Reinventing Public Service Delivery in India: Selected Case Studies [1 ed.] 0761934898, 9780761934899

Table of contents :
Contents
List of Tables
List of Figures
Acknowledgments
List of Abbreviations
1 Institutional Innovations in Public Service Delivery in India: Cases and Lessons • Vikram K. Chand
2 Promoting Competition in India’s Telecom Sector • Rahul Mukherji
3 Electronic Delivery of Citizen Services: Andhra Pradesh’s E-Seva Model • Subhash Bhatnagar
4 Transforming Service Delivery in an Indian State: Reform at the Department of Registration and Stamps in Maharashtra • Jonathan Caseley
5 Making Service Delivery Reforms Work: The Bangalore Experience • Suresh Balakrishnan
6 Rogi Kalyan Samitis: A Case Study of Hospital Reforms in Madhya Pradesh • Rajeev Sadanandan and N. Shiv Kumar
7 Rajasthan’s Experience in Improving Service Delivery in Education • Prema Clarke and Jyotsna Jha
8 The Political Economy of the Public Distribution System in Tamil Nadu • A.K. Venkatsubramanian
9 Human Development in Tamil Nadu and Karnataka: A Comparison • Sangeeta Goyal
10 Anti-Corruption in India: Issues and Strategies • Vikram Menon
11 Electoral Finance Reform: The Relevance of International Experience • E. Sridharan
About the Editor and Contributors
Index

Citation preview

Reinventing Public Service Delivery in India

Reinventing Public Service Delivery in India Selected Case Studies

Edited by

Vikram K. Chand

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Contents List of Tables List of Figures Acknowledgments List of Abbreviations 1

2 3

4

5

6

7

8

7 10 12 14

Institutional Innovations in Public Service Delivery in India: Cases and Lessons Vikram K. Chand

17

Promoting Competition in India’s Telecom Sector Rahul Mukherji

57

Electronic Delivery of Citizen Services: Andhra Pradesh’s E-Seva Model Subhash Bhatnagar

95

Transforming Service Delivery in an Indian State: Reform at the Department of Registration and Stamps in Maharashtra Jonathan Caseley

125

Making Service Delivery Reforms Work: The Bangalore Experience Suresh Balakrishnan

157

Rogi Kalyan Samitis: A Case Study of Hospital Reforms in Madhya Pradesh Rajeev Sadanandan and N. Shiv Kumar

186

Rajasthan’s Experience in Improving Service Delivery in Education Prema Clarke and Jyotsna Jha

225

The Political Economy of the Public Distribution System in Tamil Nadu A.K. Venkatsubramanian

266

6 Reinventing Public Service Delivery in India

9

10 11

Human Development in Tamil Nadu and Karnataka: A Comparison Sangeeta Goyal

294

Anti-Corruption in India: Issues and Strategies Vikram Menon

333

Electoral Finance Reform: The Relevance of International Experience E. Sridharan

363

About the Editor and Contributors Index

389 393

List of Tables 1.1

Average Tenure of Managing Directors of the Rural Women’s 19 Empowerment and Development Project (1998–2001)

3.1 3.2 3.3

List of Services Offered through E-Seva (Hyderabad) by Department Analysis of E-Seva Transactions Three Projects that Have Scaled Up

103 114

4.1 4.2

Summary of Research Methods in Maharashtra Stepwise Registration Process in Maharashtra

127 135

5.1 5.2

Key Service Providers in Bangalore Overview of Electoral Results in Bangalore and Karnataka

158 176

6.1

Changes in Select Indicators between NFHS I (1992–93) and NFHS II (1998–99) Expenditure on Health as a Percentage of State Budget in Madhya Pradesh Distribution of Government Health Subsidies by Expenditure Quintiles Progress in Formation of RKSs across Health Facilities in Madhya Pradesh Income and Expenditure of Rogi Kalyan Samitis Budgetary Allocations and RKS Contribution— A Comparison

187

6.2 6.3 6.4 6.5 6.6

7.1 7.2 7.3 7.4

Annual Growth Rate (Percent) of Total and Female Literacy in Selected States Enrollment Increases between 1993 and 1999 in Selected States Coverage of School Facilities in Selected States Completion Rates (1999) in Selected States

97

188 190 196 199 200

228 230 233 234

8 Reinventing Public Service Delivery in India

7.5 7.6 7.7 7.8 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 8.11 8.12 8.13

9.1 9.2 9.3 9.4 9.5 9.6 9.7

Teacher Absenteeism and Learning Levels in Selected States Expenditure on Elementary Education in Rajasthan Inspection Targets, Achievement, and Shortfall in the School System in Rajasthan Vacancies in the Department of Education in Rajasthan Per Capita Purchase and Income Gain from PDS in Rural Areas Fair Price Shops in Tamil Nadu (April 2004) Prices in Fair Price Shops Allotment and Off-take of Commodities from April to July 2004 Allotment and Off-take for Rice in the AAY Program Open Market Price, Central Issue Price, and State PDS Price of Rice (Rupees per Kg), 1978–96 Open Market Price, Central Issue Price, and State PDS Issue Price (Rupees per Kg) after 1997 Present Prices of Rice (Rupees per Kg) under PDS in Some Major States Food Subsidy (Rupees in Million) from 1980–81 to 2003–04 State- and National-level Diversion from PDS Probable Monthly Profit in a Fair Price Shop through Diversion to Open Market Seizures of Diverted Rice in Tamil Nadu in 2003–04 Percentage Share of National BPL Population and Allocation of Foodgrains before TPDS (1995–96): Comparing Poorer and Richer States State-wise Human Development Index (1981, 1991, 2001) Literacy Rates (1971–2001) Percentage of Population (Rural) with a Primary School/Section Gross Attendance Ratio by Gender and Rural-urban Residence in Primary and Upper Primary Schools, 1995–96 Age-specific Attendance Rates by Gender and Rural/Urban Location (1992–93) Average Annual Expenditure per Student, 1995–96 (in Rupees) Selected School Quality Indicators (Primary Schools), 1992–93

235 245 256 256 267 269 269 270 270 278 279 279 280 281 282 282 286

295 298 300 302 302 303 304

List of Tables 9

9.8 9.9 9.10 9.11 9.12 9.13 9.14

10.1 10.2 10.3 10.4 10.5 10.6 11.1 11.2 11.3 11.4

Dropout Rates from Primary School, 1995–96 Trends in Rural Child Work Participation Rates (Principal Status) Literacy Rates, Scheduled Castes and Scheduled Tribes, 1991 Selected Health and Demographic Indicators, 1971–2001 Public Expenditure on Health Selected Health Infrastructure Indicators Selected Health Service Use Indicators (1992–93 and 1998–99) Scores of 15 Asian Countries on Transparency International’s Corruption Perception Index (2003–05) Corruption in Service Delivery in India: Ranking of Services (2005) Cases Awaiting Sanction and Sanctions Received (2003), Government of India Registration of Anti-corruption Cases in Selected States in India: Scale versus Response The Anatomy of Corruption: Accessing Death Compensation in Jagatsingpur District of Orissa Factors Facilitating Corruption in India Seats Retained by Parties Re-elected in Assembly Elections (1989–2004) Pattern of Seat Retention in Lok Sabha Elections (1991–2004) Performance of BJP Incumbents in Lok Sabha Elections (1991–2004) Performance of Congress Incumbents in Lok Sabha Elections (1991–2004)

306 307 308 309 312 314 316

334 336 343 344 352 353 377 378 378 378

List of Figures 1.1

Clientelism in Service Delivery: Utilities in a Statedominated Environment

38

2.1

Distribution of Direct Exchange Lines (DELs) [Fixed + WLL + CMPs] [PSU + Private] as on March 31, 2003 Distribution of Direct Exchange Lines (DELs) [Fixed + WLL + CMPs] [PSU + Private] as on March 31, 2004 Coverage of Village VPTs (as on March 31, 2003) Coverage of Village VPTs (as on March 31, 2004) Staff per 1,000 DELs (BSNL and MTNL) Teledensity (Number of Telephones per 100 Population) from 1995–96 to 2003–04 Yearwise FDI Inflow (August 1991 to January 2004)

60

2.2 2.3 2.4 2.5 2.6 2.7 3.1

60 82 83 84 85 88

3.2 3.3 3.4 3.5

Trends in Transactions at E-Seva Centers (monthly for Hyderabad) Schematic View of E-Seva Application Architecture Stages in Evolution of Electronic Service Delivery Role of E-Seva Directorate Electronic Service Delivery Modes

100 101 104 111 119

4.1 4.2

Accountability Relationships Prior to Reform Accountability Relationships Following Reform

144 145

5.1 5.2 5.3 5.4 5.5

Satisfaction with Public Services across CRCs Satisfaction with Public Services across CRCs by Agency Problem Incidence Satisfaction with Staff Behavior across CRCs Corruption Incidence across CRCs among General Households

160 161 162 163 164

6.1

Non-plan Expenditure by Categories in Madhya Pradesh (1997–98)

189

List of Figures 11

6.2 6.3 6.4 6.5 6.6 6.7 6.8 7.1 7.2 7.3 7.4 7.5 7.6 9.1 9.2 10.1 10.2 10.3 10.4

Percentage Income from Various Sources in Various Institutions (2003–04) Expenditure across Facilities (2003–04) Income in Select Facilities Surveyed Expenditure in Select Facilities Surveyed In-patient Load (pre- and post-RKS) in Select Facilities Out-patient Load (pre- and post-RKS) in Select Facilities Patient Satisfaction Scores in Select Facilities Surveyed Literacy Growth Rate for SCs and STs in Rajasthan (1991–2001) Elementary Gross Enrollment Ratios in Rajasthan Gross Enrollment Ratios at Primary Level in Selected States Gross Enrollment Ratios at Upper Primary Level in Selected States Dropout Rate in Primary and Upper Primary Levels in Rajasthan Increase in the Number of Schools and Teachers in Rajasthan

201 202 204 204 209 210 214 228 229 231 231 232 232

Real per Capita Income, 1980–81 to 2000–01 Real per Capita Expenditure on Education (in Rs), 1980–81 to 2000–01

296 300

Trial Courts in Orissa: Pending Cases in Courts Cases Registered in Andhra Pradesh (1997–2002) Andhra Pradesh ACB Performance (1997–2002) Departmental Enquiries Pending in Orissa Government Departments (2005)

345 347 347 349

Acknowledgments Improving public service delivery in India continues to pose challenges for policy-makers, providers, and clients. This volume presents detailed case studies of how public services have been transformed across a range of sectors to draw lessons for scaling-up. In doing so, this book seeks to give the reader a deeper understanding of the key factors and processes that undergird the reform of public services as well as some of the systemic issues that might affect their delivery and performance. These 11 papers were commissioned for a larger World Bank report, based on the study of 31 cases, on ‘Reforming Public Services in India: Drawing Lessons from Success’ prepared by Vikram K. Chand, also co-published with Sage. Each of the chapters included in this volume were individually peerreviewed by the following: Peter Berman, Virat Bhatia, Stephen Howes, Kapil Kapoor, Tuan Minh Le, Mohan Nagarajan, Deepa Narayan, J.P. Narayan, Shashank Ojha, Samuel Paul, Lant Pritchett, Sita Prabhu, Shekhar Shah, Jayasankar Shivakumar, N.C. Saxena, Vinaya Swaroop, and Vinod Vyasulu. Peer-reviewers for the larger report were: M. Helen Sutch and Jose Edgardo Campos, both of The World Bank; N.C Saxena, Member, National Advisory Council and Samuel Paul, Chairman, Public Affairs Center. I am grateful to Michael Carter, Country Director of The World Bank, India; Shantayanan Devarajan, Chief Economist, South Asia; Sadiq Ahmed, Sector Director, Poverty Reduction and Economic Management (PREM), South Asia; Kapil Kapoor, Sector Manager, PREM, South Asia; and Sanjay Pradhan, Director, Public Sector Governance for their support of this work. A special word of thanks to Stephen Howes, formerly Lead Economist for India, is also in order. I would like to thank P.I. Suvrathan, formerly Additional Secretary of the Department of Administrative Reforms and Public Grievances, Government of India, for his encouragement of this work at all stages. We are also grateful to B.K. Chaturvedi, Cabinet Secretary, for hosting a seminar to discuss the findings of the larger report, as well as this edited volume. In addition, I would like to thank the Planning Commission for

Acknowledgments

13

organizing a presentation on the larger report to its members. The larger report has also been presented at seminars organized by the Lal Bahadur Shastri National Academy of Administration, the Indian Institute of Public Administration, as well as the Center for Policy Research (New Delhi) and an NGO, Initiatives of Change. Both the larger report and this edited volume have benefited greatly from these discussions.

List of Abbreviations AIES ANC BJP BPL BSG CARD C-DoT CBO CDR CHC CRCs DEO DH DPEP EPW FAQs FRIENDS GER GO GoI GoMP GoR GPI HDI ICP IMA IMR ISO LJP MHRD MIS

All India Educational Survey Ante Natal Care Bharatiya Janata Party Below Poverty Line Block Steering Committee Computer-aided Administration of Registration Department Centre for Development of Telematics Community-Based Organization Crude Death Rate Community Health Center Citizen Report Cards District Education Officer District Hospital District Primary Education Program Economic and Political Weekly Frequently Asked Questions Fast, Reliable, Instant, Effective Network for Disbursement of Services Gross Enrollment Ratio Government Order Government of India Government of Madhya Pradesh Government of Rajasthan Gender Parity Index Human Development Index Indian Congress Party Indian Medical Association Infant Mortality Rate International Organization for Standardizations Lok Jumbish Project Ministry of Human Resource Development Management Information Systems

List of Abbreviations

MKSS MP MYH NFHS NGO NIEPA NSSO NTP OBCs PDS PHC POA PRI RCH RGSM RJP RKS RMP RSS SAHDS SC SCERT SDP SIDA SKP SM SSA ST SWRC TDSAT TFR TRAI VEDC WDP WDR

15

Mazdoor Kisan Shakti Sangathana Madhya Pradesh Maharaja Yashwantrao Hospital National Family Health Survey Non-Governmental Organization National Institute for Education Planning and Administration National Sample Survey Organization National Telecommunications Policy 1994 Other Backward Classes Public Distribution System Primary Health Center Program of Action Panchayati Raj Institution Reproductive and Child Health Rajiv Gandhi Shiksha Mission Rajiv Gandhi Pathshala Rogi Kalyan Samiti Registered Medical Practitioner Rashtriya Swayamsewak Sangh South Asia Human Development Sector Scheduled Caste State Council of Educational Research and Training State Domestic Product Swedish International Development Agency Shiksha Karmi Project Sewa Mandir Sarva Shiksha Abhiyan Scheduled Tribe Social Work and Research Center Telecom Dispute Settlement Appellate Tribunal Total Fertility Rate Telecom Regulatory Authority of India Village Education Development Committee Women’s Development Program World Development Report

Chapter 1 Institutional Innovations in Public Service Delivery in India: Cases and Lessons Vikram K. Chand

Introduction This book grew out of a larger report focusing on successful innovations in service delivery (World Bank 2006). The overarching goal of the report was to identify common factors across cases that explain why these innovations worked. In addition, the report draws lessons from these innovations, which might help to improve service delivery across sectors and facilitate the transplanting of success stories to other settings. A number of criteria were used to select these cases. First, they represent some form of institutional reform in service delivery. Second, they range across a variety of sectors, making it possible to discern common threads in reform. Third, there is evidence to indicate a positive impact on service delivery, including surveys, and/or recognition by a credible external organization of significant improvement. Finally, they are stable initiatives in existence for at least two years or longer. It is to be noted that these successes have occurred, despite poor overall outcomes in service delivery, and systemic problems that have yet to be resolved. This book presents 10 of the 31 cases examined in the report. By presenting 10 detailed case studies of how public services have been

18

Vikram K. Chand

transformed across a range of sectors, this volume seeks to give the reader a deeper understanding of the key causal factors and processes involved in reform over time, as well as some of the basic systemic issues that can potentially complicate the implementation of reform. While this introduction focuses primarily on these 10 cases, for purposes of comparison it also refers to other cases presented in the main report.

Some Systemic Problems in Service Delivery Growing Salary Burden and Under-management A key issue in civil service reform is the growing salary burden facing governments, crowding out non-salary spending. In the health sector, for instance, salary spending ranges from 60 percent in some states to over 90 percent in others. In West Bengal, Karnataka, and Andhra Pradesh, 90 percent of all expenditures earmarked for elementary education are spent on salaries, resulting in weak infrastructure, poor maintenance, and a shortage of teaching and learning aids (see World Bank 2004: Chapter 2). Clearly, employees have effectively captured control over state spending in health and education, and diverted most of it to themselves through salaries, with negative consequences for service delivery. It is worth noting that the ratio of the average public sector to private sector wage is now 233 percent compared to 192 percent a decade ago. This generalization applies with full force to teachers who constitute 40 percent of the total size of the civil service, but not to senior civil servants who are actually paid less than the market wage for their services because of systematic pay compression policies implemented since 1947. It is in this context that Madhya Pradesh’s decision to hire para-teachers makes sense, given the fact that they are paid much less than their government counterparts while delivering services of comparable or better quality. The frequent transfer of civil servants remains a major problem, threatening continuity and accountability. In some states the average tenure of a collector or a district magistrate has shrunk to less than one year, throwing district administration into chaos (GoI 2004). Development projects have suffered as a result of frequent changes in project directors or counterpart government staff. One example is the Rural Women’s Empowerment and Development Project, which has seen project directors come and go in five states over three years with tenures ranging from three to eight months (see Table 1.1).

Institutional Innovations in Public Service Delivery in India 19 Table 1.1 Average Tenure of Managing Directors (MDs) of the Rural Women’s Empowerment and Development Project (1998–2001) State Bihar Gujarat Karnataka Madhya Pradesh Uttar Pradesh

Number of MDs

Average Tenure (in months)

3 7 4 4 5

8.0 3.1 6.0 6.0 4.8

Source: Seshadri (2003: 22).

While long-term overall restraint in hiring is necessary to contain the salary bill, there is evidence that the civil service is under-managed, with a shortage of technical staff in key positions. For example, though India suffers from the highest absolute number of maternal deaths in the world (about 100,000 per year) the Government of India (GoI) has only three fulltime officers dedicated to supervising maternal health programs in the Department of Family Welfare (DFW), who are overloaded with routine administrative tasks (Mavlankar 2003). Finance departments in many states lack the capacity to engage with line departments on setting and monitoring performance targets. Secretaries are burdened with attending to personnel matters, especially transfers, defending the department in court cases, and responding to requests from legislators; this is particularly true in staff-intensive departments, such as health and education. This translates into weak policy-making capacity at the highest levels of the system.

The Problem of Weak Accountability Mechanisms The fact that GoI has only three full-time officers for maternal health programs in a country with a large pool of medical talent points to a larger problem of weak accountability. Rural women who would benefit from more effective maternal health strategies lack the clout that would lead the government to take on the issue frontally. The general weakness of accountability mechanisms is a barrier to improving services across the board. Bureaucratic complexity and procedures make it difficult for ordinary citizens to navigate the system for their benefit. The lack of transparency and secrecy that shrouds government operations and programs provides fertile ground for corruption and exploitation.

20

Vikram K. Chand

A key question is how to increase the capacity of citizens to make demands on the system. There is a well-established academic literature that correlates the capacity for civic action with higher levels of income and education—higher incomes translate into a greater capacity to participate in non-remunerative activities such as volunteering time to a civic association, while more educated citizens tend to participate more actively in public or community affairs.1 There is evidence to indicate that the capacity for demand-making on the system in India is still weak: a national survey conducted in 2001–02 revealed that only 8 percent of all respondents were members of a civic association, while only 2 percent could attest to the presence of an NGO in their area working on the provision of public goods (Chibber 2004: 347). This finding is mirrored in another national survey conducted in 1996 by the Center for Developing Societies, which found that only 4 percent of all respondents were involved with a civic association (ibid.). When the citizenry fails to organize around improving public services, politicians lack the incentives to take the issue seriously. In such a situation, politics is more likely to focus on identity issues or the provision of private goods to followers than on attempts to improve services for the public as a whole. Clearly, strengthening accountability mechanisms—and sparking greater citizen demand for change— are important pillars of any strategy aimed at improving services in India.

Corruption as a Systemic Problem The lack of accountability in turn provides opportunities for corruption. In 2005, India ranked in 90th place in Transparency International’s Corruption Perception Index (CPI). Nor is the country well organized to combat corruption—a multiplicity of anti-corruption institutions with overlapping functions undermines their coherence. A patchwork of Lok Ayuktas, State Vigilance Commissions, and Anti-Corruption Bureaus with widely varying functions constitutes the system for punishing corruption in India’s states (Vittal 2005). Because law and order is a state subject, the Central Bureau of Investigation (CBI) cannot pursue corruption allegations against a member of the All-India Services (including the IAS) without state government permission. Departmental disciplinary processes are weak: civil servants have misused Article 311 of the Constitution, which provides protection against wrongful dismissal, to draw out cases against them to extreme lengths, making it difficult to remove a government

Institutional Innovations in Public Service Delivery in India 21

servant for non-performance. The Hota Committee on Administrative Reforms has recommended that Article 311 be amended to allow for the expedited removal of civil servants involved in corruption cases. The judiciary is slow in delivering judgments, making it more difficult to prosecute the corrupt. The court system is overburdened with approximately 25 million pending cases; litigants use the appeals process to prolong cases indefinitely. Collusion between lawyers, court staff, and litigants often ensures that most cases do not end in a swift outcome. Professional lawyers’ associations have opposed procedural reforms in the judiciary that would permit speedier case disposal, such as restricting the number of adjournments, requiring that lawyers be present during hearings, and setting time limits for case disposal. Obviously, much faster procedures for addressing corruption cases are necessary. The chapter by Vikram Menon (see Chapter 10 of this book) clearly underlines both the need for greater efforts to reform the anti-corruption function, particularly at the statelevel, and to prevent corruption through administrative simplification, competition in public service delivery, and greater citizen awareness.

Political Financing and Rent Seeking in Administration and Service Delivery As the chapter by E. Sridharan shows, reforming India’s campaign finance regime is an important factor in improving the overall climate for service delivery (see Chapter 11 of this book). The growth of multi-party competition in tight races has encouraged a free-for-all to outspend opponents to win. While campaign ceilings for a Lok Sabha seat have been re-pegged at Rs 2.5 million, the average winner spent approximately Rs 8.3 million in the 1999 parliamentary elections.2 India does not have a system of public funding for elections, and the unregulated cost of elections has created incentives for some politicians to extract rents from public administration or service delivery to fund campaign expenses or pay back contributions. In 2003, the government made company donations tax-deductible in order to encourage payments by check; it is another matter than many donors have avoided doing so for fear of loss of anonymity. Political parties were required to furnish a list of all donors with contributions above Rs 20,000 or lose their tax-exempt status. In 1998, political parties were granted access to free media time on state-owned television and radio networks, and in 2003 they were granted additional free time on private

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electronic media, though this decision has not yet been implemented. In 2003 the Supreme Court, in a bid to make elections more transparent, ordered that all candidates reveal any past criminal cases as well as their assets and liabilities to the electorate in a public affidavit filed at the time of nomination. The government could consider clubbing party and candidate expenses on a campaign under a single, realistic ceiling (currently party expenses are uncapped), or creating separate ceilings for both categories to restrain the costs of campaigns. Choking off the supply of unaccounted for money in the economy though other measures such as income tax simplification, the dismantling of unnecessary regulatory controls, and vigorous anticorruption enforcement will make it easier to reform the electoral funding system. Voices from across the political spectrum have come out in favor of public funding. The Manmohan Singh committee on party finances set up by the Congress Party in 2001, for example, endorsed the concept of state funding for elections.

Learning from Success: Key Lessons The Enabling Environment The Role of Political Leadership The first lesson that emerges from the cases considered in this report is the centrality of the political leadership in triggering service delivery reforms—the vision of the political leadership influenced the kinds of reforms pursued. In Andhra Pradesh, Madhya Pradesh, and Karnataka, reforms were frequently a product of the vision of leaders (Lal 2005). In Andhra Pradesh, the fact that the state was led by a politician with a fascination for technology played a role in propelling e-governance reforms (Naidu 2000; see also Chapter 3 of this book). In Madhya Pradesh, the fact that the leader was committed to a vision of governance based on community participation and decentralization clearly influenced the choice of reforms during his tenure in office, including an innovative hospital autonomy program (see Chapter 6 of this book). In Karnataka, the political leadership sought to transform Bangalore into a leader among cities, using Singapore as a model (see Chapter 5 of this book). At the national level, telecommunications reform was pushed by the Prime Minister’s Office (PMO) as part of a larger developmentalist vision, initially aimed at promoting technological innovation and then at strengthening India’s overall

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competitiveness in the global economy. Without the support of the PMO, overcoming entrenched opposition to reform, especially in the Department of Telecommunication (DoT), would have been extremely difficult (see Chapter 2 of this book). Bipartisan consensus across party lines facilitated reform; electoral incentives acted as a catalyst for change. In Tamil Nadu, the Dravidian parties, which came to power in 1967, were deeply influenced by a common ideology, including the importance of female emancipation, the eradication of caste distinction, reservations for backward groups, and family planning to promote development (see Chapter 9 of this book). Welfarist ideology emerged as a major ingredient of social policy in Tamil Nadu under both the Dravida Munnetra Kazhagam (DMK) and the All India Anna Dravida Munnetra Kazhagam (AIADMK) in the post-1967 period. Electoral incentives also pushed both parties into supporting similar policies and programs. The defeat of the Congress Party in the 1967 state elections in Tamil Nadu over the issue of food scarcity convinced both the DMK and the AIADMK to create a social safety net through the adoption of a universal system of public food distribution and midday meal programs for schoolchildren and other groups. In fact, the DMK and the AIADMK engaged in a process of active one-upmanship to extend the benefits of these programs to a wider set of beneficiaries. Opening up the marketing process for rural produce in Madhya Pradesh to private players was also an electoral winner because the move clearly benefited farmers at the expense of a small group of traders who controlled the official mandi system. Programs designed to simplify citizen interaction with government, such as E-Seva and Bhoomi, were also supported partly with an eye to their popularity with voters.3 Another important lesson is that stable governments with a clear majority in the state assembly were better positioned to implement reforms. If the ideas of leaders were important for service delivery reforms, political context mattered as well. The fact that chief ministers in Andhra Pradesh, Karnataka, and Madhya Pradesh enjoyed stable majorities in their state assemblies made it much easier to carry out reforms. In Tamil Nadu, the tradition of a strong chief minister in both the DMK and the AIADMK, coupled with the fact that no government has failed to complete its full term (with one exception) since 1967, made it easier to implement reform effectively. The fact that some leaders were willing to pay a political price for some of their less popular but important reforms—by alienating state government employees, for example—indicates a certain altruism at play not always reconcilable with rational political calculations.

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Politicians and the Civil Service: Patterns of Interaction Empowering the civil service through stability of tenure, managerial autonomy, and high-level access to political decision-makers was a crucial factor in the success of reforms. Chief ministers committed to reform acted to empower their civil servants to deliver results. Reforming leaders allowed civil servants executing their reform program stability of tenure, considerable autonomy, and direct access to the top decision-maker. Of course, it mattered that these civil servants possessed a high degree of administrative acumen in the first place: in fact, virtually every single innovation in this volume (and the larger report from which it is derived) involved a competent Indian Administrative Service (IAS) officer at the helm of affairs. Without this reservoir of administrative capacity, it is unlikely that politicians would have been able to translate their programs into action. The message from these cases is that, when properly empowered by politicians, the IAS can be transformed into an effective instrument for innovation in service delivery. An essential ingredient of such empowerment is a guarantee of stable tenure. Almost all the successful cases involved initiatives spearheaded by IAS officers who remained in their posts for at least three years, and, in some cases, much longer. Conversely, initiatives that ran into difficulty, such as Gujarat’s attempt to computerize its interstate check-posts, were marked by great instability of tenure at the top, fueled by political pressures to transfer civil servants whose reforms interfered with rent seeking by powerful interest groups.4 Managerial autonomy helped as well. Agency heads in Bangalore reported that they were free to take action against influential groups (the land mafia in the case of the Bangalore Development Authority) without political interference. The implementation of the Education Guarantee Scheme (EGS) in MP was spearheaded by a society, the Rajiv Gandhi Shiksha Mission (RGSM), not the Education Department, which was more vulnerable to pressures from teacher unions. The RGSM was able to fasttrack the reform of elementary education in the state with the backing of the chief minister. Its director enjoyed an uninterrupted tenure of 10 years. The fact that RGSM promoted changes that empowered panchayats in primary education showed that there is no necessary contradiction between implementing reform through a society rather than a department and effective decentralization. Similarly, greater hospital autonomy in MP allowed hospitals to charge and deploy user fees for much-needed equipment and maintenance, in a context where most of the state’s hospital budget was earmarked for salaries (see Chapter 6 of this volume). The

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Karnataka State Road Transport Corporation (KSRTC) is another case where autonomy facilitated reform. KSRTC as a corporation was given the right to raise and retain bus fares and the freedom to manage staff. While status as a corporation or a board conferred definite privileges (e.g., the right to retain its own revenues rather than send them on to the treasury; and to recruit flexibly from the public or private sectors on better terms), effective autonomy stemmed less from a legal charter than a decision by the chief minister not to allow meddling in the affairs of a board or corporation. Political access and signaling was also crucial. Political leaders granted key civil servants direct access, making it easier for civil servants to resolve issues that might have slowed the pace of reforms. Reporting directly to the top was clearly the best way to overcome resistance to reform in a range of services. Public signaling of support by political leaders helped protect civil servants seeking to implement difficult reforms.

Instruments for Improving Service Delivery This book classifies cases according to seven key instruments used to improve service delivery: 1. 2. 3. 4. 5. 6. 7.

promoting competition, simplifying transactions, restructuring agency processes, reinforcing provider autonomy, fostering community participation and decentralization, building political support for program delivery, and strengthening accountability mechanisms.

We shall now examine each of these in detail.

Promoting Competition Greater competition improved service delivery outcomes in India’s telecom sector, and weakened the monopoly wielded by traders in MP’s state-controlled mandi system, benefiting farmers. Promoting competition was a powerful instrument for reforming service delivery, as the chapter by Rahul Mukherji on the demonopolization of India’s telecom sector demonstrates (see Chapter 2). The dismantling of the DoT’s monopoly resulted in cheaper and more efficient calling services; a marked improvement in teledensity, especially in urban areas; and a dramatic increase in the flow of private investment.

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When one looks back at the story of telecom reform in India, one is struck by some interesting patterns. First, the process of reform was gradual: it began in the mid-1980s with the creation of Centre for Development of Telematics (C-DoT) to spearhead technological innovation in the sector, and continued fitfully until 1999, when a change of government at the national level and a crisis of investment led to a deepening of the reform process. Reform in telecom was thus a 20-year affair, spanning several governments from several parties, including the Congress, the United Front, and the BJP. Second, the power of vested interests ensconced in the DoT was whittled away primarily by the PMO. The PMO pushed reform at critical moments when DoT was clearly opposed, first by creating C-DoT and corporatizing DoT’s services in Delhi and Bombay, and then by constituting a Telecom Restructuring Committee in the early 1990s and framing the first New Telecom Policy in 1994. PMO activism in the late 1990s led to the creation of an independent regulator, the opening up of both the domestic and international long-distance markets to the private sector, and a fairer licensing regime for cellular operators. Third, ideas made a difference: successive prime ministers saw telecommunications modernization as a critical element in the growth of a world-class economy in India. Telecom reform was thus part of a broader attempt at national development and the projection of economic power abroad. Fourth, the pressures of the information technology industry—and the willingness of the government to institutionalize their views through the creation of a National Task Force on Information Technology—added to the chorus of voices seeking reform. The gradual growth of cellular operators as a lobby group also helped push reform along in the later stages of the process. Fifth, reform was aided by crisis: allegations of improprieties in the tendering process for cellular licenses in 1992 led to the creation of Telecom Regulatory Authority of India (TRAI); a further crisis of private investment in the sector in the late 1990s led to a quickening of the pace of reform. Finally, the growth of an independent regulator was an important element in curbing rent seeking by the telecom department by enforcing competition and fairer licensing practices. Similarly, the opening up of rural marketing services to private players operating outside mandis, a case discussed in the main report, has yielded gains for farmers and ITC Limited, at the expense of the traders who controlled mandi operations. Farmers found an alternative channel for selling their produce where they could be paid on time without being exploited, while ITC improved its competitiveness as a company by forging

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direct supply links with farmers. The political leadership in MP was willing to take on vested interests by amending the bye-laws of the Mandi Board and later the Agricultural Produce Marketing Act to allow for private participation in delivering marketing services to farmers.

Simplifying Transactions A second instrument used to improve service delivery was to use e-governance to simplify transactions between government and citizens. All too often ordinary citizens seeking to access government regulatory services or simply pay a utility bill are confronted with multiple visits to multiple government offices, long waiting times, complicated procedures, lack of information, and corruption. Some states have sought to harness the power of information technology to make it easier for citizens to interact with the state by simplifying transactions. This has sometimes involved horizontal integration across departments to provide different services on a single platform, like Andhra Pradesh’s E-Seva and Kerala’s FRIENDS (Fast, Reliable, Instant, Effective Network for Disbursement of Services), both one-stop service centers. In other cases, this could mean simplifying transactions in a single department with a high level of interaction with citizens. Karnataka, for example, has greatly reduced corruption in the issuance of land records for some 20 million farmers by placing them online under its Bhoomi initiative. Simplifying transactions through the greater use of e-governance made it easier for citizens to interact with the state. Successful e-governance projects took time to develop, often took the form of public–private partnerships, and needed careful nurturing by those championing the project. They also involved changes in business procedures, not just automation. Subhash Bhatnagar’s chapter analyzes what is the most successful example of a one-stop service center program in India, Andhra Pradesh’s E-Seva model (see Chapter 3 of this book). E-Seva offers under one roof the services of some 13 state and local government agencies, three central government agencies, and nine private sector organizations. Initially begun as a pilot in the Hyderabad–Secunderabad area in 1999 in a single location, the project was scaled up to 43 one-stop service centers in the twin cities in 2000 and 2001 and later rolled-out to another 220 district centers in 117 municipalities across the state by 2004. E-Seva services include the payment of utility bills, the provision of birth and death certificates, payment of property and other local taxes, train and bus reservations, private cell phone bill payments, receipt of passport applications, and even the transfer of shares.

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E-Seva centers are networked, making it possible to transact business in any center within Hyderabad or a district. The system is supported by extensive back-end computerization, allowing transactions to be instantly recorded on a central server from which departments receive updated information about, say, bill payments. E-Seva counters have also been established in banks, both private and public, and its services can be accessed online through the Andhra Pradesh portal. Customers have the option of using departmental counters as well. E-Seva centers are located in attractively furnished buildings with some 10 counters per center, at least in the Hyderabad area. E-Seva is a public–private partnership, with the government providing land and buildings and the private partners taking responsibility for connectivity, software design, hardware, and all maintenance issues. E-Seva does not rely on user fees—participating utility companies pay about five rupees per transaction to providers; in addition, users are charged a fee for private sector transactions (this, however, remains a negligible source of revenue); providers also raise revenue from advertisements printed on customer receipts or prominently displayed on the portal. Transaction fees in districts are somewhat higher than in the Hyderabad–Secunderabad area because of lower volumes. Providers can be expected to make a reasonable profit over time from these arrangements. Strong support from the chief minister (CM) played a major role in the adoption of E-Seva. A civil servant with expertize in e-governance projects was chosen to implement the pilot. In addition, a Directorate of E-Seva was established within the IT Department to supervise rollingout and stabilizing the initiative. The fact that E-Seva is a public–private partnership has given the project additional financial leverage, management skills, and technical capacity. Service-level agreements have contributed to accountability by establishing clear and objective guidelines to assess performance, especially the time needed to complete a transaction (one minute to collect a utility bill, three minutes to issue a certificate or license) and the minimum uptime expected for an E-Seva kiosk per month. E-Seva depended on high-level political support to overcome resistance by departments not accustomed to horizontal integration of services on a single platform, or vested interests that might have been sidelined by a new business process (e.g., village accountants in Bhoomi).5 Public–private partnerships made a difference, especially in e-governance projects, by raising additional funds to pay for reforms, compelling governments to levy realistic user fees to pay for private sector participation, bringing new

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technical and management skills to the table, and making it more practical to impose penalties in the event of poor performance. E-governance projects took time to implement fully: four years for E-Seva in Andhra Pradesh, and seven years for Bhoomi, partly because of the digitization challenges in the latter. All e-governance reformers including those involved in E-Seva cast the objectives of their projects in terms of reducing staff drudgery and enhancing citizen convenience, rather than eliminating corruption; not a single job was lost in any of the initiatives studied in this volume or those in the main report. Successful e-governance programs combined the use of information technology with changes in business processes as well.

Restructuring Agency Processes Simplifying transactions is a more superficial process than restructuring agency processes, as it only involves re-engineering the relationship between citizens and agencies at the point where they interact. Restructuring agency processes involves a much wider attempt at reform, involving several dimensions. New business processes might change the ways in which a cluster of agencies performing related functions interact with each other. It may involve a transformation of the way business is done within an agency, with new systems of monitoring, faster or more transparent procedures, and new reporting relationships. Or it may entail new patterns of interaction with policy-makers, especially politicians and government officials, as well as the agency’s clients. The Transformation of Maharashtra’s Registration Department In this volume, we examine two cases where profound agency reforms were implemented by reformers. Jonathan Caseley’s case study (Chapter 4) of the transformation of the Registration Department in Maharashtra clearly underlines the importance of prior consultation with staff before introducing reforms, combining IT solutions with serious business process re-engineering, and the use of public–private partnerships to enhance organizational accountability. Stamps and Registration (S&R) departments have a reputation of being vulnerable to corruption, partly because of temptation (they register high-value land transactions), opacity in rules and procedures, and weak citizen pressures for change because a property transaction is not likely to occur very often in most households, thus, lowering incentives for collective action. As Caseley shows, reform in the S&R Department in Maharashtra began with the appointment of a reforming IAS officer as Inspector-General (IG)

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in mid-1998. The new IG immediately began a series of intensive staff consultations. As a result of these consultations, it became clear that introducing computerization without changing organizational expectations would simply fail. The first change was to reorganize the layout of registration offices, compelling sub-registrars to move their desks to the front of the office among staff to improve teamwork. The second change was to launch new service standards in August 2002, including a definition of what constituted a document ready for registration to cut discretion; a set limit of 24 hours for returning a registered document to a customer; and a written explanation if a document was not returned in time. A third change was to devise more transparent property valuation tables for public usage. In the early stages, compliance with these standards was not made mandatory; only after several months did the IG and his team lean heavily on sub-registrars (SRs) to meet them. Computerization was introduced only after these business process reforms had been implemented and accepted by department employees. Private contractors were hired through a tendering process to install, maintain, and operate the new computerized system for issuing documents. Both private contractors and SRO (sub-registrar’s office) staff were subject to an innovative performance management system. The registration process was divided into six well-timed steps, totaling 30 minutes; private operators were liable to a computer-generated penalty if they took more time than allotted. Later, a system of rewards was introduced to complement the penalty system. The availability of performance-related data generated by the computer system allowed the team to enforce standards in a way that had not been possible earlier. Digital cameras for photos and biometric scanners for fingerprinting were also introduced in all 360 SROs, while property valuation was automatically calculated by the software package instantly and placed on the web for clients to verify before arriving at an SRO. Clear information boards were put up in all SROs, along with improved seating and drinking water facilities. Employee support for these reforms was secured by opening new SROs to reduce workloads and raising salaries with the permission of the state government. SROs were given monetary incentives for superior performance. The state government was kept happy by substantial revenue increases, as a result of lower corruption and greater ease of registration. In order to lock in these changes, the S&R Department applied for and secured International Organization of Standardization (ISO) certification in November 2004. This certification was based on a series of internal and external (by ISO staff) audits to assess quality management systems in

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the department. Annual external audits are necessary to retain this certification, providing a useful incentive to stay on a reform course. Because the reform process is now so well entrenched, it is unlikely that it will be easily reversed, even though the IG who initiated these changes was transferred to a new post after a tenure of three years. The transformation of Maharashtra’s S&R Department is a remarkable phenomenon. In a chain reaction, AP, Maharashtra, and Karnataka, with varying degrees of success, took important steps to reform their registration services. Interstate agency competition was thus, an important factor in effecting change. Good change management, based on consultation and the introduction of business process changes prior to computerization, prepared staff for change in Maharashtra; involving the private sector made it easier to computerize a vast department in a sprawling state; and winning ISO certification further institutionalized the reform process. Political elites went along with S&R reforms in Maharashtra partly because they wanted to show that Maharashtra could compete effectively with AP even in information technology, and partly because of the promise of additional revenue for a state with a large fiscal deficit. The support of the chief secretary helped overcome hurdles to the project that might otherwise have slowed progress. The reform process benefited from the fact that the IG who began the changes enjoyed a stable tenure of three years in his post. Bangalore: Making City Agencies Work While Caseley’s chapter focuses on the transformation of a state-wide agency, Suresh Balakrishnan’s chapter (see Chapter 5) offers an analysis of the process of transforming the working of city agencies in Bangalore, the center of India’s booming IT industry and the capital of the southern state of Karnataka. Bangalore’s population grew rapidly in the 1990s— fueled in large measure by economic growth—from 4.1 million in 1991 to 6 million in 2001.6 As the city’s capacity to deliver critical services came under increasing pressure, the need for reform became apparent. The new government, led by Chief Minister S.M. Krishna, which came to power in 1999, took it as a challenge to arrest the decay of Bangalore and make it a leader among cities. Three citizen report cards (CRCs) on city services conducted by the Public Affairs Centre (PAC), in 1994, 1999, and 2003 show a significant improvement in the quality of services provided by city agencies (see Chapter 5). The three utilities—the Bangalore Electric Supply Company (BESCOM), the telecom company (BSNL), and the Bangalore Water Supply and

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Sewerage Board (BWSSB)—showed major improvements across all three report cards; while the Bangalore City Corporation (BMP/BCC), public hospitals, and the Bangalore Development Authority (BDA) improved fastest between 1994 and 1999 with satisfaction ratings remaining steady or falling marginally in the 1999 and 2003 period. Bangalore’s five regional transport offices (RTOs) recorded major improvements between 1999 and 2003, reflecting reforms, including the use of e-governance. Aggregate satisfaction levels (all agencies combined) rose from 9 percent in 1994 to 34 percent in 1999, and further to 49 percent in 2003. The incidence of problems reported also declined significantly between 1999 and 2003, from 24 percent in 1999 to only 11 percent in 2004. Lower problem incidence, faster resolution times, and much greater satisfaction with staff behavior all contributed to improved overall satisfaction levels in 2003, along with a marked decrease in the prevalence of corruption (PAC 2004). These improvements in service delivery were corroborated by other surveys commissioned by the Bangalore Agenda Task Force (BATF) between July 2000 and February 2003. Another important step involved revitalizing the compact between city agencies and providers. The Karnataka government took several innovative steps to improve service delivery. Policy-makers in the state government entered into compacts with service-providing agencies to ensure improved delivery. More broadly, the chief minister was willing to appoint competent civil servants to key posts in city agencies and then offer them autonomy to reshape them. Agency heads were given stability of tenure in most cases: the Managing Director of the BDA, for example, remained in his position for close to five years, while the chief of the BWSSB retained his post for a full four years. Agency heads could secure direct access to the chief minister when they needed to resolve urgent problems. In exchange for autonomy, financial support, and stability of tenure, agency heads were expected to deliver concrete results in a relatively short timeframe. The government actively sought to involve the private sector and civil society in the governance of Bangalore. Immediately on being elected in 1999, the Bangalore Agenda Task Force (BATF) was established with the goal of transforming Bangalore into a world-class city. The CEO of Infosys was appointed head of the BATF, which was composed of professionals as well as prominent members of Bangalore’s civic community. BATF was asked to explore ways to improve city services and infrastructure, expand the city’s resource base, and enhance the BCC’s administrative capacity (Government of Karnataka 1999). BATF held public ‘summits’

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in the presence of the media and the chief minister every six months, at which the heads of Bangalore’s service-providing agencies were invited to report on progress and commit themselves to further improvements in time for the next summit. This intensified the pressure to deliver—no agency head would have wanted to report back to the next summit that his agency had failed to achieve what had been promised in public at the previous summit. BATF facilitated inter-agency coordination, each month the chief minister chaired a formal meeting with the BATF and all agency heads to resolve conflicts between agencies and secure the necessary level of inter-agency coordination for the city to work well. The BATF raised Rs 50 million from the Adhar Foundation (created by Infosys’ CEO) to introduce a fully computerized Fund-based Accounting System (FBAS) in the BCC, allowing the corporation to instantly track revenues and expenses down to the smallest detail. The FBAS in turn made it feasible for the BCC to release quarterly financial statements at public hearings to discuss its budget, held at the urging of several prominent NGOs.7 Most important, BATF brought together key stakeholders in Bangalore under one umbrella and a common program for change with the full support of the chief minister. Given the chief minister’s endorsement of reform and his willingness to allow autonomy to agency heads, along with strong support from the BATF, agency heads were spurred to introduce wide-ranging reforms. BCC, for example, introduced a popular and optional self-assessment system for payment of property taxes based on a transparent formula that not only reduced corruption by eliminating red tape and intrusive inspections but also raised city revenues significantly. The promise of freedom from political interference allowed BDA’s Managing Director to aggressively recover city land that had been illegally taken over by powerful interests and demolish unauthorized buildings. The sale of recovered land in turn yielded sufficient revenue to allow BDA to finance the construction of a state-of-the-art ring road around Bangalore and several flyovers at no additional cost to the state exchequer. BDA also persuaded the chief minister to risk political capital by amending a section of a Karnataka statute, adopted by the previous government, that made it possible for those in possession of illegally held land to transfer ownership to themselves. Litigation over land acquired by the BDA for public purposes virtually ceased because of a policy decision to compensate owners at close to market rates. The process of auctioning land was made far more transparent and a mandatory waiting period to secure titles for fully paid-up

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land was removed; both these changes benefited a large numbers of citizens (BDA 2004). The BWSSB initiated a community-driven program to provide direct connections to individual and groups without insisting on formal ‘proof of occupancy’, a major stumbling block to widening access of the poor to piped water supply.8 BWSSB introduced a sophisticated grievance redressal system monitored by Janaagraha (a NGO) and successfully goaded staff to meet the service standards set out in its citizens’ charter. The city police improved traffic management and computerized the complaints registration process in all their stations. While high-level political support facilitated service delivery reforms between 1999 and 2003, the foundation for change was laid earlier between 1994 and 2003, when such support was less apparent. The 1999–2003 Period: The chief minister wanted to show that he was a different kind of politician interested in development. He was inspired by the example of Mysore, one of India’s best-governed princely states. The decay of Bangalore troubled him, especially in view of the rise of Hyderabad as a major economic center. He was willing to give his civil servants in Bangalore the necessary autonomy to put in place ambitious reforms that might otherwise have been resisted. BATF acted as an important spur to reform by putting the talent of Bangalore’s private sector at the service of reform and bringing high-level public pressure to bear on agency heads to persist with reform. A powerful and proactive Lok Ayukta (ombudsman) made combating corruption in service delivery his main priority (Rao 2003). The process of reform was clearly aided by NGOs, such as Janaagraha and PAC, while Bangalore’s well educated and demanding middle classes provided a large potential reservoir of support for reform. The 1994–99 Period: Yet, it is worth noting that significant progress occurred earlier between 1994 and 1999 when there was less political interest. PAC’s first Report Card revealed highly negative perceptions of service delivery among city residents in 1994. This report card provided a hook to begin a dialogue with some agency heads in the mid-1990s. By 1999, improvements in service delivery were palpable, although satisfaction ratings remained under 50 percent for all city agencies. PAC’s work in the 1990s clearly helped lay the foundations of what followed later under far more favorable political circumstances (Paul 2002). This clearly shows that citizen pressures for change combined with an openness to reform on the part of agency heads can make a significant difference without much political support.

