Hello Timmy and Anurag,
Thank you providing me the possible solutions and for following up with me to see if the issue got resolved.
My first hunch was that it was role problem because the DeployIfNotExists code was not getting deployed. On further investigation we found out that the whole initiative was assigned in "DoNotEnforce" mode, and it seems like it has been like that right from the beginning. This was the reason the DeployIFNotExists code in all the policies was not getting initiated at the time of resource deployment. We have made the change in the assignment now and going forward we will be checking on how the compliance numbers are progressing every day. That will help us figure out if we have any other issues.
This can be closed as resolved now.