This paper brings out a few issues on how prevailing institutional conditions are inadequate for an efficient functioning of markets, and on the role of government policy in the transition period in the Indian context. We approach the issue of market institutions form the new institutional economics perspective. The basic argument of the paper is that the prevailing institutional conditions are not totally consistent and are inadequate with the spirit of free market economy and the approach of the reforms has been lopsided. To put it in the words of Williamson (1994), the approach of the reforms should be not just getting the prices right but getting the institutions right: to get the prices right one has to get the institutions right.