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Are Bangalore’s Reforms Sustainable?: Yet, there are questions about the sustainability of Bangalore’s reforms. The 2004 state elections ushered in a fragile coalition government between the Congress and the Janata Dal, and a new political leadership as a result. The previous government was criticized for being identified with urban interests, particularly Bangalore. The BATF lost its relevance in the new context, in which it could not count on serious political support. It is not clear whether this will erode the foundations of reform or whether agencies now have the necessary strength to go it on their own without political support. It is worth noting that the Congress swept Bangalore in 2004 while faring less well in the rest of the state—a clear public endorsement of the reforms in the city. Finally, it is important not to exaggerate the extent of these reforms: city roads, for example, remained in poor condition, despite repeated protests from leaders of the IT industry, while pollution and traffic congestion continued to be major concerns for most urban residents. Relevance to Other Cities: Bangalore’s reforms were the product of several interrelated factors that may not come together in a different context. Yet, there are parts of the experience that can easily be replicated. The Greater Mumbai Municipal Corporation is considering implementing FBAS, and several cities have closely studied the BCC’s self-assessment program for property taxes. Delhi has invited PAC to conduct a version of its report card in the city. GoI is considering linking central funding for municipalities more closely to performance. More broadly, Bangalore shows what cities can achieve, first through citizen pressure on providers, particularly those that were open to dialogue, and then through the additional ingredient of high-level political support from the chief minister. Other cases profiled in the main report include the use of centralized monitoring systems to hold staff accountable in the Hyderabad Water, Sewerage, and Sanitation Board (HWSSB), the bureaucratically-driven transformation of the Surat Municipal Corporation in the 10 years following the outbreak of an episode of the plague in 1994, and the emergence of the Karnataka State Road and Transport Corporation as one of the most efficient bus companies in India, reflecting a prior tradition of reform along with a mix of autonomy and state support. Broader Lessons for Agency Restructuring Emerging from these Five Cases More than one case pointed to the importance of a strong management team to complement the work of the agency head or chief executive of an organization (usually an IAS officer). In Surat, the municipal commissioner could depend on an experienced management team that remained

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the same for most of the decade following the incidence of plague in 1994. E-Seva also benefited from a stable and technically skilled management team, as did KSRTC. One common thread running through most of the cases is the fact that serious changes in internal business processes took place. In the Maharashtra Registration case, process re-engineering (publishing guideline values in an accessible form, setting new service standards, and reducing discretion in defining a document ready for registration) preceded automation. In Surat, steps such as breaking down silos, empowering deputy and assistant commissioners, and insisting that officers ‘learn from the field,’ amounted to a major restructuring in the way business was done. In Bangalore, the BATF’s emergence represented a change in the way of conducting city government that emphasized coordination across agencies. In the case of FRIENDS, adopting a common staff designation reduced hierarchical distinctions and thus improved motivation. Centralized monitoring of customer complaints using IT appears to have furnished top management in the HWSSB with a steady stream of information about performance by middle-level managers or front-line staff that could then be used to sanction poor performance. The development of a Metro Customer Care (MCC) Center located in the Board’s headquarters provided customers with an independent channel to lodge complaints in a database that was monitored by the MD and his immediate staff on a daily basis. This, in turn, made it impossible for front-line staff to connive with lower-level managers to suppress negative information from customers filed at section offices. The online complaint monitoring system in Mumbai works on a similar principle, but with one difference: complaints are monitored not just by top officials but also by an NGO, Praja. Centralized monitoring using IT was also one way of counteracting the risk that greater autonomy might lead to increased corruption in an organization. Reformers were able to design a credible system of rewards and penalties by involving private sector players, strengthening monitoring arrangements, and taking action against non-performers. The use of public–private partnership arrangements made it possible to levy penalties at least on private operators, even if government staff could not easily be disciplined for political reasons in Maharashtra’s Registration Department. In the case of the Surat Municipal Corporation (SMC), the willingness of successive commissioners to impose penalties on non-performing officials,

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including suspending them, sent a message down the line that such behavior would not be tolerated; of course, the fact that elected councilors were willing to allow commissioners this latitude in the wake of the trauma inflicted on the city by the plague episode was of great help in this process. Finally, several agency heads reported that the award of prizes for good performance by civil society groups, such as the Computer Society of India, or GoI’s Department of Administrative Reforms and Public Grievances (ARPG), had played a positive role in boosting staff morale. Some agencies such as KSRTC introduced cash bonuses, for rewarding wellperforming depots and individual staff members, to good effect. In at least one case, ISO certification constituted a significant reward for past efforts at reform, as well as an incentive to continue with the process. One important lesson that flows from these cases is the importance of breaking down silos. Silos encourage the creation of independent empires within an organization, render the flow of critical information more difficult, and make it harder to think in cross-cutting ways. In the wake of the outbreak of plague in Surat, zonal commissioners were empowered to coordinate the work of all departments in a zone; departments had previously functioned as separate entities with little or no coordination between them. In Bangalore, the BATF acted as a coordination mechanism for all civic agencies in the city. Monthly meetings chaired by the chief minister with agency heads helped resolve inter-agency disputes and share information for the benefit of the city. In Madhya Pradesh, the RGSM handled all functions relating to elementary education under one roof, and emerged as a focal point for incubating new ideas. Agency reformers in some cases relied heavily on civil society participation. In the case of Bangalore, PAC’s 1994 report card showed low levels of satisfaction with civic agencies; this, in turn, led to a dialogue with agency heads over reform. By 1999, several agencies had improved significantly, and by 2004 even more so. The BATF’s public summits in the presence of the media and the chief minister provided an occasion for agency heads to set reform targets and report back six months later at the next summit. Public summits sparked a healthy competition among city agencies to outdo each other.

Reinforcing Provider Autonomy Traditionally, the burden of providing most public services in India was viewed as an exclusive preserve of the government. The loss of autonomy

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makes it difficult, if not impossible, to separate policy-making from serviceprovision, often resulting in monopolistic service delivery arrangements with sub-optimal outcomes for the public. The failure to properly separate the state from providers also makes it much harder for the state to maintain the sort of arms-length relationship necessary to enforce compacts between the state and providers. The absence of a clear line separating providers from the state can result in politicization, bureaucratization, an entrenched culture of corruption, and public apathy, as Figure 1.1 clearly shows. Figure 1.1 Clientelism in Service Delivery: Utilities in a State-dominated Environment

Source: World Bank (2003: 163).

Rajeev Sadanandan and N. Shiv Kumar present a highly informative case study on efforts to improve the performance of public hospitals in Madhya Pradesh by bolstering their autonomy (see Chapter 6 of this book). Madhya Pradesh’s Rogi Kalyan Samiti (RKS) represents a creative adaptation to the problem of excessive spending on salaries. Under RKS, district hospitals are turned over to independent societies, which not only manage hospitals, but have the power to levy user fees, solicit private donations, use vacant hospital land to generate more revenue, and outsource cleaning and other functions. RKS societies consist of all locally important players, including the collector, MLAs and NGOs. User fees collected by RKS societies are directed towards funding maintenance and the cost of purchasing new equipment for the state’s often dilapidated hospitals. The first RKS society was introduced in Indore by the collector

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in 1995 to sustain improvements after the massive clean-up of the city’s Maharaj Yeshwant Rao (MY) Hospital, launched in the wake of the outbreak of plague in nearby Surat in 1994. MP’s chief minister was so impressed with the results that he decided to roll-out RKS to all health facilities in the state, ranging from district hospitals to community health centers to primary health centers, in one stroke. The RKS model is popular with doctors and staff because it makes available equipment that might not otherwise be affordable given the high proportion of the budget spent on salaries. By earmarking user fees for maintenance and equipment, RKS societies helped improve the productivity of salary expenditures by topping them off with necessary non-salary spending. The poor are exempted from paying user fees on the basis of self-identification rather than any formal criteria. Yet, it is important to note that while RKS can be an additional financing source, it cannot supplant the need for augmented state funding of public hospitals. Managerial capacity remains a concern in the RKS system, including the need for improved accounting and reporting systems. The use of flawed BPL lists in some hospitals in the RKS system to identify the poor, instead of self-identification, may have resulted in the exclusion of some patients from low-income backgrounds, although more research is needed to establish the point conclusively. The central government’s National Health Mission has recently identified the RKS model for replication across the country.

Fostering Community Participation and Decentralization Prema Clarke and Jyotsna Jha’s chapter (see Chapter 7 of this book) provides a community-centered explanation of the remarkable transformation of primary education in Rajasthan in the last two decades. Overall literacy grew in Rajasthan by 35.9 percent in the 1980s and 58.3 percent in the 1990s; female literacy grew even faster by 55.1 percent in the 1980s and 117 percent in the 1990s, the best performance of any major north Indian state. There were also impressive gains in enrollment rates in primary schools. Rajasthan’s performance was largely the result of multiple programs involving public action by governmental and non-governmental actors to confront the challenge of reforming the state’s educational system. Rajasthan was the first state to introduce (in 1987) the concept of parateachers chosen from the community . These Shiksha Karmis were hired by the Shiksha Karmi Board, a registered society, to teach in schools in remote areas. By the mid-1990s, the Shiksha Karmi program covered some 202,000 students spread out over 32 districts in the far-flung desert state.

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The Shiksha Karmi program was complemented by the Lok Jumbish program, introduced in 1992 to promote community mobilization for better educational services in regular government schools and to reach out to out-of-school children, particularly from disadvantaged social groups. Among Lok Jumbish’s many achievements were a comprehensive school-mapping exercise by community leaders, the creation of active village education committees with elected chairpersons, the elaboration of village registers to track the educational progress of each child, improved monitoring at the cluster and block levels by Lok Jumbish functionaries, and an expansion of flexible educational programs. Rajasthan’s success during the 1980s and 1990s was aided by the presence of a large number of civic associations, which brought considerable pressure to bear on the government to address problems of inequality and disempowerment through improvements in education. The Social Welfare Research Center (SWRC) hired local teachers to staff night schools, a forerunner of the Shiksha Karmi program. The Mazdoor Kisan Shakti Sangathana (MKSS) pushed for greater access to information in government programs, including education. The Women’s Development Program (WDP), initiated in 1983 as a partnership between the state and NGOs, focused on mobilizing rural women on several issues ranging from enforcement of minimum wages to female education to the suppression of child marriages, laying the groundwork for Lok Jumbish. Significantly, Rajasthan spent about 4.5 percent of State Domestic Product (SDP) on education during the 1980s and 1990s, higher than the all-India average of 3.3 percent. While political leaders strongly supported educational reform in the state during this period, the Lok Jumbish program was largely abandoned by the late 1990s by the government, which felt that the program had not only grown too slowly, but had become an instrument for promoting opposition-oriented NGOs. The fact that Lok Jumbish and Shiksha Karmi were run by societies alienated the state’s education bureaucracy, which felt bypassed by the programs. Despite protests from NGOs, there was an interruption in government support to Lok Jumbish and Shiksha Karmi, and a sharp decline in project activities. For the first time since the 1970s, enrollment in primary and upper-primary schools began to decline in the late 1990s, while dropout rates, which had slowly decreased in the 1980s and 1990s, began to inch back up again. Rajasthan now has the highest dropout rate for girls in primary school in the country (74 percent) and the second highest dropout rate for boys (55 percent).

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If the Rajasthan experience focused on mobilizing communities and NGOs to improve primary education, MP’s model revolved around strengthening the role of Panchayati Raj Institutions (PRIs). In the case of primary education in Madhya Pradesh, decentralizing teacher control to PRIs, who were vested with the powers to hire and remove teachers, resulted in one of the lowest rates of teacher absenteeism in India, a remarkable achievement for a low-income state. The appointment of less expensive para-teachers under PRI control allowed for the extension of a more accountable system of primary education, with local teachers subject to local communities. The MP experience is dealt with in detail in the main report.

Building Political Support for Program Delivery Political support is an important prerequisite for effective program delivery. When politicians care about a particular program, they are more likely to insist on effective implementation by the civil service, including providing autonomy and additional resources. Programs that enjoy political support are better positioned to ward off rent-seeking behavior by influential groups. The importance of political support for program delivery is clearly demonstrated in Sangeeta Goyal’s study comparing human development outcomes in Tamil Nadu and Karnataka between 1981 and 2001 (see Chapter 9). Tamil Nadu and Karnataka are two relatively advanced states in the southern region that have experienced similar levels of economic growth; yet, from the 1980s onwards, Tamil Nadu has done significantly better than Karnataka in terms of human development outcomes. Indeed, in 1981 Karnataka and Tamil Nadu ranked sixth and seventh in the Human Development Index (HDI),9 but by 1991 Tamil Nadu had pulled ahead to occupy the third position after Kerala, while Karnataka fell to seventh place. Karnataka and Tamil Nadu maintained their relative rankings in 2001. Goyal argues that political support was a key factor in explaining Tamil Nadu’s superior performance—a consensus across parties facilitated program delivery in Tamil Nadu. Political support took the form of a bipartisan consensus between the state’s two major Dravidian political parties to promote policies and programs designed to improve human development. Over about three decades, for common ideological and electoral reasons, both parties engaged in an active game of one-upmanship to extend the reach of these programs. There are signs that the gap between the two states is narrowing, but Tamil Nadu remains a better performer

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on the whole. The reason is not differences in spending levels: Tamil Nadu and Karnataka spent roughly the same amount on education between 1980 and 2000; in health, Tamil Nadu initially spent more than Karnataka, particularly during the 1970s, but the per capita spending difference on health in the 1980s was too small to account for the vastly different health outcomes in the two states. Instead, the reason for Tamil Nadu’s superior performance was the role of the government in fashioning a set of public policies and interventions to boost human development beyond what might have been expected through economic growth alone. In Karnataka, public policy was more diffuse and there were fewer interventions designed specifically to improve human development outcomes. Welfarist ideology and good politics coalesced to promote social programs that facilitated human development in Tamil Nadu. Tamil Nadu’s superior performance was basically the product of sustained state action on a variety of programmatic fronts, starting in the late 1960s. In 1967, the Congress Party was defeated in the state assembly elections and a regional party, the DMK, took power in Tamil Nadu. The DMK was rooted in the ideology of ‘Periyar’ E.V. Ramaswamy, the founder of the Self-Respect Movement of the 1920s. Ramaswamy quit the Indian National Congress in 1925 when it refused to accept the principle of reserving government jobs for non-Brahmins. Ramaswamy’s movement stood for scientific rationalism against the manipulation of religion by a priestly class; the suppression of all distinctions based on caste; female emancipation and equal rights for women; family planning; the abolition of temple prostitution, child marriages, and polygamy; and allowing untouchables access to Tamil Nadu’s temples. He sought to fashion a sense of Dravidian identity by stressing the importance of the Tamil language, and viewed the caste system essentially as a north Indian construct grafted onto Tamil society. Although the DMK later split into Karunanidhi’s DMK and M.G. Ramachandran’s AIADMK, both parties drew their inspiration from Ramaswamy’s Dravidian thought. The DMK and the AIADMK were permeated with ideas that emphasized social welfarism and empowerment. These ideas also made good political sense. As A.K. Venkatsubramanian notes in his chapter (see Chapter 8), a major food crisis in 1967 was one of the primary reasons why the Congress was voted out of power in Tamil Nadu after holding power continuously since independence. As a result, both DMK and AIADMK leaders shared a commitment to universalizing access to cheap rice. When the AIADMK’s M.G. Ramachandran (MGR) became

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chief minister in 1977, he promised to provide a fair price shop in every village. The number of such shops doubled from 9,300 in 1977 to 17,536 in 1982. Over time, the public distribution system (PDS) evolved into an untargeted subsidy with rice sold at prices far below even the central issue price. Yet, the system was highly regarded by the public. A survey by the Public Affairs Center (PAC) in 2002 ranked Tamil Nadu’s PDS as the best functioning system in the country in terms of access, reliability, and quality. This came at a heavy fiscal cost though: by 2004, Tamil Nadu’s food subsidy amounted to a staggering Rs 15.4 billion. In addition, the government introduced a vast Nutritious Midday Meal (NMM) program across the state in 1982. Other important programs focused on family planning and improving child and maternal nutrition in villages. Tamil Nadu’s experience was marked by a number of inter-locking initiatives across a range of areas that generated positive synergies. Thus, it was seen that social programs were mutually reinforcing. The family planning program motivated women to use public health care facilities where they received not only family planning services but also maternal and child health care services. At the same time, interventions in the food and nutrition sector increased the efficacy of health interventions. The midday meal scheme had an impact on the nutritional status of children and also boosted school enrollments and attendance. The cumulative effect of rising literacy levels, especially for females, had positive effects on the health status of women and children, and the lowering of fertility levels in the state. Tamil Nadu’s civil service was an effective vehicle for implementing social programs. High political commitment, in turn, galvanized Tamil Nadu’s administrative system. The collector was the lynchpin of these and other development programs, unlike several other states, the collector in Tamil Nadu is a senior post; also, Tamil Nadu does not have a system of divisional commissioners, who in some other states act as a layer between collectors and the Secretariat. The importance of the collector in Tamil Nadu is a legacy of history, unlike most north Indian states, where a feudal intermediary class of zamindars extracted land revenue for the former colonial government, Tamil Nadu remained under the ryotwari system under which peasants dealt directly with the collector on land revenue questions. This direct relationship made the collector a far more powerful figure than in the north, where the relationship was mediated by a class of landed gentry. While the tradition of a powerful collector can be a mixed blessing,

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it has made program implementation easier by creating clear lines of authority and accountability in a district. Program monitoring is particularly strong in the health sector: a review mechanism running from the top of the administrative hierarchy to the bottom has been institutionalized so that there is constant monitoring of programs and front-line providers. Monitoring in Tamil Nadu is effective: secretaries and collectors have the authority to correct problems, and politicians are unlikely to tolerate abuses in programs that they consider important for ideological and political reasons. In short, these initiatives were the product of a state committed to welfarist views on public policy as well as political calculations that such programs would pay high electoral dividends. This, in turn, activated Tamil Nadu’s administrative apparatus to deliver results. Both the AIADMK and the DMK enjoyed comfortable majorities when in power, possessed disciplined party cadres, and shared a consensus on social policy, even as rivals at the polls. One should also note that both the DMK and AIADMK have a tradition of powerful chief ministers: only once since 1967 has a state government not completed its term and chief ministers have enjoyed comfortable majorities in the state assembly throughout the 1967–2005 period. This made it politically possible to translate welfarist beliefs into programmatic action in ways that would not be easily imaginable in more chaotic political contexts. The fact that DMK and AIADMK, although bitter rivals, shared the same worldview and ideological bent made for continuity, not disruption. Karnataka’s political parties, on the other hand, have not generally sought to mobilize political support by pursuing welfarist policies (Crook and Manor 1998). It is telling that Karnataka did not introduce a state-wide midday meal program until 2002, 20 years after Tamil Nadu. Karnataka also neglected its more backward northern districts, where low female literacy rates, poor health and school infrastructure, and higher infant and child mortality rates remain a cause for concern. Family planning was implemented with less vigor in Karnataka. The state’s health establishment became enmeshed in a scandal relating to its failure to regulate spurious and adulterated drugs, brought to light in 2003 by a Lok Ayukta investigation; the government is now considering authorizing drug procurement by an autonomous agency on the lines of the Tamil Nadu Medical Services Corporation (TNMSC), and improving regulatory capacity.

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Strengthening Accountability Mechanisms Strengthening cross-cutting accountability mechanisms can play an important role in improving service delivery outcomes, as discussed in the main report (World Bank 2006: Chapter 3). Reducing premature transfers, fostering access to information, using anti-corruption institutions to generate public pressure against malfeasance, and public interest litigation were some ways used to reinforce accountability. One key cross-cutting issue is the frequent transfer of civil servants, which undermines service delivery because managers are often not able to stay in place for long enough to institute or sustain reforms. In addition, short tenures make it virtually impossible to hold officers accountable for their performance. Several states have attempted to grapple with the problem: Karnataka has capped overall transfers to about 5 percent of civil service size through a combination of quantitative caps, computerized counseling in education, and created cadre management committees to reduce political interference. Relevant information that is jealously guarded by officials (this might include prices, forms, officers to be contacted for grievance redressal, and procedures to be negotiated by applicants) yields asymmetrical returns to them. Greater access cuts those returns and reduces the capacity to extract rents from citizens. Improving access to information is a vital part of any strategy designed to empower clients in relation to providers and the government. The cases of Delhi and Rajasthan clearly point to the importance of information as a tool to enforce accountability. The use of public hearings to examine documents relating to public works (e.g., muster rolls, completion certificates, PDS stock registers) has discouraged malfeasance in service delivery in both states. The Rajasthan and Delhi cases indicate the importance of civic pressure in making right to information laws effective. Citizens’ charters are another way to improve access to information and empower citizens, provided they are based on extensive public and internal consultation, lay down minimum service standards and grievance redressal procedures clearly, and are widely disseminated. Particularly impressive are AP’s HWSSB and urban ‘core’ charter, both of which provide for penalties if the provider fails to meet charter standards. Most state anti-corruption agencies in India are trapped in a numbers game—gauging their performance by the number of people successfully prosecuted—in which they always look ineffectual for reasons beyond

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their control. The Karnataka Lok Ayukta not only avoided this trap, but also re-framed what it means to be a ‘successful’ anti-corruption agency in the Indian context. The broad statutory power and institutional strength of Karnataka’s Lok Ayukta were deployed not to prosecute people, but to make corruption in service delivery a potent public issue and compel politicians to take the matter more seriously. A shift of strategy by the Lok Ayukta in Karnataka towards high-profile raids and investigations into corruption scandals involving a range of issues from the state of public hospitals to drug procurement to corruption in municipal agencies mobilized public opinion and forced the government to take at least some steps to reform the system. India has an independent judiciary that has intervened aggressively to correct failures in service delivery by the executive branch of government. Public interest litigation has emerged as a powerful tool for civil society advocates to activate judicial remedies when services fail to work properly. In recent years, the Supreme Court has intervened in matters as diverse as solid waste management, cleaning up the air in India’s cities, and compelling candidates for elective office to disclose information about their backgrounds to the electorate. This intervention has clearly helped put pressure on the executive to improve the quality of service delivery in many sectors, although the court has been accused of providing temporary relief, rather than addressing the underlying problems that characterize the delivery of public services and stifle administrative initiative. India presents a sharp contrast to almost all Latin American countries, where an entrenched tradition of centralized government has resulted in weak judicial oversight of the working of the executive branch (Fiszbein 2005: 40–41).

Cross-Cutting Issues The Role of Civil Society In some cases, civil society groups simply placed pressure on recalcitrant providers and/or the state to compel them to initiate reform. In Rajasthan and Delhi, the MKSS and Parivartan, for example, used high-profile tactics, including public hearings, to audit government programs in a bid to check corruption. Civil society pressure was however by no means essential to prod reformers into initiating change. Although Bhoomi, E-Seva, and the computerization of the Registration Department in Maharashtra were initiatives that focused on improving citizen convenience, they were not directly the fruit of civic pressure.

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The media was particularly important as a source of pressure for change—without the media as an ally, it is unlikely that the Karnataka Lok Ayukta’s strategy of focusing attention on service delivery failures through high-profile raids would have worked. In Surat, the media galvanized support for reform by sensationalizing (in the eyes of some) the outbreak of the plague and highlighting local problems. Media coverage of service delivery failures in Bangalore played an important role in getting politicians to listen and take action to improve agency performance. Several organizations developed strategies that required a media presence to work—the BATF’s public summits would not have acquired the significance that they did without the presence of the print and electronic media. Nor would report cards have been of much use without the role of the media to disseminate their results and put pressure on agencies to react to them. In the newly created state of Jharkhand, the Hindi-language daily, Prabhat Khabar, has highlighted some of the state’s governance problems, including the frequent transfer of public officials and corruption in the administration of government schemes, in a bid to generate more public pressure for reform. On the other hand, Bangalore represents a case of collaboration between civil society groups and city agencies for reform. If the PAC’s report cards were initiated as a ‘shot in the dark’ in 1994, agency reformers quickly responded to the opportunity to initiate a dialogue with civil society groups on how to change their agencies. Later, the BATF provided an institutional mechanism for civil society groups, including the private sector, not only to officially monitor and report back on the progress of change to the chief minister, but also to provide technical help and funding for initiatives, such as fund-based accounting and property tax computerization. There were also cases of reformers who actively sought to generate demand for reform as a pre-condition for successful change. In Madhya Pradesh, turning over control over new teachers to the community enlivened local institutions and parent–teacher associations; similarly, allowing district hospitals to collect user fees—and spend the proceeds on maintenance or equipment—sparked community interest in hospital management. Reformers in the HWSSB not only went on a public campaign to sensitize citizens to the city’s water problems, but also created an institutional vehicle for relaying complaints directly to the MD’s office. In Delhi, the creation of an accessible and yet independent appeals body in the form of the Public Grievances Commission made it easier for citizens to secure information from the state government. The Delhi Right

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to Information case clearly shows the importance of prior institutional design for participation. Rajasthan is a case where highly sophisticated and well-connected NGOs rooted in the national context transferred their skills to Rajasthan, a state with historically low levels of civic mobilization, to generate pressures from below for better monitoring of government works and programs and for improvements in education. These initiatives activated civic participation and the capacity to make demands on the system as a prerequisite for meaningful reform.

Corruption in Service Delivery E-governance in particular was one tool used by reformers to promote transparency in service delivery. The computerization of land records in Karnataka as well as the Registration Department in Maharashtra certainly contributed significantly to lower corruption levels as measured by perception surveys. On the other hand, rent seekers were able to defeat intricately designed e-governance solutions in the case of rural sub-registries in Andhra Pradesh and interstate check-posts in Gujarat. The lesson is clear: technology will not by itself reduce corruption unless there is a highlevel political buy-in, combined with strong administrative leadership to ensure that the new procedures and systems are in fact implemented on the ground. In the cases of Bhoomi and the Maharashtra Registration Department, high-level support from the chief minister for land records computerization and from the Chief Secretary for the transformation of the Registration Department made it difficult for rent seekers to defeat e-governance solutions. In the case of telecom, as Mukherji’s chapter shows, rent seeking was more sophisticated in nature. A mammoth telecom department (DoT) exercised monopoly control over the sector and received windfall profits as a result. DoT’s rent-seeking proclivities were curbed over a 20-year period by several factors, as telecom was simply too important for India’s overall development to be left alone. Prime Ministers Rajiv Gandhi (1984–89) and Atal Bihari Vajpayee (1998–2004) were conscious of the importance of effective telecommunication services for the growth of Indian industry in an increasingly global environment. High-level support from the PMO was thus the only way that the DoT’s monopoly could be successfully challenged. Pressure from the IT industry, along with a political recognition of IT as a priority sector for India’s emergence as a world-class strategic player, and a crisis of investment induced by DoT’s predatory behavior, led

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to major changes in the late 1990s that threw open the sector to private competition in both cellular and long-distance services, as well as the creation of a stronger regulatory mechanism in the form of a restructured TRAI. The rise of an autonomous regulator in turn made it possible for private players to compete on a more equal footing with public sector providers MTNL and BSNL. The collapse of DoT’s rent-seeking ability is illustrated by the sharply declining staff/direct exchange line (DEL) ratio, which fell from 74 per DEL in 1990–91 to eight in 2002–03. Obviously, the best way to reduce rent seeking is competition. In this case, developmental priorities set by successive prime ministers, operating directly through the PMO, and pressure from the IT industry combined to force the demonopolization of the telecom sector, despite stiff resistance.

Strategy and Tactics of Reformers Reformers justified change by appealing to past traditions. They overcame resistance through consultation, gradualism (especially at first), promises of no retrenchment in exchange for staff cooperation, not altering much the benefits of existing civil servants, improving the working environment, and finding a place for ‘spoilers’ who might be swept aside by reform. Reformers mobilized counter-constituencies in favor of reform to convince politicians to hold their ground in the face of opposition from entrenched lobbies.10 Politicians appealed to party traditions to justify change.11 Anchoring change in the past was one way of giving them greater legitimacy and soothing opposition. The chief minister in Madhya Pradesh, for example, won over his party colleagues to his devolution program by couching it in terms of his party’s traditional support for such programs nationally and recalling the party’s role in supporting the 73rd and 74th Amendments to the Constitution, which provided a constitutional mandate for strengthening the fabric of local government. In Tamil Nadu, both the DMK and the AIADMK appealed to the ideas of ‘Periyar’ E.V. Ramaswamy, a founding figure of Dravidian thought, to promote their social policies and programs. Reformers made it clear upfront that no job losses would occur as a result of reforms: workers were thus, not immediately threatened by the prospect of reforms. In exchange for a guarantee that no retrenchment would occur, telecom unions agreed to a long-term ban on recruitment, which allowed the workforce to shrink through attrition. In MP, regular teachers continued to enjoy lifetime employment, with only new teachers

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being hired on a contractual basis—this helped mollify teacher unions. Even when substantial business process changes occurred, as they did in Bhoomi, village accountants continued to play an important role in verifying the veracity of land transactions and were thus not rendered irrelevant by land record computerization. In the E-Choupal case (profiled in the main report), ITC managed change by employing mandi workers at Sagar hub centers, allowing mandi inspectors to certify hub transactions, and even paying local taxes to mandi committees—all this blunted resistance to direct procurement by ITC from mandi employees as well as traders. ITC also used the fact that the new system benefited an even larger group —farmers—to persuade the Government of Madhya Pradesh to agree to changes in mandi rules that allowed for direct transactions outside mandis. Reformers focused on the issue of working conditions to win employee support for change. In the case of reforms in the Maharashtra Registration Department, modular furniture in a spotless environment was installed in all SROs, while computerization reduced drudgery for employees. In Surat, efforts were made to improve conditions in the colonies where sanitation workers employed by the municipal corporation worked, and to resolve petty but long-standing disputes with employees. Extensive consultation with staff prior to introducing changes helped reassure employees in the registration department in Maharashtra. An incremental approach to reform appears to have whittled away resistance over time. The process of dismantling of the telecom monopoly built up slowly over two decades before accelerating in the late 1990s. Not all reforms unfolded as slowly—the implementation of E-Seva took three years from the launch of the initial pilot to the roll-out across Hyderabad and other urban centers across the state. The transformation of Bangalore’s civic agencies occurred in a compressed space of a few years, beginning slowly in the mid-1990s but taking off after 2000. In MP, it took three years of initial preparation to create the RGSM and complete a participatory school-mapping exercise before the Education Guarantee Scheme (EGS) was launched in 1997. But between 1997 and 2000, a staggering 26,571 schools were established in some of the most deprived regions of the sprawling state. In these latter three cases, chief ministers with bold vision and tight control over state legislatures were able to push through significant reforms in a reasonably short period. In this sense, these reforms were less incremental in character, particularly if viewed from an ex ante rather than an ex post facto lens, but still far from a ‘big bang’ approach.

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On the other hand, in the rare cases where it was tried in the highly centrist Indian political system, the ‘big bang’ strategy of reform does not appear to have worked well at all. The attempt to implement a highly sophisticated technical solution to the problem of corruption in Gujarat’s interstate check-posts within 10 months was probably too ambitious to succeed in the first place (World Bank 2006: Chapter 3). These cases clearly show that vested interests can be overcome through a combination of enabling conditions, instruments, and tactics. In Andhra Pradesh’s E-Seva program, for example, departments went along with a horizontally integrated form of billing that effectively undermined their autonomy. In Karnataka’s Bhoomi program, village accountants, as noted earlier, agreed to a new system of providing land records that undermined their control over this function. In Surat, municipal employees went along with wide-ranging reforms to restructure the corporation after 1994. DoTs opposition to competition gradually eroded under pressure from the PMO. Other cases studied in this report underline the same point— political economy constraints to reform, including vested interests, can indeed be addressed and surmounted.

Sustaining Reforms Both this volume and the main report point to several lessons on how to sustain reforms in service delivery. The cases of E-Seva and E-Choupal show that when an initiative is generally popular with the public, it can survive political transitions from one party to another. Although E-Seva was identified with one particular leader, the new government came out in support of expanding it further. In the case of E-Choupal, a traders’ strike, aimed at turning back the clock to the days when all transactions had to physically occur within a mandi, provoked large counter-demonstrations by farmers and failed to persuade the new MP government to restore the status quo ante. Similarly, a strike by MP’s Shiksha Karmis after the new government took over failed to persuade authorities to concede them the right to be transferred across districts, which would have spelled an exodus of teachers from rural to urban areas. Clearly, when initiatives were owned by civil society, they were more likely to be sustainable in any political setting, as seen in the cases of Rajasthan and Delhi, where NGOs underpinned the implementation of right to information statutes. When political parties shared a consensus in favor of a set of programs, sustainability was enhanced. Tamil Nadu is a case where sustainability has been secured because both Dravidian parties, while bitter rivals, share

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the same ideological roots. Neither party when in power has attempted to dismantle social programs instituted by the other. A bipartisan consensus stemming from a shared welfarist ideology and a view that dismantling such programs could be electorally disastrous have ensured the long-term continuance of initiatives like the noon midday meal program, universal access to highly subsidized rice, and centralized drug procurement, among others. On the other hand, the perception that the Lok Jumbish program in Rajasthan has been politicized led directly to its undoing by a new government of a different political persuasion. Program design made a difference as well—the fact that Tamil Nadu implemented several interrelated public initiatives to further human development at around the same time improved sustainability by generating synergies across them. Legal reform was another key element in assuring sustainability. The fact that MP’s educational reforms were codified into law through the MP Education Act made them more difficult to undo. On the other hand, Karnataka’s transfer policies, insofar as they derive from an administrative order rather than law, remain vulnerable to being rolled back. The fact that MPs APM Act has been amended to allow for direct transactions outside the physical confines of the mandi means that only a repeal of the new law, entailing public debate on the floor of the house and extensive media coverage, would be needed to go back to the old arrangement. Codifying reform into law is useful for another reason—it places the burden of enforcement on the independent, if slow, judicial system, not the bureaucracy, which can lean one way or the other depending on political signals. Grounding new institutions in law gave them greater standing than doing so by administrative fiat. The fact that the Delhi Right to Information (DRTI) law provided for an independent and relatively informal appeals mechanism through the Public Grievances Commission (PGC) made implementation of the new law more feasible. This is in contrast to Karnataka’s law, which provides for an external appeal to highly formalistic body—the Karnataka Administrative Tribunal (KAT)—that few citizens know how to use effectively. Similarly, the creation of an independent regulator in telecom, with strengthened legal authority, improved the fairness of the licensing process, and reassured private investors as well as consumers. Economics was important for sustainability. Surat’s expanding resource base allowed the city to fund large infrastructural projects to cope with rapid population growth fueled by a buoyant local economy, thus, enhancing

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the viability of the reform program. When governments allowed user fees to be raised in exchange for better services, as in the case of KSRTC, or implemented initiatives based on sound revenue models, many times in cooperation with private partners, such as E-Seva in Hyderabad or the reforms in the Registration Department in Maharashtra, these were more likely to prosper over time. On the other hand, initiatives such as FRIENDS, which operated under politically determined constraints that made it difficult to levy transaction fees on participating departments or involve the private sector, were less likely to be sustainable in economic terms without a significant subsidy from the government.

Transplanting Lessons Because reforms often developed in a particular context, they were not always easy to transplant. Promoting dialogue between similar agencies across states, sparking competition between cities or states, and using NGO networks to spread the good news about successful reforms were the primary ways of transplanting lessons from one setting to another. The central government can also play an important role in transmitting such knowledge across states. These cases provide useful lessons about processes of replication and scaling-up. Of course, many of the initiatives studied here are contextbound—the political ownership that led to E-Seva in Andhra Pradesh or EGS in MP; the particular constellation of factors that produced the turnaround in service delivery in Bangalore; the impact of the plague in spurring reform in Surat; and the welfarist strain of ideology running through Tamil Nadu’s Dravidian political culture cannot be easily translated from one context to another. The term ‘replication’ implies a neatness that is often elusive in practice. That said, how did lessons about improving service delivery get transmitted from one setting to another? In some cases, dialogue between agencies operating outside a silo mentality sparked reform—Maharashtra’s registration reforms were inspired by CARD in Andhra Pradesh, while Karnataka’s Registration Department took its cue from Maharashtra. FRIENDS was Kerala’s response to Andhra Pradesh’s E-Seva model. The use of para-teachers and societies to implement education reform in Madhya Pradesh closely paralleled earlier such reforms in Rajasthan. In other cases, competition furnished a motive for change. It is now clear that Bangalore’s service delivery improvements were partly a response by the political leadership to the emergence of Hyderabad as a major investment destination.

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NGO networks played a role in transmitting good practices across states. Parivartan put the tactic of public hearings to good use in Delhi after it was first used in Rajasthan by the MKSS. Report cards are also becoming popular—the Delhi government has recently invited the PAC to rate city services on the lines of its prior work in Bangalore. At times, the GoI pushed states to adopt good practices. One example was GoI’s insistence that states build community ownership into all rural water supply and sanitation programs after the success of this approach in the Swajal Project in Uttaranchal. The Supreme Court also did the same thing—the decision to order states to adopt a cooked midday meal program is a case in point. When the same political party that had introduced innovations in a particular state went on to win national power, the chances that these initiatives would be implemented on a larger scale increased—the central government has, for example, recently introduced a national variant of MP’s hospital autonomy program. More innovative methods of training for government servants to spur innovation and build capacity may make it easier to transplant reforms from one state to another. Andhra Pradesh’s Chief Information Officer’s (CIO) program, designed in collaboration with the Indian Institute of Management, Ahmedabad, has made it easier to train officials in the implementation of e-governance projects. AP’s CIO program could easily be adopted by other states as well.

