ECONOMY WATCH
Dr Bharat Jhunjhunwala
Intellectuals of the country are debating whether educational system of the country should be handed over to private providers or the Government must persist in efforts to reform the same. The Planning Commission wants to handover the education system to NGOs or private providers in a Public Private Partnership or PPP mode. Other intellectuals hold that this would be tantamount to the Government withdrawing from its solemn responsibility of providing the basic needs of the people. I believe this debate is meaningless. Both private providers and government provision are failure. The only solution is to provide cash to the people directly so that they may buy the education from whatever source they deem to be proper.
The Planning Commission has suggested that government schools, hospitals and other social services should be given out to private providers just as PWD gives out contracts for making roads. Thinking is in the right direction, but fails to deal with the problem at its roots. It is recognised that improving provision of these services through government employees is beyond redemption. Instead of wasting time and energy in reforming government providers, we should move speedily to PPP mode. People would then be able to approach the government officials against deficient provision of these services by private providers. Three-way friction between people, private providers and the government regulators will provide better accountability than two-way friction between people and government providers.
Presently government officials are both providers and regulators of government employees. Say, a government teacher is absent from school. Complaint has to be lodged with the same District Education Officer with whose knowledge and connivance the teacher is absent. Naturally the regulator does not act. Private provision in PPP mode will help improve delivery of these services just as privatisation of distribution of power supply in Kolkata and Delhi has led to much improvement.
Yet, the fundamental problem of inefficient provision of government services is not solved. The Planning Commission had set-up a sub-group on Public Private Partnership in social sector. Report of the group says that the fundamental problem of delivery is that government provision is monopolistic in character. The bureaucracy indulges in lethargy, corruption and high handedness because people have no alternative but to put up with their misbehaviour—they being the sole provider of these services. The report says that giving out these services under PPP mode will be an improvement. This should not be seen as privatisation. The control will remain with the government and private providers will have to follow the rules and directions given by the government. Providing services through private providers should be seen as administrative reforms rather than dilution of role of the government.
The Planning Commission acknowledges that the main problem is of monopoly of government provision. The customer has to pay whatever a lone rickshaw puller on the street corner demands because the latter is in a monopolistic position. Similarly, people have to bear with the highhandedness of the government employees. This means that the solution will require dismantling government monopoly. Giving out provision of the services to private providers does not attain this end. Rather, government monopoly is replaced with contractor monopoly. Teachers appointed by the contractor may be just as inefficient, disinterested and corrupt as those appointed by the government.
The Planning Commission says that competitive bidding in selection of the service provider will lead to improvement. I have doubts. My experience is that government provision is better than private provision in certain sectors. Insurance agents tell that government insurance companies will generally pay full claims even though they may take longer time in doing so. Private insurance companies will try to pay less by using one tactic or other. Consumers have often complained about excessive billing by private telecom companies. Such complaints are rare in state run MTNL and BSNL. Government teachers are generally much more qualified and competent. Private providers may appoint less qualified teachers to cut their costs. Thus government and private providers have both plusses and minuses. Government system is impersonal and qualified but slow and highhanded. Private providers are less competent and more money minded but more efficient. Which of the two will be better; therefore, will depend upon case to case situation.
The Planning Commission further says that “the monopoly like situation of a public service is kept under check through the process of monitoring and evaluation. This can be further supplemented through putting in place ‘independent regulatory systems’ to protect the consumer’s interests.” True. But the same could be done with respect to the present government employees. They could also be kept under check by monitoring and evaluation. Conversely, it may be as difficult to monitor the private providers who are able to get substandard materials accepted in government purchases by giving bribes. Replacing tyranny of the government by tyranny of the private providers is no solution.
There is a greater danger. Focusing on minor improvements though the contractor route distracts our attention from the basic problem and actually perpetuates the same. Say, a young boy is interested in sports. He is not doing well in studies. He is sent to a tutor in mathematics. His math’s scores improve. But, in the process, he is distracted from pursuing his primary destiny in sports. Seeking an immediate solution without examining the deeper causes would then lead to long term harm even though there will be short term gain in marks obtained. Sachin Tendulkar and Morari Bapu would have perhaps not attained their present glory had their parents pushed them for minor improvements in their school education. Similarly, in taking the PPP route, we are distracting from breaking the basic fallacy of government provision of social services.
World Bank data tells us that government expenditure on health in India accounted for only 17 per cent of the total expenditure on health. Situation in education is similar. The welfare mafia of government teachers and doctors has captured this government money. Now the Planning Commission wants to create another mafia of private providers to replace the mafia of government teachers. The need is to wholly dismantle the government services except for the very backward areas where private providers have not reached yet. A fundamental principle of democracy is that the people know best. The government spending on social services too should be left to the people. The amount should be given out in form of cash vouchers to the people. They should be empowered to select providers. Focus must be upon improving the quality of private provision by regulation. Regulation of private schools is fundamentally different from that of regulation of government private providers because no government funding is involved. Let us not waste another decade experimenting with private providers and then finding that we have only fallen from the frying pan into the fire.
