Capitalist public administration

Sauvik Chakraverti has a provocative op-ed in the Mint which claims that India’s bureaucracy is wasteful and cumbersome and advocates a "truly capitalist public administration" ("government comprised of magistrates, policemen, judges, jailors and hangmen—nothing more"). While not holding a brief for Indian bureaucracy and even being sympathetic to the accusation, the solution advocated is at best ignorant and at worst dangerous.

Apart from the highly simplified, to the extent of being obtuse, ideological position articulated, there is a shocking level of (wilful) ignorance about the application of abstract concepts like "new public management" to our context. Take the example of the "capitalist administration" of garbage collection, steered by "just one civic official" and "rowed" by the market, to replace the "department with many rungs, recruits thousands of sweepers, buys hundreds of trucks", with its "very big jharoo tender".

"We in India, too, face a spiralling government deficit. In all our cities and towns, huge bureaucracies have been set up which contribute nothing towards improving our lives or our urban environs. These must be sacked and the system of government service delivery drastically reformed. Further, if we save money by contracting out garbage collection, we will have more left over for building roads. In my book, roads and garbage collection must be top priority for all urban local governments — and both must be provided non-bureaucratically."

The underlying assumptions in this arguement include

1. Urban bureaucracies are grossly inefficient and contribute little or nothing towards improving our lives
2. Huge amounts are being squandered by urban local bodies (and their bureaucracies) that is adding to the government deficit
3. Contracting out garbage collection is more efficient and effective than done by government
4. There are private contractors with adequate capacity to step into the shoes of the "department" and collect garbage.
5. That private contractors can do garbage collection cheaper than the "department"
6. That there are piles of money to be saved, which can be used to build roads

The reality is that most of our cities are run on shoe-string budgets, relying predominantly on property taxes and user charges (both lightly levied). India stands alone among major countries where urban local bodies do not get a meaningful share (in some states it is nothing) of the direct and indirect taxes collected by state and central governments. Urban local bodies, except in the metros (and here too small in proportion), receive hardly anything from the "government", to contribute to the "government deficit". And talking about deficits, if only our debt-averse local bodies could actually get themselves to borrow more (and of course the debt market to have the depth to supply the credit)!

About private contractors, one only needs to look at the litter of failed experiments, across cities, with civic services contracting (garbage collection, street-lighting, water and sewerage treatment facilities etc) to realize the shallowness of the "market". The perception that private contractors can do the same service, with better quality, cheaper than government is one of the most enduring fictions in the privatization folklore. For some practical evidence of such "market" interventions, see this, this, this and this.

Apart from all the aforementioned substantive problems, these canards do considerable dis-service to the final objective - efficient and cost-effective delivery of quality public services. Here are just two examples.

One, the perception that urban local bodies (or government "departments") are wasting massive financial resources, which can be saved to finance other activities, is oft-used by many (fiscally constrained) state governments to deny cash-strapped urban local bodies even the the meager resources committed under the Finance Commission recommendations. The slogan is - cut down expenditures and save money to increase revenues! People just don't seem to realize that delivering quality civic services costs handsome money, which has to come from both much higher user charges and share of taxes.

Second, the arguement that we can dramatically transform civic services in our cities by pulling out the "department" and bringing in private contractors is also fraught with dangerous implications. Given the serious problem of supply-side constraints associated with private contracting of works and services, it is only inevitable that there are failures and bad experiences (more failure than sccesses, atleast in the initial years) with outsourcing and privatization, which ends up discrediting the process itself. We need to look no further than the controversial water privatization in Cochamamba, Bolivia (or water supply O&M by Delhi Jal Board and electricity distribution franchising in Orissa) that put privatization on the backfoot and ended up becoming a rallying symbol for opposition.

And finally, Sauvik's priorities, garbage collection and roads, are at odds with the priorities of just about any civic specialist (not just officials and public representatives) which are water and sewerage, along with solid waste treatment. Incidentally, roads, though very important, come much later, so much so that the Government of India refuses to sanction road works under the JNNURM.

None of this is to decry private participation in urban civic services (regular readers of this blog will appreciate its position on the debate!). Nor is it a defense of the department. This is only a note of caution against embracing attractive ideological shibboleths ("city managers using NPM")that grossly simplify the complex challenge of delivering public services in extremely challenging environments with scarce resources. We need "practical public administration" and not "capitalist public administration".