with the opportunity to
work on this project. His able guidance and supervision were of extreme help in understanding
and carrying out the nuances of this project.

I would also like to thank The University and the Vice Chancellor for providing extensive
database resources in the library and for the internet facilities provided by the University.

Some printing errors might have crept in which are deeply regretted. I would be grateful to
receive comments and suggestions to further improve this project.

Sumit Sharma

Roll No. 157

Section C, Semester VI
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iii

Contents

1. Acknowledgements ii
2. Introduction 1
3. Research Methodology 3
4. Review of Literature 4
5. The Separation of Policy and Politics 5
6. Policy and Politics: A Combined Approach 7
7. Models Depicting Relationship between Politics and Public Policy 11
8. Policy Making wrt. 5 Year of BJP’s Rule 15
9. Conclusion 18
10. Bibliography 19
 4

Introduction
In our ever changing world, the idea of policy and politics tends to have a powerful and often
times contentious meaning. People see politics as a necessary evil in their day to day lives and
for the most part completely forget the policy behind the politics. In some cases, and more than
most of us would like to think, we combine the world of politics and policy and blur the lines of
what they truly are and represent.

“Politics” is a word that has been derived from the Greek word “politikos” meaning “an official”
which has been modeled on “Affairs of the City” by Aristotle. “Policy” is a term that has been
derived from the Old French word “policie,” from Late Latin “politia” and ancient Greek
“politeia.”

Politics, as many of us know, is the part of our governmental system where men and women vie
for the acceptance and votes of the nation or the constituents in their respective districts. Policy
on the other hand is what the elected politicians, analysts, and administrators are supposed to
1
accomplish on a day to day basis as part of their jobs. The world of politics and political science
diverges at this point but most people do not and will not see this divergence. The world of
policy is a complex world of research, writing, arguing, and hopefully reaching some kind of
consensus on a given issue. In the most general of terms, the policy world helps to create and
write the legislation that parliaments, congresses, and other elected bodies vote on during the
course of their elected terms. Politics is the part that muddles through the policy and they help
decide what is appropriate for the people and they are a form of check and balance to the policy
created daily. Political scientists study the governmental systems created by man and the
processes that work towards the creation of the policy that will one day become law.
Policy makers constantly struggle to reconcile policy and politics—to square what they want to
do on the merits with what consent requires. Academic research and teaching on public policy,
however, have typically separated policy argument from political analysis. Some authors
recommend solutions to public problems, whereas others examine the politics of actual policies.

1Jonathan Hessling, Policy vs. Politics: The Unknown Battle in Government,

https://iufberlinen.wordpress.com/2008/06/05/policy-vs-politics-the-unknown-battle-in-government/ (Accessed
February 3, 2016).
 5

In this project, I propose a combined conception of policy research and teaching that joins policy
analysis and political analysis. This approach links elements of economics and political science
to approximate the actual process of statecraft.

Politics is part of the government system, and a policy can be called a plan. Politics can be
defined as a science or art of governing or government, especially governing a political entity
like a nation. A policy can be defined as an overall plan that embraces the general goals. A policy
can also be said to be a course or action that is proposed by a government, an individual,
business firm, or any party. Politics refers to authority and refers to public life. Politics generally
revolves round government and its activities. Politics is a term that refers to the organizational
process. It also refers to the theory and practice of governance. Political parties run the
government which all adheres to certain policies.

Policy can be termed as a principle. It is not that political parties adhere to certain policies, but
almost all individuals have certain policies. Most companies follow certain policies. A policy can
also be termed as a commitment or statement of intent. It is because of the policy that people, an
organization, or a party is held accountable. A policy is a set of rules or principles that guide
decisions.

The study of public policy has the potential both to improve policy and teach us more about
government itself. Aristotle alluded to both potentials when he treated politics as the master
science—the pursuit by which a community might achieve the good life. Leaders were to use
governance to realize the good society, but to achieve that they must seriously study the
workings of government and politics. In principle, the science of policy and the science of
politics were one and the same.
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Research Methodology
Methodology:

This Research Project is descriptive and analytical in nature. Accumulation of the information on
the topic includes wide use of primary sources such as cases as well as secondary sources like
books, e-articles etc. The matter from these sources have been compiled and analysed to
understand the concept.

Websites, dictionaries and articles have also been referred.

The structure of the project, as instructed by the Faculty of Political Science has been adhered to
and same has been helpful in giving the project a fine finish off.

Objectives:

The objectives of the current project are:

1. To study the relationship between politics and public policy.

2. To understand the role of politics in good public policy making.
3. To find out the difference between politics and public policy.
 7

Review of Literature:
1. Lawrence M. Mead, Teaching Public Policy: Linking Policy and Politics, (New York
University):
This research paper written by Mead covers exhaustively the relationship between
politics and public policy including the separation between the two. Also the paper
highlights the advantages or role played by politics in formulation of public policy.

2. Taiwo Makinde, Interface between Politics and Public Policy: A Relationship of

Inseparableness, Global Journal of interdisciplinary Social Sciences, Vol. 4 No.3 (May-
June 2015):
This research paper provides a detailed account of politics and policy formulation. It
includes various aspects of policy making such as policy formulation and policy
implementation. The paper also focuses on the relationship between politics and public
policy.

3. Nitisha, Almond’s Model: Structural Functionalism,

http://www.politicalsciencenotes.com/articles/almonds-model-structural-
functionalism/735:
This online article provides in brief Gabriel Almond’s Structural Functional Analysis to
study politics and thus it was very relevant to study the model depicting the relationship
between politics and policy formulation.