Conclusion: Learning from Success Disseminating these lessons is a priority to break the climate of pessimism that nothing or very little can be done to improve delivery systems, and provide practical help to those seeking to reform service delivery across sectors. One critical issue is whether these lessons need to be applied together as a package to achieve a sustained improvement in service delivery, or whether it is possible to pick and choose at will. Clearly, a mixture of several instruments applied in the right enabling environment is likely to yield the best results over time. These cases show that improvements in service delivery can take place even in the absence of large-scale systemic changes. There is, therefore, good reason for confidence in the ability of the state, providers, and clients to come together to make services work in India.

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Notes 1. On the link between participation and socio-economic development, see Dahl (1971: 62–80); Huntington (1989: 59–72); and Lipset (1960: 45–76). 2. Figures from the National Election Audit 1999 (NEA 99) conducted by the Centre for the Study of Developing Societies (CSDS). Ambiguities in the law have made campaign ceilings largely meaningless. Explanation 1, Section 77(1) of the Representation of People’s Act (RPA) allows political parties and their supporters to spend any amount in a given constituency—over and above candidate expenditure ceilings— provided there is no direct coordination with, or mention of, candidates. 3. For more on Bhoomi and ITC’s E-Choupal, see World Bank (2006: Chapters 2 and 3). 4. For more on the attempt to computerize check-posts in Gujarat, see World Bank (2006: Chapter 3). 5. For a detailed analysis of Bhoomi, see World Bank (2006: Chapter 3). 6. For an excellent study of Bangalore’s history, see Nair (2005). 7. These included Janaagraha, Voices, PAC, and the Center for Budget and Policy Studies (CBPS). For more on Janaagraha, see Dargar (2003). 8. On reforms in the BWSSB, see Connors (2004). 9. The HDI is a composite index that takes into account per capita income, life expectancy at birth, literacy rates, and the mean years of education in the population. 10. I am grateful to Mark Robinson of IDS, Sussex, for pointing out the difference between ‘losers’ and ‘spoilers’; ‘losers’ are often not compensated for the ill-effects of reform on them, while ‘spoilers’ invariably are. 11. Referring to a past leader or tradition to justify policy changes is referred to in the political science literature as the use of ‘backward legitimacy.’ For more on the concept, see Huntington (1989). Clearly, this was a case of backward legitimacy in action.

References Bangalore Development Authority. 2004. A Saga Unfolds. Bangalore: BDA. Chibber, Pradeep. 2004. ‘Federal Arrangements and the Provision of Public Goods in India’, Asian Survey, May–June, pp. 339–52. Connors, Genevieve. 2004. ‘Pro-Poor Water Governance in Bangalore’, Unpublished paper submitted to the International Institute for Environment and Development. Crook, R.C. and Manor, J. 1998. Democracy and Decentralization in South Asia and West Africa. Cambridge: Cambridge University Press. Dahl, Robert. 1971. Polyarchy. New Haven: Yale University Press. Dargar, Seema. 2003. City Government, Budget Analysis, and People’s Participation in India. Bangalore: CBPS. Fiszbein, Ariel (ed.). 2005. Citizens, Politicians, and Providers: The Latin American Experience with Service Delivery Reform. Washington, DC: World Bank. Government of India. 2004. Committee on Civil Service Reform, Final Report. New Delhi: GoI. Government of Karnataka. 1999. Proceedings of the Government of Karnataka, Constitution of a Task Force on Metropolitan Bangalore. Bangalore: Government of Karnataka.

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Huntington, Samuel. 1989. The Third Wave: Democratization in the Late Twentieth Century. Norman: University of Okhlahoma Press. Lal, Sumir. 2005. ‘The Politics of Service Delivery Reform’, Paper prepared for India Service Delivery Report. New Delhi: World Bank. Lipset, Seymour Martin. 1960. Political Man: The Social Bases of Politics. New York: Doubleday. Mavlankar, Dileep. 2003. ‘Study of Technical Top Management Capacity for Safe Motherhood Program in India’, Paper for Study on MDGs in India. New Delhi: World Bank, SASHD. Naidu, Chandrababu (with S. Ninan). 2000. Plain Speaking. New Delhi: Viking. Nair, Janaki. 2005. The Promise of the Metropolis: Bangalore’s Twentieth Century. New Delhi: Oxford University Press. Paul, Samuel. 2002. Holding the State to Account. Bangalore: Books for Change. Public Affairs Center. 2004. The Third Report Card on Bangalore Public Services. Bangalore: PAC. Rao, Anuradha. 2003. Karnataka Lok Ayukta. Bangalore: PAC. Seshadri, Shreelata Rao. 2003. A Comparative Case Study of a Program for the Economic and Social Empowerment of Women. New Delhi: World Bank, South Asia Human Development Unit. Vittal, N. 2005. ‘Anti-Corruption Enforcement in India: The Framework and Possible Reforms’, Paper prepared for India Service Delivery Report. New Delhi: World Bank. World Bank. 2003. World Development Report 2004: Making Services Work for Poor People. Washington, DC: World Bank and Oxford University Press. ———. 2004. State Fiscal Reforms in India. New Delhi: Macmillan. ———. 2006. Reforming Public Services in India: Drawing Lessons from Success. New Delhi: Sage Publications.

Chapter 2 Promoting Competition in India’s Telecom Sector1 Rahul Mukherji

Introduction: The Problem of Institutional Change in India’s Telecom Sector The transformation of the telecom sector business environment in India, from a government monopoly dominated by the Department of Telecommunications (DoT) to one with private players and corporatized government-owned entities like the Bharat Sanchar Nigam Limited (BSNL), is an interesting research puzzle. History has the tendency to perpetuate certain trajectories. The puzzle in the Indian telecom story relates to how competition in telecom service provision was instituted, despite historical advantages for the government’s monopoly since colonial times. There were political and legal bottlenecks, and network economies favoring the status quo. First, there was a political bottleneck in terms of the possibility of rent seeking in a sector owned by the government. Economic rent is a payment to a factor of production exceeding the minimum amount needed to bring forth the quantity of services supplied by that factor. It was possible to extract rent from the consumer in the telecom sector because the consumer, in the context of the DoT’s monopoly, had neither exit options nor voice.

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The Indian customer subsidized an overstaffed telecom department with more than 400,000 workers, which was a source of political patronage. In the 1990s, India’s productivity index was 14 telephones per employee, while the same figure was 40 and 80 for Sri Lanka and Malaysia respectively. On the eve of the Eighth Five-Year Plan, the communications minister wanted to generate Rs 150 billion of the capital needs of the sector by charging it to customers. More than 75 percent of the assets of the telecom sector had been raised through telephone bills rather than through equity capital. These are just two examples that highlight the excess amount over opportunity cost that the Indian customer was paying because of the DoT’s monopoly. The luxury of economic rents resulting from a monopoly over a sector would not be easy to give up due to political control. Second, there were legal biases opposing the birth of competition. At the time that competition was introduced, there was no provision for an independent regulator who could check the excesses of the telecom department. The Indian Telegraph Act (1885) ensured that the telecom department was policy-maker, service provider and licensor in one. It could bend licensing norms to favor itself. The telecom department used this act to oppose the birth of a regulator and fought to keep the regulatory powers with itself. Third, network externalities favored the status quo. The telecom department (DoT) was the owner of the entire telecommunications network of the country at the time of liberalization. Smaller operators had no option but to connect with the DoT’s network. The DoT often tried to negotiate predatory interconnection agreements, which would raise the calling rates of cellphone operators to unsustainable levels. Furthermore, the DoT held the long-distance monopoly for a long time after competition was introduced. This long-distance monopoly was used to subsidize local calls. Tariff rebalancing (reducing the subsidy for a local call) was never fully achieved, despite the Telecom Regulatory Authority of India’s (TRAI) best efforts.

Reforming the Telecom Sector Institutions are formal rules and informal constraints based on principled ideas, which produce a certain kind of behavior. For example, formal rules, informal conventions or a combination of formal and informal conventions could secure property rights for private individuals. Institutions in the telecom sector were transformed from ones based on the

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idea that government monopoly was the best way to provide services to ones based on the principle that competition would enhance efficiency within the sector. Taking into account the capital requirements of the sector, private investment was considered desirable. The regulator would play referee between private and state capital. It was to generate an even playing field for private capital. Private capital would need regulatory independence to check the excesses of the incumbent arising from its monopoly position. Second, the synergy between the government’s dual role, that of policy-maker-cum-service-provider, reinforced the monopoly position of the incumbent, which was invariably the state-owned telecom company in most countries. The three daunting tasks for the regulator would be to secure independence from the telecom department, to ensure that the government as policy-maker was not unduly favorable towards its own service providers, and to push the government as policy-maker to establish itself as a separate entity from its service provision functions. The regulator as an institution would need to strive in the direction of fulfilling the above three functions for creating an even playing field for private capital. The entry of private capital reflected a political will in favor of private sector participation in India’s telecom sector. This occurred despite the DoT’s displeasure. The process was evolutionary and punctuated by crises. Uncertainty and transaction costs characterized the business environment, largely owing to the DoT’s unwillingness to part with its politically mandated privileges. This uncertainty discouraged foreign investment to a greater extent than domestic investment. The birth and consolidation of the regulator in order to reduce transaction costs for private investors needed both policy and legal changes. The following institutional successes need to be noted. The regulator consolidated its position and facilitated private investment. Private operators served 21 percent of the direct exchange lines in March 2003 and 39 percent in March 2004 (Figures 2.1 and 2.2). Over time, predation by the telecom department was replaced by private sector predation, which was equally dangerous for competition. Second, the DoT felt the pinch from competition as the private sector consolidated itself. The Department of Telecom Services was corporatized into the Bharat Sanchar Nigam Limited (BSNL) in 2001. The corporatization of the DoT Services was a movement in the direction of separating the service provider within the government from the policy maker. That the DoT took a long time to restructure itself into a corporate entity highlighted the difficulty of overcoming

60 Rahul Mukherji Figure 2.1 Distribution of Direct Exchange Lines (DELs) [Fixed + WLL + CMPs] [PSU + Private] as on March 31, 2003

Source: Department of Telecommunications (2005). Figure 2.2 Distribution of Direct Exchange Lines (DELs) [Fixed + WLL + CMPs] [PSU + Private] as on March 31, 2004

Source: Department of Telecommunications (2005).

political and bureaucratic interests. Subsequently, the DoT considered the merger of the government-owned corporate entity Mahanagar Telephone Nigam Limited (MTNL), serving the metro areas of Delhi and Mumbai, with the BSNL. This could allow the larger corporation to compete more effectively with private players. The period between March 2003 and March 2004 witnessed the cellular revolution in India. Cellphone connections shot up from 13 million to 35 million subscriptions. India’s teledensity (combining cellphone and

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fixed-line connections)—the number of telephone lines per hundred people—increased rather sharply from 5.11 in 2002–03 to 7.02 in 2003–04 (Figure 2.6). The New Telecom Policy of 1999 had a teledensity target of 7 by 2005. The regulator claimed that India would have a teledensity of 15 percent by 2006.2 The ratio of China’s mobile subscribers to India’s, which was 10 in 2002, came down to eight in 2003. India’s international calling rates dropped dramatically following the disinvestment of the Videsh Sanchar Nigam Limited (VSNL) and the ability of private players like Reliance and Bharti to carry long-distance traffic. The TRAI was awarded the Frost Sullivan Asia Pacific Technology Award for 2004 for the Asia Pacific Regulator of the Year. The majority of India’s population living in rural areas, people who were not within the purview of the market, did not benefit substantially from India’s telecom revolution. India’s rural teledensity was 1.55 in 2003–04, up from 0.93 in 2000–01 (Figure 2.6). This was surprising because many telecom initiatives such as the wireless-in-local-loop (WLL) technology were introduced in the name of serving the rural poor. While geographical areas serving the rich, the middle class and the exportoriented service sector benefited from competition and consequent consumer choice, those regions that markets were not able to serve profitably, suffered. There was one silver lining in this saga of depressed rural teledensity. There were reports of the government-owned BSNL’s success in securing scores of pre-paid cellphone customers in rural areas using their gigantic network. The plans of the Universal Service Obligation (USO) Fund, situated within the telecom department, were yet to materialize. The telecom department awarded tenders to BSNL and to Reliance for serving rural areas, using a subsidy from the universal service fund. This fund was collected as a 5 percent tax on revenue from operators serving commercially viable areas. If the urban-centric telecom revolution failed to get to rural India, the information divide would have deleterious consequences for India’s development. The regulator needed to pay greater attention towards the non-fulfillment of rural obligations.

The Preconditions for Private Investment This section argues that digital technology and the interests of the service sector in advanced industrialized countries produced international principles favoring telecom demonopolization. India was aware of the power

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of both digital technology and telecommunications. The power of new technology to usher competition in telecom services was appreciated and pushed by the Prime Minister’s Office (PMO), often with the help of DoE, which functioned directly under the PMO. Policies such as the corporatization of DoT, encouraging the private manufacture of telecom equipment and enhancing the competitiveness of the information technology (IT) industry were due to the resolve of the PMO, often in opposition to the interests of DoT.

Technology, Interests and Policy Ideas Favoring Competition Digital technology drove ideas favoring competition both at the global level and in India. Advances in electronics produced a new breed of telecom equipment manufacturers producing digital switches and handsets. They would stand to lose from government monopolies, which had a high tolerance for inefficient equipment manufacturers. Producers of telecom equipment in the US and Japan lobbied for promoting competition in the telecom equipment market. Demonopolization of telecom service delivery was one way of ensuring that monopolies could no longer depend on inefficient telecom equipment. For example, Bryan Carsberg, the Director General of the British regulatory agency Oftel, once remarked that a corporatized British Telecom could not afford to buy only British equipment when other service providers could enhance their efficiency through imported equipment. As information technology became cost-effective, service companies in the US and UK became significant consumers of telecommunications services. Aided by telecommunications and information technology, outsourcing, customization, customer relationship management and coordination of a company’s multinational activities using information technology were transforming the way business was conducted. These companies were using telecommunications far in excess of households and were a small and well-organized group of consumers. They argued that telecom demonopolization was a dire necessity for efficiency, as telecom services formed a substantial proportion of the costs of a company’s operations. These corporations formed a powerful lobby favoring telecom service liberalization. Governments, especially those in the US and UK, were pushed by these service companies. The interest of

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the service companies in promoting telecom demonopolization was reflected in the General Agreement on Tariffs and Trade (GATT) negotiations leading to the birth of the World Trade Organization (WTO). The Annex on Telecommunications within the WTO suggested that telecommunications was the most successful area of service trade liberalization.

Political Will in the Prime Minister’s Office (PMO) India was following these technology-driven changes, which made private provision of telecom services economic. The PMO got involved with getting India moving along the electronics revolution route. The electronics revolution led to the setting up of the DoE in India in 1973, directly under the PMO. The DoE department under Prime Minister Indira Gandhi confronted the Ministry of Posts and Telegraphs (MPT) in the early 1980s, urging it to pay greater attention to telecommunications modernization. The telecom bureaucracy resisted these moves and preferred the status quo. The DoE, on the other hand, had expressed views about the need for modernizing the MPT in the early 1980s. It favored advanced switch technology and user equipment. The posts and telegraphs department, on the other hand, viewed electronics as elitist. Jairam Ramesh, an engineer trained at the Indian Institute of Technology (Powai), the Carnegie Mellon University, and the Massachusetts Institute of Technology, was deeply involved with the formulation of India’s science and technology policy in the 1980s. Ramesh had argued in favor of the DoE’s view, and suggested the setting up of a Telecom Board, which would draw lessons from both sides of the dispute. Telecommunications were given priority over posts during the early 1980s. In the past, postal services were considered necessary, but telecommunications was viewed as being elitist. This began to change in the 1980s. First, the Sarin Committee (1981) had noted the undue emphasis on posts within the MPT. It recommended the separation of posts from telegraphs as separate departments within the Ministry of Communications. It had expressed the need for shifting the Indian Telephone Industries from the Ministry of Industry to the Ministry of Posts and Telegraphs, and urged the importation of 100,000 instruments. Second, the plan outlay for telecommunications rose from 2.48 percent in the Sixth Plan (1980–85) to 5 percent in the Seventh Plan (1985–90). Planners began viewing telecommunications as an important part of India’s growth strategy.

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The PMO under Rajiv Gandhi was the force behind the New Electronics Policy of 1984, and the setting up of the Centre for the Development of Telematics (C-DoT). C-DoT was given funds and autonomy from the DoT, and, was able to attract the best talent from the Indian Institutes of Technology. Private production of C-DoT switches and other end-use equipment was allowed. (C-DoT’s Rural Automatic Exchange Switches [RAX] served over 60 percent of rural India in September 2005.) By 1989, the Electronic Private Automatic Branch Exchange (EPABX) was so successful that 70 percent of the local manufacturers had licensing arrangements with C-DoT instead of foreign technology sources. The successful manufacture of the RAX switch by private players earned C-DoT the illwill of DoT. The public sector entity, the Telecommunications Research Centre, which was administered directly by the DoT, could not match C-DoT’s excellence in innovations. Also, the DoT was separated from the Department of Posts within the Ministry of Communications (MOC) in 1985. Furthermore, on April 1, 1986 the government created a corporatized Mahanagar Telephone Nigam Limited (MTNL) to serve the metropolitan areas of Delhi and Mumbai (Bombay). Before the creation of MTNL, the DoT within the Ministry of Communications was both service provider and policy-maker. No attempt had earlier been made within the telecom department to create public sector units, which would enjoy a degree of autonomy from the department. This was India’s first attempt at separating the telecommunications service provider from the policy-maker. Turning parts of a government department into publicly-owned corporations posed severe political challenges. Rajiv Gandhi’s office wanted more corporations like the MTNL, to serve metropolitan areas other than Delhi and Mumbai (erstwhile Bombay). The opposition to MTNL within the telecom department ensured that the idea of creating six other corporatized entities serving metropolitan areas other than Delhi and Mumbai had to be given up. The Videsh Sanchar Nigam Limited (VSNL) was formed out of a government department (Overseas Communications Service) on April 1, 1986 and given autonomy to run like a corporation. It was owned entirely by the government till February 2002. VSNL was India’s international long-distance carrier. Rajiv Gandhi also set up a Telecom Commission with extraordinary powers akin to the Atomic Energy Commission. It could take quick decisions without ministerial interference, was not subject to the ordinary policy of government transfers, and was set up to be an independent policy arm of the telecom department.

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Corporatization, MTNL-style, would be politically tough to endure. The argument that the corporatized MTNL serving the metropolitan areas of Delhi and Mumbai (erstwhile Bombay) would become financially more viable than the non-corporatized parts of the telecom department serving the rest of India was fiercely resisted by the workers of the telecom department. The 380,000 workers of the telecom department opposed the MTNL’s decision to give a performance bonus of Rs 100 to its 70,000 employees in 1990. The DoT recommended to the communications minister that MTNL be merged with DoT so that such discrimination regarding productivity, performance and rewards would not have to be confronted in the future. In 1990, Prime Minister Chandra Shekhar set up the Telecom Restructuring Committee (TRC), better known as the Athreya Committee, to get an independent view on restructuring DoT. The PMO had first approached Citibank for advice. Citibank had suggested that the PMO turn to M.B. Athreya, a scholar with a PhD from Harvard Business School, with teaching and consulting experience as a professor at the Indian Institute of Management in Kolkata (Calcutta). The TRC report was available in March 1991, a couple of months before India went for conditional lending to the International Monetary Fund (IMF) in June 1991. It reflected India’s accumulated wisdom on telecom restructuring rather than subservience to donor advice. The Athreya Committee (TRC) opined that telecommunications in India needed three kinds of institutions: policy making, regulatory, and field-oriented. The Telecom Commission could perform the policy role, an independent regulator was needed to promote competition; and the field role within the government, which was the service provider’s role, could be played by the DoT. The TRC suggested corporatization of the telecom department’s service arm and sequenced liberalization of cellular and value-added services, followed by the liberalization of basic services, which were the local, longdistance and international operations of the telecom department. The Athreya Committee was a product of the PMO’s urge to move away from the telecom department’s view on telecom demonopolization. The committee’s report made three significant contributions to thinking about demonopolization in the telecom sector. First, it noted that the sector needed private capital, which could be allowed first in areas where the opposition of the DoT was likely to be the least. Second, it pointed out that the service provider and the policy-maker roles needed to be separated. Third, it argued the case for a regulator, which would function as a referee to even out the operational circumstances in favor of private capital,

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in a sector where the regulatory and network advantages were overwhelmingly with state capital. The report was opposed by the three members of the telecom department but had the support of the Planning Commission, the Finance Ministry, the DoE, and the Ministry of Industry. N. Vittal, Secretary to the DoE, which was directly under the PMO, played an important role in creating high-speed connectivity for the software sector, outside the purview of the telecom department. At that time, Texas Instruments was paying Rs 4 million per year for using its own satellite-based earth station. Such regulation was inimical for the growth of India’s software and services sector. Vittal arranged for Rs 120 million to be diverted from the semi-conductor project to create earth stations in Mohali, Bangalore, Noida, Hyderabad, Trivandrum, Bhuvaneshwar and Gandhinagar, providing connectivity at 64 kb/second. He negotiated with public sector corporations such as the Oil and Natural Gas Commission, the Steel Authority of India Limited, and Indian Railways for the use of their telecom facilities and fiber optic network. The user charges of the software technology parks made them financially self-sustaining. The software technology parks competed favorably with India’s long-distance carrier, VSNL. The increased speed and bandwidth provided at lower cost by the technology parks was one reason for the growth of India’s software and services exports in the 1990s. The political will favoring prioritization of telecommunications modernization and for separating the policy-making functions from the service-provision functions within the DoT had arrived before the balance of payments crisis of 1991. This policy orientation was based on a view of technological development in electronics and the possibilities that telecommunications provided for India’s development. The political will radiating from the PMO would play an important role in pushing telecom demonopolization, despite DoT’s resistance. The important tasks that lay ahead were the creation of regulatory institutions and the further separation of the policy-making and service-provision roles of the DoT, which was inhibiting the initiation of private sector operations.

Political Will, Crises and Private Participation This section will describe the critical role played by the PMO during Narasimha Rao and Atal Bihari Vajpayee’s tenures as prime minister. It highlights the need for political will favoring competition at the level of

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the PMO, for sorting out problems that obstructed the birth of efficient telecom service provision in India. India had embraced global economic integration as a route to development, and telecommunications had to play an important role in giving India the much-needed edge in global competition. The previous section has argued that the need for efficient telecom infrastructure was pushed by the PMO before the balance of payments crisis. It preceded the birth of a robust information technology sector in India. Both may have facilitated the reforms, but technocratic ideas were driven first and foremost by an understanding within the PMO about the importance of electronics and telecommunications and their role in India’s development. The conflicts between the DoE and the DoT persisted beyond the balance of payments crisis of 1991. It took three years for the PMO, under Narasimha Rao, to get the secretary of the DoE, N. Vittal, appointed as the telecom secretary in 1993. Vittal designed the National Telecommunications Policy (NTP) of 1994, which was a harbinger of telecom reforms. The policy was announced despite very explicit opposition from the telecom department. In 1998 the DoE was given ministerial status and renamed the Ministry of Information Technology. The Ministry of Information Technology was subsequently brought under the Ministry of Communications and Information Technology in 2001. The DoE component of the Ministry of Communications was re-christened as the Department of Information Technology, which came under the Ministry of Communications and Information Technology.3 This was an acknowledgment at the policy level of the relationship between telecommunications and electronics. Within the PMO, electronics had been considered important for telecommunications but it had taken much inter-bureaucratic wrangling before it could get formally associated with communications. Even though turf battles between the Departments of Information Technology and Telecommunications remain, the coordination at the ministerial level has improved. One single minister looks after posts, telecommunications and information technology.

1991–94: The National Telecommunications Policy The DoT gave up rents due to its monopoly position only after giving a good fight to the PMO. It successfully resisted pro-reform initiatives between 1991 and 1993. This was the period when reforms in trade, finance and industry were carried out with great urgency, aided by the

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balance of payments crisis. The need for private investment in infrastructure areas like power and telecommunications was being expressed openly. The DoT made a signal contribution to resisting this by thwarting telecom reforms between 1991 and 1993. DoT had argued that privatization of government assets would be expensive for the exchequer, despite the innovative financing options suggested by Athreya. India could have permitted private investment into the sector after strengthening the telecom department’s operations along the lines of the British Telecom experience. British Telecom was first made fit for competition before private investment was invited into Britain’s telecom sector. The only concession made to private investment by the DoT was the invitation of bids in 1992 for cellular mobile licenses using Global System for Mobile (GSM) technology in the metropolitan areas of Mumbai, Delhi, Kolkata, and Chennai. This business was considered both elitist and unprofitable, and hence worth making a concession on. The TRC had predicted in 1990 that the DoT would first let go these value-added services, which it considered both elitist and unprofitable. N. Vittal, the pro-reform secretary of the electronics department and the father of the software technology parks, was appointed telecom secretary in 1993. The PMO is reported to have played an important role in overcoming the resistance to this appointment from the telecom department. Despite the short tenure, Vittal was able to provide a blueprint for reforms in the National Telecommunications Policy (NTP) of 1994. The political economy of the 1994 NTP is revealing. The telecom commission had four meetings in December 1993 after a departmentwide consultation. Corporatization was not accepted and the foreign direct investment limit was kept at 49 percent, rather than the suggested 51 percent. The single most important achievement of the NTP was the opening up of basic services to private operators. The concessions made by DoT in allowing the NTP were more symbolic than real. First, allowing private operators fixed basic services but keeping the long-distance monopoly with the DoT would kill private initiative in this sector. It was well known that long-distance services were used by the DoT to subsidize its local services, which were being charged below cost. This option was not available to private operators. Second, the NTP of 1994 failed to suggest the need for a regulator. Absence of an impartial regulator would aid the predatory activities of the telecom department. The DoT would be in the enviable position of being policymaker, adjudicator and service provider in the area of its operations. The

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NTP of 1994 thus provided for an uncertain and litigious business environment. Third, the recommendation to corporatize the DoT could have toughened it for competition from the private sector. This opportunity too was missed. A policy statement with little substance reflected in part the political opposition to change from within the DoT.

1994–97: Licensing Conflicts and Investment Pessimism The NTP of 1994 allowed private investment in basic telephone services for the first time in India. The absence of a powerful regulator, and, the policy-maker-cum-service-provider syndrome of the DoT made it tough for private investors to compete with the DoT. The DoT tried to keep all the privileges for itself and created a business environment characterized by rent seeking and uncertainty, which discouraged investment. The crisis of investment owing to the lack of regulation gave birth to a regulator in 1997. The Telecom Regulatory Authority of India (TRAI) was finally established in 1997. The licensing process was renewed soon after the NTP of 1994. The first round of the bidding process took place without the articulation of transparent bidding rules. Metro licenses had been awarded in 1992. At this time, the main criteria were operational experience, financial viability, and the availability of an experienced foreign partner. There was a fixed and reasonable license fee for the private operators. The list of successful bidders, however, was different from the list of the top two bidders in each of the metros. This controversial announcement led to litigation in the High Court and the Supreme Court. The controversy was resolved in October 1994 and cellular services were launched in the metros in the last quarter of 1995. The second round of the bidding process ensued in early 1995 and was completed by the end of the year. In the second round, after much persistence and efforts by private players, the weights given to the different parameters were clarified by DoT. The DoT defined the rules in a way that would lead to a commitment for very high license fees. Seventy-two percent of the weight in the licensing procedure was given to the size of the bid. The size of the bid and the payment schedule played an inordinately important role in the deciding who would get a license. In this system of auctioning licenses, offers were made to the second highest bidder to match the levy and the payment schedule of the highest bidder.

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Foreign equity participation was limited to 49 percent. The license fee had to be paid within a 10-year schedule. In the new set-up, the country was divided into A (e.g., Maharashtra and Gujarat), B (e.g., Uttar Pradesh and West Bengal), and C (e.g., Bihar and Orissa) circles, depending on the level of business in each circle. The system of auctioning licenses was beneficial for the DoT because a high license fee commitment was like a tax on private operators that the DoT did not have to pay. Moreover, it was a heavy tax because the private operators had the incentive to outbid each other if they wanted to get licenses. Two operators were allowed in each circle. The second highest bidder had to match the highest bidder in order to obtain the second license in the circle concerned. Second, the licensing period at 10 years was a very short duration by international standards. The sum total of the license fee offered by the highest bidders in basic services was Rs 1.15 trillion, when the DoT’s total assets were worth Rs 400 billion. Allowing private entry for private cellular and fixed operators into local services before long-distance services discouraged investment in the telecom sector. It was well known to investors that long-distance calls were used by the DoT to subsidize their local calls and rentals. While this opportunity would not be available to private operators, they would still have to operate in the low-profit section—the basic fixed domestic services. This was not the regular practice in other countries. The DoT did not award a license to the highest bidder in nine circles because the bid was not considered a reasonable levy. The criterion of a reasonable levy, which was subsequently called the minimum reserve price, was not mentioned before the bidding process was initiated. Under these conditions, eight of the nine circles failed to receive any bids and there was a clear case of lack of investor enthusiasm. At the end of the bidding process, only six companies offered to take licenses in a few states. International and domestic investors who had shown interest were discouraged by the lack of rules and transparency in the system.

The Struggle for Regulatory Powers-I The need for a regulator had become clear by 1996. Without a regulator to care for the interests of investors, DoT as policy-maker-cum-serviceprovider would have the incentive to thwart every chance of profitability of the private investor. It was politically very difficult to produce a legal document supporting the creation of a regulator in the telecom sector.

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The cabinet had a taken a decision in May 1995 to set up a regulator. The Congress Party had delayed the implementation of this cabinet decision. Two public interest suits filed in the Supreme Court challenging privatization without regulation were dismissed in 1996 after assurances from the government that such an authority would be formed through a presidential ordinance. After much debate, parliament finally passed the TRAI Bill in February 1997. The regulator (TRAI) was born with reform-minded members but an infirm constitutional mandate. The telecom department as policy-makercum-service-provider would systematically try to work policy to the advantage of its own service arm, to the detriment of private capital. The weak regulatory mandate given to the TRAI would make it impossible for the regulator to check the excesses of the telecom department. Four salient factors prevented the regulator (TRAI) from curbing the DoT’s predatory behavior. First, the TRAI did not have jurisdiction over the Monopolies and Restrictive Trade Practices Act (1969), which governed DoT’s anti-competitive behavior. Second, while the TRAI could resolve disputes between service-providers, it could not intervene in licensor-service provider disputes. Disputes between the DoT as a policymaker with licensing powers and service providers were beyond the scope of the TRAI. Third, the Indian Telegraph Act (ITA) of 1885 gave exclusive powers to the DoT for issuing and canceling licenses and for allocating the radio spectrum. The ITA was appropriate for an era of national monopolies but inappropriate at a time when the government was only one of the service providers. The USA and the UK had given licensing responsibilities to the regulator, realizing the conflict of interest that arose when the licensor was also a service provider. Fourth, the TRAI could clarify technical aspects of a bid. But this was a power without much consequence after the bidding process had been concluded. This power would have helped if the TRAI had been born in 1992 when the first bidding was initiated. The regulator (TRAI) could settle disputes related to interconnection agreements among service providers. However, the TRAI could not be consulted at the time of negotiation of the agreement. The market power of the DoT gave it considerable power to settle agreements in its favor— the DoT owned most of India’s telecom network, and private operators would therefore need the DoT’s network to a much greater extent than the DoT’s need to connect to any one private operator’s network. Private operators agreed to asymmetrical interconnection agreements only after it was clarified that such agreements would be retroactively subject to the

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TRAI’s adjudication. The TRAI recorded its first success when it was able to reverse a DoT decision to increase the rate for fixed-to-cellular phone calls in non-metro areas from Rs 0.46 to Rs 10. The consequent rise in cellular tariffs had resulted in a drastic fall in subscribers. TRAI’s constitutional infirmity became evident by 1998. Unlike the British and American regulators, TRAI did not have licensing powers, but merely recommendatory powers to advise the DoT on licensing matters. Neither, could it settle licensee–licensor disputes. The DoT deployed its licensing powers to help MTNL, its service arm serving the metropolitan areas of Delhi and Mumbai, to get into the cellular services market. The licensing regime had provided for two private cellphone operators in every service area. The DoT was not to compete in the cellular business. The entry of MTNL into the fray without consulting the TRAI affected the revenue expectations of the licensed service providers in a manner that they had not expected. Such unilateralism of the DoT was possible because it was policy maker and service provider at the same time. It increased the uncertainty and transactions costs of the private operators in the cellular business. Had the regulator been empowered with licensing powers, it could have determined the conditions of MTNL’s entry into the cellular area without jeopardizing the interest of the cellular companies. Cellular operators urged that the service provider function of MTNL should require its treatment at par with other private service providers. MTNL should therefore have paid a license fee to even the conditions for private operators. Bharti Cellular and Sterling Cellular challenged the DoT’s decision to enter the cellphone market without seeking the recommendation of the TRAI. The two-member TRAI bench upheld the contention that it was necessary for the telecom department to seek TRAI’s recommendation. The TRAI was concerned that the auction-based bidding process had made demands on cellphone companies that were making them financially unsustainable. The MTNL’s entry under such conditions would kill the private sector. At this point the PMO had two choices. Either it could support the regulator and cut DoT down to size by suggesting that DoT needed to consult TRAI. Or, it could keep tolerating DoT predation, which was inimical for private investment. When the PMO could not take decisive action, the Delhi High Court finally resolved the matter in 1998. The decision confirmed the regulator’s infirm mandate. Following the letter of the law, the Usha Mehra judgment upheld the claim that, if one were to interpret the Indian Telegraph Act (ITA) of 1885 alongside the TRAI Act of 1997, there was no need for the DoT to seek

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the advice of TRAI. The Indian Telegraph Amendment Bill (1995), which was introduced in 1995 with the possibility of reducing DoT’s licensing powers, could not been legislated into law. Therefore the ITA of 1885 had rested the licensing powers with the government rather than the regulator. The following salient points in the judgment showed that DoT as policymaker had the constitutional right to favor its service provider arm, the MTNL. There was a legal bias in favor of the status quo, which the 1997 TRAI legislation had not been able to correct. In the Union of India vs. TRAI case, the TRAI counsel had stressed the fact that government needed to take the recommendation of TRAI before coming to any conclusion. Second, it had argued that the TRAI Act of 1997 should have been read in consonance with the ITA of 1885. Taken together they should be taken to mean that TRAI had recommending powers, which it was not allowed to exercise. Last but not least, India’s commitments within the WTO necessitated such an interpretation. Justice Usha Mehra refuted all these claims and went with the Union of India’s position. She spent considerable effort in comprehending the recommendatory role of the regulator (TRAI). First, it was opined that the TRAI could advise but not dictate. It could neither grant nor revoke a license. Studying Section 11(1), Clauses (a), (b), (c) and (f), she opined that there were no procedural pre-requisites for the exercise of licensing power by DoT. Like in the case of the Union Public Service Commission, TRAI’s advice was not binding on the government. Second, the WTO consideration was irrelevant as this was not a WTO Dispute Settlement Panel. The government’s compliance with WTO discipline did not imply its surrender of licensing power. Last but not least, it was opined that the authority could adjudicate between service-providers and customers, or between service providers. It could also set tariffs. But the authority did not have the power to intervene in licensing decisions. Such a power, the judge thought, would directly conflict with Sections 4 and 8 of the ITA, 1885. This was a major regulatory crisis due to the ambivalent legal nature of the TRAI Act of 1997. The regulator was supposed to even the playing field for service providers. One of the ways that the regulator could achieve this was by ensuring that the licensing powers of the DoT were not used to kill competition by favoring the government’s service provision arm. This was precisely the kind of anti-competitive behavior that had marred the licensing process before the birth of the TRAI, but even after its inception, and despite its best efforts, the TRAI, was powerless to intervene in the DoT’s anti-competitive behavior.

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The Struggle for Regulatory Powers-II: The New Telecom Policy of 1999 and the TRAI Act (2000) Telecom policy reform favoring private investors beyond 1998 had three salient sources. The New Telecom Policy of 1999 and the TRAI Act (2000) are considered to be momentous policy and legal changes favoring competition, where the PMO’s initiative was critical. DoT predation had made private investment uneconomic and a crisis of private investment had matured. This crisis had been cooking since the early days of the licensing process, when the auction method had generated bids that were not economic in relation to the Indian market. The PMO decided that it had to intervene to save private investment in the sector. It also responded to a rare unity displayed by the telecom industry. The second important reason for the PMO’s involvement was that efficient service provision was the key to promoting India’s IT exports. The IT sector had grown to become an important export opportunity and the National Association of Software and Service Companies (NASSCOM) had articulated its interests well. The resolve of the PMO galvanized change by initiating structural changes within the DoT, in a manner that exemplified how the Indian state, if it was willing, could initiate policy and legal changes that encouraged private investment. The payment regime for private investors was made less severe, the TRAI’s powers were enhanced, and pro-competition elements in the policy led to the disinvestment and corporatization of government assets. These measures helped to reduce tariffs for the consumer. Had corporatization of government assets and a level playing field discouraging rent-seeking and promoting efficiency within government utilities come earlier, the barriers to private competition may have been less. In the case of India’s plural polity, where gradualism is key to the success of reforms, the sector needed political will, a powerful industrial sector consuming the services, and a crisis of investment for promoting an investmentfriendly regulatory framework. The DoT was aware of the mess that inappropriately regulated privatization had created. It commissioned two studies, one by the Bureau of Industrial Costs and Prices (BICP, November 1998) and another by the Industrial Credit and Investment Corporation of India Limited (ICICI, April 1998), to assess the viability of cellular projects in India.

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The ICICI study found that the metros of Delhi and Mumbai were doing better business than expected (52 percent of the country’s business), and that all eight projects in the metros had achieved financial closure. The majority of the projects in the states, however, which were divided into A, B and C circles, could not achieve financial closure. The average usage per subscriber, on the other hand, was going down. Subscriber revenues were less than projected even in the most business-friendly metros like Mumbai, where the subscriber base was going up but the per capita usage was coming down. About 54 percent of the subscribers in the metros generated revenues inadequate to cover the license fees per month per subscriber. If one subtracted the license fees and the interest payments from the earnings,4 one got a picture of the cash losses of the firms. The ICICI report concluded that the earnings were inadequate because of the onerous license fees commitment. The debt service coverage ratio, which was the ratio of funds available for servicing debts to the total debt-servicing requirement, was found to be less than one. The ICICI report opined that given the fact that the operators were not performing below international standards and that most of the world’s telecom players had betted on India, industrial sickness in the telecom sector owing to the present license-fee regime would lead investors to conclude that India’s telecom privatization initiative had failed. This would render the NTP of 1994 redundant. The study by the Bureau of Industrial Costs and Prices (BICP) noted that while subscribers in Delhi and Mumbai had surged beyond expectations, 15–32 percent of the subscribers used the network sparingly, contributing very little revenue. It also mentioned that project implementation problems in the circles—i.e. the time taken to get clearances—slowed down the process of generating revenues. Metro licensees could get their business started within a year but the circle licensees took anywhere between 452 and 740 days. Project delays increased the losses of the sector. By March 31, 1998 the losses of the metros ranged from Rs 660 million to Rs 1.17 billion. The service circle designated as ‘A’ lost anywhere between Rs 1.16 billion and Rs 5.28 billion. The corresponding figure for circle ‘B’ was Rs 380 million to Rs 3.52 billion, and figures for circle ‘C’ were not available. Finally, the total license fee paid up to March 31, 1998 was Rs 34.34 billion and the amount outstanding was Rs 8.81 billion. The BICP report concurred with the ICICI report in suggesting that the major reason for the cumulative losses of private investors was the license fee

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commitment. The internal rates of return on investment were disastrously very low for this reason. The financial crisis of the telecom sector coincided with a period when the PMO became proactively involved with making India a major IT and service exporter. The Bharatiya Janata Party’s (BJP) manifesto had a chapter on the need for stressing the development of IT. This was a unique policy statement issued by a political party. The PMO did not waste time, and in May 1998 set up the National Task Force on IT and Software Development (NTFIT), which was to give voice to the sector’s export-driven commercial interests. The NTFIT was designed to hear the IT industry’s export-oriented needs, and realize them through inter-ministerial coordination. Such strategic maneuvers by the Indian state seemed possible when the PMO got directly involved and saw to it that the interests of any one particular section of the bureaucracy did not capture policy. The Basic Background Report of the Prime Minister’s IT Task Force was prepared in June 1998. This suggested that the synergy between the IT industry interests and the political will emanating from the PMO pushed the telecom demonopolization process. The report argued that India’s commitment to the WTO made it necessary that domestic long-distance service be liberalized by 1999 and international long-distance service by 2004. The report had suggested that private Internet service providers (ISPs) should be free to choose between the VSNL’s international gateway and any other gateway. Policy was responsive to the needs of India’s IT sector. The domestic long-distance service was liberalized in 2000 and the international longdistance carrier (VSNL) was sold to the Tatas in February 2002, two years ahead of schedule. The Task Force had argued for ending the DoT’s monopoly over Internet service provision. In sharp contrast to the licensing policy guided by the telecom department governing basic and cellular licenses, the ISP policy of 1998 had a one-rupee license fee commitment and allowed for an unlimited number of licenses. The licenses could be valid for a city, a state, a number of states, or the entire country. Three factors moving the reform process had emerged by 1998. First, the crisis for private investors in the telecom sector as described earlier had become real. Second, the PMO was resolved to see that private initiative and efficiency would drive the development of this sector despite the telecom department’s historic opposition. This resolve was evident from the speed with which the PMO had responded to the recommendations of the NTFIT and Software Development, as described above.

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Third, all the telecom services operators were resolved to face this crisis as one. The Confederation of Indian Industry’s (CII) National Committee on Communications, in consultations with the Association of Basic Telecom Operators (ABTO), the Cellular Operators Association of India (COAI), the Indian Paging Service Operators Association (IPSOA), the Association of V-sat Service Providers, and the E-mail and Internet Service Providers Association, suggested amendments to the TRAI Act of 1997. Working with the Federation of Indian Chambers of Commerce and Industry (FICCI) and the COAI, the Central Vigilance Commissioner N. Vittal wrote a document concerning what ailed the sector. This was a rare situation when the sector’s interests were united in moving the policy in the direction of greater responsiveness towards private investment. In November 1998, Vittal, as Central Vigilance Commissioner, wrote a memo to the Director General of COAI to guide a partnership between the FICCI and COAI for pushing towards a new telecom policy. He pointed out that the PMO and finance ministry were the forces behind the liberalization process. The DoT would not support a loss of its privileges. The uneven playing field was due to the VSNL’s long-distance monopoly, no corporate tax or license fee for the DoT, and a tariff fixation policy where the tariff for the private operators had to be less than the DoT’s tariff. He raised the issue of low rates of return on private investment due to the above disadvantages, the need for telecom infrastructure for the IT sector, and the need for private investment to promote these objectives. Policy change would need political will, appropriate regulation, and market orientation favoring investment. He stressed the need for a universal service fund, which needed to cater to India’s obligations in the rural sector. Consultation with financial organizations would be essential for evolving a new policy. In 1998, the CII National Committee on Communications, in consultation with the smaller telecom-related organizations, suggested amendments to the TRAI Act (1997). It recommended that the loophole that led to the Usha Mehra judgment be plugged and urged that the licensor needed to take into account the recommendations of the regulator (TRAI) before issuing a license. The power to recommend was of little use if it was not mandatory. Second, the TRAI should be allowed to pass interim orders to provide relief that may be absolutely essential for financial reasons. Third, the TRAI needed to be vested with powers to deal with licensor–licensee disputes. Such disputes could be settled by a bench, which could include the TRAI chair and one other member.

