inflation

                   INFLATION

Inflation is the situation characterized by a sustained unchecked rise in the general price level & a fall in the purchasing power of the money observed over a period of time.

Related terms

1.      Creeping Inflation is the rate of general price increase of 1-5% per year. Creeping inflation of 3-5% erode the purchasing power of money when continued over many years but it is manageable. Furthermore a low creeping inflation could be good for the economy as producers & traders make reasonable profits encouraging them to invest.

2.      Rotating Inflation is usually defined as a 5-10% annual rate of increase in the general level of prices that if not controlled might accelerate into a galloping inflation of 200-300% a year. If it aggravates galloping inflation can worsen to runs away inflation which may change into hyper inflation.

3.      Hyper Inflation: It is which is out of control. A condition in which prices increase rapidly as currency loses its value. People loose faith in the currency of the country and govt. may think in terms of using alternate currency or switch over to Barter system: Zimbabwe (2010), Argentina (1999) Germany (1920-21).

4.      Deflation: When there is a general fall in the level of prices.

5.      Disinflation: It is the reduction of rate of inflation.

6.      Stag Inflation: A situation in which inflation co-exist with recession, slow down & unemployment.

Measurement of Inflation (3 methods)

1.      Wholesale Price Index (WPI)

2.      Consumer Price Index (CPI)

3.      GDP Deflator

Inflation is measured in India on the basis of WPI & CPI. WPI is used to measure the rate of inflation, which is called headline rate of inflation. This is the rate projected in newspaper periodically. WPI is constructed on the basis of 676 commodities with base year 2004-05. It does not include services. This index is based on wholesale prices which are collected from major wholesale markets in India.

This index givens predominant weightage of 65% to manufactured goods & just 20% to food & primary articles. WPI is calculated on Laspeyers formula i.e. weightage arithmetic mean based on the fixed value, base, weights for the base period. Here items are classified into 3 categories:

1.      Primary articles (vegetables, fruits etc.) (Weight 20.12%)

2.      Fuel, Power, Light, Lubricants (Weight 14.91%)

3.      Manufactured Products( Weight 64.97%)

Whenever inflation is more pronounced in food & primary articles it is not adequately reflected in WPI like the kind of inflation. India is witnessing in previous years. Besides the fact that this index is based on wholesale prices mean that it is not representative because masses buy goods at retail prices. No country uses WPI & most countries use CPI. This is called Headline Inflation because this includes the entire set of commodities in general price index.

While core inflation does not take into consideration commodities that have volatile prices e.g. food & fuel. This is compiled by economic advisor under ministry of commerce.

Limitations of WPI

The accuracy of WPI is unsatisfactory even after the introduction of the revise series 2010 services such as rail, road transport, health care, banking & insurance are not part of WPI basket. Neither are the products of unorganized sector that are estimated to constitute about 35% of the total manufactured output of the country. The index thus fell short of being a broad based indicator of the price level even in its construction.

Consumer Price Index

In 2011, the CPI system was reformed. Before 2011 there were 4 such types of CPI.

1.      CPI – Agricultural labourers

2.      CPI – Rural Population

3.      CPI – Urban & Rural Population

CPI is compiled by central statistical organization on under ministry of statistics (CSO). CPI has base year 2011-12 & even includes services.

GDP DEFLATOR

It is calculated by CSO under the ministry of statistics. GDP stands for gross domestic product i.e. the total value of all the final goods & services produced within the economy during the specified period. GDP deflator is the measure of the changes in price of all new domestically produced final goods & services in an economy. The GDP deflation is not based on a fixed market basket of goods & services but applies to all goods & services domestically produced.

GDP deflator = GDP at current price

                        GDP at constant price

GDP deflator is the most comprehensive no. to measure inflation. But RBI & govt. does not use it much for policy making because GDP deflator data comes quarterly not weekly or monthly.

Point to Point Deflation

Inflation during a week ending in the current year as compared to the corresponding week ending last year, thus the point to point inflation. Early WPI was calculated on weekly basis that point to point basis. Now it is calculated on monthly basis.

Producer Price Index (PPI)

It is the index constituted to measure inflation on the basis of price prevailing at the producer level. This index does not include transportation cost, trader profits margins & indirect taxes. The objective of constructing the index is to address price rise if any. At the producer level before it passes on the consumer a large number of advanced countries have started using PPI.

