AFTER LIBERALIZATION The institutional context of economic activity in India has undergone tremendous change in the past 20 years.

The Government of Indias launch of market-based economic reforms in 1991 was a response to a macro-economic crisis emanating from a deficit in the balance of payments. The economic dynamism that ensued thereafter has surprised many observers. Though high economic growth rates have attracted the most attention, concurrent changes in economic institutions have been no less important. During the 1980s, the Indian economy was characterized by pervasive controls on all aspects of market- functioning of industrial enterprisesentry, capacity expansion, exit, pricing and distribution. During the initial phase of the reforms, policy attention focused on stabilization of the macro-economy. This meant focusing on reducing the fiscal deficit and downsizing the all-encompassing role of government in economy. The original intent of industrial and trade policies were abolition of controls and trade liberalization, and these were pursued vigorously. It was only during the mid-90s that institutional change relating to governmentbusiness relations came into the policy radar. The need for better regulation in several infrastructure sectors became apparent after the failure of efforts to disinvest in and to privatize some large public sector infrastructure enterprises. There are two major aspects of government-business relations(a) the rules of the game with regard to market competition, and (b) the regulatory institutions that define and maintain these rules. The institutional framework of the rules of competition and regulation is determined by a dynamic and contentious process among the key actors. Lobbying, litigation, administrative actions and market competition together shape the emergent business-government framework. No single group is quite able to establish its preferred rules of the game. There are continual turf-battles for markets, policy space, and administrative action. Through political processes, contending economic interests are reevaluated and reconciled. Indian regulatory institutions came into existence because of the diminished role of government in the Indian economy after the economic reforms. They are supposedly independent regulatory institutions. In India, such institutions have emerged mainly in two sectorsthe financial sector and in the hitherto publicly owned infrastructure sectors. They include the Securities and Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority (IRDA), the Central Electricity and Regulatory Commission (CERC), the State Electricity Regulatory Commissions (SERCs), the Petroleum and Natural Gas Regulatory Board (PNGRB), the Tariff Authority for Major Ports (TAMP), and of course, the Telecom Regulatory Authority of India (TRAI). The most significant feature of Indian regulatory institutions arises from the fact that the government and the public sector incumbents continue to exercise great influence on the behaviour of these regulators. Since the early 1990's, when the Indian government began its (slow) process of liberalizing the economy, there have been profound changes in attitudes, expectations, and processes within the country. There has also been significant growth, evident in the rising wealth of India's middle class and in the success of many new entrepreneurial businesses. The economic reforms of 1991 caused policy changes in five major areas covered by the reform program: fiscal deficit reduction, industrial and trade policy, agricultural policy, infrastructure development and social sector development. Savings, Investment and Fiscal Discipline

Initial fiscal reform focused on politically feasible revenue-related issues like rationalizing the tax structure and increasing compliance. Fiscal profligacy was seen to have caused the balance of payments crisis in 1991 and a reduction in the fiscal deficit was therefore an urgent priority at the start of the reforms. The center government drove an initiative to move the country toward a Value-Added Tax system, and by 2005, most state governments had adopted it. States choose their tax levels, and the long lines of trucks at state borders illustrate the inefficient competition that results. The distribution of responsibilities between state and central governments in tax collection and public good provision has created perverse incentives, with states and municipalities poorly utilizing resources and failing to deliver. Reforms in Industrial and Trade Policy Reforms in industrial and trade policy were a central focus of much of Indias reform effort in the early stages. Industrial policy prior to the reforms was characterized by multiple controls over private investment which limited the areas in which private investors were allowed to operate, and often also determined the scale of operations, the location of new investment, and even the technology to be used. The industrial structure that evolved under this regime was highly inefficient and needed to be supported by a highly protective trade policy, often providing tailor-made protection to each sector of industry. During the following decade, India transitioned from a centrally planned and operated economy to a market-driven economy, reflecting a global trend toward less regulated economies. Most governmentoperated industries in India are now privatized, though some political contention still exists over the removal of reservation schemes. India has come a long way toward opening its borders to trade. Investment has increased throughout the past decade through FDI and FII and a number of important industries like aviation and construction have raised or eliminated caps on foreign investment. The economic reforms sought to phase out import licensing and also to reduce import duties. Import licensing was abolished relatively early for capital goods and intermediates which became freely importable in 1993. Liberalizing foreign direct investment was another important part of Indias reforms, driven by the belief that this would increase the total volume of investment in the economy, improve production technology, and increase access to world markets. These reforms have created a very different competitive environment for Indias industry than existed in 1991, which has led to significant changes. Indian companies have upgraded their technology and expanded to more efficient scales of production. Business view on Social policy is influenced Macro processes Implementation of the reform process Pressures from the civil society New Paradigm (focus on Delivery, Institutional Capacity) PPP - from Public to private for profit Many social policy initiatives (JNNURM, NREGP, NRHM) are based on active and participatory role of civil society actors. Decentralization can lead to greater democratization of the political process, reduce bureaucratic power, and thus provide more opportunities for individuals to participate in decision-making. Increasing dependence on centrally sponsored schemes, with greater responsibility for delivery on

