The institutional context of economic activity in India has undergone tremendous change in the past 15 years. The Government of India's 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 enterprises-entry, capacity expansion, exit, pricing and distribution. During the initial phase of the reforms, policy attention focused on stabilization of the macro-economy. It would be fair to state that there was no coherent institutional road-map that Indian reformers had in mind when the process began. The overall policies were shaped by the "Washington Consensus" model. 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 government-business 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. Policy makers began to refer to regulatory institution building and associated legislative enactments as "second-generation" reforms. Since then, there has been a steady focus on the institutional dimension-in particular with respect to the establishment of a number of regulatory institutions.

Our paper seeks to explain the ongoing process of regulatory evolution, and the crucial role of legal process. The institutional framework governing the regulation of business enterprises may well take a decade to attain mature stability. It is important to appreciate the fact that this process of institutional reform is not being driven by any particular political agenda. It has acquired a momentum of its own. Different political coalitions have ruled the Central government since 1991 without substantially reversing the direction of institutional evolution. This paper attempts to provide an explanation of the process of evolution of a regulatory framework. In this paper, we examine the case of the Indian telecommunications industry in detail, but we believe that our basic explanatory framework is valid more generally.

There is a general sense that the legal system in India is inefficient. First, there is over-legislation and unnecessary State intervention, both in the form of statutes and administrative law (rules, regulations, procedures). This increases non-transparency and contributes to rent-seeking, which is not distributionally neutral, because the relatively poor tend to suffer more. Second, over-legislation exists simultaneously with under-governance, because laws aren't enforced and the dispute resolution system, including enforcement of contracts, isn't credible.

Reforming legal institutions is not only a desirable end in itself, it also has the byproduct of adding to GDP growth. While these points are unassailable, most empirical work on documenting inefficiencies of the Indian legal system is fraught with problems. For a start, cross-country comparisons tend to be overly simplistic, ignoring the specifics of the legal regime and the context within which the country is situated. In addition, legal indicators used, even when they are not cross-country, tend to be too macro and aggregate and are indiscriminately used. For instance, data collected for Hyderabad are applied to all of Andhra Pradesh. This paper adopts a different approach. It draws contrasts between Gurgaon and Faridabad, districts (and towns) not only located within the same State, but also districts with similar historical and geographical backgrounds. This enables one to control for many variables that cause different trajectories of legal and economic development within and across countries. The paper then seeks to explain the differential growth in these two geographical regions through differences in the legal land regimes.

Private sector participation and private investment have become the mainstay of the Government of India's policy toward infrastructural development. The success of the ongoing eleventh five-year plan critically depends on the success of Public Private Partnerships (PPPs) in infrastructure. Moreover, several state governments are also trying to attract PPPs for the provision of public goods.

In this paper, we have studied the performance of the Public Private Partnerships (PPPs) programme of Government of India, for development of highways and expressways. The focus of the study is on the following questions: Why have some projects attracted private investment while others have not? Why only a few states have attracted PPPs, while some others have completely failed to do so? We have also discussed some other issues related to the PPP policy and its limited success. We have provided a set of legal and economic variables that explain the skewed distribution of PPPs across projects as well as across the states. We have shown that the richer states have attracted more PPPs than the poorer ones. Besides, the probability of PPP is higher for projects located on national highways connecting richer states, and those located closer to mega cities. Moreover, ceteris paribus, the quality of governance, in terms of the level of property rights protection, in a state is also a significant explanatory variable. Empirical evidence in support of these claims is conclusive and robust. In the light of our findings, we have answered the following additional questions: Is PPP a viable and desirable public policy for development of infrastructure in poor states? What are the lessons emerging from the Indian experience with PPPs so far? Our dataset includes all of the highway and expressway projects that have been or are being developed as a part of the National Highways Development Project (NHDP).