Service price index

1 Railway Service Price Index 

2   Postal Service Price Index

3   Banking Service Price Index 

 4 Telecom (Cellular) Service   Price Index

5 Air Service  Price  Index

History of WPI

Government launched a new series of WPI with 2004-05 as base from 2010. Earlier 1993-94 was used a base year to calculate WPI. The new series of WPI has 676 items as against 435 items in previous series. Consumer items widely used by middle class like ice cream, mineral water, flowers microwave oven, gold, silver & washing machine are reflected in the new series of WPI. This would give better picture of price variation. Readymade food, computer, stationery, dish, petroleum products are also part of new series. Under primary article group of new WPI there are 102 items against earlier 98. While fuel & power category remains static at 19. In the new series there are 555 items of manufacturing products compared to 318 items earlier. 241 new items are there in the basket of commodities making up the official WPI in a bid to reflect changes in India price line & consumption pattern. The new series is based on the recommendation of a working group that was set up under planning commission member Abhijeet Singh recommended the change of base year to 2004-05. Manufactured items have a higher weight of 64.972 as against 63.749 as earlier. The weight for fields has also increased articles the weight is down at 20.118 against 22.025. In a bad to reflect the actual consumption pattern the new series drops as many as 200 items such as typewriter, video cassette to make a room for items like computer, refrigerator, T.V. & video disk player. The WPI published weekly by the economic advisor in ministry of commerce & industry with a two week lag, tracks the wholesale traded prices of 676 items that include agricultural commodities such as rice, tea, cotton etc., industrial commodities such as iron, bauxite etc., intermediate products for consumer like atta, sugar, paper, electricity, ceiling fan etc. & energy items like petrol, kerosene, eldritch for commercial use (power). The weight attached to each item in the index is mean to reflect the volume by value of wholesale trade the volume by value of wholesale trade in that item in the Indian market. The wholesale price index is an indicator designed to measure changes in price levels of commodities that flow into the wholesale trade. The WPI is the only price index in India which is available on a weekly basis with a shortest possible time lag of 2 weeks. It has an all India character. It is due to these attributes that it is widely used in business & industry circles & in the govt. & is generally taken as an indicator of rate of inflation in the economy.

WPI new reporting method

From 2009 govt. presented WPI inflation figures on a monthly basis instead of week system. Analyst say since weekly data on WPI based inflation do not adequately capture the movement of prices of manufactured goods. Govt. has to often service the figures later on therefore govt. decided to have weekly release of inflation data on food & fuel prices & monthly data on WPI but from 2011 WPI is reported every month including food & fuel.

CPI History

There are 3 consumer price indices in India. Each tracks the retail prices of goods & services for specific group of people because the consumption patterns of different groups differ. For industrial worker CPI a basket of 370 commodities is tracked. For CPI urban non manual employees 180 commodities, for agricultural labourers 60 commodities. The respective base year are 2001, 1984-85 & 1986-87. CSO decided to discontinue CPI for urban non manual employees from 2008. In accordance with govt. of India business rule 1961 it is the responsibility of ministry of labour to compile & release the data on CPI for industrial workers & the responsibility of ministry of statistics & programme implementation to compile & release the data on CPI for urban non-manual employees. Mahatma Gandhi NAREGA wages are to be fixed to CPI agricultural labourers for the beginning of year 2011.

New CPI Series

The central statistic office of ministry of statistic & programme implementation introduced the new series of CPI for rural, urban & combined (rural + urban) on base 2010 taking all segments of rural & urban population for the States/UTs & all India. Since 2011 February, the new series is enforced. These indices are available for 5 major groups namely food, beverages & tobacco, fuel & light, housing, clothing, bedding & footwear & miscellaneous.

The present CPI numbers i.e. CPI-AL, CPI-IW do not encompass all the segments of population in the country & they do not reflect the true picture of price behavior in the country. It is therefore necessary to compile a CPI which takes into account the consumption patterns of all segments of population & includes services.

Inflation is based on following causes:

1.      Demand Pull Inflation: Inflation caused by increase in demand due to increased private & govt. spending. Demand pull inflation can be caused by increasing in money supply.

2.      Cost Push Inflation: It is also referred to as supply inflation caused by reduced supply due to increased prices of inputs e.g. crude prices globally have gone up causing supply constraints which means higher cost of production & so higher prices. Food prices are shooting up due to deficient monsoon & global shortages.

