Economic reforms and institutions: a few issues and policy implications for India

Abstract

In the absence of necessary institutional conditions, market reforms in developing economies cause rent seeking and unequitable distribution of income. This, in turn, could stun economic growth and also thwart the emergence of right institutions. It is important for government policy not only to minimize the costs of institutional failures but also to set the initial conditions for the evolution of institutions in the right direction. This paper illustrates some of the costs of institutional failures and the policy implications in the present Indian context.