Public Administration Answer Writing Practice 2018 - Week 7 - Question 5

90 Days Public Administration Answer Writing Practice Question 1 for 28-Dec-2018

Instructions for Writing Answer

1. Write your answers in the comment section.

2. Experts will provide their feedback in reply.

3. Model Answers will be uploaded on this page the next day.

4. Rectify your mistakes and progress further.

5. All the Best.

28-Dec-2018 - Question 1

“The problem is to achieve the right balance between a competitive market economy and an effective State : markets where possible; the State where necessary.” Justify your answer. (2016)

For Question 2- Click Here

Model Answer

The debate of strong state and competitive market economy has become more relevant in and meaningful in developed countries by 1980s and in developing countries in 1990s. The market has invisible hands which automatically take care of all the wrongs by balancing the demand and supply. While on another hand ineffective state economy, the state controls the market and decides the prices of the commodities and goods.


Keynes propagated strongly for enlarging the role of the state, the concept of the welfare state emerged during that time.  The state is a better actor to manage the market and welfare of the people. As with new emerging crisis, the role of the state was changed and the New Right philosophy and neo-liberal policy emerged. The New Right Philosophy advocated for smaller state and the market has to be liberated from the state.  Anthony Downs, Vincent Ostrom, Tullock were in the opinion that the size and monopolistic nature of the market have become the roadblock to the growth of the market. They advocated for the marketized state. As Waldo observed in Minnowbrook II the role of the state will change but the importance of the state is not going to be undermined.


According to Peter Drucker, the role of the state is shifting toward government by the market. The government by the market is based on three major dimensions:-

  1. Slim State:- Rolling back of the state. The state role is limited to the critical areas only. Due to the liberalization and privatization, the state is becoming slimmer and slimmer.
  2. Liberation of the market:- The market is deregulated. The private sector is allowed to operate in any sector. The market is released from the state control. Due to which efficiency and effectiveness of the market have increased significantly.
  3. Introduction of market principles and practices:- In the era of liberalization and globalization. the principles and practices that operate the market have increased.


With the rolling back of state, the role of the state is changed from the service provider to service regulatory. The main responsibility of the state in changed time is to regulate the market and ensuring open and free market. The state role is limited to the critical areas and to manage the market. The state can take up its critical roles only when it is financially ideologically and technological and intellectually strong. The state should be active in the area where non-state institutions are either absent or inadequate in the era of the liberalized and globalized world.


Denhardt and Denhardt suggested that the state can’t afford to be like market institutions. The role of state will be redefined and the markets can’t be left unregulated. The state should focus on the concept of new public services. The market may operate freely but on the boundaries of social and constitutional ethos. The state has to steer not row now. The state role is limited to facilitator and regulator to the market. The state intervened in the emergency situation only otherwise market operate freely.

Note: There is no template for a correct UPSC answer, the model answer is only for your reference


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