3.      Structural Inflation: A type of persistent inflation caused by deficiency in certain conditions in the economy such as a backward agriculture sector i.e. is unable to respond to people increased demand for food, inefficient in distribution & storage facilities leading to artificial shortage of goods & production of some goods controlled by some people.

4.      Speculation

5.      Cartelization

6.      Hoarding

Problem of High Inflation

1.      Low income groups are particularly hurt.

2.      People on a fixed income i.e. pensioners, students will be worse off in real terms due to higher prices & equal income as before.

3.      Inflation discourages exports as domestic sales are attractive & balance of payment problem can be caused. Inflation may erode the external competitiveness of domestic products if it leads to higher production cost such as wage increase, higher interest rate & currency depreciation.

4.      Inflation can drag down growth as investment climate turns bad due to instability & uncertainty & also as interest rates are raised & cost of credit increases.

5.      Inflation may discourage savings & thus hit investment.

6.      Inflation tax happens.

7.      It will redistribute income from those on fixed incomes such pensioners & shift it those who draw an inflation linked business & incomes.

8.      Strikes can take place for higher wages which can cause a wage spiral.

Benefits of Inflation

1.      Small amount of inflation can be good. Inflation means growth, normally higher incomes & more demand & so more inflation.

2.      It can be argued that a low level of inflation can be good if it is a result of innovation.

3.      New products are launched at higher prices which quickly come down through competition therefore there is encouragement for innovation & the problem is short lived, also a small price rise is necessary for wages to go up.

  Composition of indicators

Title	CPI-IW	CPI-AL	CPI-RL	WPI	CPI*
Base	2001	1986-87	1986-87	2004-05	2012
lag **	1 month	18 days	18 days	14 days	18 days
Elementary  items	320	260	260	676	200 weighted items #
Weight of food Products	48.47	69.15	66.77	24.3	45.86
Weight of enrgy (%)	7.43	8.35	7.9	14.91	6.84
Weight of misc. items, which primarily include services (%)	23.26	11.73	11.87	Services not included	28.32
No. of collection centers	78 urban	600 rural	600 rural	Centralised collection	1181 villages and 310 towns

Consumer price index  (base year revised from 2010 to 2012)

groups	Revised series of cpi base 2012 Rural                urban                combined
Food and beverages	54.18	36.29	45.86
Pan , tobacco and  intoxicants	3.26	1.36	2.38
Clothing and footwear	7.36	5.57	6.53
housing	-	21.67	10.07
Fuel and light	7.94	5.58	6.84
miscellaneous	27.26	29.53	28.32
items	225	250	475

INFLATION current status

The annual rate of inflation, based on monthly WPI, stood at -4.95% (provisional) for the month of August, 2015 (over

August, 2014) as compared to -4.05% (provisional) for the previous month and 3.85% during the corresponding month of the previous year. Build up inflation rate in the financial year so far was 0.34% compared to a build up rate of 3.11% in the corresponding period of the previous year.

The   Phillips curve

The Phillips curve shows the relationship between unemployment and inflation in an economy. Since its ‘discovery’ by British economist AW Phillips, it has become an essential tool to analyse macro-economic policy.

stated simply, decreased unemployment, (i.e., increased levels of employment) in an economy will correlate with higher rates of inflation.

While there is a short run tradeoff between unemployment and inflation, it has not been observed in the long run

Inflation  targeting

The Reserve Bank of India has announced that it is adopting inflation targeting as its guide to monetary policy. There’s been a general  move by central banks to this policy over recent years and there’s good reason for it too. So that’s one point, that the RBI is following in line with generally accepted best practice on monetary policy.

The  Reserve Bank of India (RBI), the country’s central bank, made public an agreement with the Ministry of Finance that mandates the RBI to bring inflation below 6% by January 2016, and 4% (plus or minus 2%) in the following years.

Public Policy: Models of policy-making and their critique; Processes of conceptualisation, planning, implementation, monitoring, evaluation and review and their limitations; State theories and public policy formulation.

Public Policy: Models of policy-making and their critique; Processes of conceptualisation, planning, implementation, monitoring, evaluation and review and their limitations; State theories and public policy formulation.