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The PMO used the National Task Force on Information Technology and Software Development model to set up a 12-member group on telecommunications (GOT). The New Telecom Policy (March 1999), which soon emerged from the GOT, was a landmark event favoring investment in the telecom sector. Foreign investment in the sector rose from Rs 45 billion in 2000 to nearly Rs 85 billion in 2001, when the same figure for 1999 was approximately Rs 42 billion (Figure 2.7). There were a number of benefits for private investors. First, cellphone operators were bailed out through migration to a one-time license fee plus revenue share regime. The license fee was now to be based on the amount of revenue rather than an abstract figure quoted in the bidding process without adequate knowledge of the business potential. The national long-distance service was to be liberalized by January 1, 2000. The international long distance carrier (VSNL) was to attract a private buyer by 2004.5 Second, the policy-maker-cum-licenser-cum-service-provider syndrome was to be dealt with by separating the policy role of the DoT from its service-provision role. The Department of Telecom Services (DoTS) was to be corporatized and made autonomous of the DoT. This was a step in the direction of separating the policy maker from the service provider. The policy maker and service provider differentiation would reduce the rent-seeking ability of the department and would make it more efficient. In the UK, British Telecom’s corporatization had come at an early stage of the deregulation process. The Expert Group on Infrastructure headed by Rakesh Mohan had made a recommendation to this effect in 1994, but it had taken five years for a policy formulation to the same effect. Third, the DoT as policy-maker-cum-service-provider problem was to be sorted out by strengthening TRAI. TRAI’s recommendatory role in the licensing process was to be strengthened, and it was to be given the adjudication function in disputes between the government (DoT) and the licensee. While the New Telecom Policy of 1999 kept the licensing role with the DoT, it mentioned the need to amend the ITA of 1885. Last but not least, the New Telecom Policy of 1999 advised the formation of a Universal Service Obligation (USO) fund, which would be used to promote rural telephony and bridge the rural–urban divide. The New Telecom Policy of 1999 is one of the better public policy documents in the country, which took the interests of all stakeholders into account. It received widespread acceptance as a document which attempted to even the playing field for investors while keeping the DoT’s essential

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role intact. It made a serious attempt to resolve the problems arising from the lack of a distinction between the policy maker and service provider, especially in relation to licensing issues. Policy implementation required executive coordination. The PMO set up the Group of Ministers on Telecom in November–December 1999. The group steered important policy goals such as opening up of the domestic long-distance service (2000), privatization of the international long-distance carrier VSNL (2002), and, the corporatization of the DoTS into BSNL (2000). Corporatizing the DoTS6 required the support of the telecom unions. This support became possible because retrenchment was not considered and the emoluments of the telecom workers were protected. The majority of the workers understood that job security with worker retraining was the best deal they would get in an era when the old skill sets were fast becoming obsolete. In return, the unions accepted a moratorium on further recruitment.7 Consistent with the recommendations, the TRAI Act of 2000 strengthened the hands of the regulator while keeping the licensing powers with the DoT. The TRAI’s recommendation was now required before the DoT could grant a license. The Telecom Dispute Settlement Appellate Tribunal (TDSAT) was set up in January 2000 with a retired Supreme Court judge at the helm. This gave greater sanctity to the arbitrating powers of a special court dedicated to the special task of arbitrating telecom related disputes. Earlier DoT–TRAI conflicts often went up to the High Court, where the DoT had received a favorable hearing. The telecom department was not convinced of the adjudicatory powers of the TRAI. Much work related to strengthening the institutions governing the telecom sector had been achieved between 1998 and 2000. This was the result of political will combined with the financial crisis facing private investment in the sector. The regulator was strengthened, the DoT’s service operations were to be corporatized, and the telecom department’s role was to be restricted to policy-making and licensing. The negative consequences of the telecom department’s predatory fixed license fee regime were to be addressed through the revenue share regime. The major conflicts of interest that remained related to the telecom department’s licensing powers at a time when corporatized entities like the BSNL and MTNL were still largely owned by the government. The Indian Telegraph Act of 1885 could not be amended to secure licensing

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powers for TRAI. The other problem that plagued TRAI was the independence of its members with respect to the telecom department. The independence of TRAI members was a significant facilitator of regulatory capture, despite a revision of TRAI’s constitution. Enhanced constitutional powers would be of little use if appointments to the TRAI reflected the interests of the telecom department.

Regulating Conflicts of Interest: The WLL Controversy The possibility of introducing wireless services within the local loop (WLL) for fixed-service operators using the Code Division Multiple Access (CDMA) technology was fraught with possibilities that could harm the cellular industry. This facility allowed fixed-service operators to provide cellphone type services within a defined short distance charging area (SDCA). The GSM operators8 felt the pain because the fixed operators paid a lower license fee, enjoyed a favorable interconnection regime, and did not pay for utilizing the spectrum. These benefits were accorded to the fixed operators in return for fulfilling costly rural commitments. The manner in which the DoT and TRAI dealt with the issue of allowing QUALCOMM’s CDMA technology provides insights about the strengths and weaknesses of the regulatory process in India. The DoT’s opinions till January 2001 suggested that WLL facility would not be allowed with mobility. The wireless facility could be used to reduce the costs of laying and maintaining telephone lines but it could be used only for fixed handsets. This is clear from the DoT’s opinion on offers made by Bharti Telenet (1998) and Shyam Telelink (2000), and correspondence between the DoT and the TRAI between June and August 1999. The DoT’s view changed between September 2000 and January 2001, aided by the representations made by the Association of Basic Telecom Operators, the Associated Chambers of Commerce and Industry, and the Confederation of Indian Industry. In October 2000, DoT prepared a detailed note, which favored WLL on the ground that faster roll-outs of wireless connection would help to bridge the rural–urban divide. The regulator hesitatingly agreed to this after pointing out that it may be difficult to maintain the distinction between fixed and cellular operations if fixed operators were allowed the WLL facility. The consultations were

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carried out fairly quickly between November 2000 and January 2001 and the GSM operators were not consulted during this period. The cellular operators using the GSM technology were negatively affected by this regulatory development. They approached Telecom Dispute Settlement Appellate Tribunal (TDSAT) in January 2001. When TDSAT gave an unfavorable opinion, they approached the Supreme Court. The Supreme Court sent the case back to TDSAT, requesting a fresh opinion. The TDSAT gave two opinions. The majority opinion favored the fixed operators the grounds of faster rollout of fixed wireless lines, which would help boost teledensity in India. It was opined that the distinction between WLL and long-distance services could be maintained. Since the GSM operators had already benefited from migration to the revenue-sharing regime, they should bear some extra competition in the local area. The Chairman of TDSAT gave a dissenting opinion favoring the GSM operators. He argued that the NTP of 1999 did not allow free mobility. He disagreed with the majority opinion that it would be possible to maintain the distinction between fixed and cellular operators. Last but not least, he took the fixed operators to task for not fulfilling their rural obligations, which was the major justification for their easier entry conditions. The adverse TDSAT opinion forced the cellular operators to take the case to the Supreme Court in October 2003. The case was withdrawn in January 2004, when the regulator announced a quid pro quo. This deal got a litigious industry out of the courts and aided the expansion of teledensity. Since it was understood that maintaining the distinction between the fixed and cellular operations would no longer be easy, it recommended that WLL operators be allowed to migrate to a unified license on payment of an additional charge and any penalties for executing calls beyond the SDCA. The entry of WLL operators in the cellular industry through migration to a unified licensing regime introduced enormous competition in the industry. Falling prices saw the subscriber base doubling between March and September 2003. Critics, on the other hand, argued that Reliance obtained the unified license cheap, and that the issue of non-fulfillment of rural obligations was not addressed adequately in the migration package. The WLL case demonstrated how the regulator was able to recalibrate earlier decisions. The regulator would need autonomy with accountability to solve the pressing problems ahead, which involved issues such as a more comprehensive universal licensing regime and spectrum allocation.

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The Universal Service Problem The explosion of teledensity in urban areas was not accompanied by a similar transformation in rural areas, which needed to catch up with urban areas. The rural teledensity in India was 1.5 percent in 2003–04, up from 0.68 percent in 1999–2000 (i.e. a growth of 56 percent). The same figures for urban teledensity were 8.23 and 20.79 respectively (i.e. a growth of 60 percent) (Figure 2.6). Between March 31, 2003 and March 31, 2004, the percentage of villages not covered by India’s telecommunications network came down by just 1 percent, from 15 percent to 14 percent. This increase in the rural telephone network was entirely due to the public telephone system operated by the BSNL. The contribution of private telephones operators to rural telephony stagnated at 2 percent during this period (Figures 2.3 and 2.4). These figures suggest that India’s rural–urban digital divide was growing. Rural areas did not have demand concentrations like urban areas, owing largely to the lack of purchasing power, and were hence not profitable. Laying a telephone line in a rural area could cost Rs 120,000 and yield a revenue of Rs 3,000 per year. The same figures for urban areas were about Rs 40,000 and Rs 9,000 respectively. Recovering costs from rural areas could take a much longer time than in urban metropolitan areas. Such investments were not likely to be profitable. Figure 2.3 Coverage of Village VPTs (as on March 31, 2003)

Source: Department of Telecommunications (2005).

Promoting Competition in India’s Telecom Sector 83 Figure 2.4 Coverage of Village VPTs (as on March 31, 2004)

Source: Department of Telecommunications (2005).

To address these problems, the government first charged 5 percent of the revenue of telecommunication companies for the USO fund. This fund would be used for providing rural telephony in the villages. Reliance and BSNL were awarded licenses for providing rural telephony after competitive bidding, which was to be subsidized by the USO fund. Second, an access deficit charge (ADC) was levied on international and domestic long-distance calls to subsidize the below-cost operations of BSNL in rural areas. For example, Rs 4.25 per minute was to be paid as ADC for every international long-distance call landing in India.9 Third, while the exact figures were not available, BSNL found good business for its prepaid cellphone service in rural areas. BSNL was leveraging its network for providing such services. Non-governmental initiatives, like the Grameen Sanchar Seva Organization, were taking WLL to the villages. The roaming WLL phone worked like a roaming PCO (public call office) with billing software that ensured the recovery of bills. Telecom service provision in rural areas did not succeed as in urban areas, which had a large concentration of the rich and the middle-class population of India. The fixed service providers were allowed entry into basic services in 2000 with a low license fee regime for furthering rural telephony. The wireless technology with limited mobility was supposed make it easier to implement network roll-out in rural areas. Up to March 1999, fixed service providers had provided only 12 off the 42,856 village public telephones (VPTs) they had committed. On October 31, 2002, Tata Teleservices had provided 1,314 of the 9,635 VPTs it had committed.

Source: Department of Telecommunications (2005).

Figure 2.5 Staff per 1,000 DELs (BSNL and MTNL)

Promoting Competition in India’s Telecom Sector 85 Figure 2.6 Teledensity (Number of Telephones per 100 Population) from 1995–96 to 2003–04

Source: Department of Telecommunications (2005).

The corresponding figures for Reliance Infocomm were 502 and 8,635 respectively. Considering the dismal performance of the operators, the regulator could have extracted some VPT commitments when the migration to the unified access license was proposed, but no significant concessions were extracted from any operator. The rural–urban divide could be addressed if 50 percent of the revenue was shared with the party where the traffic was terminated. For example, the international regime governing telecom accounting rates allowed the sharing of 50 percent of the revenue between the calling and receiving companies. VSNL made a lot of money from the traffic that it was receiving from the US. Resources were transferred from rich countries from where the calls were originating to poorer countries, which were largely receiving the calls. Similarly, if the urban telecommunication companies shared 50 percent of their revenues with telecommunication companies serving rural areas where the calls were being received, this could transfer resources for developing rural telephony. It was odd that while India had upheld

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this regime of accounting rates at the international level, it could not be enforced within the country to bridge the rural–urban divide. The political economy of service delivery in India’s telecom sector had an elite bias. It served the middle and upper classes and the IT sector reasonably well. If BSNL succeeded in delivering a rural cellular network via its commercial operations, this would be a welcome development. If the universal service fund were able to expand rural services by subsidizing the business of the efficient service providers in unprofitable areas, this could prove to be a good example of public–private partnership. On the other hand, writing off the rural commitments of private operators and reducing the access deficit charge to reduce the penalty of defaulters would constitute steps in the direction of disregarding the rural–urban telecommunications divide.

Conclusion The structural bias in favor of the Indian government’s monopoly was tough to reform. The monopoly was reinforced by the DoT’s combined functions as policy-maker, regulator, and service provider. In addition, ownership of the telecom network and political support made it difficult to institutionalize competition. This chapter has suggested the mechanism by which the service provision role of the DoT was diluted over time, and, the regulator made more independent. These structural changes increased productivity10 and teledensity in the sector, which was a great boon for Indian industry and the middle and upper income groups in India. This chapter has also pointed out the challenges lying ahead for independent regulation, increased domestic and foreign investment, and the universal service commitment in India. First, ideational changes, which were embedded within the PMO since the early 1980s, were critical for transforming the business environment. The PMO had to take on the telecom department for promoting competition. The microchip revolution in electronics had convinced Indira Gandhi and Rajiv Gandhi that electronics, telecommunications and productivity needed to be harnessed for India’s development. The corporatization of MTNL and the VSNL, and technological innovations within the C-DoT, which were licensed for private telecom equipment manufacture, all occurred despite the telecom department’s resistance. The conviction in favor of private investment expressed in the report of the TRC (March 1991)

Promoting Competition in India’s Telecom Sector 87

was due to an initiative of the PMO under Chandra Shekhar’s premiership. The report was opposed by the telecom department. The vital role of the PMO in fostering private investment continued during the tenure of Narasimha Rao and Atal Bihari Vajpayee. Telecom Secretary Vittal needed Rao’s support to push the NTP of 1994. Vajpayee’s PMO played a critical role in shaping the IT policy and the New Telecom Policy of 1999, and in pushing the government in the direction of the TRAI Act (2000). The efforts of the PMO were often aided by systematic interest articulation by the private sector. The licensing process after 1995, in the absence of a regulator, was both opaque and predatory with respect to private investors. The legislation that gave birth to the regulatory institution (TRAI) in 1997 became essential to deal with a telecom department which deployed its regulatory powers to the detriment of the private sector. The insubstantial regulatory powers of TRAI in 1997, which produced a comprehensive crisis of investment by 1999, united the industry against the telecom department. A favorably inclined PMO responded positively to investor concerns. This effort produced a new policy document (New Telecom Policy, 1999), a new legislation (TRAI Act 2000), and a new institution TDSAT. Third, efficient telecommunications was an essential component for India’s IT exports. India’s IT sector was a small and well-organized group of bulk consumers of telecom services, whose contribution towards India’s growth was widely recognized. The PMO understood this and pushed India’s competitiveness in this area. This was reflected in the DoE’s11 successful experiment with software technology parks, and the PM’s initiative to set up the National Task Force on IT (1998). The task force speeded the privatization of India’s long-distance carrier (VSNL) and produced a remarkably liberal ISP policy. Foreign direct investment (FDI) received a raw deal from India’s uncertain regulatory climate, and foreign investors fared much worse than domestic investors. There was no big foreign player in fixed services and there was just one in the cellular area. Foreign investors found it more difficult than domestic investors to cope with predation and uncertainty. Domestic investors would make unreasonable bids and invest despite the irregular behavior of the DoT. They would then expect the PMO to bail them out. This strategy worked reasonably well for Indian capital. Foreign investors were not keen on such risks. Investor confidence was more directly related to the perceived regulatory certainty. Figure 2.7 tells the story. Investor confidence was high in 1995 when the licensing process

88 Rahul Mukherji Figure 2.7 Yearwise FDI Inflow (August 1991 to January 2004)

Source: Department of Telecommunications (2005).

began. It dipped between 1998 and 2000 when it became clear that the regulator had few powers to revive the sector from the financial gloom caused by the telecom department’s predatory policies. The New Telecom Policy of 1999 and the TRAI Act of 1999 once again boosted investor sentiment, but the WLL saga sapped it. Foreign investment was urgently needed to generate a substantial portion of the Rs 1.6 trillion required for reaching the target of 250 million telephones in India. The vast majority of telephone users in rural areas, who were an unorganized group, did not benefit to the same extent as did the rich, the middle classes and the IT sector. Initiatives to promote rural telephony using the USO would be critical for bridging the rural–urban divide. The past practice of the government’s overlooking the rural commitments of private operators needed to be reversed. That this happened was surprising, because the entry of basic operators in the fixed wireless services area was allowed due to the contribution this could make to rural telephony. The utilization of the access deficit charge (ADC) and the USO fund needed to be monitored closely. Practices such as non-payment of the ADC by devious means needed to be adequately reprimanded. The regulators role in this area needed to become more proactive.

Promoting Competition in India’s Telecom Sector 89

The answer to the problem of rent-seeking by DoT and private players lay in increasing the independence of the regulator, while at the same time making it accountable to the government’s policy. The regulator needed financial independence, a technocratic hiring policy, and checks on regulatory integrity. With adequate checks on regulatory integrity, regulatory autonomy could reduce rent-seeking propensities associated with politics in plural polities. The Indian Telegraph Act 1885, which was designed for an era of government-owned monopolies, was the singular obstacle to regulatory independence from the telecom department. It needed to be amended in order to reduce the telecom department’s interference with the regulator’s financial needs and its technocratic role. Regulatory independence with accountability would help in the realization of the three pressing issues ahead—spectrum allocation, universal service and universal licensing. The telecom sector achieved greater success than the power sector in promoting competition in the business environment. I have argued elsewhere (Mukherji 2004) that two major factors explain this outcome. First, consumers were habituated to paying telephone bills, but the majority of the farmers, the middle classes, and small industrialists were accustomed to treating free electricity as a right. It was more difficult to realize power tariffs than telecom tariffs. Realizing power tariffs needed a sophisticated understanding of the political economy of agricultural and industrial theft. Second, central regulation of the telecom sector made the battle for regulatory control a transparent contest, mediated by the regulator, between the public utility bureaucracy and private investors. The private sector was much better organized to take on the telecom department at the central level. The power sector, on the other hand, was faced with contests between many entrenched state-level bureaucracies versus new state level regulators. In most conflicts the state-level power sector regulators had a tough time disciplining the state-level electricity boards. It is to be seen whether the Electricity Act 2003 will change this dynamic in favor of regulators through greater central direction. In the story of change in the Indian telecom sector, neither the bureaucracy that governed the state-owned telecom sector nor organized labor in the sector could be easily disciplined. The process of initiating competition began by allowing private entry in cellular and value-added services, where the telecom department saw little business potential in the early 1990s. The regulatory framework was firmly under the control of the telecom department. The logic of change towards empowering the private sector was driven by several crises faced by private investors, with a sympathetic

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PMO calling the shots every time it became clear that the persistence of a crisis would engender the exit of private investment. These actions of the PMO strengthened the hands of the regulator over a period of time. Subsequently, the private sector learned to win its regulatory wars against the government’s incumbents, despite the government’s regulatory and network advantages. It was this challenge from private investment that led to the corporatization of government assets like the BSNL and VSNL. It was understood within the government that direct political control over telecom assets was rendering it inefficient with respect to the private sector. When India could not make its government’s service provider bend to the discipline of productivity, it pushed restructuring by gradually encouraging private investors to compete with the government.

Notes 1. The author gratefully acknowledges the suggestions of Jack Snyder (Columbia University, New York) and Vikram Chand (The World Bank, New Delhi). Discussions with Sourav Adhikari (HCLTech, NOIDA), M.B. Athreya (consultant, New Delhi), Pradeep Baijal (TRAI, New Delhi), Virat Bhatia (AT&T, New Delhi), T.H. Chowdary (Centre for Telecom Management & Studies, Hyderabad), Ajai Chowdhry (HCL Infosystems Limited, NOIDA), Ashim Ghosh (Hutch, Mumbai), Shyamal Ghosh (Universal Service Obligation Fund, New Delhi), S. Gopalakrishnan (Infosys, Bangalore), O.P. Gupta (National Federation of Telecom Employees, New Delhi), Pradeep Gupta (Cybermedia, New Delhi), Anjali Hans (COAI, New Delhi), Rajat Kathuria (International Management Institute and TRAI, New Delhi), Amit Khanna (Reliance Entertainment, Mumbai), S.C. Khanna (Association of Unified Telecom Service Operators, New Delhi), Sudheendra Kulkarni (Bharatiya Janata Party, New Delhi), Anil Kumar (Vice-President’s Office, New Delhi), Meet Malhotra (TRAI counsel, New Delhi), Nripendra Misra (Department of Telecommunications, New Delhi), Nandan Nilekani (Infosys, Bangalore), T.V. Ramachandran (COAI, New Delhi), S.S. Sodhi (judge and ex-chairman, TRAI, Chandigarh), S. Ramakrishnan (Tata Teleservices, Mumbai), S.D. Saxena (BSNL, New Delhi), Arun Seth (British Telecom, New Delhi), Narinder Sharma (Reliance, Mumbai), Brijendra K. Syngal (BPL Communications, Bangalore), Vinod Vaish (Telecom Disputes Settlement & Appellate Tribunal, New Delhi), N. Vittal (IAS retired, Chennai), and B.K. Zutshi (IAS and ex-vice chairman, TRAI, Jaipur), were a valuable learning experience. Anjali Mukherji chipped in with very valuable editorial recommendations and Ajoy Lywait and Indu Rayadurgam provided excellent research assistance. The Centre for Political Studies, Jawaharlal Nehru University; the Saltzman Institute of War and Peace, Columbia University; and the Institute of South Asian Studies, National University of Singapore, provided facilitating environments that aided this chapter. The author thanks the World Bank for commissioning this paper. The errors that remain are the responsibility of the author. 2. India’s regulatory institution is called the Telecom Regulatory Authority of India or simply TRAI. According to newspaper reports, India’s teledensity was on a growth path and the same figure was approximately 8.80 in February 2005.

Promoting Competition in India’s Telecom Sector 91 3. The Ministry of Communications and Information Technology has three departments. These are the Department of Telecommunications, the Department of Information Technology and the Department of Posts. 4. These were earnings before interest, depreciation and amortization (EBIDA). 5. About 45 percent of VSNL’s equity was subsequently sold to the Tata group of industries in 2002, two years ahead of scehdule. 6. The Department of Telecom Services (DoTS) within the DoT was the service arm of the telecom department. 7. The National Federation of Telecom Employees (NFTE) was the most important union at this time. 8. GSM stands for the Global System for Mobile communications technology. GSM is an open, digital cellular technology used for transmitting mobile voice and data services. The CDMA or the Code Division Multiple Access Technology is a separate digital technology used for mobile communications. 9. From February 1, 2005 the access deficit charge on all incoming international calls would be Rs 3.25 and that on all outgoing international calls would be Rs 2.50. See http://www.trai.gov.in/pr6jan.htm. 10. A good index for the rise in productivity in the telecom sector is the declining staff needed for serving 1,000 direct exchange lines in the government-owned corporations MTNL and BSNL. See Figure 2.5. 11. The Department of Electronics was directly under the PMO at that time and held a view that was diametrically opposite to that of the DoT.

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92 Rahul Mukherji Chowdary, T.H. 2003a. ‘Telecom: Migration to Unified Multiple-Service Licenses’, Economic and Political Weekly, 38 (8): 3965–68. ———. 2003b. ‘Telecommunications Tariff Revision’, Economic and Political Weekly, 38 (6): 503. Cowhey, Peter F. 1990. ‘The International Telecommunications Regime: The Political Roots of Regimes in High Technology’, International Organization, 44: 169–99. David, Paul A. 1990. ‘Clio and the Economics of QWERTY’, American Economic Review, 75 (2): 332–37. Delhi High Court (July 23, 1998), Union of India Versus TRAI, Usha Mehra Judgment, New Delhi. Department of Telecommunications. 1994. The National Telecom Policy 1994. New Delhi: Ministry of Communications. Available at http://www.trai.gov.in/ntp1994.htm. ———. 1999. New Telecom Policy 1999. New Delhi: Ministry of Communications. Available at http://www.trai.gov.in/npt1999.htm. ———. 2005. Annual Report 2003–2004. New Delhi: Ministry of Communications. Available at http://www.dotindia.com/annualreport/annualreport.htm. Dokeniya, Anupama. 1999. ‘Reforming the state: Telecom liberalization in India’, Telecommunications Policy, 23 (2): 111–22. Dossani, Rafiq. 2002. ‘Telecommunications Reform in India’, India Review, 1 (2): 74. Evans, Peter. 1995. Embedded Autonomy: States and Industrial Transformation. Princeton, New Jersey: Princeton University Press. Expert Group on Infrastructure. 1994. India Infrastructure Report, pp. 34–38. New Delhi: Twenty First Century Prints. Gandhi, Indira. 1985. Selected Speeches and Writings, Vol. 4. New Delhi: Government of India (Publications Division, Ministry of Information and Broadcasting). Gupta, Rajni. 2002. ‘Telecommunications Liberalization: Critical Role of Legal and Regulatory Regime’, Economic and Political Weekly, 37 (17): 1679–90. Gupta, Surajeet Das. 2004. ‘The WLL Letters’, Business Standard (October–November), New Delhi, Ice World Annual Issue, pp. 12–15. Haggard, Stephan. 1990. Pathways from the Periphery: The Politics of Growth in Newly Industrializing Countries. Ithaca, NY: Cornell University Press. Industrial Credit and Investment Corporation of India Limited. 1998. ‘Draft Report to the Department of Telecommunications: State Cellular Projects—Assessment of Viability’, Unpublished Report. Mumbai: ICICI. Knight, Jack. 2001. ‘Explaining the Rise of Neoliberalism: The Mechanisms of Institutional Change’, in John L. Campbell and Ove K. Pederson (eds), The Rise of Neoliberalism and Institutional Analysis, pp. 35–37. Princeton: Princeton University Press Kohli, Atul. 2002. ‘State, Society and Development’, in Ira Katznelson and Helen V. Milner (eds), Political Science: State of the Discipline. NY and London: W.W. Norton and Company. ———. 2004. State Directed Development, Political Power and Industrialization in the Global Periphery. Cambridge: Cambridge University Press. Krasner, Stephen D. 1991. ‘Global Communications and National Power: Life on the Pareto Frontier’, World Politics, 43 (3): 353–57. McDowell, Stephen D. 1997. Globalization, Liberalization and Policy Change, pp. 127–35. New York: St. Martin’s Press.

Promoting Competition in India’s Telecom Sector 93 Mukherji, Rahul. 2000. ‘India’s Aborted Liberalization—1966’, Pacific Affairs, 73 (3): 381. ———. 2004. ‘Managing Competition: Politics and the Building of Independent Regulatory Institutions’, India Review (Frank Cass), 3 (4) (October): 278–305. Murthy, N.R. Narayana. 2004. ‘The Impact of Economic Reforms on Industry in India: A Case Study of the Software Industry’, in Kaushik Basu (ed.), India’s Emerging Economy, pp. 217–22. New Delhi: Oxford University Press. National Taskforce on IT and Software Development. 1998. IT Taskforce—Basic Background Report. Available at: http://it-taskforce.nic.in/bgr7.htm. North, Douglass C. 1990. Institutions, Institutional Change and Economic Performance. Cambridge and New York: Cambridge University Press. ———. 1995a. ‘The New Institutional Economics and Third World Development’, in J. Harriss, J. Hunter, and C. Lewis (eds), New Institutional Economics and the Third World, pp. 24–26. London: Routledge. ———. 1995b. ‘Five Propositions about Institutional Change’, in Jack Knight and Itai Sened (eds), Explaining Social Institutions, pp. 15–16. Ann Arbor: University of Michigan Press. North, Douglass C. and Weingast, Barry R. 1989. ‘Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth Century England’, Journal of Economic History, 49 (4): 803–32. Patel, Urjit R. 2004. ‘Lessons in Telecom Turnaround’, Business Standard, October 29, New Delhi. Pierson, Paul. 2000. ‘Increasing Returns, Path Dependence and the Study of Politics’, American Political Science Review, 94 (2): 253–57. Ramachandran, T.V. 2005. ‘Off the cuff: Flawed TRAI Proposals,’ Financial Express, January 17, New Delhi. Rodrik, Dani, Subramaniam, Arvind and Trebbi, Franscesco. 2002. ‘Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development’, National Bureau of Economic Research [NBER] Working Paper Number 9305, October. Cambridge, MA: NBER. Rubin, Barnett R. 1985. ‘Economic Liberalization and the Indian State’, Third World Quarterly, 7 (4): 942–57. Saha, Biswatosh. 2004. ‘State Support for R&D in Developing Countries: Telecom Equipment Industry in India and China’, Economic and Political Weekly, August 28: 3917–21. Sengupta, Arjun K. 2001. Reforms, Equity and the IMF. New Delhi: Har Anand. Singh, J.P. 1999. Leapfrogging Development: The Political Economy of Telecommunications Restructuring. Albany: State University of New York Press. Sinha, Nikhil. 1996. ‘The political economy of India’s telecommunications reforms’, Telecommunications Policy, 20 (1): 31. Telecom Disputes Settlement and Appellate Tribunal. 2003a. Wadhwa Judgement, New Delhi, August 8. Available at: http://www.tdsat.nic.in/ord21504.htm. ———. 2003b. Prasad and Dasgupta—Majority Opinion, New Delhi, August 8. Available at http://www.tdsat.nic.in/ord21504.htm. Telecom Regulatory Authority of India. 2003. Recommendations on Unified Licensing. New Delhi. Available at: www.trai.gov.in/Recomofiedfinal.pdf. ———. 2005. ‘TRAI Issues Recommendations on Unified Licensing Regime’, New Delhi: Press Release No. 8/2005, January 13.

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Chapter 3 Electronic Delivery of Citizen Services: Andhra Pradesh’s E-Seva Model Subhash Bhatnagar

Introduction Even though e-government is at the initial stage of implementation in most developing countries, some of the well-known successes have come in applications that streamline the delivery of government services to citizens.1 E-Seva is one such flagship project under the e-governance initiative of the Government of Andhra Pradesh (GoAP), which aims to take the benefits of Information Technology (IT) to the common man. E-Seva is the most evolved model of electronic service delivery in India, offering services of 13 states and local government agencies, three central government agencies and nine private sector organizations. The E-Seva centers have evolved into a one-stop shop for more than 130 governmentto-consumer (G2C) and business-to-consumer (B2C) services. Citizens prefer to use E-Seva because it offers convenience of delivery at a location closer to home or office, requires just one visit to an E-Seva center instead of visiting many different offices, takes less time to transact and entails shorter waiting periods. Nearly 1.6 million citizens use E-Seva services every month. In comparison to other projects of electronic service

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delivery, E-Seva offers the widest choice of channels (departmental counters, Internet, ATMs, E-Seva counters in Banks, any E-Seva service center, AP online kiosks) and the widest array of services. Unlike many other projects, citizens are not restricted to use a specific service center. E-Seva has been implemented through a Public–Private Partnership (PPP). In four years of its operation, E-Seva has become an economically viable proposition for delivery of services in urban areas that can be replicated in other states of India. E-Seva centers were first established in Hyderabad and have now been replicated in several towns of Andhra Pradesh (AP). The application is in the process of being replicated by other states like Karnataka and Maharashtra. Within AP, further expansion into rural areas is under implementation. However, a successful business model for rural areas is still not in place. This case study evaluates the performance of E-Seva as a one-stop shop, analyzes the reasons for its success,2 the problems in extending E-Seva in rural areas of AP and draws lessons for replicating E-Seva in other states of India.

Description of the E-Seva Project The objective of E-Seva is to provide to citizens selected services and information about departments and agencies of state and central governments in an efficient, reliable, transparent, and integrated manner through a chain of computerized Integrated Citizen Service Centers (ICSC). E-Seva is built on the success of a pilot project in one location in Hyderabad called Twin Cities Network Services Project (TWINS) that was launched in 1999 in partnership with a local software company.3 Later, ICSCs were extended to other locations in the twin cities of Hyderabad and Secunderabad for online delivery of eight services under one roof. These centers were established by the AP government in partnership with two private sector companies, which have invested in application software development, computer equipment, and communication lines. Each center has 8–10 counters operated by private contract staff. Counters have a printer, a bar-code reader and a computer loaded with menu-driven software that can process multiple types of transactions by accessing a central web server, which in turn communicates with departmental servers. Departments access and update their databases when a transaction is performed at an ICSC counter. The project was renamed E-Seva when the AP government decided to extend similar services to major towns and municipalities of the state.

Andhra Pradesh’s E-Seva Model 97

Currently there are 43 E-Seva centers with 350 service counters spread across the twin cities. Each center operates from 8 am to 8 pm every weekday and 9 am to 3 pm on Sundays and holidays. Services of 13 states and local government agencies, three central government agencies, and nine private sector organizations are on offer. The E-Seva centers have evolved into a one-stop-shop for more than 130 G2C and B2C services including payment of utility bills; reservations of train tickets; getting birth and death certificates, vehicle permits and driving licenses; transport department services; sale and receipt of passport applications; telephone connections; collection of small savings; ATM (cash withdrawal and deposits and issue of statement of accounts); mutual funds (collection of applications and transfer of shares); receipt of complaints or requests in connection with citizen services; cell phone bill payments; etc. Before the launch of E-Seva, citizens had to visit many offices to avail these services. The current list of services offered at these centers is provided in Table 3.1. The number of monthly transactions carried out by E-Seva centers in Hyderabad grew steadily in the first four years, reaching a million transactions in July 2003. The trend of growth for Hyderabad and Ranga Table 3.1 List of Services Offered through E-Seva (Hyderabad) by Department Department

Service

G2C Services (106) 1

Central Power Distribution Company of Andhra Pradesh Ltd (APCPDCL)

Payment of electricity bills

2

Hyderabad Metropolitan Water Supply & Sewerage Board (HMWS&SB)

Payment of water bills Reservation of Water Tanker

3

Municipal Services

Payment of Property Tax of Municipal Corporation of Hyderabad (MCH) Registration of Birth Certificates Issue of Birth Certificates Registration of Death Certificates Issue of Death Certificates Renewal of Trade Licenses Renewal of Labor Licenses Issue of Prepaid Parking Tickets Payment of Property Tax of commercial establishments (Table 3.1 continued)

98 Subhash Bhatnagar (Table 3.1 continued) Department

Service

4 Bharat Sanchar Nigam Ltd (BSNL)

Payment of telephone bills Sale of Indian Telephone Cards

5 Andhra Pradesh State Road Transport Corporation (APSRTC)

Reservation of APSRTC Tickets

6 Regional Passport Office

Sale of Passport applications Filing of Passport applications

7 Commercial Taxes Department

Filing of A1/A2/AA9 Returns of AP General Sales Tax Filing of C6 Returns of AP Central Sales Tax Payment of Rural Development Cess Payment of Entertainment Tax Maha Bill

8 Registration and Stamps (R&S)

Sale of Non-Judicial Stamps

9 Regional Transport Authority (RTA)

Payment of vehicle tax for non-transport vehicles Payment of quarterly tax for transport vehicles

10 Income Tax

Filing of IT Returns

11 Education

Payment of Examination fee of Board of Intermediate Colleges Sale of Engineering Agriculture and Medical Common Entrance Test (EAMCET) applications Results of Intermediate Final Examinations

12 Andhra Pradesh Public Service Commission (APPSC)

Sale of applications for APPSC Information Results of Group II Recruitment Issue of duplicate hall tickets for Group I examination

13 Police

67 Services like visa fee, gun licenses renewal fee, etc.

14 Sports Authority of Andhra Pradesh (SAAP)

Sale of tickets for games/events

15 Hyderabad Urban Development Authority (HUDA)

Sale of HUDA Plan Books

B2C Services (4) 1

Tata Teleservices Ltd (TTL)

Payment of TTL Telephone bills

2

Reliance Infocomm

Filing of applications for Reliance CDMA Mobile Phones

3

Bharti Cellular Private Ltd

Sale of Magic Cards Sale of new kits of Airtel Mobile Phones

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Reddy district (areas surrounding Hyderabad) is given in Figure 3.1. Growth in transactions is influenced by two factors: increasing acceptance of each service and the number of services added over time. The number of transactions reached a peak of 1.7 million in July 2004 and has stayed at around 1.5 million per month during the 12 months of 2004. Aggregate data for transactions in 2004 indicates the following break up for major utilities: electricity bills 51 percent, water bills 6.8 percent, and BSNL (Bharat Sanchar Nigam Limited) 7.2 percent. The application architecture of E-Seva is quite sophisticated in comparison to other projects of online service delivery in India, where a large number of utilities do not collect bills online—a one-stop shop to collect different types of bills and services represented a major leap. The 3-tier application architecture is built on a client–server model relying on web browsers at the front end, a relational database at the back-end, and a web application server and reliable communication lines in the middle. A combination of leased Lines, ISDN (Integrated Services Digital Networks) lines and asynchronous lines has been established to connect the E-Seva data center to all the departmental servers and to all the E-Seva service centers. The transactions are done on a real-time basis. Figure 3.2 offers a schematic view of the entire application.

Evolution of E-Seva over Four Years (1999–2004) E-Seva has evolved in many ways over the last four years. Services from government departments and private service providers have been added to increase transaction volume. Service centers have also been added to enhance convenience and increase volumes. New channels have been created for providing access to E-Seva services. Revenues have been enhanced by selling space for advertisements. There has been an increasing use of private contract staff at the centers. The number of services being offered from E-Seva counters has been expanding gradually. Initially, state government departments were connected to the E-Seva centers and services offered by them could be accessed through the E-Seva counters. Later, some central government departments, such as the regional passport office, were also connected, enabling citizens to apply for a new passport or renewal of an old passport through the E-Seva centers. Some services from the private sector have also been added. For example, telephone bills of private telecom companies can now

Figure 3.1 Trends in Transactions at E-Seva Centers (monthly for Hyderabad)

Figure 3.2 Schematic View of E-Seva Application Architecture

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be paid through E-Seva counters. The most recent addition of a service is the issuance and renewal of bus passes of the Road Transport Corporation of Andhra Pradesh for which one or two counters are specifically dedicated. Addition of this service has not been followed by a corresponding expansion of the infrastructure within each center, resulting in a longer waiting time for citizens for the other services. In future, services such as insurance policy sales are likely to be added. The other direction in which E-Seva has evolved is to provide alternate channels through which citizens can access E-Seva services. First, the number of E-Seva centers was gradually expanded from eight to the current level of 43. In a recent development, E-Seva counters have also been established in private and state-run banks, where a limited complement of E-Seva services can be availed of. The banks find it attractive to host E-Seva counters because every citizen that comes for E-Seva services is a potential bank customer. Besides E-Seva centers, citizens can directly access E-Seva services through the Andhra Pradesh Online portal, which has been created with the help of another private sector partner. To avail of such services, citizens need to register at the portal and provide some minimal information so that their access can be authenticated. Andhra Pradesh Online has also licensed the ‘Andhra Pradesh Online E-Seva Kiosks’ run by private entrepreneurs, where citizens can avail of E-Seva services in an assisted mode. These kiosks permit different ways of making payments, whereas direct access to E-Seva services from home requires a payment through direct bank transfer. After the success of E-Seva in the twin cities of Hyderabad and Secunderabad, the AP government extended the facility to all 117 municipalities in AP. For the expansion of E-Seva, nearly 230 centers were to be opened in the state, covering 85 percent of AP’s population of around 75 million. Nearly 220 district e-services centers have already been established. These centers are connected to a district-level data center where the necessary databases of utility companies are maintained. Computerization within the municipal corporation was done on a standardized pattern through funding provided by the state government and various donor agencies. Table 3.2 provides an analysis of the aggregate number of monthly transactions separately for urban centers in Hyderabad and nearly 220 centers in major towns all over AP. The aggregate monthly collection at E-Seva centers is Rs 3 billion, but this has no implications for the revenue of private operators. Operator revenue is based on the number of transactions.

Andhra Pradesh’s E-Seva Model 103 Table 3.2 Analysis of E-Seva Transactions

Month August–December 2001 January–December 2002 January–December 2003 January 2004 February 2004 March 2004 April 2004 May 2004 June 2004 July 2004

Districts Twin Cities Number of Value Number of Value Transactions (in Rs Million) Transactions (in Rs Million) – – 439,304 409,267 556,967 923,592 1,063,296 1,162,202 1,132,623 1,509,781

– – 312.0 298.0 307.5 438.4 584.0 533.2 573.4 999.0

289,087 4,487,646 10,062,604 967,471 964,097 1,111,090 1,045,829 1,124,137 1,107,153 1,686,045

3,343.0 10,050.0 38,385.0 2,708.5 2,541.5 2,693.0 2,573.2 2,990.1 2,993.0 3,212.0

Source: E-Seva, Information Technology & Communications Department, Government of Andhra Pradesh, 2004.

However, this large collection has implications for design of procedures for physical security and prevention of fraud. E-Seva has evolved in another direction: a call center facility (Parishkaram) has been created, wherein a citizen from any part of AP can dial a toll free number for accessing information and registering grievances. Information pertaining to major government schemes and education-related news (admissions, fees, dates of reopening, counseling, results) can be accessed. Citizens can also register grievances pertaining to municipal services and welfare departments. An important service is the advice provided to farmers by agriculture scientists on seeds, fertilizers, pesticides, cropping patterns, rainfall, water level in the reservoirs, etc. The call center also provides medical advice through government doctors specially deputed to the call center for this purpose. During the first year of operation, nearly 1,000 calls have been processed daily. Figure 3.3 represents five stages through which an electronic service delivery application like E-Seva would evolve. The current status of E-Seva is at stage 4. To reach stage 5, the back-end in many of the participating agencies will have to be re-engineered and further computerized. It would then be possible for E-Seva to offer online services which cut across departments. It would also be possible to extend some services beyond the stage of accepting applications, to online delivery of certificates, permissions, and documents.