4. Political System by David Easton, http://visittolearn.blogspot.in/search/label/function

%20of%20political%20system:
This online article throws light on David Easton’s Systems Analysis model to study
politics and its impact on public policies. It also cover the black box model thus it was
very relevant to study the model depicting the relationship between politics and policy
formulation.
 8

The Separation of Policy and Politics:

Public policy as an academic field arose in the 1960s because of widespread dissatisfaction with
the performance of government, especially at the national level. As they have developed,
however, these programs seldom teach statecraft as officeholders experience it, with policy and
politics in constant tension. Rather, research and teaching in the two subjects are largely separate.
Policy analysis, or the study of what government should do about public problems, is done and
taught mostly by economists; the subjects here include microeconomics and statistics. Studies
about politics are done and taught largely by political scientists; the subjects here include the
2
legislative process, implementation, and administration. The first group focuses largely on
policy, the second mostly on politics, and neither says much about the other. Thus, ironically,
economics tells government what to do while ignoring it, while political science does focus on
government but will not tell it what to do. Neither achieves that union of policy and politics that
Aristotle imagined.

Each side makes assumptions that effectively exclude the other subject. When discussing policy
3
argument, economists often make the “Model 1” assumption, the idea that government consists
of a single decision maker, thus eliminating politics as a constraint. That leader’s problem is then
entirely one of choice rather than power. Political scientists, for their part, usually disclaim any
authority to say what policy should be. To do that would be to second-guess the democratic
political process, which they refuse to do. So rather than reason about policy independent of
4
politics, they often assume that the outcome of a democratic process is by definition optimal. In
practice, each discipline admits the need for the other. Economists, after dominating the early
curricula of the policy schools, came to accept the need for more courses about politics and
implementation, because these subjects were so important in the real world. But in theory, policy
and politics are still approached differently and usually taught by different scholars.

Some will say that policy analysis and political analysis are not really separate. Don’t texts in
public policy cover both? True, general texts about policy say something about both subjects, but

2 Radin, B. A. (1997). Presidential address: The evolution of the policy analysis field: From
conversation to conversations. Journal of Policy Analysis and Management, 16(2), 204–218.
3 Allison, G. T. (1971). Essence of decision: Explaining the Cuban missile crisis. New York, NY: Norton.
4 Nelson, R. R. (1977). The moon and the ghetto. New York, NY: Norton.
 9

the relative emphasis differs sharply depending on authorship.2 Texts written by economists
focus mostly on how to optimize policy using such tools as cost-benefit analysis or program
evaluation. The policy process is treated as secondary, to be modeled with other economic
5
concepts such as rational choice or the Arrow paradox. Conversely, texts written by political
scientists chiefly describe the evolution of policy in areas such as economic management,
education, or social welfare. Policy analysis either gets limited attention or is treated as part of
6
the policy process. Texts focused on just analysis or just process are, of course, even more
specialized.

The separation of policy and politics weakens the public policy field. Arguments for best policy
that ignore institutional constraints are often stillborn: Congress ignores them, or the bureaucracy
cannot implement them. That, for instance, was the fate of the early proposals for welfare reform
that economists drafted in the 1960s and 1970s. These plans would have guaranteed all poor a
minimum income. However, Congress focused instead on getting welfare recipients to work, and
this was the goal that dominated welfare reform in the 1980s and 1990s. One reason many
economists opposed enforcing work in welfare was that they did not appreciate how popular this
was, and they knew little about how work programs operate. Work-based reform succeeded
7
because it cut with the grain of the institutions, as the earlier proposals had not.

Equally, research on the politics of policy lacks a wide audience because it usually makes no
argument for best policy. Few other than academic specialists will be interested in the political
analysis of issues unless it is linked to some serious proposal for change. Only then are policy
and politics joined in the way that successful statecraft requires. Only then does the researcher sit
in the same seat as the policy maker, seeking to reconcile the optimal with the politic.

5 Munger, M. C. (2000). Analyzing policy: Choices, conflicts, and practices. New York, NY: Norton.
6 Cochran, C. E., Mayer, L. C., Carr, T. R., Cayer, N. J., McKenzie, M., and Peck, L. R. (2012). American public
policy: An introduction. Boston, MA: Wadsworth.
7 Mead L.M. (2005). Policy research: The field dimension. Policy Studies Journal, 33(4), 35–57.
 10

Policy and Politics: A Combined

Approach:
The earlier discussion on politics/administration dichotomy brings out clearly the fact that
politics cannot be divorced from administration. What public policy is or what it is not, it can
still be argued further that public policy is the heart of government which can be manipulated
positively or negatively, depending on the actors involved. This leads us into a discussion on
actors in policy process. These are the executive, the legislature, the judiciary, the bureaucrats,
the interest groups as well as the politicians, among others. What this section is trying to
emphasize is that through the actors, politics interacts with policy process.

Far better would be a combined approach to public policy research and teaching that brings
policy and politics together. Scholars should first argue how to solve a public problem “on the
merits,” that is, on a policy analytic basis and without concessions to politics. They should then
go on to discuss impediments that might arise from the legislative or administrative process, and
how these might be handled. In fact, they should forecast the tension between policy argument
8
and politics that policy makers would face if they espoused these proposals in office.