This article is on Public Policy which is the heart,soul and identity of governments everywhere. It is the major reason on the basis of which they are voted to power by the sovereign(citizens of a country). Potential Policies advertised by them during election campaigning as well as the previous work/policies brought out and their implementation/non implementation by the party in question when they were in power are the reason people would like to see or not see them again at the helm of political affairs of the country.

And in the era of Welfare State it assumes all the more importance both as an activity as well as a discipline of study known as Policy Science.

We begin.






PUBLIC POLICY - CONCEPT & MEANING:
Public Policy in the broad term refers to the policy (plan of what to do) that is formulated and implemented for the benefit of the public. If read in light of the narrow view of Public Policy then it relates to plan of action to be pursued by the Govt.(because Public is also used as a synonym for Government in many places).

There is no unanimity on the definition of Public Policy. However,Public Policy can be described as the overall framework within which the actions of the government are undertaken to achieve its goals. It is a purposive and consistent course of action devised in response to a perceived problem of a constituency, formulated by a specific political process, and adopted, implemented, and enforced by a public agency.

Goals,policies and programmes are different and should not be used as synonyms of each other or interchangeably. Policies are devised to achieve certain goals by the government,for example the Sarva Shiksha Abhiyaan is a govt. programme to achieve the Policy of Free and compulsory education to all children between 6-14 in India that was established through the Right to education act 2009 which is a part of meta policy of  Education For All by UNESCO. Another example is the policy of poverty alleviation for which several programmes have been designed like the Integrated Rural Development Programme,MGNREGA,etc. Poverty alleviation also comes under a bigger goal of overall socio-economic growth of the country. Each of these programmes have their own goals to achieve which then all taken collectively achieve the unified goal of the original policy. There can be a number of programmes established for achievement of a single policy goal. And there are a number of policies that are formulated as well to achieve the goals of the govt.
Once a policy is declared(statement of goals) then programmes are devised within/under it to take action through it to achieve those overall goals.

Public Policy is a document that contains the broad outline as well as the detailed description of formulation as well as implementation of various govt. programmes and plans that are taken out for the goal/objective of public benefit and implemented through the constitutional authorities,bureaucracy and government organisations/institutions in collaboration with civil society organisations. It takes a variety of forms like law,ordinances,court decisions,executive orders,decisions,etc.

It is the authoritative declaration of the intentions of the government of what it intends to do and to not do & the success of Public Administration as well as government in a country is linked with the success of its Public Policy.

Once a goal is determined then the government has to develop a broad outline/policy document to show how it will be worked towards and then once that is done,programmes are developed which are the executive wing of the govt. to achieve those goals. Then organisations and institutions are set up to house those programmes and organise personnel in it to achieve the particular programme's goals which will in cohesion with other programmes and their organisations under the same policy help achieve the policy's goals and that will help achieve the overall goal of the govt.











TYPES OF PUBLIC POLICIES:
1) Substantive Public Policy - These are the policies concerned with the general welfare and development of the society like provision of education and employment opportunities,economic stabilisation,law and order enforcement,anti pollution laws,etc are its examples. It does not cater to any particular or privileged section of society and have to be formulated dynamically keeping in mind the goals and characteristics of the constitution and directive principles of state policy as well as the current and moral claims of society.

2) Regulatory Public Policy - These policies are concerned with regulation of trade,business,safety measures,public utilities,etc performed by independent organisations working on behalf of the government like LIC,RBI,SEBI,STATE ELECTRICITY BOARDS,etc. Policies pertaining to to these services and organisations rendering these services are known as regulatory policies.

3) Distributive Public Policy - These are the policies meant for specific segments of society especially the needy ones. Public assistance and welfare programmes,adult education programme,food relief,social insurance,vaccination camps,public distribution systems,etc are all examples of such policy.

4) Redistributive Public Policy - These policies are concerned with rearrangement of policies concerned with bringing basic social and economic changes. Certain assets and benefits are divided disproportionately amongst certain segments of society and so those need to be redistributed so it reaches where it is needed and does not lie about surplus somewhere else.

5) Capitalisation Public Policy - These policies are related to financial subsidies given by the Centre to state and local governments and central and state business undertakings,etc and is not directly linked to public welfare as the others listed above. it does contribute but indirectly. It is basically infrastructural and development policies for govt. business organisations to keep functioning properly.

6) Constituent Public Policy - It is the policies relating to constituting new institutions/mechanisms for public welfare.