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Implementation Model: A Public–Private Partnership Given that scaling up of E-Seva from the initial pilot to 45 centers in Hyderabad and later to 220 towns all over AP was going to be a gigantic task that would need financial resources, technical capability and large project management skills, a PPP model was evolved for the expansion. For its expansion beyond Hyderabad, the state was divided into six zones. Tenders were called for each of the six zones to seek a partner that would invest in infrastructure using the software to be provided by the existing partner at Hyderabad. Three partners were identified through a bidding process. Out of the targeted 230 centers, nearly 185 were functioning in August 2004, conducting 1.4 million transactions per month. The project was implemented on the basis of a Build-Own-Operateand-Transfer (BOOT) model, wherein the technology partners provided the necessary hardware, software, connectivity and maintenance for the centers. The same equipment will be transferred to the government after the completion of the contract period of five years. Activities like framing the contract, inviting tenders, designating responsibilities to the partners and evaluation of bids were undertaken by AP Technologies Services Limited (APTS), a GoAP enterprise established in 1986 to provide consultancy services to government and non-government bodies in the state of AP.

Revenue Model There are three distinct streams of revenue for the E-Seva centers, which are shared between different partners that operate the service. 1. Transaction-based service charges collected from each agency (e.g., utility companies, municipal corporation) that is offering a service

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or collecting bills/payments from citizens and businesses. For example, for every bill collected on its behalf the utility company pays a fee of Rs 5. Citizens do not pay any extra charge for bill payments at E-Seva centers. 2. A service fee collected from citizens for certain types of transactions. 3. Revenues from advertisers whose advertisements are carried on the internet and on the receipts issued to citizens. The revenues are shared between partners. In the case of centers in Hyderabad, the private partner was reimbursed Rs 4.75 per transaction in the first 18 months and Rs 3.95 after the first 18 months. If the number of transactions exceeded 0.36 million, the reimbursement was to be Rs 3.95, irrespective of the months elapsed. All banks offering E-Seva services are reimbursed Rs 1.75 per transaction (out of the fee payable to the private partner), enabling them to cover the cost of infrastructure for an E-Seva counter. In the case of municipal towns, the reimbursement has been fixed based on competitive bidding for the six zones. It varies between Rs 6.4 to Rs 8.5 per transaction for the six zones at low volumes, and Rs 5.1 to Rs 5.95 when transactions exceed a pre-defined cut-off level.

Measuring the Success of E-Seva One way to judge the success of E-Seva is to seek feedback from citizens on the quality of service delivery at the E-Seva centers. E-Seva is expected to offer the following benefits to its users:  







Faster processing, shorter wait, and shorter queues Fewer trips to government offices, saving transport costs, and wage losses More accurate and legible documents, easy recovery from errors, and better reception areas Improved access to offices (nearer home, open seven days a week, and extended timings) Improved complaint handling

There have been very few formal evaluations of E-Seva by an independent agency. The results of one such assessment based on a field survey

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conducted by the Administrative Staff College of India (ASCI) indicate that many of the expected benefits are being realized (ASCI 2002). Eightyfour percent of respondents indicated that E-Seva counters provided faster service than traditional department counters. An overwhelming majority of users (97 percent) agreed that E-Seva staff were courteous. Convenience of location and faster service were cited as the main reason for use of E-Seva. Only a few respondents (about 5 percent) experienced problems when they paid their bills at E-Seva (e.g., payments not properly recorded and reflected in the subsequent bills). Most users (80 percent) transacted at E-Seva counters on their own behalf. In the latter part of 2002, when the survey was conducted, the most popular service was payment of electricity bills (75 percent of users). Usage was much less for water bills (28 percent of users) and telephone bills (24 percent of users) and far lower for other services like property tax (5 percent of users) and other services. Most of the users (87 percent) availed of only one or two of the 30-odd available services at E-Seva, and very few users (13 percent) availed of more than two services. Most of the users (70 percent) pay the bills separately. An overwhelming majority of users (97 percent) are literate. The vast majority (82 percent) were in the younger/middle age group (less than 40 years). The facility appeared to be drawing fewer first-time users (17 percent), as compared to repeat users (83 percent). About 25 percent of the users suggested that increasing the number of centers could render better/faster services. About 10 percent suggested increasing the number of counters per center. Another indicator of success is the increasing number of service providers participating in E-Seva. Various public and private organizations are providing their services through E-Seva centers. Private sector banks are keen to partner in providing additional channels.4 The growth of transaction volume is also indicative of success. Monthly transactions data for the first four years shown in Figure 3.1 indicate a steady growth from the inception of the E-Seva facility that started with about 27,000 transactions per month. The average monthly transactions in 2004 were about 1.5 million. This growth was achieved by addition of new centers (currently 43) and addition of new services (currently about 130). There has been a continuous shift of customers from departmental counters to the E-Seva counters.5 The popularity of E-Seva can also be seen from the requests by legislators and citizen associations for opening centers in specific areas. E-Seva has also received various recognitions and awards.6

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Field visits by the author confirmed the fact that E-Seva has gained popularity over the last four years at all the centers in Hyderabad. The waiting halls were nearly full, as the period was one of peak activity when many of the utility bills were approaching the last date of payment. During the peak activity period, the waiting time is about half an hour. Some citizens reported a wait of as much as one hour. The orderliness at the centers seemed to be a function of the energy levels of the local managers. For instance, at Khairatabad the manager was seen to be proactive, solving problems of the citizens by walking around the waiting area. On the other hand, at Vanasthalipuram the token system was not functioning and the entire lot of waiting citizens were actually standing near the counters. The quality of managers at the centers is an important factor for the overall performance of the system.

Potential for Further Improvements The existing system represents a significant departure from the old system of delivering services. E-Seva represents a single window system, where a large number of agencies with computerized back-ends have been connected to the one-stop service centers. IT has been used to glue together separate departments without effecting many changes in the internal computerization and working of each of the concerned departments. An area of potential improvement is to further speed up the time to process transactions at an E-Seva counter. During his field visit, this author found that at almost all the locations there were some complaints by the operators about slow response time from the center servers. At least at two of these locations, a few operators were unable to get the relevant screen for carrying out the transactions. A few examples of simple process change suggested by the ASCI report to make the single window even more efficient are presented below. Currently all departments are charged the same rate per transaction for a particular type of transaction. However, an examination of the number of keystroke entries per transaction can pinpoint instances where redundant data is being inputted. With thousands of transaction taking place daily, a fraction of a second saved on a single transaction can greatly improve the overall efficiency of the system and reduce the waiting time for the citizen at the service centers. Instead of charging a flat rate from

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all the departments, the possibility of a rate dependent on transaction time can be explored to create an incentive for departments to re-engineer their processes. Throughput per counter can be increased through a combination of the following: 



The unique transaction/customer identification number on each bill can be bar-coded, so that time taken for manual entry and errors is eliminated. In nearly 95 percent of all cases, bills are fully settled, i.e. the amount of bill being paid is equal to the amount printed on the bill as payable. On the data entry screen, the amount column can therefore be populated automatically (by default) with the payable amount, minimizing data entry effort. In the remaining cases, the amount field would require editing by counter staff.

A well-articulated citizens’ charter using glow-sign running-displays, clearly written notices (in English, Hindi, Telugu and Urdu) and touchscreen kiosks can make the citizens aware of the procedures for availing of different types of services at E-Seva counters. The current display of such information in E-Seva is quite minimal. Payments above a certain amount (say Rs 1,000) may in future not be accepted in cash, so that the time to count cash can be reduced. There is bunching of traffic on a few dates because all the bills are dispatched on the same date. Besides, some time slots, before and after office hours, are more popular. This bunching results in long wait times. Ideally, a citizen should not be required to visit an ICSC more than once in a given period of time (say, once a month). This would mean that all the departments/utility providers should synchronize their billing cycles and bill due dates, so that the citizens, if they so desire, are able to pay all their bills in one go. Currently, a citizen’s address or ownership of an entity is stored in databases of many different agencies. If there is a change in address of a citizen or a change in ownership of a house, this change needs to be reflected in many different databases. For each agency, a separate application is required for change of address. If a unique identifier can be developed for urban properties and citizens, a single application for change could suffice.

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In addition to the process changes that can be made, the quality of maintenance of equipment at a few centers is an area of concern. Capacity of servers and communication bandwidth has not kept pace with the growth in transaction volume, resulting in slow response. Even though the waiting areas and the chairs within the waiting halls represent a vast improvement over the departmental counters where citizens had to transact services prior to E-Seva, there is considerable scope for providing further comfort to citizens at E-Seva centers.

Key Success Factors Political Support The most important factor in the success of E-Seva has been strong and visible political support from the then Chief Minister, Chandrababu Naidu. E-Seva was the chief minister’s idea, sparked by a visit to Singapore where he became familiar with the role of the city state’s portal in delivering services online. A civil servant handpicked by the chief minister implemented the idea. Strong political support helped E-Seva persuade key departments from the state and central governments to participate. Funds for the pilot were made available easily and in one go. The chief minister reviewed the progress every week in the first year, forcing recalcitrant agencies to cooperate. Departments, for example, were persuaded to close their own counters, and, in the case of the electricity utility, pay a transaction fee to E-Seva for bills collected on its behalf. The E-Seva directorate could operate with flexibility because of political support. The informal relationship with private partners led to better coordination. However, the importance of visible political support can sometimes be exaggerated. Whereas the political support of the chief minister was critical to the success of E-Seva, in the case of Maharashtra, which is implementing a similar project, the same level of support has not been necessary. First-time implementation needs much greater support because of the potential risks of a new project. Once the success of a concept has been demonstrated, the task of replication is easier. There are other projects like Computer-aided Administration of Registration Department (CARD) for property registration in AP that have now been replicated in Maharashtra and Karnataka in a significantly modified manner without strong and visible political support.

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Coordination and Technical Soundness Use of a PPP model and an informal relationship with private partners has contributed to effective coordination. Robust technical design and reasonable IT infrastructure has also contributed to the success of the project. Application software has been able to assimilate many different channels of delivery (ATM, Internet) and different types of services. There has been no major problem in connecting new E-Seva centers located in different parts of Hyderabad and E-Seva counters in banks to the existing network. The error rate as a result of wrong postings is also very low,7 indicating that system design is robust. One of the difficulties encountered by many countries in implementing e-government is the complexity of coordination across government departments that are reluctant to share information and resources. The effectiveness with which the E-Seva directorate has played the coordination role is also responsible for the success of E-Seva.

The E-Seva Directorate: Constructing an Experienced Management Team in a Flexible Organization A team of dedicated professionals implemented the project. A civil servant with expertize in e-governance projects was chosen to implement the pilot. In addition, a Directorate of E-Seva was established within the IT Department to supervise rolling-out and stabilizing the initiative. The directorate is a lean organization with a flat hierarchy. It operates out of an E-Seva center in Hyderabad rather than the Secretariat, to emphasize its closeness to clients and relative freedom from bureaucracy. The directorate has a variety of functions ranging from coordinating with E-Seva’s partners, monitoring service-level agreements, business development, supervising centers to coordinating the relationship with departments and utility companies. The directorate has had five directors in four years from the Indian Administrative Service (IAS), a fact that would normally arouse concern, but for the greater stability of tenure enjoyed by the IT Secretary. In addition, the directorate was fortunate to possess a highly competent second rung of managers with adequate training and technical qualifications—four deputy and assistant directors—who have been in position for four years each and can carry out the directorate’s core functions without much supervision by the director.

Andhra Pradesh’s E-Seva Model 111 Figure 3.4 Role of E-Seva Directorate

The Future of E-Seva: Sustainability and Scalability in Rural Areas Sustainability of Current Operations Sustainability could be defined as the continued use of a system over long periods. Many systems of electronic service delivery that are successfully implemented in the initial phase of their life have an inbuilt safeguard against disuse. Often the old system that is replaced is dismantled, leaving no fallback option.8 In the case of E-Seva, the old system continues. However, growth in transactions done at E-Seva centers indicates that citizens have experienced an improved level of service and will resist a return to the old system.

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It is interesting that a change in government at the center and in the state of AP has not affected the commitment of policy-makers to increasing the use of ICTs for service delivery. E-Seva continues to enjoy strong backing from the new government, with the expansion into rural areas receiving the highest priority in accordance with the pro-rural stance of the new government. The growing popularity of E-Seva amongst the urban population in Hyderabad is the main reason why the new government is supporting the expansion of E-Seva. Another factor that usually makes projects unsustainable is instability of tenure. In E-Seva, there have been frequent changes in leadership. The E-Seva Directorate has had five directors in four years. However, in a highly visible application such as E-Seva, which enjoyed the support of the chief minister and the state’s long-time IT secretary, tenurial instability in the directorate did not prove to be an impediment to the success of the project. Each director has contributed in a different manner, attempting to leave a distinctive mark. For example, the second director contributed to the growth of centers, while the third director focused on marketing and community involvement to increase traffic. The fourth director strengthened monitoring and focused on the performance of private partners, while the fifth director intends to focus on internal systems and rural expansion in tune with the new political direction. The stability of the second rung of administrators is another reason why frequent transfers of directors were not disruptive in E-Seva.9 Perhaps tenurial stability is more important when the civil servant is the sole driver of the project. Sustainability also depends on the economic viability of the project for all the partnering agencies. E-Seva needs to be viable for the private operators, who have invested in software development, hardware and networking infrastructure. This investment needs to be recovered in a period of six years, when the assets would have to be turned over to the government. E-Seva has to be viable for the government, which invests in building E-Seva centers. The utility companies must feel that the payment per transaction made to E-Seva is less than the costs they would incur in collecting bills on their own. Since economic viability depends strongly on the number of transactions processed per month per center, it will need to be assessed separately for Phase I (Hyderabad), Phase II (expansion to 220 municipal towns) and Phase III (expansion into rural areas). The first phase of E-Seva covering the city of Hyderabad has become economically viable for the private operators on the strength of 2–3 services, the most significant being the payment of electricity bills. The number of customers of the

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electricity company is large, and bills need to be paid every month. So far 31.6 million transactions of all types have been processed, cumulatively generating revenue of nearly Rs 130 million for the partners. Private partners’ revenue in the next two years is likely to be Rs 130 million at current levels of activity (1.6 million transactions per month). The partners made a total investment of Rs 200 million10 and their annual operating expenses are in the range of Rs 15 million11 for peak transaction volumes. On the basis of these gross calculations, private partners should recover their investments and operating expenses over the life of the project. In addition, the private partners own the application software that can be used in other locations and situations.12 The second phase of E-Seva covering 200 districts should also become economically viable. In a typical district with five centers, the investment by the private operator in equipment is approximately Rs 3.5 million. 13 Annual operating expense for each of the five centers is Rs 1 million.14 Currently 25,000 transactions are being processed per month, generating revenue of Rs 2 million per year. Therefore the private operator is likely to recover the investment and operating expenses in about four years at current volumes. In fact the volumes are also likely to grow, enhancing the profitabilty of the project. In rural areas, each kiosk will have to invest about Rs 100,000 and incur an operational expense of Rs 60,000 per year. Presuming a user fee of Rs 10 per transaction, at least 8,000 transactions will have to be processed in a year to break even within two years. It would be difficult to generate a demand for 8,000 fee-paying transactions in many rural areas, making the viability of a rural kiosk very difficult to attain. For the government, which had to invest in real estate for the expansion program, operations may not become viable at current volumes of about 200 transactions per day. The government has invested Rs 1.4 million in building and furniture of each E-Seva center in a municipality. To recover the investment over six years, nearly 700 transactions have to be processed per center per day.15

Scalability in Rural Areas In the next phase, coverage of E-Seva is being expanded to rural areas. Given the rural orientation of the new government that came to power in mid-2004, this expansion has acquired a sense of urgency. One thousand new rural kiosks, known as RSDP (Rural Service Delivery Points), have already been opened. These kiosks owned by private entrepreneurs will

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provide E-Seva services through an Internet connection to the Andhra Pradesh Online portal. The services include bill payments, information, download of forms, and telemedicine. The entire effort is being orchestrated by the E-Seva directorate and district collectors. However, E-Seva centers in rural areas have still to prove their viability. Many experiments in delivery of electronic services through internet kiosks in other states have not been able to sustain themselves. A few of the projects that have sustained and scaled up offer insights into the type of business models that are likely to work in rural areas. Three such projects are described briefly in Table 3.3. All the projects listed in Table 3.3 involved the private sector, either as the sole provider or as a significant partner. One of these projects— e-Choupal—has scaled up to a significant degree. Drishtee offers a possible model for AP. It is an intermediary that partners with providers of valued services on the one hand, and rural entrepreneurs who create access points Table 3.3 Three Projects that Have Scaled Up Name of Project

Purpose

No. of Centers

Future Plans

Drishtee

A private company orchestrating a network of privately owned Internet kiosks in villages for easy access to information, government and commercial services, education and entertainment.

500

Centers in 5 states (Haryana, Rajasthan, Bihar, Assam, MP). Seeking funds to expand in other states.

e-Choupal

Established by ITC, a private company in agri-business. Farmers get information on prices, farming knowledge, and e-commerce at Internet kiosks called e-Choupals in 11 states. Reduces ITC’s cost of procurement of agricultural commodities and ensures higher prices for farmers.

3,500

Scale up to 20,000 e-Choupals by 2010 through ICT’s own funds.

N-Logue

A private company set up to promote WLL technology developed by IIT Chennai. Getting entrepreneurs to set up multifunction Internet kiosks in villages based on low-cost access using WLL.∗

2,000

Centers in Tamil Nadu, Gujarat, Karnataka and MP. Seeking commercial borrowing to expand.

∗ Wireless in the local loop uses CorDECT technology developed by IIT Chennai. For details, visit: http://www.n-logue.co.in/, http://www.tenet.res.in/nlogue.html.

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on the other. Drishtee orchestrates the operation of a large network of kiosks through such partnerships. Several lessons can be drawn for the expansion of E-Seva into rural areas from these projects: 







The existing basket of E-Seva services is not likely to generate transaction volumes that are needed to make an E-Seva kiosk viable in rural areas because of the sparse nature of habitation in rural areas. Rural areas need multi-function access points (kiosks) which can deliver a large basket of services that appeal to different segments of the rural population. Some government services for which citizens can pay a user fee for electronic delivery (e.g., land titles and other certificates) need to be included in the basket. Success in scaling up will need an organization that has the analytical capacity to understand the market for information and services, and the managerial capacity to implement projects. Market research is needed to understand micro socio-economic conditions, local institutions, etc. Most community centers run by volunteers or individual entrepreneurs have not been scaled up. These could not become viable because value in the services offered was weak. The services that are of value vary with regions and patterns of economic activity in a rural area. Success is more likely when a private network orchestrator (as opposed to an individual entrepreneurs or a government agency) is involved in scaling up. Therefore, rather than franchising new E-Seva kiosks, E-Seva services can be offered through existing Internet kiosks. E-Seva can partner with agencies like Drishtee to open kiosks in AP that can carry E-Seva services. There are limitations to the widespread provision of electronic services in remote rural areas by pure market mechanisms. Low teledensity,16 high cost of services on a per user basis, low levels of literacy, and low purchasing power are major constraints for the profitable development of Information and Communication Technology (ICT) services in many parts of rural India. Therefore, even partnership with private intermediaries would cover only the more developed rural areas. For backward areas, subsidies would be needed, at least in the initial period, to make the operation of a rural kiosk viable. A least-cost subsidy mechanism can be used to identify partners for such areas.

It is too early to judge the success of the expansion of E-Seva in rural areas, which is being implemented by government agencies. The idea of

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using a private network orchestrator like Dhrishtee, e-Choupal or N-Logue has not been accepted. Often, the government is the monopoly service provider in rural areas. There is very little private sector involvement even in commercial services such as insurance, banking, and transport. Given the serious crunch on their financial and managerial resources faced by most governments, it becomes essential to involve the private sector, as it can bring in the necessary entrepreneurship to create a demand for electronically delivered services, and the managerial skills to run a network in the difficult conditions that exist in rural areas.

Key Lessons for Replicating E-Seva on a Wider Scale 

E-Seva provides a replicable business model for e-delivery of services in urban areas.

The investments needed to build integrated electronic delivery systems are not large. The total investment in the first phase of E-Seva that benefits 1.6 million customers is of the order of $4.5 million. The business model of E-Seva for delivery of services to urban areas is robust. E-Seva can be replicated in large cities in other states. However, a different business model would have to be evolved for rural areas. While the support for the E-Seva project has come both from the bureaucracy and the politicians, the uniqueness of E-Seva is the role of the private sector in a successful and apparently sustainable partnership. A major concern in the context of IT-related investments by the government is the lack of adequately trained manpower to manage and maintain software applications. Shortage of skills and experience can lead to a high risk of failure in an IT project. Building a public–private partnership for reforming service delivery could result in a win–win situation for both the government and the private sector. 

E-delivery is a potent tool for improving services.

E-Seva demonstrates that electronic delivery can significantly improve the delivery of certain types of services. Even when only a few stages of a service are delivered electronically, as in the case of acceptance of passport applications, the benefits to the citizens can be considerable. Electronic

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delivery of services introduces competition amongst delivery channels (between new service centers, new channels and departmental counters). The use of IT in delivery of services modularizes tasks, thereby making it possible to outsource some tasks to the private sector. For example, Maharashtra and Karnataka have outsourced many processes (e.g., registering applications, issue of encumbrance certificates, scanning of documents) in registration of deeds to private operators. The passport department has been able to outsource the process of receiving applications to E-Seva, effectively multiplying the number of receiving centers from one to 45. The ability to outsource makes it easier for governments to forge PPPs to share the investments needed to modernize delivery of public services. Resources have always been a constraint for the public sector, and large financial allocations by the government in favor of projects that do not result in tangible assets like dams, flyovers and roads are therefore often hard to make. Yet the need to reform the delivery of services to the citizens in an efficient manner can hardly be overemphasized. 

Type of services that can be delivered electronically.

Different services have varying levels of information content. For example, health services often require physical contact between provider and the client, but adult literacy may be based entirely on providing rich information content. Clearly, information-rich services are more amenable to online delivery, whereas in other cases only planning and monitoring can be strengthened by the use of computers. For example, E-Seva focuses on online delivery of regulatory services (issue of a variety of certificates) and payment of different kinds of bills, where the services are entirely based on exchange of information and documents (bills, certificates, receipts, tickets) and do not involve any physical elements. In many services offered by E-Seva, the main problem being addressed is one of inefficiency and inconvenience rather than that of corruption. (In a few of the regulatory services though, such as issue of certificates and receipt of passport applications, there could be some petty corruption in the form of ‘speed’ money.) Resistance from vested interests was therefore not a challenge during implementation, as corruption was not the key issue in bill collection. Services that are prone to corruption often involve complex procedures that provide avenues for arbitrary actions by civil servants. Computerization

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alone does not help reduce corruption unless procedures are simplified, thereby reducing discretion available to civil servants. Services that need several processes (e.g., property registration, issue of new driving licenses) for delivery are difficult to include in the basket of services offered from common service centers like E-Seva. In common service centers, it is expensive to replicate the complex processes involving operators with specialized skills. E-Seva had to abandon the delivery of services such as issue of driving licenses when it was expanded from a pilot to many centers. In E-Seva, for some types of services such as bill payments, the entire transaction can be done online at one go. For some of the other services such as passport renewals, only the first stage—that of receiving an application—is handled online. The actual delivery of documents is done offline after due processing. In choosing a service for online delivery, it is immaterial whether a service can be completely automated or only partially automated, as long as there is a significant improvement for the customer. Services that are offered in the E-Seva centers are not of any strategic importance to broader objectives such as the achievement of the millennium development goals or reduction in poverty. Nor does the electronic delivery of these services improve the investment climate of the state in any direct way. However, these services touch the lives of a very large number of citizens in a small way, and the fact that bills need to be paid every month also helps in reminding citizens that the state is modernizing. Whereas the need for improving basic social services such as health and education for the poor should receive the highest priority, simple services that are used by non-poor citizens in urban and rural areas and simple goals of transaction efficiency are also worthy projects to implement. Support for E-Seva across the political spectrum indicates that such projects are also seen to be important by politicians. 

Identifying the best models for electronic delivery of services.

One-stop shops for online delivery, assisted counters where service is delivered, and PPPs are some of the features that have made E-Seva popular and successful. Figure 3.5 indicates many different ways in which services can be delivered to citizens electronically. The first step in computerizing an agency is to create an electronic database of customers, in order that bills can be issued in time. Often agencies create their own

Figure 3.5 Electronic Service Delivery Modes

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online bill collection centers, where a receipt can be issued for payments received. Agencies such as municipalities, which offer many different types of services, re-engineer processes and computerize their back-end so that many different services offered by them (payments and issue of documents) can be processed online. Such agencies may open many online service centers at different locations in a city (see Bhatnagar and Kumar 2001). In industrialized countries, the concept of the one-stop shop is implemented by an integrated portal through which services of several departments are web enabled for citizen access. The E-Seva model is more appropriate in a country like India where Internet penetration is low and a significant proportion of the population is illiterate. Unlike the popular Internet portal model based on self-service, in E-Seva counter clerks assist citizens. Some states have implemented electronic delivery at the front-end without computerizing the back-end at the agencies.17 Such systems are highly prone to errors and manipulation because of the manual process of updating departmental data. Such systems do not have the benefit of competition between different channels, which is made possible by a system that connects all agencies to a single platform accessible through various means. There are several experiments in which access to different services offered by a single agency is provided under one roof, but there are few that offer the convenience of accessing services offered by many different agencies (state, local, and federal) under one roof. Moreover, in most experiments there is only one channel to offer online services— through agency run service centers. In E-Seva, a variety of different channels including private kiosks are available, and citizens are not required to go to a specific location for receiving these services. Therefore, E-Seva represents the most evolved model of one-stop service centers in India. 

Creating successful public–private partnerships.

An important factor is the design of appropriate technology architecture, which will enable different private sector partners to offer services through a variety of channels. Since the technology is evolving continuously, the architectures of future projects could be more flexible in their ability to accommodate more partners and new channels. The nature of the arrangement worked out by the government and private sector partners for offering electronic services determines the longterm viability of the project. These partnerships can take the form of Andhra Pradesh model, where both the government and private sector

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partners need to make investments and share operational costs. Some of the new models being explored include initiatives by the Government of Maharashtra, where the entire investment is to be made by the private sector partners. The partner will also bear the operational costs. To compensate for the added burden, the validity of the agreement would be longer (e.g., 10 years). In the early stages, the number of electricity bill payment transactions was nearly 85 percent of all transactions, representing the bulk of the revenues collected by the private partner. As other services were added to the basket of services offered by E-Seva, the proportion of electricity bill transactions has declined to 51 percent of all transactions. Fixation of the fee to be charged to the organizations (e.g., utility companies) that offer their services through E-Seva is a complex issue. The fee can be based on the existing cost of the utility companies for collecting payments. However, calculation of existing cost is not a straightforward task. The fee can also be based on the opportunity cost of collecting payments, which would mean that the utility company may explore a variety of arrangements, choosing the one that is least costly to them, even though it may cost more to the paying party. In the case of the Andhra Pradesh Electricity Company, there is resentment within the company against the charge of Rs 5 that is paid to E-Seva. The company accepted the fee because of political pressure. Perhaps this perception was molded by the fact that electricity bills were seen to be the mainstay of E-Seva in the initial stages. The reimbursement to the private sector partners is also a key determinant for the success and viability of the electronic service model. Since the reimbursement is determined through an open bidding process, the market decides the level of the reimbursement. However, in the case of Andhra Pradesh both the government and the private sector were clearly unaware of the level of uptake for electronic service delivery. As it turned out, the number of transactions grew to 1.6 million, exceeding the expectations of both the government and the private partner. This means that the private sector partner has been able to recover its investments in a shorter time frame than expected. Perhaps similar models being deployed by other states can benefit from the data on transaction volumes in Andhra Pradesh. The design of the Service-Level Agreement (SLA) with private operators in E-Seva could be improved considerably, as the original design could not benefit from any previous experiences of similar service delivery projects. In the existing arrangement, there is considerable ambiguity with regard to the operational expenses incurred on creating awareness and marketing E-Seva services. The success of E-Seva-like projects depends

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to a large extent on creating awareness and marketing of services, which can be expensive. Service levels need to be specified through many different dimensions and with a greater degree of specificity and detail. Service levels need to be focused on outcome measures, such as transaction times at the counters, the waiting period for customers, errors in posting payments, and the level of satisfaction of citizens with the queuing discipline and waiting hall conditions. However, for these indicators to reach a satisfactory level, all the components of the system must work well. A key technology component is the quality and bandwidth of the connection between the E-Seva centers and the data center, and the connection between the data center and the departmental servers. The other technology component is the capacity of various servers in the data centers. Quality of maintenance of different types of desktop equipments at the counters has a significant impact on overall performance and also on the work ethos of the operators. Therefore, service level indicators need to be defined on a variety of parameters that can measure the performance of different components of the system, including equipment and people. However, SLAs are only as good as the quality of enforcement of these agreements. Since there is no automatic way of monitoring the performance on different parameters specified in a SLA, the staff of the E-Seva directorate often find it difficult to enforce the SLA. An effective process of monitoring can provide the incentive for the private sector operators to continue investing in upgrading capacity to keep pace with growing transaction volumes. In the operations of E-Seva during the last four years, there has been only one period of 3–4 months when any kind of fine or penalty has been levied on the private sector operator. 

Why are successful innovations in administration not replicated?

The fact that a large number of projects which were seen to be successful in reforming service delivery have not been replicated is disheartening. Perhaps the track record of IT-enabled reform is somewhat better. CARD—the property registration application pioneered by AP— replicated in Maharashtra and Karnataka. In both cases the core idea was replicated, but the format and partnership models are different. In the case of E-Seva, other states like Maharashtra are in the process of replicating the core idea and also the basic arrangement with some marginal modifications. It is interesting that when private partners are involved in a successful project, they are strongly motivated to take the application elsewhere.

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We list below some of the factors responsible for low replication of some other IT-enabled reforms: 1. The context is so different that replication is not feasible. 2. Often the political support that is necessary for such reforms is missing. 3. The benefits delivered by the application have not been established beyond doubt. Independent and rigorous evaluation by different agencies can establish the real value of an application. 4. The application development process has not been well documented. Potential replicators do not understand what is involved and how it was done. This case study is a small step towards mitigating at least the last two lacunae.

Notes 1. Documentation of many of these successful applications is available at: http://www1. worldbank.org/publicsector/egov/http://www1.worldbank.org/publicsector/egov/ 2. The success of E-Seva has been demonstrated in urban centers in Hydearbad. Its expansion to municipal towns is less than a year old but the centers are doing reasonable business, moving steadily towards economic viability. It is too early to judge the success of the rural expansion, as very few centers have yet been opened. 3. The software for the pilot project in Banjara Hills was developed by Ram Informatics (a local software company), using six programmers. 4. For instance, ICICI Bank, HDFC Bank, Global Trust Bank (GTB) and UTI Bank are some of the banks with whom E-Seva has tied up to facilitate banking services. 5. The electricity department indicated that nearly 80 out of 120 collection counters were closed in Hyderabad during the last four years of E-Seva operation. 6. E-Seva, the integrated citizen services project, having centers across the state, bagged the Commonwealth Association for Public Administration (CAPAM) innovation award that promotes innovations in government reforms in the Commonwealth countries. 7. Only a few hundred errors are reported out of a million transactions. 8. For example, in Bhoomi and CARD, electronic service delivery is the only way a RTC or property registration can now be done. The manual system has ceased to exist. 9. Most of the current staff at middle level (3–4 deputy directors/assistant directors) have been with the E-Seva directorate for the last four years. 10. Investments of Rs 70 million in data center, Rs 20 million in equipment at 43 service centers, Rs 30 million in networking equipment, Rs 10 million in miscellaneous equipment, and Rs 70 million in software development. These estimates are based on discussions with the partners and Mr J. Satyanarayana, who was in charge of the TWINS pilot implementation.

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11. Nearly 40 people are employed for the operations. Other expenses include rentals for communication lines, electricity, maintenance of equipment, and stationery. 12. The government is a joint owner, with a small share of the intellectual property. 13. Investments in a web server, database server, back-up server and router at the data center, and five PCs, printers, and miscellaneous equipment at the centers. 14. Operating expenses cover operator’s salaries (Rs 2,500 per month), electricity, rentals for communication lines, and stationery. 15. Figures taken from a brief note on E-Seva in Medak district. The revenue for the government is assumed at Re 1 per transaction, as is the case in urban areas. 16. The current teledensity in India continues to be low at 3.2 lines per 100 people, and even lower in rural areas at 0.4 lines per 100 people. More than half of India’s 600,000 villages were without telephone connections at the turn of the century. 17. FRIENDS in Kerala is an example of such a project where centers at district headquarters process payments made to government departments and agencies.

References Administrative Staff College of India (ASCI). 2002. ‘Study on the e-Seva scheme in Twin Cities’, mimeo. Hyderabad: ASCI. Bhatnagar, Subhash and Kumar, Arvind. 2001. ‘VOICE: Online Delivery of Municipal Services in Vijaywada, India’, Case Study on Better Service Delivery to Citizens, e-Government Website, World Bank, March 2001. Available at: http://www1.worldbank.org/publicsector/ egov/voice_cs.htm. Deshpande, Prabhakar. 2004. ‘Maharashtra: e-governance is here’, Economic Times, Mumbai, Thursday, March 18. Available at: http://www1.economictimes.indiatimes.com/ articleshow/566838.cms (Last accessed August 2004). E-Seva Network. 2004. Diagram available at: http://www.utlindia.com/utl/images/arc.jpg (Last accessed August 2004). Kshetri, Nir. 2002. ‘Providing Citizen Services online: E-Seva in Andhra Pradesh State of India’, ICT Story on International Institute for Communication and Development (IICD) Website, April 2002. Available at: http://www.iicd.org/stories/articles/Story.import4918 (Last accessed August 2004). Sarkar, Reshmi (IT for Change, Bangalore). n.d. Interview with Mr. Sanjay Jaju, IAS, Collector and District Magistrate West Godavari District, Eluru (AP), E-Governance a Step towards Democracy, Excerpts of interview available at: http://itforchange.net/ resources/Egovernance%20-%20Main%20article.htm (Last accessed August 2004). Satyanarayana, J. n.d. ‘Challenges of e-Government … two success stories from India’, Presentation available at: http://unpan1.un.org/intradoc/groups/public/documents/ APCITY/UNPAN003379.pdf (Last accessed August 2004).

Chapter 4 Transforming Service Delivery in an Indian State: Reform at the Department of Registration and Stamps in Maharashtra Jonathan Caseley

Introduction Since India’s independence, successive governments have appointed and immediately challenged numerous national commissions to find answers to one of the most perplexing questions in the country’s public sector: how can public sector service providers undertake reform and deliver more responsive, less corrupt services to citizens? Unfortunately, or fortunately, depending on one’s opinion as to the relevance of various commission reports, a combination of political and economic factors have prevented these ‘expert’ recommendations from being acted upon. As a consequence citizens have continued to suffer from inefficient, and often corrupt, public service provision (see Public Affairs Centre 2002). In recent years there is evidence that citizens, especially those living in urban areas, have become less tolerant of long queues, rude and indifferent front-line service providers, and petty corruption in order to access basic services. This emerging societal demand for change, which Goetz and Jenkins (2001) refer to as the new accountability agenda, can be attributed

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to dramatic socio-political changes which have occurred across India over the last 15 years. A rapidly expanding middle class, more assertive and demanding civil society organizations and private sector media, and increased literacy and political awareness among India’s urban and rural poor have placed growing pressure on state governments to improve service delivery performance.1 This emergent societal demand for accountability appears to have coincided with the explosive growth of information communication technologies (ICT), both within India and internationally. As a result a number of state governments have placed an inordinate amount of faith in these new technologies to solve the complex problems of poor public sector performance (Heeks 2002). For example, the Andhra Pradesh government embarked upon a number of ICT-based public sector reforms, one of the most well known being the CARD reforms (Computer-aided Administration of the Registration Department) in the Department of Registration and Stamps (R&S). Interestingly, this appears to have triggered similar reforms in other states, even though there was limited evidence available at the time as to whether or not these reforms had actually delivered better quality services to citizens.2 This discussion highlights the importance of stepping back from the ‘glamor’ of ICT in order to assess the impact of reform on front-line service delivery performance. In this chapter the impact of service-based ICT reforms undertaken at the Department of R&S in Maharashtra are examined. Following a brief overview of the research methodology, the chapter explains how reform was undertaken. This is followed by an assessment of the impact of reform on front-line service delivery performance, explanations as to why reform succeeded, and relevant lessons for public sector service-based reform in India.

Methodology The data presented in this study were collected by a lead researcher and two research assistants in August and September 2004. The first phase of research started with a series of semi-structured interviews with key informants to document how the department had undertaken reform; to collect secondary data; and to identify additional key informants to interview. Following the first round of interviews, a smaller group of key informants was identified for follow-up interviews. During this period, random unannounced visits to selected urban and rural sub-registrar offices (SRO)

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were made in order to observe reformed front-line services and interview sub-registrars (SRs). From these visits two structured questionnaires, one for SRs and a second for customers, were developed, tested and revised. The second phase of research involved visits to one urban and one rural SRO in four districts, which represented different socio-economic regions. At each SRO the research assistant interviewed the SR, observed service provision, and conducted exit interviews with at least 25 customers.3 In Table 4.1 a summary of the key informants, SRs and customers interviewed is presented. All structured questionnaire survey data was processed using SPSS (Statistical Package for the Social Sciences). Table 4.1 Summary of Research Methods in Maharashtra

Target Group Key informants Sub-registrars (SR) Customers

Number of Semi-structured In-depth Interviews (Including Follow-up Interviews)

Number of Structured Survey Questionnaires

Observation of Service Provision (Estimated Number of Days)

22 4 NA

NA 15 200

NA 2 2

Reforming the Department of R&S in Maharashtra Statewide Consultations Reform at the Department of R&S started in 1998 when the state government appointed the Centre for Development of Advanced Computing (C-DAC) based in Pune to develop a strategy for computerizing the department. In June 1999 C-DAC submitted a System Requirement Study to the state government and subsequently secured funding to develop the software package it had proposed. Nine months, and more than 300 man-months later, in March 2000 the software package was ready for piloting in one SRO in Pune. However, at this point the reform program appeared to stall, as the national government undertook a review of its policy on the pricing of computer hardware, which negated tender documents which had been prepared by C-DAC and the Department of R&S to move forward with full computerization.

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Three months later the reform program was revived once more with the appointment of Dr Nitin Kareer to the post of Inspector General (IG). However, instead of building on the work undertaken to date, Dr Kareer took a completely different approach and embarked on an extensive series of consultations with staff and external stakeholders in order to better understand the needs of the department and its customers. This monthlong exercise involved visits to districts across the state, where the new IG and spoke with more than 70 percent of the 2,657 departmental employees, many of whom met the IG for the first time. He also visited SROs incognito in order to observe first-hand the services citizens were receiving from the department. Dr Kareer also met with a variety of stakeholder groups (real estate brokers, citizens groups, and lawyers) to hear their views as to how the department could improve the delivery of services to citizens. Based on these consultations, the new IG came to the conclusion that the current approach to reform was deeply flawed due to its dependence on computers to change an entrenched culture of poor service delivery and corruption that he found across the state. This assessment was all the more remarkable bearing in mind that the state government had already invested a considerable amount of money to develop an elaborate software package to fully computerize registration services. Further complicating Dr Kareer’s reassessment of the reform strategy was the fact that he had been hand-picked by the chief secretary, with a clear mandate to proceed quickly with computerization.

Cultural Change at the Department of R&S Upon returning to Pune from his state-wide consultations, Dr Kareer immediately set about convincing his senior colleagues in the state government in Mumbai that a different approach was needed to ensure that reform would deliver better services to citizens. In making his case to the chief secretary and the Ministers of Finance and Revenue, Dr Kareer argued that organizational change had to precede computerization in order to establish a customer-focused organizational culture, which could be built upon with the introduction of computers. As important was the need to actively engage department employees across the organization in the reform process, as opposed to more common top-down reform, which imposes change without employee participation. Interestingly, these lessons were derived from his earlier work as District Collector in Sangli district where Kareer had undertaken a successful initiative to provide health and education services to commercial sex workers. In speaking

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about this work, Dr Kareer felt that stakeholder consultation and target group ownership were the key to the overall success of the program. Following a series of meetings in the state capital, Dr Kareer secured support for his reform strategy and he immediately set about implementing the first and most important phase—changing the department’s organizational culture. In studying every aspect of the department since he had arrived, Dr Kareer had identified two critical problems. First, SR had wide discretion in registering a document, determining its value, and deciding when to return it to a customer. This provided considerable scope for corruption. Second, the lack of clear service standards in the registration process made it impossible to hold staff to account for the delivery of efficient registration services. As a consequence, document registration often took weeks and it was common for documents to take years to be returned to customers. The extent of this problem became apparent in a survey in July 2000, which found more than one million documents pending registration across the state. There was also an enormous backlog of 15 million registered documents, due to a requirement that all registered documents be microfilmed in Pune before being returned to customers. To address these systemic failures, which fueled the department’s reputation as one of the most corrupt and inefficient service providers in the state, Dr Kareer launched two customer-focused reforms that were the catalyst for dramatic changes in the quality of services provided by the department.

Transforming Sub-registrar Offices The first of the two service-based reforms requested all SRs to reorganize their offices based on a standard layout, in order to make them more customer-friendly. SRs were asked to move their desks to the front of the office so that they could function more effectively as team leaders for staff, while at the same time being more accessible to customers. Seating was to be provided for customers, as well as drinking water and clear information boards about the registration process. Unnecessary files and other desk-based tasks were to be moved to back offices, in order to create more open space where staff engaged with customers. All offices were to be cleaned, and, if possible, painted. Windows were to be opened daily to create a light and inviting atmosphere for customers. Finally, staff were asked to make an effort to be polite and friendly to customers when they entered SROs. One final point worth noting is that this reform was to be undertaken by SRO staff without any funding from the department.

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In looking back at this reform, it is remarkable to find that the majority of offices complied with the changes. This can be attributed to the way the initiative was launched. Following his extensive consultations with staff in June and early July 2000, Dr Kareer was quick to tap the goodwill he had established across the state. On July 27 he sent a detailed letter to all SRO staff asking them to reorganize their offices to make them more customer-friendly. This letter was innovative in a number of ways. First, it was written in a completely different style from ‘traditional’ order-based communication between the head office and SROs. Second, Dr Kareer demonstrated his commitment to breaking bureaucratic hierarchies by addressing the letter to ‘Friends’ as opposed to using more formal titles. Third, Dr Kareer was honest and direct about the current problems at the department. Fourth, he made a direct appeal to employees, asking them to work together for the benefit of the department and its customers. Also important were efforts made by Dr Kareer to ground the changes that he proposed in the suggestions made by staff and other stakeholders during the weeks he had spent touring the state. Further contributing to the success of this reform was a request, outlined in the letter sent on July 27, that all SROs publicly launch their ‘newlook’ offices with an official ceremony with prominent leaders from the local community on August 15. Dr Kareer highlighted the importance of this date by inviting the widely respected state governor to officially inaugurate the transformed SROs in Pune. At this ceremony the governor made an important speech where he directly appealed to employees to change. He also spoke highly about Dr Kareer’s work prior to taking the post of IG. This public endorsement boosted his standing among employees, which in turn led to greater support for the two reforms he proposed. In response to pressure from the chief secretary to move ahead with computerization, Dr Kareer combined the official launch of the transformed SROs across the state with the inauguration of a fully computerized SRO in Pune, as well as a website for the department. This appeared to buy Dr Kareer the crucial time he needed to rethink how he would computerize the department and deliver better services to customers.