local governments. Social policies are increasingly funded by the central government, implemented by local government, and monitored by the middle tier of government, with serious difficulties is achieving the desired outcomes.

Forum of Free Enterprise The Forum of Free Enterprise is a non-political and non-partisan organization, established in 1956, to educate public opinion in India on free enterprise and its close relationship with the democratic way of life. The Forum seeks to stimulate public thinking on vital economic problems of the day through booklets and leaflets, meetings, essay competitions and other means as befit a democratic society. Forums concept of free enterprise was one with a social purpose. The Forum stands for every individual in the country having the largest scope to make a contribution within the framework of planned development through his initiative and enterprise. And that it is ready and capable of making a substantial contribution to society provided it is not handicapped and hamstrung by the sort of controls and regulation to which it was subject. CWG Scam The Commonwealth games scam as it is known involved large scale misappropriation of money during the preparatory phase and conduct of the 2010 Commonwealth games held in New Delhi. The total value of the scam is estimated to be 70,000 crore. It involved politicians, bureaucrats and corporates acting in collusion Politicians involved Suresh Kalmadi, the Congress party representative to 15 LokSabha from the Pune constituency. He was the Chairman of the Organising Committee of the Delhi Commonwealth games. Sheila Dikshit, Chief minister of Delhi: Was indicted for several irregularities in the CWG processes both by Shunglu committee and also by the CAG Robert Wadra

Bureaucrats involved Lalit Bhanot, Secretary General of the Organising committee TS Darbari, Joint Director General of the Organising committee Sanjay Mahindroo, Deputy Director General of the Organising committee BS Lalli, CEO of Prasar Bharati M Jayachandran, Joint Director General (Accounts and Finance)

Corporations involved AM Films AM Cars SIS Live Jaypee Group, Its alleged that the proceeds of corruption are parked here through financial involvement of Suresh Kalmadi's son, Sumeer Kalmadi in the F1 circuit project at Greater Noida. MTNL

 HCL Infosystems Businessmen involved RSP Sinha, MTNL CMD SM Talwar, Executive director MTNL NK Jain, GM (Corporate Sales) MTNL Jitendra Garg, DGM MTNL

Whistleblowers/ Law enforcers The scam was unearthed by CAG even before the conduct of the games. Presently the scam is being probed by the CBI. Socio-economic impact Financial costs It was a "drain on public funds" and the Indian Government was criticized for sanctioning billions of dollars for the Games even though India requires massive investment in social development programs. Social and environmental impact Nearly 400,000 people from three large slum clusters in Delhi have been relocated since 2004. Commonwealth Games have resulted in "an unprecedented increase in the degree, frequency and scale of indiscriminate evictions without proper resettlement. Labour laws violations The organisers were guilty of enormous and systematic violations of labour laws at construction sites. Human Rights Law Network reports that independent investigations have discovered more than 70 cases where workers have died in accidents at construction sites since work began. During the construction of the Games Village, there was controversy over financial mismanagement, profiteering by the Delhi Development Authority and private real estate companies, and inhumane working conditions.