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Broader policy analysis has received less attention compared with routine public administration for reasons clearly related to the nature of policymaking in India. The public administrators, or civil service officials, provide the analytical and intellectual back-up to political leaders for developing and analyzing policy options. Public administrators are at the centre-stage of policy analysis and not experts or bodies outside the formal political venue (Sapru 2004). Thus, the policy process is coordinated by government departments manned by bureaucrats and headed by a Minister (an elected political leader). This has been the most prominent venue for policy formulation in India. The Minister heading the department has control over the appointments and transfer of public administrators. Hence, the Minister commands considerable influence on administrative procedures and outcomes. This type of venue is hereafter referred to as government-led. The following subsections discuss the cases of tool use under this particular policy venue.

Cost-Benefit Analysis in Dam Building Policy

Cost-benefit analysis (CBA) is one of the oldest and most commonly used policy formulation tools in India. Although also used for project evaluation and approval, it has a strong bearing on the overall policy related to publicly funded infrastructure projects. This experience will have a bearing on the future use of tools in policy formulation. Hence, for these reasons, it is important to review the use of CBA.

The design of CBA

Under British rule, dam projects were largely undertaken for returns in the form of revenue to the government, although a few projects were also undertaken specifically for drought mitigation (Singh 1997). The main criterion for undertaking projects was financial return, typically assessed by calculating internal rate of return (Iyer 2003; Singh 1997). This was a stringent criterion for assessing projects and helped in maintaining financial discipline in project planning and execution (Singh 1997). In the post-independence period, the Government of India followed a less stringent approach to project appraisal. Its approach was based on a simple cost-benefit analysis where the benefits are measured in terms of the net benefits of irrigation accruing to farmers and thereby to the economy. Costs represented only the direct cost for constructing the dam (Iyer 2003).

The less stringent design of CBA for dam projects was certainly beneficial for farmers who otherwise would have not benefitted from irrigation. Hence, it was referred to as a 'social CBA' (Singh 1997). But the main question was about distribution of these benefits. The social CBA was not a comprehensive socio-economic analysis. It did not include the full cost associated with resettlement of project-affected people and environmental damage. Had these costs been included in the design of the tool then many projects that exist today would have been rendered unviable. Hence, the design was only partly 'social'.

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