But are not policy and politics separate subjects? I think not, and here is why. Policy and politics
each provides a critical perspective on the other. When we talk Teaching Public Policy Education
about any policy issue, we may discuss either the merits or the politics of what to do. These
9
subjects can seem to be distinct, but they are really different facets of the same problem.

In analyzing policy, one makes an argument for a preferred course of action initially on the
merits, without attention to the politics. But having done that, one should go on to consider
whether the political system can approve and implement such a policy. Those factors begin as
elements of policy analytic arguments for or against various options, but they also generate a
different perspective. If government cannot “do the right thing,” as is often the case that may
suggest that the political process be changed, so that outcomes improve.

8 Mead L.M. (1995). Public policy: Vision, potential, limits. Policy Currents, 5, 1–4.
9 Mead, L. M. (1983). A meaning for “public policy.” Policy Studies Journal, 12(2), 247–250.
 11

As one example, changes in congressional procedure were essential to the balancing of the
budget that was achieved—all too briefly—in the late 1990s. In the 1980s, partisan
disagreements made it difficult to agree on spending cuts or tax increases to cut the deficit. But
because public pressure to reduce the red ink was strong, the parties finally did agree on
procedures that at least forced spending and revenues into better alignment. Under the Budget
Enforcement Act of 1990, limits were placed on discretionary spending, and changes in
entitlements or taxes required offsets so that the deficit did not expand. Here policy analysis
provides arguments to change politics.

Equally, political analysis can provide perspective on policy. Goals that are sufficiently difficult
to achieve politically may finally call policy argument into question. If there is no way to do
what we want, then we must choose something more feasible. Aaron Wildavsky argued that we
often do not choose ends and then go looking for means, as classical economic policy analysis
supposes. Rather, we first see what things government can do and then choose our ends from
10
among them.

As one example, welfare reform focused on putting welfare mothers to work because evaluations
showed that this was something government could achieve. Another goal that reform might have
had—restoring marriage so that fewer families became headed by females—was deemphasized
because it was much less popular than enforcing work, and programs able to achieve it had not
appeared. Rhetorically, welfare reformers lauded marriage as the solution to poverty, but they
made no serious attempt to enforce it as they did work. Government could handle the work goal,
whereas marriage was beyond it.

Academically, the study of policy and the study of politics can seem like ships passing in the
night. But in the actual practice of government, they are as closely tied as brothers. It is too
simple to say that a policy argument succeeds or not, or that the politics prefers one option or
another. Either studied in isolation misses the crucial interaction between them. Policy argument
and actual politics are not separate but merged in a high-level systems analysis. Faced with any
serious problem, policy makers keep trying out various courses of action to see what works but

10 Wildavsky, A. (1979). Speaking truth to power: The art and craft of policy analysis. Boston,
MA: Little, Brown..
 12

also what has support. Whatever they do has to be justifiable to them on the merits, but it also
has to be persuasive to other actors. Statecraft requires that policy satisfy both priorities.

Note that the political side of policy reasoning extends beyond the legislative arena to include
implementation. Bureaucracy and federalism are among the constraints on what policy makers
may choose to do. In recent decades, public administration has often been a forgotten subject in
11
political science. One good effect of linking policy and political analysis more closely is to
restore administration as a central subject of policy research.

The history of any policy area shows a constant jockeying between innovative ideas and a search
for consent, between ends and means. In the welfare area, policy making went through several
stages of controversy, enactment, implementation, and renewed controversy from the 1960s
through the 1990s, each cycle generating the issues for the next (Mead, 2002). Policy and the
politics must be made consistent, and only when they are does the ferment cease. That is the
process that public policy research and teaching should seek to capture, and only the combined
conception can do it.

Another way to put this is that policies are not really chosen in isolation from the institutions, as
orthodox policy analysis assumes. Rather, options and the arrangements for them must be chosen
together. To be effective, programs must have a persuasive rationale and be embedded in a
supportive legislative and administrative setting (Baumgartner & Jones, 2009). In choosing some
new policy, one also chooses a regime for that program, and perhaps others. That is especially
true of major structural changes. Reforms in bureaucratic organization or in intergovernmental
relations, for instance, will affect policies in many areas. Such restructuring amounts to
12
“metapolicymaking.”

Even where texts in public policy devote attention to both policy analysis and political analysis,
they fail to capture the intimate connection between them. The two subjects appear as separate
worlds, when they are really two sides of the same coin. The texts do not consider that political
constraints should really be part of policy argument or that the policy-making process can
sharply limit what best policy means. And in research on public policy, there is even less sense

11 Frederickson, H. G. (1999). The repositioning of American public administration. PS: Political Science and
Politics, 32(4), 701–711.
12 Dror, Y. (1968). Public policymaking reexamined. Scranton, PA: Chandler Publishing.
 13

of policy and politics shaping and reshaping each other. Typically, the usual division prevails
where economists recommend best policy while political scientists explain what government
actually does.