7) Technical Public Policy - It relates to the policies framed for arrangement of procedures,rules and framework which a system shall provide for discharge of action by various agencies on the field.










IMPORTANCE OF PUBLIC POLICY AND ITS STUDY:
As listed above one can understand the significance of public policy and how it is the oxygen for growth and development of a country and its people. Good policies take a country to great heights and without a detailed policy no goals of a country and its govt can ever be achieved. Without Public Policy and Planning a country would become stagnant and lag behind the rest of the world and never evolve and keep up with the ever changing times and global scenario.
Policy studies are therefore of utmost importance as it helps scholars,administrators,politicians and political scientists analyse every policy in depth and its pros and cons and help improve its choices,formulations,implementation and feedback process immensely and help it be at par with its contemporaries.










MODELS OF POLICY MAKING AND THEIR CRITIQUE:
1) Institutional Model: Under this model certain institutions in society are seen as competent institutions for determining public policy objectives and processes. The institutions are chosen on the basis of democratic participation,bureaucratic specification and judicial adjudication and the functions performed by these certain institutions are the most major determining factor to implement various policies. This model also specifies and suggests the relationship between various institutions and how they all work together and collectively contribute to a successful policy implementation.


2) Systems Model: Proposed by David Easton. Already discussed in a previous post on this blog under the article title of "Organisations",please r

3) Rational Model: Discussed under the article posted on this blog with title " Process and Techniques Of Decision Making",please refer to Herbert Simon part -

4) Bounded Rationality Model: Refer again to the same post again under Herbert Simon part

5) Incrementalism Model: Refer to Charles E. Lindblom's part

6) Game Theory : Refer to the Game Theory in the ml


7) Optimal-Normative Model: Refer to Yehezkel Dror's

8) Elite Model: Public Administrators and politicians belong to the elite club of knowledge possessing group that is fully equipped to frame and implement policies and people are to follow it as they are not equipped to understand and know the same.


9) Group Theory : A few groups and lobbies possessing power and organised stronghold over the bureaucracy and legislature get their way in policy selection and implementation.


10) Market Exchange Model: It believes in a free market with minimum regulations by the State in the affairs and a lot of public-private partnership as well as a lot of private organisations taking over the government's functions and directing the policy making. It is believed that this will lead to higher competition and thus higher economic growth and this will in turn benefit the government in funds for its policies.









CRITIQUE OF THE ABOVE MENTIONED MODELS OF PUBLIC POLICY:
1) Institutional Model: It is possible when all institutions are studied thoroughly and the relationships it shares with other organisations and also in a developing society where one organisation provides overlapping services with another organisation then it becomes difficult to segregate and duplication occurs wasting money and resources of the country people.

2) Systems Model: Though considered useful still has various limitations. Thomas Dye points out that in the Systems Model significant characteristics of the political system,which plays a very important role in the policy process of transforming decisions into policies has been lacking. Furthermore,the the environmental inputs that influence the political systems have also not been clearly defined and described. It is also seen as too simple an approach to explain the complex cycle of policies. It employs value laden techniques of welfare economics and other factors like rationality,power,personnel and institutions,etc have been neglected and not shown as integral ingredients in the policy cycle.

3) Rational Model: Problems arise when put into practice since social and environmental values can be difficult to quantify and gather a consensus on the same . Not totally practical as it is based on the principle that the decision maker is aware of all facts and statistics that are to be considered in the current situation and knows the best way to deal and take a completely rational decision.

4) Bounded Rationality Model: It is only goal pursuing and does not take in a very detailed account of the means to attain it.

5) Incrementalism Model: It only looks at immediate problems and short term solutions by taking one step at a time and leaves behind the overall issue for which the root has to be pulled out otherwise whatever little work is done will be undone very soon. And also it gives way to steps that enter quietly and were never thought of in the first place which may or may not be useful.

6) Game Theory Model: It justifies selfishness in the name of self interest and values are extremely variable so you cannot say that everyone will behave/respond in the same manner as everybody is not completely rational as claimed by the concept of the Games Theory Model.

7) Optimal-Normative Model: it is based on a combination of rational and non rational factors but those factors have not been clearly specified. It also rests on the assumption that true optimality could be possible only in such cases where inter-relationships between various aspects of knowledge have been established and analysed. That means the decision maker has to have knowledge of two or more areas of concern regarding the situation to take a better decision and that is not feasible neither is practical in most situations.