Setting New Service Standards The second reform launched in August 2000 involved new service standards for registering a document. The most important were a clear definition of what constituted a document ready for registration; a fixed time

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limit of 24 hours for returning a document to a customer; a procedure whereby a written explanation was given to customers in cases where their document was found to be incomplete; and the use of new property valuation tables, which were based on land parcel numbers. Although these new service norms were to be implemented from August 15 onwards, they were not immediately enforced; instead, SROs were given time to adjust to the organizational changes in the office setup. As with the previous reform Dr Kareer took an innovative approach to its adoption. Instead of using his authority to force SROs to comply with the new service standards, he gently prodded SRs to adopt the changes for the benefit of both department staff and customers. After a few months of this supportive engagement, Dr Kareer and his senior staff gradually became more assertive in demanding that SRs complied with the new standards. Although less intensively than in the previous months, Dr Kareer continued to travel to districts and SROs across the state in order to meet with staff and monitor the implementation of the two service-based reforms. This made an important statement as to his determination to see that both reforms succeeded. The official launch of the new-look SROs, combined with the adoption of the new service standards and procedures for registering a document, were important catalysts for cultural change at the Department of R&S. However this change did not happen overnight; rather, it occurred over a number of months through the steadfast leadership of Dr Kareer. And it was not all smooth sailing. There were challenges to deal with from disgruntled staff who resisted change, as well as from lawyers who publicly contested the new service norms.4 However, over time Dr Kareer was able to successfully counter this resistance to change and as a result services began to improve at SROs throughout the state. By the time the second phase of computerization reforms were ready for implementation approximately one year later, both reforms had been widely adopted across the department.

Rethinking Computerization In the build up to the official launch of the ‘new-look’ SROs, Dr Kareer spent a considerable amount of time with C-DAC experts examining how the software package they had designed could be mad more customerfriendly. Of critical importance was the need to guarantee that citizens received their registered documents within a set time frame. These consultations led to a number of revisions in the software developed by

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C-DAC, which were then tested and refined in the pilot SRO launched in Pune on August 15. One issue, which continued to challenge Dr Kareer and the small team of C-DAC and department staff he worked with in late 2000 and early 2001, was how a department with no experience in ICT could acquire the skills needed to successfully operate and critically maintain hundreds of computers, scanners and CD writers located in 360 offices across the state. In an attempt to find answers to this question, Dr Kareer visited the Department of R&S in Andhra Pradesh, which had embarked on an intensive staff training program, only to find that additional private-sector ICT support was needed to ensure that the system they had established was sustained. As it turned out, the solution to the problem was to be found much closer to home. Upon returning by car from one of his weekly meetings with senior government leaders in Mumbai, Dr Kareer asked his colleague from CDAC why they could not replicate the successful Build-Operate-Transfer (BOT) model, which had financed the Bombay–Pune expressway. This comment triggered a discussion, which led to the development of an innovative proposal to partner with private sector companies in order to deliver computerized registration services to customers. This idea would transform registration services in Maharashtra, and set an important precedent for service-based reform in India. Immediately upon returning from Pune, Dr Kareer set about researching and writing a proposal for an install, staff, operate and maintain (ISOM) private–public sector partnership with the Department of R&S. Within a week he returned to the state capital to secure support from his superiors in the state government. No doubt one of the most attractive aspects of his proposal was the fact that private sector companies would cover the entire cost of the hardware and furniture needed to fully computerize each SRO. In addition, they would provide trained staff, as well as on-call technical support, to ensure that computerized registration services were sustained on a daily basis. To pay for the cost of the private sector operators, Dr Kareer proposed a new document-handling service charge of Rs 20 per page. Other outdated service charges were to be discontinued. Following agreement in the state capital, a concept note was written, submitted to the state cabinet and approved on July 11, 2001. Dr Kareer was especially savvy to request a special account (called a Personal Deposit [PD] account), which would receive all document-handling charges paid

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by customers. Furthermore, he specified that the IG would have sole authority over this account, which meant that he could circumvent the notoriously slow state bureaucracy and pay private sector contractors on time. This was crucial as it prevented state bureaucrats in the Department of Finance from undermining the reforms. As important was the fact that the PD account would generate additional funds, which could be used for supporting further reforms at the department. Almost one month after the Cabinet had approved Dr Kareer’s reform program, private sector contractors were invited to submit tenders to provide technical support services for eight divisions across the state. There were also a number of innovations in the tendering process. First, Dr Kareer and his team developed detailed tender documents, leaving no doubt as to the roles and responsibilities of each party. Second, the key criterion in selecting successful companies in each division was the document-handling charge they proposed should be paid if they won the tender. This realized substantial savings for the department, as the average charge per page across the eight successful companies was Rs 8. Third, dividing up the state into divisions provided opportunities for local ICT companies to bid for the contracts. This led to greater competition, as well as support for smaller division-based companies, which may have been better placed to provide on-call support to local SROs. By the middle of October 2001, tenders had been awarded and letters of intent signed with the eight successful companies. This was followed by an intensive two-month period of training for their staff in the software, which had been designed by C-DAC and Dr Kareer over the previous six months. At the end of 2001 each company was active in installing computers and equipment in the SROs for which they had secured ISOM contracts. On February 1, 2002 computerized registration services were started simultaneously in all 360 SROs across Maharashtra state. One month later, on March 8, the new system of computerized document registration was officially launched by the chief minister, the ministers of finance and revenue, and the chief secretary. At this ceremony a new logo for the department was launched, as well as a Citizen’s Charter which committed the department to registering a document within 30 minutes. This was a dramatic transformation of service provision at the department, considering that the norm prior to Dr Kareer’s arrival varied widely from days to a worst-case scenario of years. The question which was no doubt on everyone’s mind on March 8 was whether or not the department could deliver

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such rapid registration services to citizens. Before answering this question, it is useful to briefly examine a number of important innovations initiated over the next 18 months to support the implementation of the computerization reforms.

Tapping Staff Expertize and Building Ownership To highlight the importance of staff involvement in the computerization reforms, a special advisory committee of SRs (from across the state) was established to examine, test, and report on the different aspects of the computerized registration process. This decision ensured that SRs had an opportunity to contribute to, and critically own, the final software package which was adopted across all SROs at the start of 2002.

Payments, Penalties and Performance In contracting private-sector staff to work alongside government employees in SROs, there were clearly many unanswered questions. Could they work together to deliver quality registration services? How could the department avoid a scenario whereby each party blamed the other for failing to achieve the new service norms? To help answer these questions, Dr Kareer came up with an innovative solution which would play a key role in the remarkable performance achievements that have been realized in Maharashtra to date. First, he studied the registration process in minute detail and broke it down into six timed steps. The total time for these steps, listed in Table 4.2, determined the new service norm of 30 minutes to register a document. With the registration process now timed, it became possible to use the software program to measure the performance of both private sector and department staff responsible for different steps in the registration process. This resolved the question posed earlier about the potential risk of each party blaming the other for failing to achieve the service norms outlined in the Citizen’s Charter. Now Dr Kareer had accurate performance data, which he could use to pinpoint who was failing to deliver a registered document in 30 minutes. This innovation also addressed one of the major flaws in the pre-reform registration process, which was a complete lack of performance information with which senior managers could use to hold front-line SRO staff to account. As a consequence, senior managers abrogated their supervisory roles, which led to a deterioration of registration service standards to the point where it took days, and often years, for customers to have their registered documents returned.

Transforming Service Delivery in Maharashtra 135 Table 4.2 Stepwise Registration Process in Maharashtra No. 1.

2.

3.

4.

5. 6. 7.

Step Entry of document for registration—Issuing a token number to customers for queuing, writing the page numbers on customers’ documents, and placement of a round seal on each page Scrutiny of documents to be registered—Checking that the property details and stamp duty fees are correct, printing of a receipt for registration fees to be given to the SR Payment of registration fees—Review of document by the SR, payment of registration fees by the customer, issuing of receipt by SR to the customer Admission of parties—Collection of digital photograph and fingerprints, printing of documents for signatures Signatures of parties—Signing of documents by all parties, witnesses and the SR Scanning of documents Miscellaneous (i.e. margin of error in the registration process) Total

Responsible Party SRO staff

Time Allocation in Minutes Not timed

Private sector operator

6

SR

3

Private sector operator

8

SR

5

Private sector operator

6 2 30

What is interesting to note with regard to the computerization reforms is that the timed registration steps locked SRs into a process over which they no longer had any control. As soon as a document was entered for scrutiny (Step 2), the clock started ticking and it only stopped after the document had been scanned (Step 6). Any attempt to delay the registration process (which was common practice in the past) immediately implicated the SR, as it was occurring during his/her timed task. Furthermore, the way the computerized registration process was designed made it much harder for delays to occur, as the first stage in the process (Step 2) was based on the assumption that documents were ready for registration. This meant there was less scope for SRs or, for that matter, SRO staff to obfuscate and delay a customer’s registration. With accurate performance data now being generated on a daily basis in each SRO, Dr Kareer was able to set performance penalties for both private-sector contractors and SRs in cases where they failed to deliver registered documents in 30 minutes. At a later stage, Dr Kareer would complement this well-used contemporary management practice with a

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reward scheme, whereby SRO staff were collectively rewarded for the consistent achievement of the 30-minute service norm. However, we shall first examine the penalty system. All the contracts signed with the eight private sector firms stated very clearly that they would be charged penalties if they failed to deliver the services for which they were responsible within the designated time frames. As Table 4.2 shows, the private sector operators were responsible for three steps, which involved a total service time of 20 minutes. Therefore, Dr Kareer set a penalty fee proportionate to the extra time they took above the 20-minute ceiling. For example, at the end of the month if a company had taken 10 percent more time than the maximum allowed, then they would incur a 10 percent final payment penalty.5 Implementing this system was extremely easy. At the click of a button, SRs could print a monthly invoice which listed the necessary data—the total number of pages processed and scanned by the contractor during the month, the contracted rate per page, the total fees to be paid, the total penalties to be paid, and the final monthly payment to be made by the department. The integrated computerized registration, penalty assessment and billing system was both efficient and transparent, and there was very little scope for manipulation. Dr Kareer also established a penalty system for SRs in cases where they failed to deliver the services for which they were responsible within the eight-minute time frame that they had been assigned. However, he appears to have been less active in enforcing this penalty, probably due to the fact that staff salaries were already quite low. What was more important was that he was active in monitoring the performance of SRs on a monthly basis. This was a radical departure from the pre-reform scenario where individual accountability was virtually non-existent. The performance monitoring system was simple and yet comprehensive. Critically it ensured that both private sector and government employees were held to account for their performance. Also important was the fact that both actors were inextricably linked in the registration process, much in the same way as two dancers are linked in a tango. Both had an equal stake in performing the steps in the computerized registration process in sequence, in order to realize their shared aim of delivering a registered document within 30 minutes.

Rewarding Good Performance In January 2003, Dr Kareer announced a new scheme, the first of its kind in Maharashtra, to motivate staff and reward good performance. Annual

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monetary rewards were to be given to government staff in SROs which (a) achieved 105 percent of their annual revenue target, (b) consistently registered documents within 30 minutes, (c) had few, if any, citizen complaints, and (d) maintained a clean, customer-friendly office. Back-office administrative offices were also included in this scheme, although using different performance criteria. Securing approval from the state government involved an enormous amount of work, and over a number of months a series of meetings were held in Mumbai to convince senior state leaders of the benefits of such a system. A strong argument made by Dr Kareer was that this initiative would not cost the government anything as he proposed funding the awards from the surplus funds in the PD account. In May 2004 the state government finally acquiesced and issued a government order officially establishing the scheme.6

Calling for Help in Mumbai One of the major challenges for the Department of R&S was coping with the huge demand for registration services in Mumbai city, due to an expanding urban middle class, a seemingly endless property boom, and dramatic annual economic growth. This created considerable opportunity for corruption, as citizens were vulnerable to manipulation by streetwise middlemen. Of critical importance was the provision of accurate information to citizens so that they could avoid being misled and exploited. To address this issue Dr Kareer launched a telephone help-line (open from 10.30 am to 5 pm) in April 2003, to provide information to customers about any aspect of the registration process, including property valuations based on a customer’s land survey number. With an average of 80–90 calls a day, it is clear that this office is providing an extremely useful service to citizens. Another problem which was unique to Mumbai was the severe overcrowding of SROs, due to the high demand for registration services. This forced citizens to arrive early in the morning in order to queue to register their documents. As can be expected, this led to a burgeoning industry of queue dealers, which created considerable frustration among customers. To address this problem, a telephone-based appointment system was established, allowing citizens to call and book an appointment to register their documents. This system was hugely popular among customers as it saved them a great deal of time and inconvenience. All they had to do was to arrive at the SRO a few minutes prior to their appointment time to register their documents. It also brought order and sanity to the SROs

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across the city, as staff could now better manage the constant flow of people in and out of their offices.7 8

The Last Frontier—ISO 9001 In June 2003, Dr Kareer was coming to the end of his three-year term as IG at the Department of R&S. Under his leadership the department had clearly achieved a great deal and many would have anticipated his interest in moving on to new challenges. However, Dr Kareer was concerned about the extent to which the reforms he had established would be sustained and, ideally, built upon by his successor. Furthermore, he was conscious of the fact that reforms could be quickly rolled back through weak and ineffective leadership. To reduce this risk he decided to stay on for an extra year during which time he set himself one final challenge—to secure International Organization of Standardization (ISO) 9001: 2000 certification for the department. To assist with this task, Dr Kareer secured help from a private-sector expert who had considerable experience in the ISO certification process, although, interestingly, not in the public sector. The first stage of certification involved the documentation of 18 key organizational processes, including service deliverables (outputs), in a detailed ISO training manual. Starting in July 2003, the first of a number of training courses was held for senior department staff who would serve as internal auditors of the 18 performance-based processes and outputs. On August 15, the department’s ISO quality management system was officially launched, and on September 1, the first internal audit was conducted by trained department staff to assess whether or not the organization was achieving its set performance standards. This audit was followed by further training and refinements to the ISO quality management system. In the first week of October, a second organization-wide internal audit was undertaken in 410 departmental offices (SRO and administration offices) across the state, which led to further improvements in the system. In November another internal audit was undertaken, and at this time staff across the department began to see noticeable results. Based on this success Dr Kareer decided to undertake the first external audit (in early 2004) of the department, which involved 12 qualified ISO auditors examining all 18 registration processes and outputs over a 10-day period. At the end of this audit, the ISO team recommended the department for ISO certification, which was officially awarded (for a three-year period) on November 5, 2004.

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It is important to highlight that ISO certification committed the Department of R&S to a process of quarterly internal audits and annual external audits to review the organization’s performance and to assess whether or not it was providing quality services to citizens. In sum, ISO certification institutionalized the service-based reforms and ensured that they would be sustained over the long term.

Measuring Performance Change in Maharashtra Processes, Outputs and Outcomes In order to measure the impact of the service-based reforms at the Department of R&S in Maharashtra, a performance measurement model was developed that covered three ‘dimensions of performance’: processes, the way in which a service is delivered; outputs, the services an organization produces; and outcomes, the impact of the service on citizens. To apply this model, key processes (such as hiring private-sector operators), outputs (time taken to register a document), and outcomes (overall customer satisfaction) were identified and measured. In the following discussion, selected findings from a customer survey (N = 200 customers) as well as secondary data are discussed to highlight changes in performance.

Has Reform Improved Registration Service Processes? Hiring Private Sector Operators In the majority of registration departments in India, even in some which have undertaken reform, it is usually essential to hire private-sector operators (advocates, stamp vendors, real estate agents, and bond/document writers) to navigate the intricate maze of document registration. Decades of collusion between unresponsive registration staff and exploitative private sector operators has created an extremely lucrative industry, whereby citizens are forced to pay unregulated fees, and often exorbitant bribes, in order to register their documents (see Caseley 2004). If reform has made it easier for citizens to register documents on their own, then one could argue that reform has been successful. At the Department of R&S in Mahrashtra, 60 percent of customers surveyed registered their document on their own. Furthermore, 21 percent of the 81 customers who ‘got help’ asked a friend as opposed to hiring a private sector operator.

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Staff Behavior Citizen perceptions of staff they met during the registration process can provide insights as to how successful reform has been in changing rude and indifferent staff behavior, which is common in registration departments in India.9 If we assume that the pre-reform scenario is ‘normal’ (neither polite nor impolite) staff behavior, then we can find evidence of quite dramatic changes in Maharashtra, where 75 percent of customers surveyed stated that they staff they met were polite.

Corruption An important registration process, which provides insights as to how effective reforms have been, concerns corruption. Yet, this issue is extremely difficult to tackle head-on, as customers are often unwilling to divulge how much additional money they have paid to register their documents due to fears that it may negatively affect their property registration. It is even harder to talk about corruption during exit interviews, which are undertaken in the vicinity of the SRO. Despite these challenges, the customer questionnaire contained a number of questions which attempted to collect data on whether or not corruption had been impacted following reform. What is most striking is that the majority of customers in Maharashtra (94 percent) appear quite adamant that they did not pay a bribe (defined as unofficial fees without a receipt) to register their documents. Customers were then asked to state whether or not two statements were true or false. The design of these statements was based on the assumption that customers may reveal whether or not they paid a bribe by commenting about collective rather than individual behavior. First, the vast majority of customers (94 percent) agreed with the statement that in the past it was common knowledge that the Department of R&S in Maharashtra was corrupt. Second, customers were asked if it was true or false that in recent years the department had undertaken reform which had significantly reduced corruption; 95 percent of customers said that this statement was true.

Has Reform Improved Registration Service Outputs? Time Taken to Register a Document It is quite remarkable that in Maharashtra, 100 percent of customers surveyed in rural and urban SROs stated that they received their documents

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within the 30-minute service norm outlined in the Citizen’s Charter. To further investigate this finding, data was collected from 15 urban and rural SROs across the state. In each SRO, staff were asked to print out a document summary report which listed all of the documents registered by customers on August 17 and 18. The average registration time for each customer was then calculated by subtracting the exit (scanning end) time from the entry (start of scrutiny) time. Across the 519 customers sampled, the average time taken to register their documents was 18 minutes. However, it is important to point out that this average registration time does not provide a full picture of the total amount of time each customer spends at the SRO to register his or her document. To assess this aspect, data was collected from the handwritten registers in 10 urban and rural SROs. For each of the customers listed in the above-mentioned document summary reports, their entry and exit time was copied from the handwritten register at the SRO concerned. Then the average total registration visit time was calculated from the sampled SROs. In Maharashtra, citizens are currently still spending approximately three hours at their local SRO to register their documents. This is a dramatic improvement from prereform registration service times, which involved many hours waiting, and travelling back and forth to the SRO to collect their registered documents.

Has Reform Improved Registration Service Outcomes? Customer Satisfaction with Registration Services When asked to compare the services provided by the Department of R&S with other service-based state departments, 65 percent of customers surveyed said that they were better. Furthermore, 40 percent of customers were very satisfied with the registration services they received, while a further 55 percent were satisfied.

Success in Maharashtra Based on the data presented in this section, combined with additional data collected in the field (in-depth interviews, observation and secondary data), there is sufficient evidence, across the three dimensions of performance examined, to conclude that the reforms undertaken at the Department of R&S in Maharashtra have delivered improved services to citizens.

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Explaining Improved Performance in Maharashtra Public-sector Service Delivery Accountability The recent publication of the World Development Report (WDR) 2004 has played an important role in focusing attention on the broader sociopolitical context within which accountability relationships between citizens, politicians, service providers, and front-line workers have the potential to positively influence public-sector service delivery performance. This section widens the three-actor (the state, citizens/clients, and providers) theoretical framework, which forms the basis of the WDR, to include accountability relationships operating between external actors and staff at the Department of R&S in Maharashtra. However, before starting this analysis, it may be useful to define public-sector service delivery accountability in more theoretical terms. One of the limitations of current debates on public sector accountability has been the lack of attention paid to the relationship between accountability and responsiveness. Some have argued that ‘public sector actors have a duty to be responsive to the members of the public with whom they interact, but to account for their actions to their seniors, who account to the legislature and the executive, to financial auditors, and to higher court judges’ (Goetz and Jenkins 2002: 8, emphasis in original). Others however suggest that ‘people should be considered accountable when there is a high probability that they will be responsive to legitimate authority or influence’ (Lipsky 1980: 160). Strengthening the case for a definition of accountability that includes a responsiveness dimension are civil societybased initiatives that have challenged ‘traditional’public-sector official– elected representative accountability relationships due to their failure to deliver responsive public services (Goetz and Gaventa 2001: 7). In this research, public sector service delivery accountability involves two aspects; first, engagement, a reciprocal relationship (not necessarily constant or equal) operating between two actors, whereby demands for improved service delivery performance are articulated through formal, accessible and transparent accountability mechanisms; and second, responsiveness, the extent to which the party upon whom demands are made takes one or more of three actions—answerability (the provision of information and or a decision); enforcement (supporting the achievement

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of existing service norms); and organizational change (sustained changes in both service norms and in the way services are delivered). This definition provides an opportunity to assess the extent to which societal actors are able to hold a service provider to account and influence service delivery performance. However, it is important to first define the extent to which external demand for accountability leads to organizational responsiveness and, over time, to positive changes in service delivery performance. Two scenarios are proposed. In cases where active demand for accountability leads to the provision of information and/or to a decision (answerability) by a service provider without any effort to directly address the demands articulated, then it is argued that dysfunctional accountability relationships are operating due to the fact that service delivery performance remains unchanged. Alternatively, where a service provider is more responsive to external demands, leading to either the strengthening of existing service norms (answerability and enforcement), or to changes in both service norms and in the way services are delivered (answerability and organizational change), then it is proposed that effective accountability relationships are operating. If these relationships are sustained over time, it is argued that they will contribute to positive improvements in service delivery performance.

Accountability Relationships Prior to Reform In applying the above definition to the Maharashtra case, it is useful to start with an assessment of the various accountability relationships operating between external actors and the Department of R&S, as well as within the organization, prior to reform. These are shown in Figure 4.1. In the pre-reform accountability dynamic (Figure 4.1), three dysfunctional (broken line) accountability relationships, involving only answerability, are depicted. Prior to reform, elite politicians, such as the chief minister and the ministers of finance and revenue, appear to have been uninterested in placing demands on the department to improve service delivery performance. As a consequence there was no pressure on senior managers to change the poor level of service provision that was common across front-line SROs. This explains the dysfunctional accountability relationships operating between senior managers and front-line workers. Even if senior managers were interested in holding SRs and their staff to account, they were severely handicapped by a lack of accurate performance data as to what level of services these staff were providing to customers on a daily basis.

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In this research, professional networks are defined as communication between a service provider and national and international advisors/ trainers/academics/researchers, colleagues from neighboring public sector organizations, and state bureaucrats. Prior to reform, there is no evidence of active demand for accountability by professional networks, such as senior bureaucrats in Mumbai or national and international experts, and hence we find dysfunctional accountability relationship operating between these two actors. To summarize, public sector service delivery accountability at the Department of R&S prior to reform was extremely weak, which is why no effort was made to improve front-line service delivery performance. In retrospect, it was an easy life for senior managers at the Department of R&S. This would change dramatically following the appointment of Dr Kareer in 1999.

The Tipping Point for Reform Before examining the accountability relationships which have contributed to sustained improvements in service delivery performance at the Department of R&S, it is useful to briefly discuss the catalyst for reform in the Maharashtra case. Despite lack of time to fully explore this aspect, all evidence suggests that reform was triggered by a decision by the chief secretary to take a calculated political risk and appoint a widely respected and highly competent IAS officer, Dr Nitin Kareer, as IG of the Department of R&S. This was a bold decision, as Dr Kareer was essentially promoted from District Collector to the post of IG.10

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In trying to understand why the chief secretary was so intent on placing a reformer with considerable integrity and professional qualifications (MD, IAS, and MBA) in one of the most corrupt, and possibly poorly run, departments in the state, two reasons emerge. The first can be attributed to public service motivation, which is the ‘motivational force’ prevalent in the public sector that inspires individuals to undertake public service.11 The chief secretary, who had patiently risen through the ranks to the most powerful IAS post in the state, wanted to make a difference in the lives of the people he had dedicated most of his working life to serving. The second reason was related to interstate competition for the soughtafter reputation as the most ICT-focused state in the country. In 1998, Andhra Pradesh computerized front-line services at the Department of R&S in Andhra Pradesh and this appears to have placed pressure on other state governments who were competing for national and international investments in state-supported ICT industries to follow suit.

Accountability Relationships Following Reform With a clearer picture of the tipping point for reform, we now turn our attention to the accountability dynamic operating following service-based reforms at the Department of R&S in Maharashtra. In Figure 4.2, various accountability relationships are depicted by arrows which represent contrasting degrees of engagement, with either active unidirectional (single arrow), or active bidirectional (double arrow) demand Figure 4.2 Accountability Relationships Following Reform

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for accountability; and lines which indicate two levels of responsiveness, ranging from effective (solid line) accountability relationships that contribute to performance improvement (through a combination of answerability, and/or enforcement, and/or organizational change), to dysfunctional (broken line) accountability relationships (involving answerability only) that maintain the status quo. In Figure 4.2, we find that service-based reforms have dramatically altered the accountability relationships operating between external actors, senior managers and front-line workers. These relationships are discussed in the next section.

Triangulating Accountability between Senior Managers, Front-line Workers and Private Sector Operators Effective Accountability Relationships between Senior Managers and Front-line Workers As we have seen earlier in this chapter, active demand from senior managers for service delivery accountability at SROs started during the first phase of reform in August 2000. Over the following 17 months, senior managers placed sustained pressure on SRs and their staff to undertake organizational changes to make their SROs more customer-friendly. As important was the adoption of new service norms, such as returning registered documents to customers within 24 hours. This led to the establishment of effective accountability relationships between senior managers and front-line workers.12 In reciprocating demand on senior managers for accountability, SRs and their staff asked Dr Kareer in October 2000 to investigate and resolve a long-standing grievance regarding their pay scales. In December, Dr Kareer made a request to the minister of finance for this issue to be addressed, arguing that it would lead to increased annual revenues. The minister agreed to establish a special commission of senior state leaders to investigate this issue, and within two months a decision was made in favor of SRs. Dr Kareer had a second opportunity to demonstrate responsiveness to SR demands for accountability in early 2001, when they requested an expansion of the number of SROs to cope with increasing demand for registration services in rapidly expanding urban areas. Over a series of visits to Mumbai, Dr Kareer met with the Ministers of Finance and Revenue

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and secured their approval for an expansion of SROs (from 319 to 360), which was to take effect from January 1, 2002. It is likely that the resolution of SRs’ pay scales, combined with the reduction in workload through the expansion of SROs, played a crucial role in the success of the first-phase reforms, as it demonstrated to frontline workers that senior managers were responsive to their concerns. This was in stark contrast to years of indifference and inaction by senior managers prior to reform. Interestingly, the first phase of reform did not establish an effective mechanism to provide consistent information to senior managers with regard to SRO compliance with the first-phase reforms. Therefore Dr Kareer continued his program of monthly visits throughout the state in order to demand accountability from SROs. This behavior, which was a radical departure from previous leadership, demonstrated Dr Kareer’s determination and commitment to organizational change and improved service delivery performance.

Effective Accountability Relationships between Senior Managers, Front-line Workers and Private Sector Operators As soon as the second-phase computerization reforms were launched statewide in February 2002, Dr Kareer had accurate and reliable performance information, which he could use to demand accountability for further organizational changes at SROs, such as the adoption of new registration processes in order to deliver registered documents to customers within 30 minutes. The clearest evidence of this demand for accountability being institutionalized can be seen in the astute use of penalties, and, at a later stage, rewards to hold both front-line workers and private sector operators to account for their performance. This further strengthened the effective accountability relationships operating between senior managers and front-line workers, and led to the establishment of new effective accountability relationships between senior managers and private sector contractors. In reciprocating demand for accountability, SRs placed new demands on senior managers to further expand the number of SROs in order to deal with increasing demand for registration services.13 For their part, private sector contractors demanded prompt payment of their monthly invoices and quick redressal of any issue which fell outside their existing service contract. A realization that it was in the collective interest of both front-line workers and private sector contractors to work together to achieve the

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new service norms led to the establishment of an effective accountability relationship between these two actors. Yet, at the same time, both were aware of their individual responsibility for the steps they had been assigned in the registration process. This ensured that each actor was quick to hold the other to account in situations where one party was holding up the registration process. The second-phase set of reforms at the Department of R&S provided senior managers with new sources of accurate and critically consistent performance information which they could use to hold both front-line workers and private sector operators to account for the achievement of the new service norms outlined in the Citizen’s Charter. This led to a triangulation of demand for accountability between senior managers, front-line workers and private sector operators, which over time brought about dramatic improvements in service delivery performance. Of critical importance was the fact that senior managers were responsive to the demands of both front-line workers and private sector contractors. This played a central role in deepening cultural change, which over time was able to overcome past practices of corruption and rude and indifferent staff behavior.

The Role of Citizens—Untapped Demand for Accountability Demands from Senior Managers and Front-line Workers Starting with the first phase of reforms, both senior managers and frontline workers were active in placing demands on citizens to fulfill one of the key norms outlined in the Citizen’s Charter, namely to come to their local SRO with a registration-ready document. However, as we can see in the above diagram, the accountability relationships triangulating between citizens, senior managers, and front-line workers are not as effective as they could be due to the fact that citizens are unable to demand accountability from either senior managers or front-line workers (demand is currently unidirectional). This represents a major weakness in the current accountability dynamic in the Maharashtra case.

Enabling Citizen Demand for Accountability In this study, the majority of customers surveyed (57.5 percent) have currently not been given an Index 2 Form, which they are entitled to receive free as part of the registration process. As a result of this service

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failure, these customers will be unable to receive their official land title from the Department of Revenue, which requires a signed Index 2 Form. Therefore, customers will have to return to their local SRO, at considerable inconvenience, in order to collect this form, at which point they may be asked for additional money from SRO staff. This points to a lack of citizen awareness, including the possibility that despite the overall success of the reforms, some SRs and their staff, especially those working in remote rural areas, may try to undermine the registration process by forcing citizens to pay bribes. At this time senior managers have no way of knowing how satisfied customers are with the registration services they are receiving. Furthermore, the computer-based registration performance tracking system does not capture all of the stages in the registration process. For example, customer entry and exit data is not yet computerized, and this is therefore an area which could be exploited by SRO staff.14 Finally, there is currently no mechanism in place to capture poor treatment of customers by SRO staff. This discussion highlights the importance of enabling citizen demand for accountability by establishing a formal mechanism through which citizens can contact senior managers when they feel that they are not receiving quality registration services. One of the most efficient ways to enable citizen demand is through a statewide telephone-based complaints and information service, which allows citizens to bypass front-line workers and report poor service provision directly to senior managers. A good example of such a mechanism can be found in Andhra Pradesh, where the Hyderabad Metropolitan Water Supply and Sewerage Board has established a telephone-based complaints line (open 24 hours a day) so that citizens can lodge complaints about water and sewerage services (Caseley 2003a). This information is entered by telephone operators into a database which is networked to the offices of senior managers based at head office and division levels throughout the city. This database automatically calculates the performance of front-line staff in addressing customer complaints within the time frames outlined in the Citizen’s Charter. Senior managers have then used this information to hold frontline workers to account for their performance. Until citizen demand is enabled at the Department of R&S through a complaints line or a similar mechanism, citizens will continue to be vulnerable to exploitation by middlemen and SRO staff who want to return to the corrupt practices of the past.

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Elite Politicians and Professional Networks In the post-reform accountability dynamic, effective accountability relationships are now operating between senior managers and elite politicians (ministers of finance and revenue) and professional networks (chief secretary and secretaries of revenue, finance, and information technology). This can be attributed to the leadership of Dr Kareer, who went to great lengths to keep these senior leaders fully informed on every aspect of his reform program. It is likely that his commitment to information transparency triggered the active engagement, and subsequent demand for accountability, from these actors. Further examples of supportive professional network engagement can be seen in the three national awards which have been bestowed on the department in recognition of the success of its service-based reforms.15 It is likely that these awards played an important role in motivating staff across the organization to further improve service delivery performance. As important was the fact that the awards were received on behalf of all employees, and this no doubt contributed to a sense of pride across the department, which further strengthened cultural change. More recent professional network engagement has involved ISO 9001: 2000 certification, a process which has committed the department to rigorous quarterly and annual performance assessments. Also important are demands made by Dr Kareer upon both elite politicians and senior bureaucrats for the approval of requests he made on a regular basis to support his reform program and to address issues which had remained unresolved for many years, such as the expansion of the number of SROs to address pockets of increasing demand for services, rewards for good performance, and salary reviews for staff.

Media and Senior Managers Despite an extremely competitive media environment in Maharashtra, the media in the state does not appear to have played an active role in demanding accountability for service delivery performance from the Department of R&S. Nor have senior managers been active in using media to communicate with customers as to their roles and responsibilities under the reformed registration process. As a result this accountability relationship is dysfunctional at this time. However, since 2002 a number of articles have been published in daily newspapers (The Sunday Express, The Times of India),

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which have praised Dr Kareer and the department for undertaking reform. This publicity has no doubt provided important information to customers about the changes which have occurred at the Department of R&S. One of the constraints with regard to media demand for accountability is the fact that proportionally only a small number of state citizens engage the department for registration services. This makes it difficult to generate public interest in whether or not the department is fulfilling the obligations outlined in the Citizen’s Charter. For the Department of R&S, active media engagement can be an extremely efficient way of communicating information to customers. In hindsight, if senior managers had paid more attention to this relationship, they may have been able to create greater awareness among customers as to their right to receive an Index 2 Form when registering their documents.

Multiple Accountability Relationships and Improved Service Delivery Performance In concluding this section, three important lessons are highlighted. First, service delivery accountability relationships appear to be far more complex than one might assume at first glance. In the Maharashtra case, multiple effective accountability relationships operating between senior managers, front-line workers, private sector operators, politicians, professional networks and, to a lesser extent, citizens have over a number of years contributed to improvements in service delivery performance. However, it was the interdependent accountability dynamic operating between senior managers, front-line workers, and private sector operators which has been the key to sustained improvements in the quality of registration service provision. Second, ICT can contribute to improvements in front-line service delivery provision when it is linked to measurable service norms. In the Maharashtra case, the innovative computer-based performance tracking system provided senior managers with accurate and reliable performance information, which they then used to hold both front-line workers and private sector operators to account for sustained improvements in service delivery performance. Third, citizens can be an important source of information on the performance of front-line service providers, as they engage with these services

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on a daily basis. Enabling citizen demand for accountability in Maharashtra through the establishment of a statewide telephone-based complaints service, for example, could provide new sources of performance information to senior managers, which they could then use to make further improvements in the quality of registration services.

Implications for Public Sector Reform in India What are the main lessons to be drawn from the Maharashtra case? And how do these lessons inform current approaches to public sector reform in India? Five issues are of importance.

Political Commitment A common factor which has been highlighted in a number of case studies of successful public sector reform is political commitment. This is especially crucial in an organization such as the Department of R&S, where it is likely that institutionalized corruption provides important sources of revenue for local politicians.16 Yet, it is important to point out that political commitment is far more complex than merely granting carte blanche authority to senior managers to undertake reform. Rather it involves the establishment of effective accountability relationships, whereby each party is responsive to the others’ demands for accountability.17 Political commitment is also contingent upon trust, which in the Maharashtra case was established through weekly engagement between Dr Kareer and elite politicians over a number of years. Although political commitment cannot be ‘created’, the Maharashtra case provides insight as to how it can be sustained and deepened over time. In Maharashtra, Dr Kareer delivered dramatic improvements in frontline service delivery performance in parallel with substantial increases in annual revenue. (During the three financial years he headed the department, annual revenue increased from Rs 190 to 287.1 billion.) When these two aspects of service provision are addressed in unison, they can be a very effective motivator for continued political commitment to reform.

Stakeholder Consultation One of the first, and possibly most important, actions that Dr Kareer took when he first arrived at the Department of R&S was to consult widely

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with stakeholders across the state. Of critical importance were his efforts to meet with staff at all levels in order to better understand their needs as well as document their recommendations for reform. This ensured that the reform agenda was grounded in the recommendations of stakeholders from both within and outside the department. It also ensured that there was wide ownership of the reform program when it was launched. Interestingly, a similar approach was undertaken at the Hyderabad Metropolitan Water and Sewerage Board, and this contributed to the success of the service-based reforms which were launched in 1999 and 2000 (see Caseley 2003a).

Cultural Change Prior to Computerization The fact that reform was rolled out in two phases enabled change to be managed gradually, as opposed to the ‘big bang’ approach which is often employed in top-down ICT-based reform. The 17 months of cultural change, which was the focus both of senior managers and front-line staff in Maharashtra during the first phase of reform, played a central role in the overall success of the second-phase reforms.

Leadership Although obvious, it is important to mention the central role that leadership has played in the success of the Maharashtra case. Credit must be given to Dr Kareer for his dynamic leadership during the four years he headed the department.

Multiple Accountability Relationships and Performance Information In the Maharashtra case, multiple effective accountability relationships operating between senior managers, elite politicians, professional networks, front-line workers, private sector operators, and, to a lesser extent, citizens have over a number of years contributed to improved service delivery performance. However, it was the interdependent accountability dynamic operating between senior managers, front-line workers, and private sector operators which was the key to sustained improvements in the provision of registration services. This dynamic was enabled by the establishment of an innovative computer-based performance tracking system, which provided new sources of performance information to senior

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managers that could then be used to hold front-line workers and contracted private sector operators to account for responsive service provision. Multiple effective accountability relationships, which are grounded in institutionalized performance monitoring, have the potential to contribute to organizational change and sustained improvements in service delivery performance in public sector organizations.

Notes 1. For a discussion of these socio-political changes in Andhra Pradesh, see Caseley (2003b). 2. Recent research has found that the CARD reforms delivered faster registration services, but citizens may still be forced to pay bribes to register their documents in some rural areas (see Caseley 2004). 3. In SROs where there were insufficient customers, a third SRO was selected to conduct additional interviews in order to reach the target of 50 customers per district. 4. This was most likely due to the fact that they benefited from the previous system whereby a document could be submitted for registration and held by a SR, regardless of whether or not it met the requirements for a registered document. 5. In cases where documents were longer than 35 pages or there were more than six people registering a document, the maximum service time period was extended. 6. At this time awards have been granted to the best performing SROs and back-office staff for 2003 and 2004, although it is unclear if the actual reward payments have been made. 7. For each SRO, 50 appointment slots were available each day. Once the appointment schedule was full, no other document registrations were accepted, although citizens without an appointment could wait in the SRO to see if there were any people who had booked but did not turn up. 8. ISO 9001 is a methodology to establish and maintain an effective quality management system in an organization. ISO certification is awarded by external ISO evaluators when an organization meets the standards it has committed itself to in its quality management system. These standards are created to ensure that the products and services provided by an organization meet the customers’ requirements and thereby ensure customer satisfaction. 9. Based on research conducted by the author in the Department of R&S in Andhra Pradesh and Maharashtra. 10. An indication of the audacity of the appointment is evident from the fact that it was questioned by the state governor. 11. There is a significant body of literature going back to the 1960s (Crewson 1997: 500) that concludes that some public sector employees have ‘strong norms and emotions about performing public service’ (Brewer et al. 2000: 254). Empirical research on public service motivation undertaken by Brewer et al. (ibid.: 261) concluded that ‘many people are strongly motivated to perform public service’ (italics in original), and

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12.

13.

14. 15.

16. 17.

they argue that this finding ‘challenges assumptions that public sector employees are motivated by self-interest and must be induced or forced to perform public service.’ Based on the definition of accountability presented earlier, these actions involved engagement and responsiveness, the latter involving a combination of answerability (the provision of information and or a decision) and organizational change (sustained changes in both service norms and the way services are delivered). Dr Kareer responded to these demands and in October 2003 he submitted a proposal to the state government for 91 new SROs. A second proposal was submitted to the state government in May 2004 to establish 33 new SROs in urban areas which had high demand for registration services due to an ongoing property boom. For example, by collecting money from customers to help them jump the queue. These awards were the Government of Maharashtra’s Rajiv Gandhi Award, 2002 (for efficient administration); the Computer Society of India’s E-governance Award, 2002 (for best revenue system); and the Government of India’s Golden Icon Award, 2003 (for exemplary e-governance). This statement is based on research undertaken by the author in Andhra Pradesh, Maharashtra and Karnataka. Dr Kareer often made requests to the ministers of finance and revenue to address obstacles to reform when he was reporting good news, such as an increase in annual revenues. Alternatively, it was common for politicians to make their decisions conditional upon further growth in revenue.

References Brewer, G.A. Selden, S.C., and Facer, R.L. 2000. ‘Individual Conceptions of Public Service Motivation’, Public Administration Review, 60 (3): 254–64. Caseley, J. 2003a. ‘Blocked Drains and Open Minds: Multiple accountability relationships and improved service delivery performance in an Indian city’, IDS Working Paper 211, Institute of Development Studies, Sussex. ———. 2003b. ‘Bringing Citizens Back In: Public Sector Reform, Service Delivery Performance, and Accountability in an Indian State’, Unpublished PhD Thesis, Institute of Development Studies, Sussex. ———. 2004. ‘Public sector reform and corruption: CARD façade in Andhra Pradesh’, Economic and Political Weekly, 39 (11). Crewson, P.E. 1997. ‘Public Service Motivation: Building Empirical Evidence of Incidence and Effect’, Journal of Public Administration Research and Theory, 7 (4): 499–518. Goetz, A.M and Gaventa, J. 2001. ‘Bringing Citizen Voice and Client Focus into Service Delivery’, IDS Working Paper 138, Brighton: Institute of Development Studies. Goetz, A.M and Jenkins, R. 2001. ‘Hybrid Forms of Accountability: Citizen engagement in institutions of public sector oversight in India’, Public Management Review, 3 (3): 363–84. ———. 2002. ‘Voice, Accountability and Human Development: The emergence of a new agenda’, Human Development Report Background Paper, New York: United Nations Development Program. Heeks, R. 2002. ‘The Approach of Senior Public Officials to Information Technology-Related Reform: Lessons from India’, Public Administration and Development, 20 (3): 197–205.