The political party is another political actor in policy process. The political party articulates the
demands and preferences of the people especially their members and supporters into the political
process. The party also uses its resources to ensure that the demands of its supporters are enacted
into policies. Political parties, through their members in public office, sometimes wield
considerable influence in the execution of public policies particularly when they are in control of
the government apparatus. They exercise this influence by ensuring that their manifestoes,
policies and their programmes are implemented. Other actors in the policy process include the
bureaucracy, interest groups, the citizenry as well as the experts and the professionals.
 14

Models Depicting Relationship between

Politics and Public Policy:
David Easton’s System Analysis:
The term of “political system” is being used increasingly in the study of comparative politics.
Different political scientists have a variety of views upon the definition of political system.
David Easton says that “Political system is authoritative allocation of values but before going
into the elaborated definition of the political system, one must know about “political and
system.” The word political in its literal meanings is that any phenomenon pertains to the study
of politics. So politics in its simplest meaning is, “Practice of government and managing of
public affairs.” The word system, “implies the interdependence of parts and a boundary of some
kind between it and its environment” further he says, “By interdependence we means that when
the properties of one components in a system change all the other components and the system as
a whole is affected.” The boundary of the political system means that every political system has
its circumscribed frame work in which it performs.

In this way it has become easier to understand the meaning of a political system “Broadly the
political arrangement of a society, embracing all factors influencing collective decisions, the
political system thus includes processes of recruitment and socialization, parties, voters and
social movements, which is not a formal part government.” In a political system there are some
fundamental units and boundaries that differentiate it from other systems. The political system is
composed of different structures and functions, structures ensure systems officially and
development functions denote realization of demands and promotion of development since
demands and developments are variables.

The political system is a biological phenomenon in which is a human body work in a mechanized
form. The heart circulates blood to the organs of the whole body. All organs of the body have
their special functions to perform. If any organ of the body does not receive the blood properly or
resists in performing its function, the whole system of the body will be disturbed. In the same
way, the political system has different structures and functions and every structure has its sub
system that is assigned specific functions to do, it may be authoritative assigned function. The
 15

political system exists only in a state, which is the sole entity for the identification of its
credibility. The functions in a political system cater the demands of the people to ensure
13
development. There are two types of input and output in every political system.

The whole political system is designed for the welfare of the society and emphasize upon the
betterment of the people. The quantum of demand is deeply concerned with the development of
the political system. If the demands are higher as compared to capabilities, the political system
will become dysfunctional and if demands are equal or lesser as compared to capabilities the
political system will show upward change. This process of change is called development. Every
14
political system is composed of infrastructures (input) and ultra structures (output).

13 Political System by David Easton, http://visittolearn.blogspot.in/search/label/function%20of%20political

%20system (Accessed on February 6, 2016).
14 Id.
 16

Gabriel Almond’s Structural Functional Analysis:

Almond’s model is popularly known to the students of political science as structural
functionalism. It is so called because Almond has explained his views keeping these structures of
political system in mind. He has, in fact, stressed that every political system has some structures
and these structures perform certain functions meant for it.

In his noted work The Politics of the Developing Areas Almond has drawn our attention to an
interesting issue. He says that though there are differences between developed and developing
countries so far as structures are concerned, the structures perform almost similar functions.
What is structure? Here the word structure is used in a sense different from sociological sense.
Structure means institutions. Every political system has several institutions such as political
party, legislature, executive, judiciary, etc. Almond claims that all these were previously called
15
institutions. But he has changed the nomenclature.

The chief objective of Almond was to make a comparative study of the major political systems
and for that purpose what he has done ultimately became the foundation of general systems
theory/analysis. For the purposes of comparison Gabriel Almond has divided the functions of
political system into two broad categories—Input functions and output functions. Easton and
Almond have borrowed the terms—input and output from economics for the purpose of
analysing the functions and behaviour of political systems and their different structures. This
approach helps comparison considerably.

16
The input functions are:

1. Political socialisation and recruitment.

2. Interest articulation
3. Interest aggregation
4. Political communication.

15 Nitisha, Almond’s Model: Structural Functionalism,

http://www.politicalsciencenotes.com/articles/almonds-model-structural-functionalism/735 (Accessed on October
6, 2019).
16 Id.
 17

17
The output functions are:

1. Rule making.
2. Rule adjudication.
3. Rule application.

If we focus our attention to these two types of functions performed by political systems we shall
find that the input functions are generally done by the non-governmental organisations and
agencies which include pressure groups, interest groups, parties, educational institutions. The
government has very little part to play in the input functions. While performing the input
functions the agencies have little scope to violate the common law and existing legal and
constitutional structure. But if the agencies have in mind the idea of changing the existing
structure, they can do otherwise.

17 Id.
 18

Policy Making wrt. 5 Year of BJP’s Rule

1. Pradhan Mantri Jan Dhan Yojana

PMJDY was introduced by government of India on 28th August, 2014 to ensure comprehensive
financial inclusion of all the households in the country. PMJDY envisions universal access to
banking services and products with at least one banking account for every households in the
country. This scheme came into picture with a view to provide comprehensive and inclusive
growth. PMJDY is a scheme which came with additional features compare to earlier financial
inclusion schemes like minor above 10 years can open the account, RuPay debit card issued for
the account holder to withdrawal, deposits and payment purpose, accidental insurance of Rs.
1,00,000 and life insurance of Rs. 30,000 provided without premium, after 6 month of
satisfactory transaction of the account household can avail Rs. 5,000 overdraft facility and
interest will be charged base plus 2% or 12% whichever is lower, account can be transferred in
case customer relocates.

HIGHLIGHTS OF THE PRADHAN MANTRI JAN DHAN YOJANA SCHEME

 Interest on deposit.
 In built accident insurance cover of Rs. 1 lakh with RuPay Debit Card given to the
account holder.
 No minimum balance required.
 An additional Rs. 30,000 life insurance cover for the accounts opened up to January, 26,
2015.
 Easy transfer of money across India.
 Beneficiaries of government schemes will get direct benefit transfer in that account.
 After satisfactory operation of the account for 6 months an overdraft facility will be
permitted.
 Access to pension, insurance product.
 Accidental insurance cover, RuPay Debit Card must be used at least once in 45 days.
 Availability of overdraft facility up to Rs. 5,000 but in only one account per household
preferably lady of
the household.