8) Elite Model: Here it is stated that only a few people who are referred to as elite,who are the public administrators and politicians are the only ones who possess the knowledge to make policies and hence no need to interact with others who are not equipped in this matter. It does not take into account the importance of civil society organisations and other non profit and voluntary associations possessing grass root knowledge of issues and solutions to the same.

9) Group Model: It states that a few groups and lobbies who have stronghold on organised agitation and means to influence bureaucracy and legislature get their way in view of lack of other organised opposition.

10) Market Exchange Model: It is a very capitalist approach and leads to concentration of wealth and very rarely economic and social development of the people especially the lower rungs and underprivileged. It leads to crisis in welfare policy making as the market is only bothered about profit and will influence the legislature to pass policies that benefit them monetarily and not socially uplifting.


However,lets remember that all of these models of policy making are still in use and are very useful. A mix and match/blend of the right characteristics of each that is suitable to the environment and ecology of a country in question should be applied for best results.










                                                                   POLICY CYCLE 

1) Policy Formulation : Out of all the options brought forward by different parts of society like interest and pressure groups,civil society,mass media,international organisations,etc as well as political parties in front of the govt. for action,the agenda(list of possible issues to be converted into policy) for policy formulation is then set. Then the goal and objective setting for the same is prepared realistically. It is then passed to enact a law by the legislature and give it legal status and authority to carry out its duties.And then the strategy of implementation is devised as well as the machinery needed to do the same.
Limitations are - paucity of time with legislature,corruption,not in session always,emergency needs to be addressed first.

Role of Bureaucrats in the Indian context: Due to the major information base,knowledge and experience,permanent service and advisory expertise ambits possesed by the bureaucrats in policy matters, it makes them instrumental to the formulation of public policy. The major role in the policy formulation part of the policy cycle of Indian bureaucrats is that of the middle level ones - ranks three and four from the top who are actively engaged in the above activity. They are the ones who fill in the details to the draft skeletons provided to them passed by the legislature. Their proposals are then scrutinised by the top level bureaucrats who are closer to the ministers who may accept them with or without alteration or resend it to them for changes,adjustments,etc. However at times, these top level bureaucrats perform the duties of executor as well where they themselves correct the drafts proposed to them by their subordinates and then pass it on to the minister for approval.



2) Policy implementation and monitoring: Machinery is developed and Bureaucracy is strengthened to implement the selected policy and every aspect of the same is taken care of like getting the knowledgeable and skilled personnel,proper organisational and infrastructural setup,technology,technical and financial aid. Decisions making is done at every stage to choose the best alternative out of available ones  by the administrators while carrying out the tasks allotted to each. Mid term appraisals are held of policy development and senior officers keep monitoring and directing the juniors at every stage of policy implementation to make it error free.
Limitations are - bureaucratic(nepotism,red tapism,etc) and rigid behaviour of administrators,lack of expertise and knowledge,lack of funds and infrastructure,citizens not cooperative.

3) Policy Education : People/target groups are made aware of the objectives of the policies and how it will be of help to them now and in the future and garner their support so that implementation is smooth without any roadblocks. This will also help in increasing participation of people in the policy process to provide true feedback and curb nepotism and corruption in implementation as well as provide their own expertise. This helps in the decision making of the administrator as well and helps in improving/bettering the policy implementation at the same time so that there is no conflict at a later stage.
Limitations are - lack of trust of people in bureaucracy,hostile attitude between both parties,etc.


4) Policy Evaluation and review : In order to determine the success and failure of any policy this step is necessary.Policy evaluation is weighed in many ways like cost benefit,welfare of the people,achievement of goals and objectives set,etc. The legislature,bureaucracy,judiciary(through its powers of judicial review) and voluntary and non profit organisations and associations play a huge role in policy evaluation.Policy studies help in reviewing the policies and improving them.
Limitations are- lack of will,lack of resources,data issues,ambiguous policy staements,equity or economical dilemma,etc.









THEORIES OF STATE AND PUBLIC POLICY FORMULATION IN SUCH STATES:
Theories of State and public policy formulation will help us understand the different kinds of State's and how policies are formulated under them.

