01 April 2003 -

The factors discussed the preceding series of articles have contributed in varying degrees to the dismal state of our public services. But it is clearer now that at the root of this problem lies the government’s inability to balance its preoccupation with investment with an equally strong concern for outputs and productivity. This failure has to some degree resulted in a neglect of the organisational requirements for the efficient design and delivery of services at the ground level.

Resource constraints cannot fully explain this trend in view of the evidence that the potential for resource generation is often left untapped. That the elite in authority have better access to most essential services may partly explain why the task of reforming the system is being ignored. An unwelcome byproduct of these developments -- reinforced by a weak civil society -- is the spread of corruption in public services.

Could the market have done a better job of delivering public services than the state? Champions of privatisation will certainly answer this question in the affirmative. After all, in many developed economies, some of the services discussed above are indeed delivered by the private sector. In fact, private utilities have a good track record of producing and delivering services such as electricity, water, telephones, and transport in many parts of the world. Municipal services such as garbage clearance, road maintenance, etc., have also been privatised with much success in several countries. The United Kingdom (UK) has been the leader in this field with its privatisation of telecom, water, electricity, and transport. Among developing countries, Latin American governments have privatised more of their stated owned enterprises than other countries.

But privatisation does not mean that government would have nothing to do with these services. In all cases, it will be necessary for government and its specialised regulatory agencies to specify the standards and conditions of the services, regulate tariffs and related financial matters, and monitor the service providers’ performance. In India too, efforts are under way to let the private sector play an increasing role in the production and delivery of some services such as electricity and telephones.

The pace of actual privatisation of public enterprises has been agonisingly slow. These are relatively new policies and it is too early to judge their effectiveness and efficiency. However, if functions such as standard setting, pricing, and supervision are not well designed by the state, these reforms may end up creating a new set of private sector monopolies performing worse than the public sector. If government organises itself well to perform its regulatory and monitoring roles, the private sector may deliver at least some of the services more efficiently than is the case at present. Private investors may also have stronger incentives and capabilities to access new technologies and innovative practices than their public sector counterparts.

The government's role will change in significant ways when the market is given a larger role in the production and delivery of public services. It will have to assemble staff with the skills, experience, and incentives to regulate and supervise the new private service providers. From the direct management of public services, government will now be expected to move towards an indirect management or oversight role, one that will call for a significant reorientation in terms of competence, behaviour, and attitudes.

If functions such as standard setting, pricing, and supervision are not well designed by the state, these reforms may end up creating a new set of private sector monopolies performing worse than the public sector.
Even if the state reorients itself and the market’s role is enlarged, there will still be many services that government will need to provide for its citizens. Some are public goods such as law and order, which benefit all people. Government will have to ensure that certain activities of households and business are in compliance with existing laws and regulations. Basic education, preventive health, maintenance of certain common facilities, pollution control, etc., are not tasks that can be left wholly to market forces. At a minimum, government has to play a regulatory role and monitor standards in these services. User charges cannot be levied on some public services that provide collective benefits to society. These activities and services will remain the responsibility of local governments, regulatory bodies, and other specialised public agencies. Getting the government to deliver these services more responsively to the people will be a continuing challenge in any society.

While the market’s role has been discussed a great deal in the context of the reform of public services, the role and relevance of civil society as a force for better services have not received much attention. In many regions such as the former Soviet Union countries, South Africa, and East Europe, civil society institutions have played an important role in mobilising public opinion to reform the role of the state and its institutions. Civil society here refers not only to formal entities like the media or professional associations, but also to the informal networks of people from different walks of life. Powerful movements involving the civil society have surfaced in response to major crises of governance in several countries. The "people power" revolutions of the Philippines that led to the overthrow of two corrupt presidents are an inspiring example. Similar civil society movements in Indonesia and Iran also achieved significant results. Even in the absence of major crises, reforms in government and the restructuring of many public institutions and practices in some countries have come about in response to the pressure from civil society interventions.

It is in this context that the role of state-society interaction in improving public services assumes special significance. We have noted above that so far it is the organised sections of society that have exerted pressure for or against major reforms in government. Industry and labour associations, for example, have been actively engaged in campaigns for or against certain economic reforms. In respect of public services, it is citizen groups who should play this role. They are the primary stakeholders as they stand to lose when services are in disarray. But their “voice” is seldom well orchestrated or heard. Occasionally, people have protested or organised public campaigns and marches in times of crisis. Public hearings have been used by some activist groups to highlight abuses and demand public accountability. The series of public hearings in Rajasthan held by MKSS (a union of rural workers and farmers) that ultimately culminated in new laws for the right to information is an example. Similar public campaigns by environmental groups have also been widely documented. But sustaining such organised efforts to put continuing public pressure for reform on public agencies on a large scale has not been easy.

One form of civil society action that has gathered momentum in India is “public interest litigation" (PIL). Here we have the truly inspiring example of Mr. H.D. Shourie, a senior citizen, who in the past two decades, has appealed to the Supreme Court of India and won several significant cases involving the abuses and neglect of the law by powerful ministries and agencies of the government. According to Mr. Shourie, the Court gave him a patient hearing not merely out of respect for his age, but also because he argued the cases himself, without the assistance of any lawyer! The failures and non-responsiveness of service providers have been successfully challenged in many other cases too in Indian courts of law in the past two decades. These judgments have signalled the executive agencies of government that courts could be used by citizens to seek increased public accountability. But the key issue here is whether these judicial interventions will succeed in stimulating systemic reform in government that will institutionalise improved responsiveness to citizens. As of now, except in a few notable cases, there is little evidence of that happening.

In conclusion, the quality and responsiveness of the providers of public services are unlikely to improve when external pressure for reform from the citizenry is weak. The state is clearly the key actor in the provision of public services. What we have shown in this chapter is that the problems inherent in the functioning of governments are such as to cast doubts on the state's ability to overcome them solely through its own efforts. There are two other actors who can make major contributions to the improvement of public services. As the diagram below shows, the state can reduce its overload and enhance its performance by hiving off those services or activities which can benefit from market competition. Hiving off does not imply abdicating responsibilities by the state. There will also be opportunities for the state to partner the private sector in some of the services. Such partnerships could be in terms of technology, finance or innovative practices that enhances performance of service providers. Even when the private sector takes over a service, a regulatory role for the state may still be required. Whether the state is the sole supplier of services or provides them jointly with the market, the role of the civil society as an active monitor of the services and advocate of accountability is an essential one.

Series : Why are our Public Services Unsatisfactory?

(Concluded)