ACTION PLAN FOR IMPLEMENTING PRADHAN MANTRI JAN DHAN

YOJANA
 19

Two phases of this scheme has been determined in which the objective of financial
inclusion of weaker section of the society is supposed to be achieved. The PMJDY
scheme is being implemented in two phases. The first phase was to be 15th August, 2014
to 14th August, 2015 and the second phase from 15th August, 2015 to 14th August, 2018.
Phase I of PMJDY (15th August, 2014 To 14th August, 2015):
1. Universal access to banking facilities for all households across the country through a
bank branch or a fixed point BC within a reasonable distance except areas with
infrastructure and connectivity constraints.
2. Covering all households with at least one basic banking account with overdraft
facility of up to Rs. 5,000 after satisfactory operation for 6 months.
3. Expansion of direct benefit transfer facility under various government schemes will
be provided through bank account of the beneficiaries. Issuing KCC as RuPay Kisan.
4. Providing basic banking accounts and RuPay Debit card which has inbuilt accident
insurance cover of Rs. 1 lakh.
5. Financial literacy programme under the scheme will be implemented up to village
level.
Phase II of PMJDY (15th August, 2015 To 14th August, 2018):
a. Covering 7.5 crore households with at least one PMJDY.
b. Overdraft facility up to Rs. 5,000 after six months satisfactory operation / history.
c. Creation of Credit Guarantee Fund for coverage of defaults in accounts with
overdraft limit up to Rs.5,000.
d. Micro insurance will be provided to the people.
e. Unorganized sector pension schemes like Swavalamban is to be proposed through
the business correspondence.
f. Coverage of households in hilly, tribal and difficult areas and coverage of
remaining adults in the households and students.
g. Reactivating a large number of dormant accounts.

BENEFITS OF PRADHAN MANTRI JAN DHAN YOJANA

 Account holders will be provided zero balance bank account with RuPay debit card, in
addition to accidental insurance cover of Rs. 1 Lakh.
 Those who open accounts by January, 2015 over and above the 1 lakh accident, they be
given life insurance cover of Rs. 30,000 to be give by Life Insurance Corporation.
 After six months of opening of the bank account, holders can avail 5,000 overdrafts from
the bank.
 Overdraft facility is of great support to the people to come out of the clutches of
pawnbrokers who change an exorbitant rate of interest.
 20

 With the introduction of new technology introduced by National Payments Corporation

of India (NPCI), a person can transfer funds, check balance through a normal phone
which was earlier limited only to smart phones so far.
 Mobile banking for the poor would be available through National Unified USSD platform
(NUUP) for which all banks and mobile companies have come together.
 Account holders receive cheque book, literature on financial literacy and pass book in a
kit.
 Account holder will have debit card which can be used for E-Commerce transactions.
 Additional loan of Rs. 15,000 will be sanctioned to the account holder in case the
repayment of each loan was made on time.
 Mobile banking facility would also be extended.
 Account holders would get attractive rate of interest on deposits besides availing of
pension facility notified by the insurance company
.

2. Demonetisation

The 31st month also brought in what is arguably the most controversial, disruptive and critiqued
policy of the Modi government — demonetisation. In his 8 November 2016 address to the
nation, Modi announced that Rs 500 and Rs 1,000 currency notes would cease to be legal tender
that midnight. By tuning into corruption at high places and the widespread black money in the
economy, Modi articulated a political angst against “anti -national and anti-social elements.” An
additional objective of this scheme was curb fake currency and terror financing from across the
border. As reports of individual and small business hardships flooded the nation, and 98.96% of
the notes returning back to the banking system, demonetisation ended up creating acute
individual distress that Finance Minister termed ‘anecdotal’. It hit real estate, slowed growth due
to reduced demand, disrupted supply

BACKGROUND
The Indian government had demonetised banknotes on two prior occasions—once in 1946 and
once in 1978—and in both cases, the goal was to combat tax evasion via "black money" held
outside the formal economic system.[21][21][21] In 1978, the Janata Party coalition government
demonetised banknotes of ₹1,000, ₹5,000 and ₹10,000, again in the hopes of curbing
counterfeit money and black money.
 21

In 2012, the Central Board of Direct Taxes recommended against demonetisation, saying in a
report that "demonetisation may not be a solution for tackling black money or shadow economy,
which is largely held in the form of benami properties, bullion and jewelry."[23][24] According
to data from income tax probes, black money holders kept only 6% or less of their wealth as
cash, suggesting that targeting this cash would not be a successful strategy.