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Lipsky, M. 1980. Street-Level Bureaucracy: Dilemmas of the Individual in Public Services. New York: Russell Sage Foundation. Public Affairs Centre. 2002. State of India’s Public Services: Benchmarks of the New Millennium. Bangalore: PAC. World Bank. 2003. World Development Report 2004: Making Services Work for Poor People. Washington, DC: World Bank Group.

Chapter 5 Making Service Delivery Reforms Work: The Bangalore Experience Suresh Balakrishnan1

Introduction Provision of better public services is a key challenge for local, state, and central governments across India. This chapter provides insights into the variety of actions by the state government, local service provision agencies, and civil society that enabled urban services in Bangalore to improve significantly between 1994 and 2004. This experience in Bangalore is significant because shows how key processes such as high-level political support; compacts between policy-makers and service providers to improve quality; client power and voice (expressed through report cards, for example); and civil service capacity converged to give service delivery improvements a big push in the early part of this decade. It is evident that the improvements in Bangalore were not a simple aggregation of agency-level initiatives, conceived and implemented separately. Nor do they seem to have come about only from improved managerial efficiency in the agencies. Rather the reason for improvements stems from a multiplicity of factors that came together over a decade.

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Profile of Service Delivery Improvements in Bangalore Bangalore, the capital of the State of Karnataka, is one of India’s large cosmopolitan cities, with a population of around 6 million. The city expanded very rapidly since the 1980s, putting immense pressure on public service providers to cope with increased demand for essential services. The city’s services deteriorated significantly between the late 1980s and mid-1990s, after which major changes and improvements took place.

Overview of the Decline At the root of the problems in Bangalore was the rapid growth of the city, from a population of 1.2 million in 1961 to 4.1 million in 1991. Although the local government—the Bangalore City Corporation, with an elected Mayor and Council, and a large complement of civil servants—was mandated to provide services such as solid waste disposal, maintenance of roads, permissions for erecting new buildings, etc., other services such as drinking water, public transport, electricity, security, and traffic management were provided by separate agencies set up by the state government. Urban planning and expansion of housing were facilitated by yet another agency. Table 5.1 gives the list of key service providers in Bangalore. By the early 1990s, the situation in the city was not only one of inadequate and low quality public services, but also of a sense of helplessness among Table 5.1 Key Service Providers in Bangalore Agency

Service/Reference in Case Study

Bangalore Development Authority (BDA) Urban Development Bangalore Electricity Supply Company Electricity (BESCOM) Bangalore Mahanagara Palike (BMP) City Government: Solid waste, roads, storm water drains, street lights, building permits, birth and death certificates, maternity homes Bangalore Metropolitan Transport Public Buses Corporation (BMTC) Bharat Sanchar Nigam Limited (BSNL) Telephones Bangalore Water Supply and Sewerage Water and Sewerage Board (BWSSB)

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ordinary people about resolving such problems. Electricity, water, garbage removal, and other essential services were both unreliable and difficult to access. People waited for years to get new telephone connections. Roads were in bad shape, especially in residential areas. Pedestrian sidewalks, parks, and other civic amenities were poorly maintained. There was a widespread impression that it was difficult to get assistance from service providers without bribes. Even paying property tax was a cumbersome task. Until 1999, there was no institutional mechanism for coordinating the activities of different service providers. Each agency formulated policies and plans depending on its priorities and resources. Administrative systems provided little room for direct consultation with city residents to establish priorities, plan or monitor services. Slum dwellers, who accounted for a large proportion of the urban poor and approximately 25 percent of city resident’s, were a fast-growing population. Their problems were similar to those faced by slum dwellers in other cities: civic agencies were reluctant to provide services without a land title; the high density of habitation placed pressure on the minimal infrastructure; subsidized services were needed, etc. Bangalore’s slums were scattered across the city, and urban growth created pressure to move the slums. The misery in the city was sustained by a sense of resignation among citizens. There were no loud protests or public agitations demanding an overall improvement in services. In retrospect, one could largely attribute the lack of corrective action by service providers to this deficit in collective action by city residents. There were very few neighborhood associations in Bangalore to take up civic issues. Most city-based NGOs directed their attention to specific segments such as children, women, and slum dwellers. The poor level of organization in civil society matched the low level of concern among activists and leading citizens about fighting against the dismal public services in their own backyard.

Improvements in Services between 1994 and 2003 The quality of services from a user perspective was benchmarked and periodically assessed by the Public Affairs Centre, as an independent initiative of civil society. Their assessments, called ‘Citizen Report Cards’ (CRCs) (Paul 1995, 2004; Paul and Sekhar 2000), provide insights into how service quality and user satisfaction improved over time.

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Citizen report cards are assessments of quality of civic services based on sample surveys with users of services. These report cards deal with aspects of services that only actual users can provide information on, such as reliability of service, responsiveness of officials and satisfaction with service. By benchmarking and comparing feedback from users, the report cards are able to assemble the ‘voice’ of citizens, compare the performance of different agencies on dimensions such as reliability and satisfaction, and articulate issues in a systematic manner to seek corrective action from service providers and policy-makers.

A comparison of the citizen ratings of these agencies over the last 10 years is perhaps the only way to judge whether their services had improved significantly. The early responses of the agencies between the first two report cards were varied. Some agencies took reform initiatives while others did not. It was during the period between the second and third report cards that more concerted efforts towards reform took place. The evidence presented in Figure 5.1 shows that user satisfaction increased in both periods. Figure 5.1 Satisfaction with Public Services across CRCs

The comparison of user satisfaction presented below calls for a word of explanation. Comparability of data over time is a problem, as changes invariably occur in the survey setting and the methods used. In the present case, the survey methodology used in the second and third report cards was fine tuned in the light of experience, especially with regard to the rating scale. To ensure comparability of the data between periods, Figure 5.1 uses the evidence from all respondents who had interacted with one agency or another. The data for all agencies are aggregated for each report card. For 2003, the column represents the proportion of users that is completely satisfied with a service. This is compared with the proportion

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of users in the upper end of the scale, viz., ‘completely satisfied’ and ‘satisfied,’ in 1994 and 1999. A comparison of both these categories in 1994 and 1999 with just ‘completely satisfied’ in 2003 is defensible, but means that the data given in 2003 is a more restrictive measure of user satisfaction compared to 1999 and 1994. Despite this limitation, the chart shows that the average user satisfaction increased by over 40 percent between 1999 and 2003. Focus on the upper end of the scale is appropriate because it sets a goal for the service provider to achieve, i.e. giving complete or high satisfaction to the user.2 These findings are broadly supported by similar feedback surveys conducted by the Bangalore Agenda Task Force (BATF), which found 94 percent of its sample of Bangalore residents saying that the city was better off (in February 2003). Figure 5.2 presents the satisfaction ratings across the three CRCs by agency. Here again, while the rating for 1994 and 1999 includes those users who interacted with service providers and are either very satisfied or satisfied, that for 2003 includes only those who are completely satisfied. The chart shows that agencies have varied in terms of overall satisfaction. This probably reflects the complexity of the agency tasks and the nature of reforms attempted. BESCOM, BSNL, and BWSSB showed major improvements across all three report cards, while the BMP, public hospitals, and the BDA improved fastest between 1994 and 1999 with satisfaction ratings remaining steady or falling slightly in the 1999 and 2003 period. Bangalore’s five regional transport offices recorded major improvements between 1999 and 2003. Figure 5.2 Satisfaction with Public Services across CRCs by Agency

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Figure 5.1 clearly indicates a trend of across-the-board improvement over time in user satisfaction when all the agencies are taken together. Figure 5.2 shows that there are variations in the ratings across CRCs for agencies. The usage of the restrictive measure in 2003 understates the extent of satisfaction. The improvement in rating would have been better if a less restrictive measure had been used. It is important to understand what lies behind this change. Does the improvement in satisfaction reflect real changes that might have occurred in the quality of services, responsiveness of the service providers, and efficiency of service delivery? Did the need for interaction with the agencies significantly decrease? What actions might have been taken by the government and its service providers to achieve such positive outcomes? The comparative charts below provide some answers to these questions.

Problem Incidence People are likely to be more satisfied when they have fewer problems in getting a service or while interacting with an agency. The extent to which users of services experience problems came down in 2003 in comparison with 1999 (see Figure 5.3). Fewer problems mean fewer interactions with the agencies. This usually happens when more people experience relatively more reliable or hassle-free services. Since this aspect was not quantified in 1994, it is not possible to say whether the same pattern existed between 1994 and 1999. Reduction of problems is an important reason for improved satisfaction. It is likely that the reduction in the frequency of routine problems translates into fewer interactions with citizens, thereby reducing the scope Figure 5.3 Problem Incidence

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for delay, harassment, and corruption. The regularity and reliability of services have improved during the period, according to users. To quote two examples, additional data collected in the survey revealed that satisfaction with regularity of garbage clearance by the City Corporation has gone up from 16 percent in 1999 to 75 percent in 2003, and that with accuracy of billing in the Water Board from 32 to 90 percent. The reduction in problems described above has been matched also by improvement in satisfaction with behavior of staff (see Figure 5.4).3 Figure 5.4 Satisfaction with Staff Behavior across CRCs

Figure 5.4 indicates a positive change in staff behavior for all the agencies taken together. It is difficult to imagine that people who gave low ratings in the past to the same staff would applaud them now without valid reason. While improved procedures have reduced the possibility of abuse of discretion, most agencies have also invested in training their staff. These efforts may have positively influenced the attitude and mindset of staff since 1999.

Corruption An important question is whether service improvement has been accompanied by a reduction in corruption. Evidence on this is given in Figure 5.5. Despite some improvement in the services, corruption seems to have increased between 1994 and 1999. But, compared to the report card of 1999, the findings of CRC 2003 for general households show that corruption in the agencies has come down (see Figure 5.5). We suspect that this reflects a reduction in the bribes demanded and paid by people in routine transactions. Streamlining of procedures and systems and

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increased transparency may well have contributed to this outcome. Some examples of how this might have happened are given below. This does not imply that all pockets of corruption have been eliminated. In specialized areas such as building permits and approvals of various kinds, corruption may still be substantial, but this survey was not designed to unearth them. The findings definitely support the premise that simpler procedures and improved efficiency in routine operations such as self assessment of property tax by the City Corporation, simplified land transfer by the Urban Development Authority and the like, as well as measures such as IT-enabled billing systems in BESCOM (the Electricity Company) served to reduce harassment and extortion faced by citizens in the late 1990s.

Making Services Work in Bangalore The improvements in services reported in the previous section indicate that almost all city agencies achieved noticeable improvement in many aspects of their services over the last decade. While the proportion of users of services who reported that they were satisfied with services had almost doubled over the last five years, the rate at which they encountered problems while using services declined substantially for most agencies. What is most striking is the perceptible decline in corruption levels in routine transactions. All these improvements have been matched with an increase in satisfaction with the behavior of staff of these agencies while interacting with citizens. We conclude that the changes observed

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from these feedback surveys, taken together, indicate the depth to which improvements have taken place. Unlike similar improvements which have taken place in different parts of the world, under new charismatic mayors or large donor-assisted reforms, the Bangalore story had no such single converging point. Instead, the experience is about a series of linked actions that happened during this period of change, involving a wide range of stakeholders, particularly communities and civil society. Moreover, these improvements took place over a fairly long period of time, and have experienced ups and downs, a pattern that is characteristic of such changes.

The Build-up for Change The profile of development in Bangalore had a significant role in incubating the changes that became visible during the 1990s. The cosmopolitan character of the city, which is fundamentally linked to its prominent role dating from the 19th century as a cantonment town with a salubrious climate, was consolidated when large public sector units were established in and around the city, before and soon after India’s independence. These units succeeded in drawing employees from different parts of the country. Several townships were set up by these large public sector companies, which primarily operated in the suburbs. This base of industrial activity brought in its wake substantial growth in the private sector. From the early 1990s, several multinational corporations established manufacturing facilities and corporate headquarters in and around Bangalore and nearby Hosur, bringing in highly respected and influential managers into the city. Several prominent persons, who had pursued careers in different parts of India with government and business, chose to retire to the salubrious comfort of Bangalore. In the process, the city came to accumulate a rich diversity of citizens, beyond the traditional elite, to play a role in the development and governance of the city. The first long-term response to this issue of poor urban services came in 1992, from an eminent group of Bangalore residents led by Dr Samuel Paul. This group initiated what they thought would be a one-time effort to assess public services—to place on record the public’s dissatisfaction with the state of the city. The responses from general residents revealed the need for repeated visits to get a job done, high levels of dissatisfaction, and widespread corruption. The survey also led to interesting estimates of the hidden costs people incur in order to compensate for the inadequacy of public services, such as investments in water tanks and voltage stabilizers

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for secure water and power at considerable cost; the total cost of these devices were assessed to be of the order of about Rs 10 billion (US $200 million), which was many times the property tax collected by the city. The findings were presented as a ‘report card’ on the performance of these state agencies, and were meant to provide an impetus for action by service providers. Copies of the report card were sent to the heads of the public agencies covered by the survey, and to the chief minister and chief secretary of Karnataka. Findings were also disseminated to the Bangalore press, whereupon all major newspapers published them. A leading newspaper, The Times of India, published reports on each agency over a few weeks.

Early State Responses and the Strengthening of Voice One of the first reactions came from the incumbent chief secretary of the state government of Karnataka. He did not challenge the findings, but gave reasons why the practice of corruption should not be laid at the door of the bureaucrats. Almost all the heads of agencies acknowledged the report politely and promised to study the findings. Though the report card did not provoke all the service providers to take immediate steps, over the next year three of the eight agencies initiated action and sought help from the PAC (which was set up subsequent to this first report card) to improve their services. They saw the report card as an opportunity to wake up their agencies and serve the public better. Over the next few years, most of the city service providers initiated important steps to address the issues raised by residents of the city. In terms of scale, a major step among the initiatives that followed was the City Corporation’s initiative to set up a public grievance redressal system and the launch of a ‘Clean Bangalore Campaign’ in collaboration with civil society. Both these efforts did not live up to the expectations generated, and faded away with the transfer of the commissioner who launched them. But the bigger more strategic step was in relation to raising funds in the market to garner resources for an ambitious project to improve the network of roads in the city. Given the post-liberalization scenario, the state government encouraged the city corporation to explore this new option to finance urban infrastructure (primarily roads), and Bangalore became the first city in the country to float municipal bonds and raise Rs 1.25 billion. This move was a harbinger of the changes that followed. In the Water Supply Board, officials started meeting with customers in different areas of the city both to understand their problems, and improve

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procedures for billing and collection. The Electricity Board’s performance was limited by periodic shortages of power and the difficulty in controlling the theft and transmission losses of electricity. Although power outages continued, the use of mobile transformers reduced the severity of the problem. Bill collection was made easier by the use of mobile counters. The diversity in these internal initiatives reflected the different approaches adopted by heads of these agencies to respond to issues. However, it was difficult to identify any cross-cutting strategy for change with the exception of a greater willingness to engage with civil society. Some time after the first report card in 1993, the state government appointed an administrator, who headed the City Corporation in the absence of an elected body in office. He requested that the PAC assist the government to interface systematically with citizen groups. This led to the formation of a platform called ‘Swabhimana’ (self-respect), through which residents’ associations, NGOs, and officials came to interact on a sustained basis. The Urban Development Authority and Electricity Board called upon resident’s associations to provide timely feedback to help agencies deliver better services. It was during this period that other civil society responses evolved to challenge the state government on critical issues, such as campaigns on the Comprehensive Development Plan for the city. Resident welfare associations in different neighborhoods, largely led by senior citizens with long-term stakes in the communities they lived in, grew in numbers. While these responses were small in scale, they provided the growing body of concerned citizens with a point of reference to deal with poor services. But the strength of these small groups in relation to the city primarily arose out of the networking and collaboration which took shape during the second half of the decade. Another immediate influence was the software industry, which took shape in the early 1990s. The fledgling software industry, which emerged at the start of the decade, grew rapidly from the mid-1990s and started attracting young professionals from all parts of India. But this population did not enjoy the kind of planned support that large public sector companies had provided in earlier decades, such as campus housing and schooling, leading to sharp escalation of prices for property in and around the city, and putting pressure on civic infrastructure to expand and cope with this demand. In the process, this new segment of migrants became acutely aware of the dependence on the state and city government for adequate infrastructure, and came to provide a critical mass of support for civil society in Bangalore.

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But the need to address the problems in Bangalore’s urban infrastructure had also been flagged in strong and unambiguous terms in the late 1990s by an arm of the state, the judiciary. In a series of directions, the High Court of Karnataka had responded to public interest litigation and pulled up different agencies in charge of Bangalore, including the city corporation, to address glaring instances of non-performance, including filling of potholes. Through its directions, the High Court had emerged as a focal point for residents of Bangalore to seek relief, and at the same time put the state government under pressure to find ways to improve services in Bangalore. Issues such as deterioration of roads and plans to construct in traditional green spaces like Cubbon Park gave rise to a broad coalition of organizations led by Public Affairs Centre, to mobilize a ‘Citizens’ Protest March’ in November 1999. In parallel, the city saw a protest by CEOs of the biggest software companies; these individuals rolled up their sleeves and attempted to repair the major road to the Electronics City. The transfer of a well-respected municipal commissioner also led to a citywide protest to revoke the order.

Triggers Accelerating Change Notwithstanding the early responses described earlier, the change of state government in 1999 seems to have provided the immediate trigger for the series of reforms in policy and management of service agencies that led to coordinated and all-round improvement in service delivery. Soon after the new government took office in Karnataka, the chief minister made a public commitment to improve services in Bangalore. The comfortable majority that the ruling party enjoyed and the credibility enjoyed by the chief minister in the higher echelons of his party helped in taking an innovative approach to the issues at hand. The competition with Hyderabad in attracting and retaining software companies was a major issue for the new state government. The promise of reliable infrastructure by the new leadership in Andhra Pradesh had attracted investment from the software sector away from a crumbling Bangalore. This certainly constituted a threat and potential setback for Karnataka’s economy, which no new government could ignore. But the manner in which the new Chief Minister, S.M. Krishna, responded by projecting the vision of developing Bangalore into a world-class city was much

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more than reacting to Hyderabad’s challenge. It reflected a larger vision and commitment to improve Bangalore, not only in terms of infrastructure, but also its institutions, which lie at the heart of any modern city. The bureaucracy of the state government and its service agencies in Bangalore were called upon to translate this vision into an agenda for action. This became necessary as a state government initiative, because the mandated role of the City Corporation, inspite of statutes on decentralization, provided limited powers for it to play a leadership role. While a team of hand-picked officers to head the main agencies involved in providing civic services in Bangalore enabled the chief minister to set the course of action, the call to action seems to have invoked inspiration from the traditions that came from the well known practices of the erstwhile Mysore state. Key elements of this tradition that came to be reflected in the policies of the new government include the openness with which princely governments co-opted key stakeholders and the strong commitment to use technology in development. Keeping this tradition in perspective, it would be appropriate to credit the new state government with a rather unique response to this vision to develop Bangalore. Instead of the conventional approach of state-driven investments and policy initiatives, the chief minister chose to innovate and reach out to eminent residents and leaders of respected private sector corporations, as well as multi-stakeholder task forces to oversee change in different areas. The best known among them was the BATF, meant to help city agencies work together to improve Bangalore. The BATF turned out to be a success in terms of the intellectual input and strategic financial assistance that it mobilized for improving public services, and as an institution which held itself accountable for its mandated performance. The other significant factor which gave the reforms greater credibility and direction was the approach of the new Lok Ayukta or ombudsman. The office of the Lok Ayukta, which was expected to respond to complaints of maladministration in the broadest sense, had little visibility in the eyes of the residents of Karnataka till the new Lok Ayukta assumed office in 2001. Raids by the Lok Ayukta, to take corrupt officials to task, at offices used by common citizens such as the city corporation, public hospitals, and vehicle inspection agencies, created wide public expectations and demand that such pernicious practices would not be condoned but dealt with firmly by the state government.

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Translating Policy into Pragmatic Compacts The development agenda of the state government came to be closely defined in the Medium Term Fiscal Plan agreed upon with the Government of India, which became effective from 2001. This broad financial plan brought in its wake a series of subsidiary agreements (not always formal) with state agencies regarding financial support that would be made available. This agreement, in the case of the Bangalore City Corporation, took the form of a Memorandum of Understanding between the state government and the city corporation, which laid down the improvements in performance that the corporation would achieve each year in order to be eligible for the next tranche of support from the state government. Although large investments were made by all the city agencies to expand and strengthen their operations, the state government did not have to finance all the activities of these agencies. The city corporation and the development authority, which required very large funds, were encouraged to use loans and public debt to finance capital expenditure. These steps reflected a viable compact between the state as a policy-maker and the city agencies to move ahead in a pragmatic manner, and to address the issue of financing capital expenditure. This approach was also in evidence when it came to sourcing privately owned infrastructure for the city. The BMTC was permitted, for the first time, to use privately owned buses on a revenue-sharing contract, whereby it could avoid making large investments while substantially increasing the scale and quality of its services that came to be ranked as the best among different urban services assessed through the CRC of 2003. The city corporation, on similar lines, outsourced solid waste collection to private contractors, particularly in the newer parts of the city, due to which it was able to substantially restrict increases in operational overheads. Not all legislation had such immediate and positive impact. For example, the Right to Information Act was passed by the State Assembly to improve access to information for citizens of the state, including residents of Bangalore. The orders for implementation were issued in the gazette in December 2000, but implementation orders were issued only in July 2002. But when the Public Affairs Centre carried out an independent audit of the implementation of this provision by city agencies, it was found that only 24 percent of applications received the required response.

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The commitment to provide stability of tenure to senior officers was also, to a fair extent, adhered to. While the Urban Development Commissioner had almost a five-year term, the heads of the Water Board, the Metro Transport Corporation, Electricity Company, and City Corporation also enjoyed fairly long tenures. This enabled these senior officers to prepare plans and implement them in a comprehensive manner. Perhaps, the most significant part of these compacts came from the commitment of the state government to monitor compliance by these agencies. The periodic summits, organized by the BATF, were used by the state government to assess, in a transparent manner, the extent to which plans and commitments were being adhered to. This approach put pressure on agencies to perform, and at the same time created awareness in residents of Bangalore about the progress being achieved.

Co-opting Client Power into Partnerships The relationship between the city agencies and other large stakeholder groups was largely mediated through the BATF and its activities. The Task Force, which was formally set up by the state government, was headed by Mr Nandan Nilakeni, CEO of Infosys, one of India’s best-known corporations, and included heads of city agencies, eminent Bangaloreans from all walks of life, and representatives from the private sector. Through this Task Force, the state government forged a partnership between all the key stakeholders in the city, which developed tremendous synergies in addressing issues confronting the city. The BATF in turn used periodic surveys to keep track of changing perceptions among residents of Bangalore on issues that were of immediate priority. The Water Board and the Electricity Company made systematic efforts to dialogue with residents of the city through open houses in partnership with NGOs such as PAC, and by organizing Adalats (forums for grievance redress) in their operating zones. The BDA organized similar events to engage with clients to facilitate systematic transfer of documents. These city agencies also reorganized bill collection systems by making collection centers operate on weekends and evening hours to suit the convenience of clients. Most city agencies brought out simple brochures and guides to help residents access their services with ease. These efforts reflected a deeper understanding of clients, and a willingness to meet their legitimate demands for information and convenient service. The willingness of the poor to pay for assured services was the basis for a major change in approach to slum dwellers. In the past, the urban

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poor were often denied basic services at their houses on the grounds that such a provision would amount to acceptance of rights to occupation of state property. This meant that the poor had to seek alternate access to these services, through middlemen or illegal connections, which often involved significant costs. However, this reluctance in the agencies was replaced with a concerted effort to get the urban poor to take paid connections for water and power, whereby the poor got better services and the agencies got some revenue. Most city agencies strengthened their grievance redressal systems. As a result, in the case of services such as electric power and water supply, residents who needed service or were dissatisfied with some aspect of service could leave complaints on interactive voice recorder systems. This facility enabled the client to contact providers in a timely and effective manner for problems, instead of making repeated visits to these offices to seek assistance. The other area where public–private partnerships gathered momentum was in relation to the maintenance of neighborhood gardens and parks. Several parks belonging to the city corporation were adopted, developed, and maintained by corporate groups for the benefit of neighborhood residents. By actively encouraging and facilitating this arrangement, the city corporation was able to improve and maintain neighborhood parks to superior standards, at no cost to the city or communities.

Leveraging Voice for Greater Accountability The common thread that runs through the different supply-side interventions discussed earlier is the political commitment and support of the chief minister of the state. This was a weak factor during the period 1994–99. The change at the top in 1999 made a decisive difference. Instead of ignoring or downplaying critical feedback, the political leadership of the state offered legitimacy and space for the voice of citizens to be expressed. As a result, a wide range of civil society institutions, from resident welfare associations to well-established NGOs, were able to reach out to the government in relation to issues such as property taxation, location of flyovers, etc., without having to take recourse to one-sided protests. This willingness to listen also meant that judicial recourse in public interest could be avoided to a greater extent. CRCs provided independent and systematic feedback on the performance of agencies. This information was complemented by the periodic surveys conducted by BATF. These mechanisms enabled ordinary

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citizens to express their feedback on services without fear, and in a systematic and comprehensive manner. The city agencies responded positively, and cooperated with civil society in participating in public events, providing information for analysis, and sharing the findings with employees down the line. Voice is most effective when it draws forth a clear response. This happened frequently through the BATF summits. The summits provided an opportunity for citizens from different walks of life to hear from agency chiefs on their performance, and the chance to raise specific questions. The willingness of the chief minister and the political leadership to support this mechanism, and the professional manner in which it was implemented by the BATF made it possible to leverage voice for effective public accountability. But the participation in these summits from the urban poor was nominal. Hence, the ability of these summits to include all segments of society was limited. The media in Bangalore played an unusual role by adding their weight to the pressure for better services. Over the last 10 years, the print media has moved from marginal reporting on neighborhood issues to systematic investigative reports on a regular basis. Newspapers have come to regularly seek inputs from civil society groups (like PAC) on current issues. One newspaper began a series of reports on the different wards of the city, highlighting their problems and focusing on the performance of elected corporators. This was followed by another innovative campaign of the kind that newspapers seldom undertake, through which they organized interactive meetings in different parts of the city for citizens to voice specific problems to senior officials from selected city agencies. A large number of public officials were thus exposed to the issues of the localities and stimulated to respond. FM radio channels also provide opportunities for city residents to call in and raise questions on key issues. Civil society in Bangalore has also made important efforts to engage with elected representatives through neighborhood organizations. Instead of remaining in the fringes, these civil society groups in various parts of the city have come together to assess the quality of public facilities in neighborhoods, represent local priorities, and demand information as per the provisions of the Karnataka Right to Information Act. In the process, the interface with elected representatives has increased in scale and content. An important step forward was the PROOF campaign in 2002, for quarterly disclosure of financial accounts and physical performance by the City Corporation. This initiative built on the BATF-supported effort

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to introduce a modern IT-enabled fund-based accounting system, which made it possible to monitor revenues and expenditure with much greater ease then the traditional system. The City Corporation responded to this initiative, and became the first urban local government in the country to commence quarterly disclosure of accounts, in the manner well-run corporations do. More important, civil society groups were trained to carry out systematic analysis of these accounts, and they presented their assessment and questions at quarterly public meetings to the City Corporation.

Strengthened Autonomy and Effective Internal Management While there was no instance of major restructuring, the powers for zonal units to perform with greater autonomy and accountability were substantially enhanced across most agencies. Be it collection of user charges for electricity supplied or repairs at a depot level, this approach enabled cutting-edge officials to deal with performance issues in a timely manner. The BDA tapped into the pool of properties it had lost to encroachers, while the BMTC made use of provisions to lease buses from the private sector on a revenue-sharing basis. The City Corporation used public– private partnerships to get bus shelters constructed free of cost by offering advertising rights to the private partners; similarly, pedestrian pavements were constructed by companies laying optic fibre telephone lines. The state government’s policy of better managing free services, including free power, had its impact on city agencies. While the water board systematically reduced the number of public connections and encouraged direct home connections and group connections, the electricity company vigorously enforced penal action on defaulters. This emphasis on revenue served to improve cash flows in these agencies, and helped expand services across the city. The commitment to serve clients better was reflected in a variety of initiatives by city agencies. In addition to the measures to change working hours to suit the convenience of clients, agencies invested in training their staff in soft skills for their direct interface with clients. The benefit from these inputs was evident in the feedback from residents of Bangalore regarding their satisfaction with behavior of staff. More important, it encouraged officials to have greater ownership and commitment. A conductor in a BMTC was heard proudly telling a quarrelsome passenger: ‘Don’t you know that PAC has rated our transport service as the best among all the services in the city?’

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Technology came to play a big role in making improvements. While IT helped to improve the reliability of billing and monitoring revenue collection, fund-based accounting served to improve cash management and tracking of liabilities. The use of mobile transformers to address local power outages, powered tools to clear blocked sewage lines, and compactors to reduce the volume of solid waste to be cleared have all contributed to improve service delivery in the city. The experiences from well-managed corporate houses percolated into these service agencies. Improved discipline at work seems to have received substantial attention from the highest level of management. Attendance monitoring through swipe cards, verification of completion of garbage clearance, and immediate response to instances of alleged corruption have been reported by various agencies. The number of persons who faced disciplinary action for corruption in the BWSSB is testimony to this harder approach. While these steps do not amount to total compliance by all parts of the organization, they are indicative of firm steps and commitment in these agencies. As part of the commitment to improve services, the state government encouraged service agencies to prepare citizen charters. While many of these charters served to inform users about the agency and its services, some also moved towards defining service standards. The most important steps were taken in the case of the electricity distribution companies, which were operating under the directions of the Electricity Regulatory Commission. The distribution companies were called upon to follow a clear set of service standards, and to report on the extent of non-compliance. The Water Board also had a strong system for internal monitoring of service breakdowns and complaints, with the reporting escalating to higher levels including the chairman, in case of a delay in redressal.

Challenges of the Future If elections to State Assembly were the impetus for accelerating change in 2000, the announcement of dates for the next state assembly elections that took place in 2004 provided the trigger for a slowdown in the pace of change. While norms related to fair electioneering precluded the announcement of new projects, the change in mood was evident with a wide range of ongoing infrastructure development activity slowing down. The results of the election reduced the incumbent Indian National Congress to a minority in the new house, and resulted in the party forming a coalition ministry.

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The results of the election in Bangalore stand in contrast to those across the rest of the state. The Indian National Congress retained its tally of seats in Bangalore (eight out of 12) despite reverses in other parts of the state. It is likely that this success in Bangalore had much to do with the achievements in the city. Table 5.2 Overview of Electoral Results in Bangalore and Karnataka Year Location Karnataka

Bangalore

Party Indian National Congress Bharatiya Janata Party Others Indian National Congress Bharatiya Janata Party Others

1999

2003

132 44 48 7 4 1

65 79 80 8 4 0

Comment 50 percent fall in seats Nearly doubled seats Maintained tally

Recent Changes The loss in momentum after the elections was most evident in the work of the City Corporation, although it was technically an independent entity. After the monsoon, the city experienced a rapid deterioration in roads. But the City Corporation took time to initiate even basic patchwork and repairs. Work on flyovers slowed down, as did progress on allotment of housing sites at layouts announced by the urban development authority during the tenure of the previous government. Chaotic traffic added to the woes of the residents of Bangalore. But the delivery of other services, such as water supply and electricity, has remained steady. While some mention was made about the continuation of the BATF, no formal efforts to do so were evident, and the Task Force has receded into the background.

Consequences of the Slowdown The most recent changes following the change of government also serve to highlight the challenges to sustaining improvements in service delivery. It would be useful to highlight the main elements of the partnership that made that the turnaround happen, which have now come under strain. The first area where deterioration has taken place is the compact between policy-makers and service-providing agencies. While some agencies have internalized superior practices and retained service quality at earlier levels, quality in others has dropped significantly. Second, the inclusive process

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through which public accountability for performance was made operational has waned. The public summits through which public disclosure of commitments and achievements happened has not taken place after the new government took office. This has not only closed the open channel of communication between policy-makers and citizens, but also taken the pressure of direct accountability off service agencies. Finally, the tendency to create a false dichotomy between improving urban services in Bangalore and responding to the legitimate needs of Karnataka’s rural communities could undermine the impetus to continue building on the gains won in past years in Bangalore.

Lessons from the Bangalore Experience In this complex story, where change evolved over a decade, through the actions of a multiplicity of stakeholders, an attempt to unravel the underlying causal connections is not only a conceptual challenge but also bears the risk of oversimplification. This section seeks to draw threads from the processes described in the previous section, and share insights arising from the analysis.

Explaining Success The drivers of change in Bangalore can be divided into two categories. On the one hand, demand-side factors such as citizen and media pressure sparked and sustained the initiative. On the other hand, supply-side factors, in the form of government action to implement reforms, were also indispensable. The government response made possible the interaction between citizens and agencies that led to positive outcomes in improvement of services.

Demand Factors Contributing to Success In the decade-long report card experience in Bangalore, it is possible to identify four factors on the demand side that worked together to sustain pressure for change. Citizen Report Cards as Public Scanners The Bangalore citizen report cards exerted pressure on the city’s service providers in three ways. First, by providing focused information on performance from the perspective of citizens, the reports put the agencies under a public scanner. Such information was new to them, and, as much

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of it was negative, it had the effect of shaming the poor performers. Evidence from the corporate world shows that measuring and quantifying work and outputs tends to make organizations pay more attention to what is being measured. Something similar seems to have happened in the Bangalore service agencies. The chairman of the BDA recalled his reaction after the first report card gave his agency a low rating: ‘For the first time, there was feedback from the public on the performance of agencies. My curiosity was triggered by the fact that in the rankings the report card assigned to the various agencies, I found the BDA had got the first rank from the bottom. I thought I should do something about this.’ A similar motivation is evident in the initiative some agencies took after the first report card in contacting the PAC for its advice and assistance to improve services. Public agencies tend to be sensitive to adverse publicity, especially in a democracy. Second, inter-agency comparisons seem to have worked as a surrogate for market competition. Although each service provider is a monopoly within its distinctive area of activity, the report card sets up a competitive arena by permitting inter-agency comparison of common attributes. Users, the media, and civil society groups see delays, bribery, and nonresponsiveness as negative features in any service provider. The fact that the heads of some of the agencies called PAC to find out where they stood in the second report card before its findings were released shows that organizations do pay attention to how the public views them. They wanted to know not only whether their ratings had improved, but also whether they ranked higher or lower than others. This was the case despite objections by the same officials to public release of inter-agency comparisons. Third, it appears that at least some agency heads saw the report card as an aid in their efforts to reform their agencies. Although the feedback on their agencies was initially negative, these leaders took a positive view of the exercise. They used the findings to goad their colleagues to take action to improve services. This shows that a report card, when prepared impartially and professionally, can encourage the more proactive among public leaders to move ahead on the reform front. A recent assessment of the Bangalore initiative states that several agencies characterized the report cards as a ‘catalyst’ (Ravindra 2004). The same report quotes one agency leader as saying that PAC’s work on satisfaction levels and on quality of services had a profound effect on him as a public manager. Some agencies subsequently adopted the practice of preparing their own

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report cards, thus affirming the value of user feedback as an internal management tool. It is important to note that the report card was not a one-time initiative ending with the dissemination of findings. Rather, the first report card was followed up by two more within 10 years, and by ongoing advocacy for more responsive and efficient agencies. Citizen Report Card as a Trigger for Civic Action The report cards helped stimulate complementary public advocacy work, with the two factors together having a cumulative impact on the government and citizens of Bangalore. This advocacy, spearheaded by PAC, was carried out through a network of civic groups and NGOs in the city. The number of such groups increased significantly in the period following the first report card. Only about 20 were active in 1994; by 2000 their number exceeded 200. Not all of them were dynamic groups. Even so, many did participate in the campaigns and meetings organized by PAC, adding to the public pressure on service providers. The network included two types of organizations. Neighborhood groups called residents’ associations focus on one part of the city but have a direct interest in the performance of all the service providers. Citywide NGOs focus on specific civic or service-related issues. Both kinds of organizations participated in public meetings and seminars where report cards or other civic issues were discussed. These meetings engaged the service providers in active public dialogues, in contrast to the closed personal meetings with officials that were previously customary in all agencies. Some service providers, such as the electricity board, the water and sanitation board, and even the police, subsequently organized their own forums, inviting civil society groups for dialogue. As a result, interactions between organized civic groups and the service providers grew significantly. Civic advocacy increased the stimulus for reform and responsiveness on the part of the service providers. This was already evident in 1999. After a public meeting held in Bangalore in connection with the second report card, a leading newspaper, The Times of India, said in an editorial (November 8, 1999): ‘PAC, in creating this forum, has opened doors, even windows, for a healthy tête-à-tête with our service providers. The honesty on display was remarkable … this is the spirit of democracy in action. Civil society working in tandem with government for the greater good of all.’ In addition to such meetings, several NGOs have made distinctive contributions by carrying out citywide campaigns on specific issues. These

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campaigns, in most cases assisted by partnership with PAC, have served to strengthen the city’s ‘social capital.’ One NGO undertook advocacy work linked to property tax reform. Another examined the municipal budget and engaged the city corporation in a debate on service efficiency and public expenditure. A third worked on the improvement of solid waste management. These diverse interventions all signalled to the service providers that their activities were being watched and assessed in a systematic fashion. In different ways, all these civil society groups were demanding better services and accountability from the government and its agencies. Media Glare The print media in Bangalore played an unusual role by adding their weight to the pressure for better services. In 1994 the newspapers did little more than publicize the negative findings of the report card or other similar critical assessments. Investigative reports on civic issues were relatively rare. Subsequently, however, the newspapers took on a much more proactive role. After deciding to devote more space to public service problems and related civic issues, several newspapers sought PAC’s advice and technical support for special features. One newspaper began a series of reports on different wards of the city, highlighting their problems and focusing on their elected council members. Another leading newspaper even took the initiative to organize meetings in different parts of the city at which citizens were invited to voice their local problems in the presence of senior officials from a selected group of public agencies. A large number of public officials were thus exposed to the issues of the localities and pressed to respond with answers. These meetings received much publicity in the newspaper, as did the remedial actions taken subsequently. This public process clearly put increased pressure on the agencies to be more transparent and accountable and to deliver on their promises.

Supply Factors Contributing to Success In addition to the responsiveness shown initially by agency leaders themselves, the most decisive supply-side factor was establishment of the BATF in 2000, one year after the second report card. This step, an initiative of the new chief minister of Karnataka state, was reinforced by additional resource mobilization within the agencies, by an active state ombudsman, and by the ongoing political commitment of the state government.

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The Bangalore Agenda Task Force (BATF) Until 1999, the modest improvements in services that occurred in Bangalore (and were reflected in the second report card) resulted from actions taken by the agency leaders on their own initiative. The constraints within which they operated limited the scope of the reforms they could attempt. The scene changed for the better in 2000 when the new chief minister created the BATF to work in partnership with the major service providers. This step, coming only a few months after the release of the second report card, showed the government’s determination to deal with the problems being experienced by the public. BATF was made up of several prominent persons from the private and professional sectors, along with the chairpersons of seven service agencies. This public–private partnership was authorized to mobilize funds and expertize to assist and stimulate change in the functioning of these agencies, and to involve the public in the process in appropriate ways. It provided a forum for the service providers to test and experiment with reform ideas, seek assistance, and give an account of their actions. BATF launched a series of six-monthly summits where service-providers made statements on their plans, outcomes, and commitments, and citizens were invited to listen and respond. These summits were also attended by the chief minister, who personally questioned the heads of agencies on their plans and achievements. BATF thus became a forum for accountability and for monitoring by the public, creating greater openness and a sense of public participation. BATF also brought out report cards on the progress of its own work. The private donations mobilized by BATF enabled service providers to experiment with new systems, practices, and infrastructural options. Government funds would not have given them the degree of flexibility that private funds did. The speedy introduction of the fund-based accounting system in BMP, for example, would not have occurred without the money provided through BATF. The professional expertise that BATF made available allowed service providers to explore new options they might not otherwise have considered. The private funds raised by BATF were used in part to finance such selective technical assistance. Some projects, such as road building, had no need of technical support from BATF. The property tax reform, on the other hand, required the fine-tuning of criteria, preparation of a manual, workshops for citizen orientation, and other steps that needed careful planning and attention to detail. These tasks benefited much from

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BATF’s input. The involvement of BATF experts speeded up the process and goaded BMP staff to move forward faster. BATF had no legal or administrative authority over the public agencies with which it worked. It did not approve their budgets or oversee their programs and projects. Its influence stemmed from its partnership and catalytic mode of operation, reinforced by direct political support from the chief minister. His participation in the summits was a testimony to his commitment, and made it possible for BATF to solve tricky problems of coordination between some of the service providers in the course of these meetings. Agency leaders found the strategic inputs and assistance provided by BATF to be valuable and timely. Enhanced Resource Mobilization by the Agencies A parallel development encouraged by, but independent of, the BATF was a significant increase in resources available to service-providing agencies. New projects and expansion of infrastructure required more resources, which the agency leaders were able to mobilize from a variety of sources. The expanded BMP roads and related infrastructure program was financed by a loan from the Housing and Urban Development Corporation. Similarly, BMTC, BWSSB, and BESCOM were able to get similar long-term loans from other sources. BDA was a unique case in that it was able to raise most of the funds required for new infrastructure projects from its own internal surpluses. Overall, the budgets of these agencies increased by 50–100 percent over the three-year period from 2000 to 2003. Upgrading of services and infrastructure through increased borrowing might have happened in earlier years. But it took the proactive support of the state government and the catalytic role of BATF to make this happen in a short period of time. Role of the Lok Ayukta The Karnataka state ombudsman played an indirect role in enhancing accountability in the agencies. This official has powers not only to investigate grievances from the public about public agencies but also to initiate investigations into agency operations. The ombudsman appointed in 2001 was active on both fronts. His raids on offices and subsequent actions to penalize public officials guilty of corruption produced much adverse publicity for many agencies and departments of the state government. His integrity and courage were lauded by civil society, the media, and political leaders. Many observers believe that these actions also had a deterrent effect, even on agencies that were not investigated by the ombudsman.

