The objective of Liberalization, Privatization and Globalization and of New Public Management was to limit government functions and reduce public expenditure. However both functions and expenditure has increased. Account for the paradox. (Answer in 350 words)

- The objective of Liberalization, Privatization and Globalization and of New Public Management was to limit government functions and reduce public expenditure. However both functions and expenditure has increased. Account for the paradox. (Answer in 350 words)
Introduction
Liberalization, Privatization and Globalization and New Public Management shared one premise: a state that stopped producing would also do less and spend less. Three decades on the Indian state produces less directly, does more overall, and spends more doing it. The paradox is explained by what liberalisation itself creates.

Why functions expanded
- Withdrawal creates regulation: opening or selling a sector does not end public responsibility for it, it converts ownership into rule-making. SEBI, TRAI, CERC, Insurance Regulatory and Development Authority of India (IRDAI), PNGRB and the state electricity regulatory commissions are all products of the reforms, not survivors of the old order.
- Contracting is harder to govern than producing: public-private partnerships in highways, ports and airports demand tendering, concession design, renegotiation and dispute resolution capacity that departmental works never needed.
- NPM's own machinery: performance agreements, outcome budgets, citizens' charters, evaluation and audit units are themselves new administrative functions, created by the doctrine meant to shrink administration.
- Political compensation for uneven gains: rights-based welfare followed liberalisation rather than preceding it — Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in 2005, the Right to Education in 2009, the National Food Security Act in 2013.

Why expenditure rose
- Entitlements are open-ended: a legal claim must be funded to whatever level demand reaches, unlike a discretionary scheme that can be squeezed. MGNREGA, food security and PM-JAY converted welfare into an obligation on the exchequer.
- Subsidies were restructured, not removed: fertiliser, food and fuel support moved to direct transfer and better targeting, but the fiscal load persisted.
- Establishment costs kept rising: successive Pay Commission awards raised salary and pension bills at Centre and in the States regardless of restraint on headcount.
- Crisis absorption fell to the state: the 2008 financial crisis and the COVID-19 response showed that only government can absorb systemic shocks, and each episode reset the expenditure base upwards.
- The enabling role costs money: capital spending on roads, railways, power and digital public infrastructure grew precisely because the state became a facilitator of private activity.

Conclusion
The reforms redefined the state rather than reduced it — from producer to regulator, financier and guarantor of last resort. Wagner's law anticipated the spending path and Majone's regulatory state anticipated the functional one: a market economy needs more public rule-making, not less. The honest measure of reform is therefore the quality of state functions, not their number.