Merits-Demonetization Favoured India’s Economic Growth

 Demonetization policy of the Government has been termed as the greatest financial reform that
aimed to curb the black money, corruption and counterfeit currency notes.
 All the people who are not involved in malpractices welcomed the demonetization as the right
move.
 Demonetization was done to help India to become corruption-free as it will be difficult now to
keep the unaccounted cash.
 Demonetization will help the government to track the black money and the unaccounted cash
will now flow no more and the amount collected by means of tax can be better utilized for the
public welfare and development schemes.
 One of the biggest achievements of demonetization has been seen in the drastic curb of terrorist
activities as it has stopped the funding the terrorism which used to get a boost due to inflow of
unaccounted cash and fake currency in large volume.
 Money laundering will eventually come to halt as the activity can easily be tracked and the
money can be seized by the authorities.
 Demonetization aimed to stop the running of parallel economy due to circulation of fake
currency as the banning of Rs.500 and Rs. 1000 notes will eliminate their circulation.
 The unaccounted cash could be deposited in the Pradhan Mantri Garib Kalyan Yojana after
paying 50% tax. The money will remain deposited for 4 years with the bank without incurring
any interest. However, after 4 years the amount will be returned. This amount can be utilized for
social welfare schemes and making the life of low income groups better.
 The Public Sector Banks which were reeling under deposit crunch and were running short of
funds have suddenly swelled with lot of money which can be used for future finances and loans
after keeping a certain amount of reserve as per RBI guidelines.
 The people who opened the Jan Dhan accounts will now use their accounts and become familiar
with banking activitiy. The money deposited in these accounts can be used for the developmental
activity of the country.
 22

 The tax collected due to launch of demonetization policy will be put to developmental activities
in the country.
 Demonetization has driven the country towards a cashless society. Lakhs of the people even in
remote rural areas have started resorting to use the cashless transactions. The move has promoted
banking activities. Now even the small transactions have started going through banking channels
and the small savings have turned into a huge national asset.
 The high rising price pattern and inflationary trends which the Indian economy was facing are
taking a down turn making the living possible within low income group reach.

Demerits-Blow to economic growth and inconvenience all around

The very next day of announcing the demonetization, the BSE Sensex and NIFTY 50 stock
indices fell over 6%. The severe cash shortages brought detrimental impact on the
economy. People trying to exchange their bank notes had to stand in lengthy queues causing
many deaths due to inconvenience and rush.
 The sudden announcement has made adverse impact on business and economy. Instead of a
growing economy India has become a standstill and no growth economy. It is fearedthat a fall of
2-3% in the GDP growth will be recorded coming year.
 India is an agriculture based economy. Due to the cash crunch, the farmers especially small and
marginal who largely depend on cash to buy seeds, fertilizers and to pay for sowing, borrowing
water for irrigation and for other related agriculture equipments remained worst affected and
could not complete the crop related activity.
 Since small branches of the banks were also not supplied with adequate cash within time of
sowing season of the crop, farmers could not get their crop loans disbursed. This added to the
woes of the farmers leading to a weak agriculture production the coming year.
 Real Estate sector came to a stand still and is still gasping for buyers of the constructed and half
constructed inventory without buyers. This has resulted in poor cash flow leading to a poor
demand.
 Demonetization has made the situation become chaotic. Tempers are running high among the
masses as there is a delay in the circulation of new currency.
 Due to the inability to pay cash to poor daily wage workers, the small employers have stopped
their business activity.
 The poor planning on the part of the government has also added to the woes of the common
people with low incomes. The Rs.2000 currency note does not find many takers as it is difficult
to get the balance back when you are buying daily needs like vegetables, milk, bread or paying
 23

for petty expenses like bus fare. While rs.100 currency notes were not available in sufficient
number, Rs.500 note arrived in the market very late.
 Demonetization is the 2 way sword in regard to incurring the public expenditure. On the one
hand huge cost is to be incurred on printing the new currency and on the other hand managing
the lakhs of crores of old currency volume has also become a big expenditure incurring item.
 Many Economists are of the view that Rs.2000 currency note will be much easier to hide and can
be used to store black money in shorter space.
Entire opposition has stood against demonetization and has called this decision a draconian law.
 24

3. Goods and Services Tax

Modi’s biggest reform push, with the greatest impact to public finances, and the strongest tool
against tax evasion and arguably the most complex law in the history of Independent India’s —
the introduction of the goods and services tax (GST) — was launched in the 39th month of his
term. The enabling mechanism was provided by the enactment of the Constitution (One Hundred
and First Amendment) Act, following which Parliament enacted four Central laws. Further, all
the 29 States enacted enabling laws in their Assemblies, while the Centre notified it for all the
seven Union Territories. The GST replaces eight Central taxes and nine State taxes, but leaves
five petroleum products and alcohol for human consumption out of its ambit. In tune with
indirect taxes in 140 other nations, Modi has brought to completion one of India’s longest
reforms — the GST story began more than three decades ago, in 1985. The structural reform
over, minor tinkering will continue, though criticism about its implementation, particularly the
huge compliance burden for small enterprises in its initial launch, was needless, bureaucratic and
not thought through.

GST Advantages

1. GST is a transparent tax and also reduce number of indirect taxes.

2. GST will not be a cost to registered retailers therefore there will be no hidden taxes and
and the cost of doing business will be lower.
3. Benefit people as prices will come down which in turn will help companies as
consumption will increase.
4. There is no doubt that in production and distribution of goods, services are increasingly
used or consumed and vice versa.
5. Separate taxes for goods and services, which is the present taxation system, requires
division of transaction values into value of goods and services for taxation, leading to
greater complications, administration, including compliances costs.
6. In the GST system, when all the taxes are integrated, it would make possible the taxation
burden to be split equitably between manufacturing and services.
7. GST will be levied only at the final destination of consumption based on VAT principle
and not at various points (from manufacturing to retail outlets). This will help in
 25

removing economic distortions and bring about development of a common national

market.
8. GST will also help to build a transparent and corruption free tax administration.
9. Presently, a tax is levied on when a finished product moves out from a factory, which is
paid by the manufacturer, and it is again levied at the retail outlet when sold.
10. GST is backed by the GSTN, which is a fully integrated tax platform to deal with all
aspects of GST.

