Human resource policies play an important role in shaping the culture and type of psychological contract in a growing organization. These policies can be formulated either in coherence with the developing organizational culture and psychological contract or can act as an instrument to mould the organizational culture and psychological contract. ABCEL - A growing energy generation firm in India is facing the dilemma of deciding on the direction in which human resource policies should be formulated. ABCEL could formulate its policies in line with the demand of the business environment or in line with the current culture and relationship with the employees (psychological contract). The present paper describes this dilemma and suggests that further research is warranted in an emerging economy to provide managerial directions in this context. While studies in western context have reported diminishing role of relational psychological contract, the paper identifies the need for further research in this context within developing economies,considering the cultural difference between west and east.