With the International Monetary Fund chief, Kristalina Georgieva, claiming that
“uncertainty is the new normal”, developmental economists now confront a new interpretive challenge. Indian scholars and policymakers, however, face an additional puzzle: how to design next-generation public institutions that are contingent on local conditions and pre-existing advantages while simultaneously overcoming domestic constraints? Whether this is pursued through what James C. Scott describes
as a high-modernist approach or through the polycentric framework proposed by
the Ostroms is ultimately a matter of political will. What is widely accepted, however, is that uncertainty is best addressed through strategic decentralisation.

The ongoing discourse on India’s growth story has entered something of an epistemic cul-de-sac. The binary of ‘more State’ vs ‘less State’ obscures a fundamental need for robust, locally adaptive institutions. State-level reforms in India must now move decisively towards cultivating ‘locally agile institutions’ that internalise systems of adaptive co-management. These systems should drive on input-output-outcome feedback loops, while empowering decentralised decision-making through ‘reflective improvement capability’.

While the Centre continues liberalisation, states hold the latitude to shape their own destinies. This urgency is underscored by persistent disparities in economic growth and human development across states. Amitabh Kant and Amit Kapoor, in The Elephant Moves, show that convergence in human development is far from assured, and the Social Progress Index indicates wide variations in performance among states.

Consider, for instance, the panchayati raj institutions across Indian states. While a strong constitutional framework exists for devolving powers to micro-level institutions for decision-making, state-level regulatory frameworks often leave little
room for such autonomy. A Comptroller and Auditor General audit of PRIs shows that the majority of Indian states do not actually give micro-institutions the power to
adapt expenditures; all PRI expenditure must be ‘voted’ by the legislature. Further, our institutions tend to fall into the trap of ‘best practices’. Scholars have increasingly argued that the standard application of international best practices may do more harm than good. Best-practice models can provide a useful starting framework, but excessive reliance on them discourages institutions from engaging in ‘reflexive regulation’ — the ability to adjust to complex social contexts. The Smart Cities Mission, for example, sought to replicate a similar model of ‘smartness’ across cities of widely varying character and capacity.

Another illustration lies in the global shift from viewing development merely as economic growth to understanding it as multidimensional prosperity. This
reorientation has important implications for public institutions. While market and regulatory reforms can raise incomes and reduce poverty, advancing genuine social mobility requires deeper institutional and policy engagement rooted in local context.

The challenge is not simply deregulation, but the construction of credible, transparent, and learning-intensive institutions, especially where uncertainty and local variation shape outcomes.

As India aspires to become Viksit Bharat, the real reform frontier lies in building epistemically intelligent governance as a state-wide movement. The next generation of reforms must treat states and their institutions as epistemic technologies: systems designed to continuously discover, justify, and adapt knowledge across complex policy terrains. Only then will India’s growth story do justice to its constitutional commitments.

Suresh Kumar, IAS, was the chief principal secretary to the chief minister of Punjab from 2017 to 2021. Sirjan Kaur is with the PANJ Foundation, a Punjab-based policy think tank