GST Disadvantages

1. Some Economist say that GST in India would impact negatively on the real estate market.
It would add up to 8 percent to the cost of new homes and reduce demand by about 12
percent.
2. Some Experts says that CGST(Central GST), SGST(State GST) are nothing but new
names for Central Excise/Service Tax, VAT and CST. Hence, there is no major reduction
in the number of tax layers.
3. Some retail products currently have only four percent tax on them. After GST, garments
and clothes could become more expensive.
4. The aviation industry would be affected. Service taxes on airfares currently range from
six to nine percent. With GST, this rate will surpass fifteen percent and effectively double
the tax rate.

Adoption and migration to the new GST system would involve teething troubles and learning for
the entire ecosystem

4. Aadhaar

On 26 March 2016, the Modi government’s 23rd month in power, Aadhaar, an identity mapping
tool launched by the United Progressive Alliance in January 2009, was strengthened, taken
forward and institutionalised. In a country, where elections are won on promises of basic
benefits, ensuring that they reach the targeted beneficiaries has remained a challenge for wealth
distributive policies, from wages to pensions . While Aadhaar functioned under the Unique
Identification Authority of India (UIDAI), the body lacked
 26

statutory support. As a result, the Modi government proposed and Parliament enacted the
Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act. Today,
Aadhaar has become India’s most credible identity currency, and is used while filing taxes, and
buying financial products like mutual funds. This along with linking direct benefits such as the
public distribution system, employment guarantee schemes, cash transfers to the poor, and
opening bank accounts, has been challenged in various courts, and objections to the State
collecting personal information like fingerprints and iris scans raised. While these will get sorted
out one way or another, Aadhaar has the potential to become one of India’s major soft power
exports.

One of the most important topic for any selection process to understand candidate’s familiarity
with current affairs. Aadhaar was introduced as an optional 12-digit identification tool for Indian
citizens in January 2009. The optional nature of the Aadhaar came up for discussion when the
National Identification Authority of India Bill, 2010 was introduced in the Parliament by UPA-II.
Under the Aadhaar Act 2016, UIDAI is responsible for Aadhaar enrolment and authentication,
including operation and management of all stages of Aadhaar life cycle, developing the policy,
procedure and system for issuing Aadhaar numbers to individuals and perform authentication and
also required to ensure the security of identity information and authentication records of
individuals.

The “Aadhaar is not mandatory” status was reaffirmed by the SC in 2016. Therefore, the
government’s decision to make Aadhaar mandatory for welfare schemes recently has caused an
uproar in opposition and on social media.

As per the amendments to the Finance Bill, 2017, an Aadhaar number is necessary for filing tax
returns. So, those who don’t have Aadhaar effectively become “criminals” in the eyes of the law
and are left with no choice but to enroll in Unique Identification (UID).

Aadhaar has been appreciated in the public policy sphere as being a game-changer for effective
implementation of government schemes. Its most crucial role is that of plugging leakages via
targeted public delivery and social support systems.

Pros:
 27

1. The usage of biometrics is expected to give a unique identity to every individual in India.
Wrong/fake beneficiaries have been a major issue with many schemes which benefits public.
2. A problem in reaching benefits to poor and marginalized residents is that they often lack the
identification documents they need to receive Aadhaar provides a platform to directly provide
benefits to residents without the heavy costs associated today with benefits distribution.
3. In several places and all government departments various documentary proof is required, but,
the Aadhar will reduce the burden of many identity proofs.
4. Under the Prime Minister’s ‘Jhan Dhan Yojana,’ Aadhar is used as the main document
evidence, to open a ‘bank account.’
5. The National Institute of Public Finance and Policy published a paper that found that the
benefits of the Aadhaar project will surpass the costs. According to the paper, by 2020-21 the
total benefit would be Rs. 25,100 crore against the total expenditure of Rs. 4,835 crore.
Cons:
1. If this Aadhar Card is used for bank transactions or ATM & Debit Cards, it will be easier for
the frauds, which live in the society, to misuse them.
2. Most of the databases will be accessible to the government under the national security clause.
That would mean, there is a potential breach of privacy which is a pre-condition for civil
liberty.
3. It is not easy to cover those populations, who live in India, who does not have any identity
cards or proofs like SC, ST, and socially backward people, etc.
4. While Aadhaar is a proof of identity, the mere possession of a physical Aadhaar card is not
authentication of the fact that it belongs to the person carrying it. Due to non-implementation
of this very crucial provision of the Act, any imposter with a genuine citizen’s name and
Aadhaar number can take such a printout and enter high-security areas and there have already
been numerous cases of fake and duplicate Aadhar cards.
During Elections, there are possibilities of misusing the votes of illiterate peoples.

