ABSTRACT
This chapter elaborates the governance paradigm with its focus on the state–society interactions, the state capacity and the complexities and dynamism of interactions between different actors is the most beneficial approach to address the puzzle. The puzzle is: Two subnational states (Andhra Pradesh and Bihar) with a comparable initial political and economic condition and the divergent economic trajectories. The chapter focuses on two relevant conceptualizations: the first conceptualization is 'good governance' and second conceptualization of governance is related to the comparative political economy. The neo-liberal agenda of the World Bank and International Monetary Fund for the developing countries ascended in the context of Washington consensus. Most works, discussing and examining the interrelations between governance and development in India used 'good governance' discourse. The rise of 'neo-statism' in the social sciences played a significant role in the emergence of governance as a scientific keyword in political science. The concept of governance signifies the multiple actors, state and non-state.