The four major theories of State are:

1) Pluralistic theory of State: It is a liberal theory of State and states that the State acts as a referee and umpire who as and when required steps in to arbitrate between issues occurring. It believes that every individual of the society knows what is best for him and has mutually agreed into a social contract with other individuals to protect their interests and the duty to referee that social contract is in the hands of the State,so as and when that social contract stands violated by anybody the State will punish them neutrally.
This theory states that since the State is non partisan, and unbiased it brings out only altruistic,universal and benevolent Public policy.

i) Neo-Pluralistic State theory - However,the new or neo-pluralistic State theory state that the State is not completely insulated from influence and is influenced repeatedly by groups whose relative strength caused by huge investments like corporates,etc and so the State also bows down many a times and misuses its powers. therefore Public Policy formulated in such a Stateis influenced by these groups and many a times goes against the majority's will.

2) Marxist Theory Of State: Marx claimed in his theory of State that the State is an institution created to cater to the interests of the bourgeois (rich/upper middle class) and to perpetuate their vested interests. State wears the mask of the protector of the proletariat/peasants/poor but actually has a different face , that of catering only to the bourgeois.
Public policy formed in such a State will be coercive towards the proletariat and will be pleasing to the bourgeois or the dominant group.

i) Neo-Marxist or new-Marxist theory of State: Gramsci through his phrase " Ideological hegemony" states that Bourgeois does not only use the State for its vested interests but also uses other instruments like education,religion,etc to do the same. Public policy formulation in such a State tries to take care of religion,culture,education,etc. through public policy to perpetuate the bourgeois interest.

ii) Contemporary Marxist theory of State: Miliband and Poulantzas challenged the two class model of Marx and stated that even the bourgeois class consist of different levels. And beyond the two classes of bourgeois and proletariat there are also other classes like white collar jobs,etc. Miliband argued that the State will formulate policies that act like an instrument to serve the interests of business class and will also serve the poor and vulnerable but under the aegis of the business class. That is why Miliband is also called as an instrumentalist.
Poulantzas states that the role of the State is the outcome of the balance of the power of the society thus the public policy formulated in such a State arrangement is influenced by the balance of power in the society. Thus it is a structure that is formed on the basis of benefit of both opposing factors. Thus,he is also called the Structuralist.


3) Leviathan State: State is all powerful and having all potentialities and is all encompassing. Leviathan means Gigantic and powerful and was coined and theorised by Thomas Hobbes.
This state has two sides - Demand and Supply
Demand side refers to the demands of the society brought about by the big state and supply side refers to initiation of the State to become a big State.
Public Policy formulation in this kind of a State relates to all areas including developmental and non developmental. People get a chance to voice their view (demand side) and State on its own brings public policy which it feels is beneficial for people(supply side of State).


4) Patriarchal State: It is a feminist view of State as they believe that the State is exploitative towards females and justifies male values and orients towards males.

It has two approaches to it - Radical and Liberal Feminism
i) Radical feminism: These are radicalists and revolutionary ideas and do not believe in reform or gradual change. They believe in confronting the State and demanding their rights at the very moment.

ii) Liberal feminism: This view believes in gradual reform and states that the traditional sphere is believed to be for females and the public sphere is believed to be for males and the State supports this imbalance. However,they believe in taking one step at a time to rectify the gender imbalance in both sectors.


Now since we have studied the theories of State. Now let's move to the practical aspect of State and its various typologies.









TYPOLOGIES OF STATE / ROLE OF STATE & PUBLIC POLICY FORMULATION IN THEM:
1) Minimalist State: Believes in Laissez Faire "leave us alone" policy where state takes up only regulatory role and a non-development role.
Public policy here will be regulative,facilitating (New Right Philosophy).

2) Developmental State: It does allow private players in the public field but the State is proactive in developmental activities and there is private public partnership to achieve the same.
Public policy here is very detailed and gives a clear explanation of each issue.

3) Social Democratic State: Here the State focuses on equity instead of economy and democratic methods are used to achieve the same.
Public policy here is socially oriented.

4) Collectivised State: Private sector is majorly sidelined and the economic planning and development is centralised and in the State's hands.
Public Policy here will do the same and enforce the principles the State follows.

5) Totalitarian State: Here every aspect of society is centralised and controlled by the State totally like education,culture,religion,etc.
Public policy here is made on every aspect and the State performs all the functions alone.

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