5. Make in India
 28

It was Launched on 25th September 2014, to make India a manufacturing hub. Make in India is
an initiative of the Government of India to encourage multinational, as well as domestic,
companies to manufacture their products in India. The major objective behind the initiative is to
focus on job creation and skill enhancement in twenty-five sectors of the economy
A strong manufacturing sector is critical for an economy like India, especially considering the
huge employable workforce in the country and the need for self-sufficiency in a number of
sectors to bring down the trade deficit. Manufacturing is urgently needed to provide livelihood
opportunities to a huge chunk of the population outside of agriculture. The manufacturing sector
supplies quality products across the supply chain, thereby fueling the growth and productivity of
other sectors in the process.
Shri Narendra Modi, Hon'ble Prime Minister of India, launched the visionary Make in India
programme in September 2014. The programme is aimed at transforming India into a global hub
for manufacturing, research & innovation and an integral part of the global supply chain. The
programme aimed at building confidence in India's strengths and potential as a manufacturing
hub across internal and external stakeholders. It has led to a major rehaul of processes and
policies to enhance ease of doing business in India. Indeed, this is the single largest
manufacturing initiative by any country in the recent past.

Some of the initiatives undertaken under Make in India are as follows:

1. Twenty five sectors have been selected under Make in India; a framework was developed
to share a large amount of technical information on these sectors. Domestic and
international audiences are constantly updated with latest information on opportunities,
reform measures, etc.
2. FDI has been liberalised in some key sectors including Defence Manufacturing, Food
Processing, Telecommunications, Agriculture, Pharmaceuticals, Civil Aviation, Space,
Private Security Agencies, Railways, Insurance and Pensions and Medical Devices.
3. Several reforms undertaken to enhance ease of doing business and enhance FDI
4. Industrial corridors and smart cities are being built at a fast pace.
5. Intellectual Property Rights (IPRs) registrations are being accelerated and measures are
being taken to cater to the training needs of the skilled workforce.
 29

The manufacturing sector is expected to reach US$ 1 trillion by 2025 and contribute about 25%
to India's GDP. Under the Make in India programme, indigenous manufacturing is expected to
increase by 12-14% per annum over the medium term. As per the World Bank, manufacturing
contributed about 16% to the country's GDP in 2016. This is on the higher side when compared
with the global average of about 15% in 2015.
Manufacturing is expected to create 100 million additional jobs by 2025, considering how India
is now one of the most attractive destinations for investments in this sector. Most leading
companies including those of defence equipment, mobile phones and automobile brands have
established or are looking to set up their manufacturing base in the country, which will have a
positive impact on job creation.

Impact:

Since its launch, Make in India has played a major role when it comes to improving ease of
doing business in India. The various initiatives being undertaken have made a hugely positive
impact on investor confidence. Some of the major achievements are as follows:
 Total FDI between April 2014 and March 2017 amounted to around 33% of cumulative
FDI into India since April 2000. In 2015-16, FDI inflow crossed US$ 50 billion for the
first time in any fiscal, and further in 2016-17, FDI reached a record figure of US$ 60
billion. Cumulative FDI inflows from April 2000 to March 2018 had reached US$ 546.45
billion (including equity inflows, invested earnings and other capital). In 2017, India
retained its position as the world's most attractive destination for greenfield FDI.
 Measures to improve business confidence have led to progressive improvements in
India's rank in the World Bank's ease of doing business rankings from 142 in 2014 to 100
in 2017.
 Five industrial corridors and 21 new nodal industrial cities are being developed to boost
industrial growth.
 The Insolvency and Bankruptcy Code 2016 has consolidated all rules and laws pertaining
to insolvency into one legislation, thereby bringing India's bankruptcy code in step with
global best practices.

The Government of India introduced a holistic National Intellectual Property Rights (IPR) policy
in May 2016 in order to spur creativity and innovation in the Indian economy. During April -
 30

October 2017, 45,449 patents and 15,627 copyrights were filed in India, out of which 9,847
patents and 3,541 copyrights were granted.

These are some illustrations of various policies initiated by the government and its interrelation
with respect to policy making process. What are various factors which influence these policies is
also illustrated.
 31

18

Conclusion:
It should be noted that society is ordered, steered and directed towards desired ends by the state
through policies. Therefore, policy becomes the object, the tool and the means of governance.
Let us remind ourselves again that politics is viewed as the authoritative allocation of values
18
such as making decision on who gets what, when and how, while policy is defined by
19
Ikelegbe as governmental actions or course of actions or proposed actions or course of
proposed actions that are directed at achieving certain goals..

At the stage of recognizing that there is a problem to be solved, it is the people – the citizens, a
group of people, the bureaucrats, the legislative body, or, even the executive – that will come up
with policy demands. From the level of problem recognition to that of policy adoption, a lot of
politics is involved. When the demands are made on the government on certain issues, if it is not
translated into political issue, it may not get to be on the agenda. The agenda stage is that stage
where government ruminates over the demands from the environment. This is always a political
process in which groups struggle for power to be in control. It is also at this level that ideological
and interest groups compete to broaden the agenda or include their issues or to narrow it by
excluding issues that they do not want considered. After the adoption of policies, the
implementation stage is very crucial and it involves a lot of politics. Remember, there is no way
a policy can be implemented successfully without adequate funding and availability of
personnel. Allocation of funds, infrastructures, as well as provision of personnel is political. If
the government is not in favour of the policy, it is capable of frustrating it by failing to provide
adequately for its implementation.

When one considers the contributions of each of the actors discussed above – the legislature, the
executive, the judiciary, the political party, even the citizens and the interest groups – politics
will be found at every stage of the policy process from the problem recognition to the policy
evaluation.

18 Lasswell, D (1936), Politics: Who Gets What, When How? Stanford, California: Stanford University Press.
19 Ikelegbe, A.O. (2006).Public Policy Analysis: Concepts, Issues and Cases, Lagos: Imprint Services.
 32

19

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