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Strong support from the chief minister was a major factor that made it possible for the ombudsman to function fearlessly. While BATF provided positive impetus for public agencies to perform better, political support for the ombudsman sent the agencies a warning that corruption and sloth would not be tolerated. These two approaches were thus mutually reinforcing. Political Commitment and Support The common thread that runs through the different supply-side interventions discussed earlier is the political commitment and support of the chief minister of the state. The lack of such commitment was a significant factor during 1994–99, and the political change in 1999 made a decisive difference. The new chief minister, committed to improving public services and infrastructure, was determined to find effective responses to citizens’ dissatisfaction with essential services and industry’s dissatisfaction with infrastructure. After setting up the BATF, he called on public agencies to mobilize more resources and facilitated their efforts. He appointed a new ombudsman, known for his integrity and willingness to deal with corruption and other abuses of power. With a strong majority in the legislature, the chief minister could implement his vision without fear of political instability. Such political will can of course vary with future changes in leaders and governments, and this does raise questions about the sustainability of the reforms. It underscores the critical role of civil society institutions as monitors of governance and catalysts for reform. Civil society initiatives and demand for accountability are essential for coping with the vagaries of political commitment. Institutional Entrepreneurs This enabling story will be incomplete without mentioning the critical role played by several heads of agencies during the period. These administrators in the BMP, BDA, BWSSB, and BMTC made use of the conducive environment provided by the political leadership, and embarked on the initiatives described in earlier sections. The introduction of a self-assessment system for property taxation, and a simplified procedure for receiving properties purchased from BDA were examples of institutional entrepreneurship that had a direct and immediate impact on strengthening these agencies, while also securing the goodwill and appreciation of citizens. The widely visible benefits from these initiatives provided an impetus for both the political leadership and citizenry to welcome and embrace reform.

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Karnataka’s high level of civil service capacity and competence clearly played a major role in complementing political ownership and civil society support for improvements in service delivery.

Is the Bangalore Experience Replicable? The transformation of Bangalore between 1994 and 2004 was clearly the product of a variety of factors that came together in a particular city and time. These factors may or may not come together in another context in the same way as they did in Bangalore. Yet, there are lessons that can be derived from the Bangalore experience that are directly relevant to other cities. First, techniques such as the use of report cards can be used to generate pressure on service providers to improve the quality of services. Indeed, in recent months, Delhi, West Bengal, and Jharkhand have shown an interest in using CRCs to gain feedback on the working of public services. Second, civil society groups can play a role not just in pressuring for change but implementing reform as well, as the example of BATF illustrates. One key function of the BATF was to provide a forum for different civil society groups to hold public agencies accountable on a periodic basis; the BATF also provided a coordinating mechanism to bring the city’s diverse agencies together under one umbrella. Third, while agency reforms did occur between 1994 and 1999 in the absence of strong political support, political ownership helped spur agency heads to implement further improvements between 1999 and 2004. Fourth, the Bangalore experience illustrates the importance of empowering agency heads to effect change by backing them up with financial resources, political support, and stability of tenure. Without this, it is unlikely that agency reform would have progressed as fast and as far as it did between 1999 and 2004. Civil servants were able to leverage change using civil society support and political backing at the same time.

Notes 1. The author wishes to thank Samuel Paul, A. Ravindra, Gopakumar Thampi, Sita Shekhar, Deepa Narayan, and Vinod Vyasulu for their advice and inputs in the preparation of this chapter. 2. The first two report cards used seven-point scales to assess levels of satisfaction. They combined responses on the top two points (‘Completely Satisfied’ and ‘Satisfied’) to estimate satisfaction and combined responses on the bottom two points (‘Completely

Service Delivery Reforms in Bangalore 185 Dissatisfied’ and ‘Dissatisfied’) to estimate dissatisfaction ratings. The three points that fell in the middle (‘Somewhat Satisfied,’ ‘Somewhat Dissatisfied,’ and ‘Neither Satisfied nor Dissatisfied’) were treated as ambivalent, and therefore not included in either the satisfied or dissatisfied categories. However, the third report card of 2003 used a two-step approach—respondents first indicated either satisfaction or dissatisfaction. Satisfied respondents were then asked whether they were completely satisfied or partially satisfied. In order to assure comparability across the three surveys in a way that does not bias the 2003 results upwards, only completely satisfied responses in 2003 were compared to the overall satisfaction ratings for 1999 and 1994. 3. The satisfaction rating of 44 percent in 2003 is an understatement since the measure used is more restrictive than that used for the earlier years, as discussed previously.

References Paul, S. 1995. A Report Card on Public Services in Indian Cities—A View from Below. Bangalore: Public Affairs Centre. ———. 2002. Holding the State to Account: Citizen Monitoring in Action. Bangalore: Books for Change. ———. 2004. ‘Citizen Report Cards: A Case Study’, Paper prepared for the Shanghai Conference on ‘Scaling-up for Poverty Reduction’ (Washington, DC: The World Development Institute, 2004). Available at: http://www.worldbank.org/wbi/reducingpoverty. Paul, S. and Sekhar, S. 2000. Benchmarking Urban Services: The Second Report Card on Bangalore. Bangalore: Public Affairs Centre. Public Affairs Centre and Commonwealth Human Rights Initiative. 2003. ‘Implementation Audit of Karnataka Right to Information Act, 2000’, Public Affairs Centre (mimeo). Ravindra, A. 2004. ‘An Assessment of the Impact of the Bangalore Citizen Report Cards on the Performance of Public Agencies’, OED Working Paper, World Bank, Washington, DC. World Bank. 2003. Making Services Work for the Poor: World Development Report 2004. Washington, DC: World Bank and Oxford University Press.

Chapter 6 Rogi Kalyan Samitis: A Case Study of Hospital Reforms in Madhya Pradesh Rajeev Sadanandan and N. Shiv Kumar

1

Health Care in Madhya Pradesh Madhya Pradesh ranks below most Indian states in health outcomes (this chapter relates to the original Madhya Pradesh state, before Chhattisgarh was separated out). The state is in the early stage of demographic transition, characterized by high fertility and mortality rates—the TFR (Total Fertility Rate) was 3.31 and CDR (Crude Death Rate) 31.1 in 1999, against national averages of 2.85 and 26.1 respectively (GoI 2001, 2003), and an epidemiological profile with high prevalence of communicable diseases and early deaths (Madhya Pradesh accounts for 23 percent of malaria cases in India; the under-five mortality rate is 56.4, as against the national average of 29.31) (ibid.). The Planning Commission has estimated that 37.34 percent of the population in Madhya Pradesh is below the poverty line, as compared to the national average of 26.1 percent. Income-based data on health outcomes is not available, but it may be assumed that burden of ill health falls disproportionately on the poor. While a certain degree of poor health can be explained by geographic or demographic causes,2 its improvement over time reflects either an improvement in

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socio-economic status, a decrease in inequality or delivery of better services. The National Family Health Survey (NFHS) is conducted at regular time periods in the country. (The International Institute for Population Sciences [IIPS], Mumbai, India was designated by the Ministry of Health and Family Welfare as the nodal agency to conduct the NFHS. The first round was conducted in 1992–93 and the second in 1998–99.) Its sample size is adequate to assess the performance at the state-level in areas that affect the poor. It also collects data on output and outcome indicators. Six representative indicators are presented in Table 6.1. The figures for Madhya Pradesh (MP) are compared with the national figures, the figures from one state (Kerala) whose performance is better than Madhya Pradesh, and two states (Uttar Pradesh [UP] and Orissa) whose performance is worse than Madhya Pradesh. Of these three states, UP has similar characteristics as Madhya Pradesh. Over the two rounds of NFHS, there is a marked improvement in the performance of the select indicators for India as a whole, as well as for Kerala and Orissa. UP has shown an improvement in almost all the indicators, while in Madhya Pradesh progress is comparatively slower. The percentage of children fully immunized and the IMR (Infant Mortality Rate) for Madhya Pradesh show a decline in Table 6.1 Changes in Select Indicators between NFHS I (1992–93) and NFHS II (1998–99)

India Kerala MP UP Orissa

Infant Mortality Rate I II

Total Fertility Rate I II

78.5 23.8 85.2 99.9 112.1

3.4 2.0 3.85 4.75 2.92

67.6 16.3 86.1 86.7 81.0

Percentage of Currently Married Women Currently Using Any Contraception India Kerala MP UP Orissa

I

II

40.6 63.3 36.5 19.8 36.3

48.2 63.7 44.3 28.1 46.8

2.85 1.96 3.31 3.99 2.46

Percentage Getting Safe Delivery I 34.2 89.7 30.0 17.2 20.5

II 42.3 94.0 30.1 23.0 33.4

Percentage of Mothers Given ANC I II 44.0 97.3 52.3 44.4 61.0

65.3 98.9 61.1 34.3 79.2

Percentage of Fully Immunized Children I

II

35.4 54.4 22.9 19.8 36.1

42.0 79.7 22.4 21.2 43.7

188 Rajeev Sadanandan and N. Shiv Kumar

performance over the two rounds. Immunization is almost always accessed from the public sector,3 and is indicative of the government machinery not reaching the poor. Health is an outcome of many factors and is only partly explained by interventions in the health sector (McKeown 1976).4 But the willingness of governments to spend resources on the health sector is a strong indicator of the political commitment to improve the health of the population. Table 6.2 looks at expenditure on health as a percentage of the total budget of the state. Table 6.2 Expenditure on Health as a Percentage of State Budget in Madhya Pradesh Year Health budget as percentage of total budget

1985–86

1991–92

1994–95

6.69

5.78

4.66

1997–98 1999–2000 2000–2001 3.78

2.89

3.25

Source: Duggal (1997) for figures from 1985 to 1992; EPOS Consultants (n.d.) for rest.

Table 6.2 shows that expenditure on health as a percentage of the state budget has been decreasing consistently over the years. Similar results are obtained when health expenditure is assessed by measures such as per capita real expenditure on health and health expenditure as a proportion of state domestic product. There is also a shortfall in the availability of hospitalization facilities. Madhya Pradesh has the least favorable ratio of population served per hospital bed. In 2000, a year before it was bifurcated, the number of persons to a hospital bed was 2,375 as against the national average of 1,096 (the figures for Kerala and Orissa were 296 and 2,137 respectively) (GoI 2003). While new investments and programs are included in the state plan, most of the finances required for the functioning of the health system are provided in the non-plan budget, which is met from the state’s resources. When the state faces a resource crunch, the first cuts are made to this budget. Subsequently, soft sectors, such as education and health, get squeezed the most. When health expenditure is broken into its components (see Figure 6.1), it is seen that almost all resources go towards fixed costs such as salaries, leaving a very small budget for items such as drugs, food, and repairs. The reduction in expenditure on drugs and food affects poor patients the most. The impact of budgetary squeeze on the poor is thus, worse than what appears from an aggregate analysis. Conversely, the benefits that accrue

Rogi Kalyan Samitis 189 Figure 6.1 Non-plan Expenditure by Categories in Madhya Pradesh (1997–98)

from a financing strategy that makes funds available for running costs exceed the monetary value of the amounts raised. The additional investments bring back into operation assets that would otherwise have remained unused due to lack of critical investment. Nations that spend less in the health sector should target expenditure to the poor, where the marginal benefit is higher, resulting in better health outcomes. Unless equity is adopted as a conscious policy choice, services that benefit the rich are likely to attract a greater share of resources due to the ability of the rich to influence decision-making on health investments by government. These are likely to be specialized services, which incur high costs. If the rich prefer to use these services (which involve higher per capita expenditures) from government hospitals, and if they do not pay income-differentiated user fees, the subsidy received by the rich would be more than the poor. This would be further compounded by better knowledge about specialized care and the ability to ensure access to these services. This appears to have happened in Madhya Pradesh, as in most states (see Table 6.3). According to the NSS 52nd round, the subsidy received by the richest quintile was four times that of the poorest (NSSO 1998). The ratio of subsidy received by the richest quintile to the poorest is estimated at 4.16:1 in MP, as against a national average of 3.28:1 (it is 1.1:1 for Kerala and 4.87:1 for Orissa) (Misra et al. 2003). As expected, the distribution of net public sector subsidies is most inequitable in hospitalization and least in immunization. In states with high health consciousness, the differential between rural and urban hospitalization will not be much. For all Indian states taken together, while 20 persons per thousand in urban areas accessed treatment,

190 Rajeev Sadanandan and N. Shiv Kumar Table 6.3 Distribution of Government Health Subsidies by Expenditure Quintiles Service Short hospitalization Hospitalization PHC and others Immunization Total

Q1

Q2

Q3

Q4

Q5

Total (INR)

8.6 6.4 17.2 24.1 8.8

9.3 9.2 22.5 21.1 11.5

12.2 12.5 29.4 20.9 15.0

32.3 29.1 18.8 19.1 27.3

37.7 42.8 12.1 1.8 37.4

1,601 2,179 302 172 2,653

Source: Misra et al. (2003).

in rural areas it was only 13. In Madhya Pradesh, the corresponding figures are 15 and 7 respectively. (These figures refer to treatment from any source, not only the public sector. Of this, the share of public hospitals was 53.3 percent for rural areas and 46 percent for urban areas, compared to the national average of 45.3 percent for rural areas and 43.1 percent for urban areas.) Only Bihar had a less favorable ratio. It is also seen that the rural population spent an average of Rs 529 per capita per incident of hospitalization more than the urban population (NSSO 1998). This data allows us to draw a few conclusions regarding the health status of Madhya Pradesh: 









The health indices are among the lowest in the country. Unlike in many other states, there is no evidence that these are improving. Given the strong correlation between poor health indices and poverty, it may be assumed that the incidence of poor health is greater among the poor. The availability of health care services is among the lowest in the country. At a time when more government resources are needed in the health sector, investments are being scaled down. This not only deprives the state of further augmentation of services, but also reduces the upkeep and utilization of existing facilities. Most of the budget provision is for salaries, leaving very little for drugs and other expenses necessary for running health institutions. Even the existing resources are poorly targeted. The rich appropriate a larger share of subsidies from the less than adequate government health expenditure.

Significant improvements in health indices in the state will be seen only when access of the poor to health care services improves.5 This can

Rogi Kalyan Samitis 191

happen by providing adequate services, positively discriminating in favor of services that benefit the poor more, and revamping management to ensure access to the poor. Any reform initiative has to be measured against this background. While a reform that operates only in hospitals cannot be expected to address the structural constraints to good health such as nutrition, lack of access to safe drinking water and sanitation, it can be assessed on whether it offsets the disabilities of the population to access hospital services. Given the Madhya Pradesh health budgets and poor health outcomes, the impact of any reduction in expenditures on hospital services would be drastic. When more than 87 percent of the health expenditure is spent on salaries, the amount available for drugs, consumables, procurement and maintenance of equipment and upkeep of infrastructure is reduced. This will reduce the quality of services, result in underutilization of manpower and equipment, and worsen staff morale and foster attrition. The impact will be more severe on the poor, as patients would have to procure drugs and consumables from the private sector even to make use of facilities available in the public hospital. Given the tradition of decentralized action in Madhya Pradesh, it is to be expected that there would be a local response to this unsatisfactory state of affairs. The history of hospital reforms elsewhere would lead us to expect such a response to emerge out of a crisis. The emergence of Rogi Kalyan Samiti (RKS) as a local initiative to improve hospital administration may be seen as such a response to the unacceptable condition of hospital services in the state.

Rogi Kalyan Samitis The Rogi Kalyan Samiti (RKS) is a local governance mechanism, set up for all hospital facilities in Madhya Pradesh. The Rogi Kalyan Samitis (Patient Welfare Societies) are registered societies under the MP Societies Registration Act, 1973, with the mandate to manage the hospital and the powers to mobilize additional finances, apply them to local needs, hire staff on contract basis and carry out other activities to improve hospital services. The RKS has attracted considerable attention, both within and outside the state, for its contributions. The Department of Health and Family Welfare (DH&FW) of the Government of Madhya Pradesh (GoMP) decided to form one such RKS to manage each health facility. The RKSs operate under rules framed by

192 Rajeev Sadanandan and N. Shiv Kumar

GoMP in the form of a government order (GO). The RKSs are charged with the management of the hospital facilities in the public sector in Madhya Pradesh. More specifically, their stated objectives involve: 

    





  

Upgrading, expanding, and maintaining health infrastructure, through their own and borrowed resources. Ensuring hospital maintenance and cleanliness. Developing unused assets with hospitals for commercial purposes. Providing ambulance services. Ensuring adequate and safe disposal of hospital wastes. Ensuring equity through provision of free treatment to patients below the poverty line. Arranging for the provision of adequate medicines and food for patients. Improving the management of the hospitals with community participation. Monitoring and supervising National Health Programmes. Establishing public–private partnerships when appropriate. Organizing training for staff members.

The RKSs are managed through two bodies—the General Body and the Executive Body. The Executive Body is charged with the day-to-day management of the RKS, while the General Body is responsible for general oversight. Membership in both these bodies varies slightly, depending on which level the RKS is located—district, tehsil/block or Primary Health Centre (PHC). The membership of the general and executive committees of RKS societies has been designed in such a way as to broaden participation and ownership within the community (see Annexure 1 for details). Typically, the General Body consists of elected representatives (MLAs, Panchayati Raj Institution [PRI] representatives), the district administration, medical professionals, donors and additional members (such as social workers), and representatives of the Indian Medical Association (IMA). The Executive Body consists of the district administration, PRI representatives, and medical professionals from the concerned hospital. The General Body is chaired by elected representatives, while the Executive Committee is chaired by members of the district administration. The main sources of funds for RKS are:  

Donations. User charges6 (OPD registration, admission charges, laboratory tests, X-rays, deliveries, operations, etc.).

Rogi Kalyan Samitis 193 

  

Revenues from income-generating activities (ambulance services, rents received from leased-out properties, etc.). Loans from banks and financial institutions. Loans/grants from state government and/or other agencies. Other sources as approved by the General Body of the society.

The bye-laws of the RKS and other guidelines issued by the state government provide the broad framework for the functioning of the RKS. Each RKS has a separate bank account and is managed by a smaller team of the Executive Body members.

The History of Rogi Kalyan Samitis When Crisis becomes an Opportunity The initiation of the RKS in Indore is credited to the crisis in public health and sanitation generated by the plague that hit the town of Surat, Gujarat, in 1994. The town was in a neighboring state and several migrants from Indore worked in Surat. The citizenry was worried about the spread of the plague to their city and there was a demand for preventive action. The terror generated by plague moved public health and sanitation to top priority on the agenda of policy-makers. The collector of Indore had already launched a drive to clean up the city when the plague occurred. During the discussion on plague management, it was pointed out that the biggest hospital in Indore, the Maharaja Yashwantrao Hospital (MYH), which would have to become the referral center for treatment and care, was itself in bad shape. It was infested with rats, which were the prime vector of the plague pathogen. The initiative for transforming the city offered a springboard for the hospital cleaning drive. The members associated with the cleaning drive assessed the situation at the hospital and realized that the clean-up would involve shifting all patients to nearby hospitals. The clean-up was a gigantic operation and a great success. It won media attention and was endorsed by the then chief minister and the governor. It is doubtful if the collector’s attention would have been focused on the hospital, or that the support received would have been on that scale, in the absence of the sense of urgency generated by a crisis. It is to the credit of the administration that they seized the opportunity to do a total clean-up, and then used it to further revamp the functioning of the hospital. The high degree of media attention may also have been a factor in spurring the local administration and state government into supporting the effort to clean up the Maharaja Yashwantrao Hospital (MYH).

194 Rajeev Sadanandan and N. Shiv Kumar

Seizing the Opportunity Cleaning attempts were made in most of the districts during this period. But it is to the credit of the Indore team that they seized the opportunity to rework the layout of the hospital. This exercise led to a demand for the improvement of the functioning of the hospital, and to the need for a management structure that would sustain the gains made in the hospital. Thus evolved a series of measures that included:     

A more participatory and effective management of the hospital. Delegation of powers to heads of departments. Introduction of user charges. Recruitment of staff on a contract basis (where shortages existed). Permission to accept donations, lease out facilities/resources.

This also led to the establishment of a new structure, the RKS, to oversee these arrangements. The RKS was positioned outside the routine management hierarchy. Instead of restricting its scope to the clean-up operation, it was scaled up as a hospital reform measure, leading to positive spin-offs. The RKS model was also quickly institutionalized by the state government. The issuance of the GO and other guidelines from the state government saved the RKS model from becoming an isolated example within MYH in Indore, and set the stage for its adoption in health facilities across the state.

Celebrating a Success Initially, the MYH and then the RKS were perceived, both locally and at the state-level, to have been ‘successful.’ Several examples of improvements gave mutually reinforcing feedback on the efficacy of the approach. This provided an incentive to the state to order a full-fledged scale-up, and to managers to implement it with enthusiasm. Since the initiative had elements that good managers could use, and the managers were provided the freedom to do so, the image of success remained intact. The RKS also struck a chord in terms of the dominant themes of political discourse in the state. During this period, decentralization was an important issue for the state government. Even though the RKS was driven by officials and not linked to the Panchayati Raj structure, it was positioned as a decentralization effort and was recognized as such. The political party in power identified with the reform, with the result that it was adopted by most of the collectors in the state. Formalization of the arrangement through a GO further strengthened political support for the reform.

Rogi Kalyan Samitis 195

During this period, partly because of the attention generated by MP Human Development Report, Madhya Pradesh’s poor health indicators had become a concern. The government responded by setting up highprofile initiatives, such as the Rajiv Gandhi Mission for health. RKS, though not originally a part of this initiative, was soon made part of a package of measures, which the government announced would make a difference to health outcomes in Madhya Pradesh.

Providing Space for Change Agents Health department staff, especially doctors, can make or mar a reform initiative. For reasons discussed earlier, the condition of hospitals was extremely disappointing for all staff, most of all for doctors, who felt constrained by these limitations in practicing their profession. Administrative restructuring and the freedom to take decisions gave doctors the power to make a difference. In fact, doctors emerged as the biggest supporters of a reform started by a generalist administrator. Even now, doctors remain the most active movers of the RKS model. As hospital and district health administrators have moved up the hierarchy, they have kept support for RKS alive in the health department, thus insulating RKS from the influence of a change in government.

Scaling up RKSs In 1996, the state government issued a formal GO7 institutionalising the RKS model across the state in all district- and sub-district-level government hospitals (see Table 6.4). The document provided the district administration a formal roadmap on how to set up RKSs for hospitals in their jurisdiction. Standard bye-laws for each type of hospital/health center and the composition of societies were also issued. The GO also gave certain powers to RKSs, including: 





The ability to mobilize finances, in case of a short-fall, to augment the government budget for capital and revenue expenditure, through user charges, leasing of assets and, if necessary, through loans from banks. The freedom to apply the resources raised in what the local RKS deems to be the most useful activity (e.g., civil construction, purchase and upgradation of equipment, introduction of new services). The powers to hire part-time and full-time staff on contract basis, as required.

196 Rajeev Sadanandan and N. Shiv Kumar Table 6.4 Progress in Formation of RKSs across Health Facilities in Madhya Pradesh Institution District hospital Civil hospital CHC (community health centre) PHC Total





Number

RKS Constituted

43 59 231 1,170 1,503

43 59 231 378 711

Permission to enter into collaboration with the private sector for improving health services. Space to improve the overall management of hospitals to make it more efficient and effective.

In all this, provision of free service to the poor and needy was given central importance. A method of ‘self-certification’ was introduced, in which the poor could themselves certify their income status and access the services at zero cost. All district and sub-district hospitals, civil dispensaries and approximately one-third of the PHCs in the state have an RKS in place. Currently 711 of the 1,503 health facilities have an RKS. All facilities up to the CHC level operate within the RKS framework.

Design of the Study Objectives of the Study (a) To measure the outcomes of the RKS mechanism. (b) To assess the factors that might have contributed to its genesis, implementation, and scale-up. (c) To draw lessons that can be learnt from the experience.

Methodology The study analyzed secondary data, collected primary data from facilities and conducted key informant interviews. Secondary data used included reports on the history of RKSs, reports filed by districts regarding financial performance of RKSs, and other published sources. Primary data was

Rogi Kalyan Samitis 197

collected in three tiers of institutions from four representative districts of the state, covering 12 facilities. During the data collection process, the researchers surveyed the facilities, held interviews with key informants, examined hospital records, conducted focus group discussions with staff and patients and administered a patient satisfaction survey. The data was analyzed for outcomes of the functioning of health facilities in the state which could be attributed to the RKS. Three categories of hospitals—district hospitals, CHCs, and PHCs— were covered by the study. These institutions were chosen from four districts—Indore, Mandla, Shajapur, and Shivpuri. Criteria used for selection of districts were collection and expenditure figures and SC/ST population. Collection and application of funds (expenditure) provided an indicator of performance. SC/ST population, which is inversely correlated with HDI (Human Development Index) in Madhya Pradesh, provided another criteria for categorization. Given these three parameters, the final four districts were selected in consultation with the DH & FW, GoMP.

Limitations This study has a series of limitations. Since RKSs do not have a clear Management Information System (MIS) with indicators to measure the achievement of objectives, and information available with the headquarters revealed little about the performance of RKSs, the researchers had to collect information directly from the districts. As sufficient data was often not available at the district level and was inadequate in many facilities, the study does suffer from gaps in data. The records at the facilities did not have any processed information other than financial information. Hence the researchers had to glean the data from primary records, which was time-consuming. We could carry out this labour-intensive process only in a limited number of facilities. Given the variation in data noticed in these facilities and the fact that records were not maintained in a uniform format, we feel that the data may not be representative. The study sample is also not of adequate size to draw conclusions that can be generalized to all hospitals in the state. We have had to restrict our conclusions to features that were uniform across these facilities. The study also suffers from the lack of comparable data from different districts.

198 Rajeev Sadanandan and N. Shiv Kumar

Hospital level records do not reflect crucial information on impact of RKSs on patient care. It has not been possible to assess the impact on the poor, as data on the socio-economic status of patients (even regarding whether they belong to BPL families or SC/ST) is not maintained. Similarly pre- and post-RKS data could not be collected8 from all facilities to assess the impact of RKSs on the patients accessing the improved facilities. While budget data is available at the state level, the funds available to institutions from the state budgets cannot be assessed since the institutions (except the MYH) did not have this data. It is also possible that the impact of RKS could have been affected by other factors. But we could not establish if any co-determinants of patient satisfaction and utilization were in operation.

Rogi Kalyan Samitis—The Outcomes It is important to analyze the RKS—both the performance and the outcomes—based on the objectives that it has set for itself. The objectives of the RKS, set out in the 1996 GO issued by the government, may be categorized into the following heads for analysis: I. Mobilizing additional resources   



Upgrade and modernize health services provided by the facility. Maintain and expand hospital buildings. Develop vacant land in the premises for commercial purposes with a view to improve financial position of the Samiti. Obtain loans from banks/financial institutions for the development/upgradation of hospitals.

II. Improving management and governance practices 

  

 

Enhance collaboration with the private sector for improving health services. Make suitable arrangements for scientific waste management. Maintain equipment provided by the government. Supervise the implementation of national health programmes like Reproductive and Child Health (RCH), blindness control, etc. Arrange training for medical, paramedical and other staff. Ensure discipline and accountability of staff.

Rogi Kalyan Samitis 199

III. Fostering patient welfare 

  

Ensure equity through provision of free treatment to patients below the poverty line. Provide ambulance services. Make arrangements for free boarding and medicines for patients. Encourage civic participation.

While analyzing the performance and outcomes of the RKS, these three broad aspects were examined closely, particularly in the 12 facilities studied.

Additional Resources Generated and Applied The financial data available for analysis is secondary data (Table 6.5) and the primary data collected in the 12 facilities. The interpretations of the secondary and primary data are first presented independently, and then together at the end of this section. Table 6.5 Income and Expenditure of Rogi Kalyan Samitis Year 1995–96 1996–97 1997–98 1998–99 1999–2000 2000–01 2001–02 2002–03 2003–04 Total

Income (in Millions)

Expenditure (in Millions)

Expenditure over Income (%)

6 30 49 52 97 128 140 89 186 777

4 14 42 41 74 91 92 64 49 471

75 45 85 78 77 71 66 72 26 61

Source: Directorate of Health and Family Welfare, MP.

A significant contribution of RKS has been collection of additional financial resources for hospitals (see Table 6.6 for details). From the introduction of the concept in 1996, RKS has managed to raise an additional Rs 777.4 million9 as income. This is in addition to the money which the GoMP has committed to the health budget. The average contribution RKS income has made to the total government expenditure on public

200 Rajeev Sadanandan and N. Shiv Kumar Table 6.6 Budgetary Allocations and RKS Contribution—A Comparison

Year 1995–96 1996–97 1997–98 1998–99 1999–2000 2000–01 2001–02

Government Budgetary Expenditure on Public Hospitals (Million Rupees) Non-salary Total & Non-wage 155.196 193.709 226.618 299.003 307.943 308.812 227.839

19.987 22.348 13.12 7.053 18.817 27.017 20.817

Rogi Kalyan Samiti Income and Expenditure (Million Rupees)

RKS Expenditure as a Proportion of Non-salary and Non-wage Budgetary Expenditure

Income

Expenditure

%

0.59 3.007 4.93 5.233 9.701 12.806 13.972

0.448 1.361 4.189 4.092 7.44 9.072 9.213

2.24 6.09 31.93 58.02 39.54 33.58 44.26

Source: Chaurasia (2004).

hospitals is about 4 percent. Although this looks small, it has brought in resources equal to 44 percent of the non-salary share of the government expenditure on public hospitals in 2001–02. The benefits of these additional resources available for non-salary items are greater than their monetary value, as they increase the productivity of the salary portion. This is particularly true in a situation where overall health allocations are falling, with no significant change in salary spending, thus squeezing out essential non-salary expenditures. To take but one example of the usefulness of nonsalary expenditures, if X-ray films are not available, the cost of investment on the machine and the salary of the X-ray technician would not be leveraged properly. Although the cost of films as a percentage of total investment plus salary costs may be insignificant, its non-availability results in wastage of investment on both equipment and salaries. More important is the fact that the monies collected have been spent. Cumulatively 61 percent of monies collected have been spent locally, based on the RKS Governing/Executive Body decisions. This is likely10 to have been focused on local needs, within the broad guidelines provided by the DH&FW. However, it is to be noted that in the year 2003–04, there has been an expenditure of only 26 percent. The reasons for this are not immediately clear. When one disaggregates the data to examine the utilization of funds across facilities, certain trends emerge. Collections in district

Rogi Kalyan Samitis 201

hospitals and CHCs has been about 92 percent of the total collections, with PHCs contributing about 8 percent. The reasons that can be given for this are: 1. The chances of resource mobilization are likely to be higher in district and CHC facilities as they have more sophisticated diagnostic and therapeutic services for which user fees can be charged. 2. PHC-level RKSs have been recently formed, many of them in the last 2–3 years. 3. PHCs visited (four in all) were not completely clear on the guidelines and how user fees were to be levied and utilized. 4. While curative services constitute a significant percentage of services provided at CHCs and district hospitals, the primary function of PHCs relate to preventive and promotive services for which user fees cannot be charged. Given these factors, the collection and application of funds has been largely limited to the small number of district and CHC facilities. However the amounts collected and utilized are not insignificant and have provided a very important ‘space’ for the local application of funds. The secondary data available with the health department gives details of funds raised through RKSs in different facilities across the states for 2003–04 (see Figure 6.2). On an average only 43 percent of income in 2003–04 is from user fees, 26 percent from Income-Generating Activities (IGA),11 3 percent from donors and the remaining 28 percent from Figure 6.2 Percentage Income from Various Sources in Various Institutions (2003–04)

Source: Department of Health and Family Welfare, MP.

202 Rajeev Sadanandan and N. Shiv Kumar

‘other income’. It is not immediately clear what the ‘other income’ consists of, or whether this is a trend in every year for which data is available. The expenditure pattern (see Figure 6.3) of all the institutions taken together shows that about 44 percent of the money has been spent on construction and equipment, and 9 percent on medicines. A substantial 45 percent has been spent on ‘other expenses’, for which no details are available.12 This could include salaries, office expenses, consumables, etc. When one looks at it facility-wise, PHCs spent the highest amount on construction and equipment, roughly 74 percent. The expenditure patterns of PHCs are slightly different from those of the other two levels. PHCs where the RKS concept has been newly introduced have not applied expenses for various activities, as they feel that clear guidelines and direction are not available to them. In 2003–04, while all District Hospitals (DHs) spent 73 percent of their income and CHCs spent about 61 percent, PHCs spent only 13 percent. However this could be due to the fact that PHCs have started levying user charges only recently, and repairs, construction, and equipment could have been a priority in 2003–04. Figure 6.3 Expenditure across Facilities (2003–04)

Source: Department of Health and Family Welfare, MP.

Expenses such as repairs, medicines, and other hospital items such as X-ray films ideally ought to have been met from state budget. But since state budgets have not been able to cover the essential costs of providing services, it is likely that these would have been denied to patients, who would then have had to buy them from the private sector at a higher price.

Rogi Kalyan Samitis 203

Many doctors report that they were enabled to practice their specialties due to the support provided by the RKS. The ease of decision making at local level rather than at central level also helped them to obtain resources as and when needed. The secondary data13 with the department however has several problems. The lumping together of some of the user fee income sources, such as X-ray fees, under ‘other income’ makes any in-depth analysis difficult. In view of these limitations, the primary data collected from 12 facilities, across four districts and three levels (District, CHC, and PHC) becomes important. It shows the following trends: (a) Seventy percent of all income is from user fees, 16 percent from donations, and 12 percent from Income-Generating Activities (IGAs). Donations are restricted to district and CHC facilities. IGAs are limited only to district facilities. While district hospital income is spread out over several sources, the bulk of income in CHCs and PHCs comes from user fees (90 and 98 percent respectively) (see Figure 6.4). (b) Construction/repairs, equipment and medicines are the top three expenditure items, forming 50 percent of the total. A large 33 percent is ‘other expenses’. Significantly, medicines form only 10 percent of all expenditure, although in CHCs it is as high as 23 percent. (c) There are variations in the percentage expenditure in district hospitals, CHCs and PHCs. Over 75 percent of all expenditure in all facilities is spent on the three major heads mentioned earlier (see Figure 6.5). In district hospitals, ‘other expenses’ (a mélange of miscellaneous expenditures), equipment and construction/ repairs in that order constitute the top three categories of expenditure. In CHCs it is construction/repairs, consumables and medicines. In PHCs, office expenses, ‘other expenses’ and construction/repairs are the main heads of accounts. (d) Seventy-five percent of all funds collected have been spent overall. In the case of PHCs, it is a low 24 percent. (e) Given the wide variety of expenditure that RKSs meet, the large lump called ‘other expenses’ is not amenable to analysis from current data and points to the need for more transparent reporting. These two sets of data, viewed individually and together, only highlight the diversity of the trends, leading us to conclude that each facility has raised resources within RKS guidelines using methodologies which have

204 Rajeev Sadanandan and N. Shiv Kumar Figure 6.4 Income in Select Facilities Surveyed

Figure 6.5 Expenditure in Select Facilities Surveyed

worked locally. Similarly, when one analyses the expenditures incurred in various facilities from where primary data was collected, no single trend emerges. This could signify that expenditure decisions have responded to local needs and pressures. There is a high standard deviation14 of the income and expenditure figures across facilities. This shows that each RKS has evolved differently, although common guidelines for user fee collections exist.

Rogi Kalyan Samitis 205

Staff attributed the possibility of timely repair and maintenance, the capacity to carry out diagnostic tests, construction of essential infrastructure and the ability to help patients in need to the RKS. The Chief Medical Officer at Ujjain15 remarked that the subsidized user fees had paid for the cost of an ultra-sonogram which was now generating surplus revenue for the hospital. An examination of expenditure categories gives evidence of crucial inputs paid for by the RKS. Had the RKS not been functional, facilities such as ambulances aned X-ray services might not have been available. Some doctors also mention that since the commencement of RKS, it has become easy for them to obtain resources to meet immediate needs. RKS has been successful in meeting the objective of generating additional revenues. The impact of these resources is greater than the amount spent on their acquisition. It has increased the productivity of investments and restored the morale of the staff. The RKS mechanism does not have a systematic user feedback mechanism in place, without which it is not evident how user priorities are reflected in expenditure decisions. Given this lack of a robust feedback loop, the priorities decided are most likely to mirror those of the medical professionals who run these hospitals and focus on items that are immediately ‘visible’, such as buildings and equipment. An element that has clear welfare implications for the poor is the money spent on medicines.16 Hospitals are expected to obtain their medicines from departmental stores. But due to budgetary constraints, the supply of medicines does not meet the demand. The common practice is to ask patients to obtain drugs from private pharmacies, where costs are higher than the rate at which the government procures. This increases the burden on the poor and may lead to incomplete treatment outcomes. When the RKS purchases the drugs, it obtains them at lower costs and supplies them to the patients free of cost. Of the 12 facilities visited, it was found that five had not spent any money on medicines. Of the 223 patients interviewed, about 46 percent report being satisfied with the availability of medicines and 39 percent not satisfied. Hospital authorities complained that the government often announced free treatment for different categories without providing for funds, and expected the RKS to meet the costs. Examples of hospitals being asked to pay registration fees and power charges from RKS funds were also found. The RKS appears, at least in some instances, to be substituting for regular government budget allocations to hospitals.

206 Rajeev Sadanandan and N. Shiv Kumar

From our observation of the state of the hospitals, we had seen that the resources brought in by the RKS were not enough to offset the shortfalls in the health budget of the state. The poor condition of infrastructure, lack of essential equipment and the shortage of supplies, which has been reduced but not eliminated by the RKSs, points to the limitations of the RKS as a financing strategy. It can be an additional financing source, but cannot supplant the need for augmented state funding. The objective of providing additional resources has met some immediate and pressing needs and also resulted in positive outcomes for hospital services, patient satisfaction and staff morale. The RKS has provided an important mechanism to augment local resources through a variety of means. The resources raised have been significant compared to the non-salary component of expenditure. Resources raised have been applied to local facility priorities in the major (district, CHC) facilities. These have been applied according to priorities decided by the executive and governing bodies. The priorities have focused largely around construction, equipment, repairs, and maintenance. These investments have led to visible improvements in equipment, infrastructure, and cleanliness in the facilities. Although these are important, they do not necessarily seem to have been driven by ‘user perspectives’. PHCs have neither raised any significant resources nor applied them in great measure. Without clear guidance to PHC managers (medical officers), many of the RKSs at PHC level are operating at sub-optimal level.

Management Practices and Governance Improved Encouraging public participation in the management of hospitals is one of the main objectives of the RKS. With a local management structure, the RKS presents an opportunity for a participatory style of functioning. In the 12 facilities visited during this study, the level of participation was varied. Significantly, there is no evidence that the elected representatives use feedback from people to influence the way the RKS or the health facility works. Where district collectors were interested, they were able to mobilize participation mainly on account of the prestige associated with the office. Since this did not operate at levels below the district, the general bodies and executive committees rarely met with a full quorum. Evidence of public participation was sketchy and, going by the informants’ statements, by no means widespread.

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On the issue of private sector collaboration, given that there is no clear state strategy on collaborating with the private sector (see Nandraj et al. 2001), to assume that each RKS would carry out collaboration appears unrealistic. In the 12 facilities visited, there was no evidence of private sector collaboration. The vertically implemented national programs do not appear to have been considered in the decision-making process of many of the RKSs, although monitoring and supervising them is one of the stated objectives of the RKS. However, in two institutions, it was seen that RKS money had been used to conduct a blindness control camp. RKS does offer synergies for addressing the unmet needs of users of national programs. With regard to internal participation, only the senior doctors reported that they were consulted in hospital functioning. Officials other than doctors mostly denied any degree of participation. This may be partly owing to the top-down manner in which the reform came about, and partly due to the lack of orientation or clearly laid down protocols for participatory management styles. Hence internal participatory decisionmaking is practically non-existent in these 12 facilities. The RKS was subsumed into the overall reform framework for Madhya Pradesh’s health sector. The period starting from 1995 saw the beginning of initiatives under the Rajiv Gandhi Mission on Community Health and many of its initiatives like Swasth Jeevan Guarantee Yojana, Jan Swasthya Rakshak, and the formation of state and district health societies. But the links to the larger effort to improve the functioning of the health system and the rationale for the RKS itself were not always made clear to staff on the ground, who were charged with operationalizing it. Systems of accounting and stock-keeping were not well developed, and personnel were not trained in maintaining them. Some well-maintained accounts and stock registers were observed, but the persons maintaining them had developed these skills with their own efforts and the support of their acquaintances. This only proves that officials at lower levels can initiate needed changes on their own when given the space to do so. But any attempt at scaling-up a decentralized reform of this nature could be better managed if systems are made explicit, practitioners trained, and their skills updated regularly in partnership with local managers. The managers of the health facilities have utilized RKS funds and systems to recruit contract staff in crucial vacant positions. The vacancies were normally filled at the Class IV level (e.g., cleaning staff). RKS has

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provided the flexibility for such contract-based hiring, and many of the managers have taken advantage of this facility to improve hospital cleanliness. Monitoring and evaluation design as well as record keeping within RKSs are weak. Data required for measuring the objectives or outcomes of RKS is not being collected systematically. No overall monitoring and evaluation system appears to be in place. Finally, there is no central MIS to monitor performance and gather feedback on RKS. Record keeping has been largely left to individual RKSs, with only broad guidance provided. Therefore, monies spent are accounted under broad heads of accounts and can sometimes be inconsistently booked. Often, facility managers are unsure what they can or cannot spend their money on. Since information regarding the fee structures is not clear to the patients, especially to the rural poor, instances of excess illegal payments being collected were reported from at least one hospital. While the RKS may not be equipped to address all the causes for these deficiencies, the issue remains a major constraint in the efficient functioning of hospitals in Madhya Pradesh. No orientation on the RKS seems to have been provided to the staff. In the PHCs visited, the staff did not spend any money in the initial years as they were not aware that the money could be used by the institution. Even when interviewed during the study, they were unsure of what they could use the money for. Most of the staff felt that this was an innovation meant to reduce the load on a cash-strapped exchequer. A reform of this nature is always a work in progress. Persons managing the program in the field had valuable comments to make on improvements in the reform, whose value they acknowledge. But they were frustrated by not having a forum to discuss their views. The reform would have developed much further if the expertize that was developed in implementing it at different levels across the state could have been gathered, processed and used to further refine the systems. Since similar reforms had been implemented in other states before the RKS was scaled up in 1997–98, it may also have been useful to learn from their experience. Overall, the quality of management practices and governance varies across facilities. Where there are interested individuals—particularly collectors or active elected representatives—initiatives have been noteworthy. Otherwise RKS contribution to improved management practices is largely limited to the space it provides for local decision making, within the scope

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of the bodies (governing and executive) and the guidelines that have been established. There are no user feedback systems in place. Given this, the service provider adapts to user feedback through pressure from elected representatives. There is not much evidence of users directly influencing hospital management. Staffing has been augmented through contract hiring, using the RKS system. However, the staff so hired has usually been at the Class IV level, as noted earlier. Areas where the RKS aims to contribute but where there is little evidence of success include private sector collaboration, capacity building of staff, improvement in internal management, and monitoring of national programs. Other weaknesses include lack of systems, particularly M&E systems. Lack of orientation and hand-holding support to the RKS participants has led to a varying degree of understanding and implementation of the letter and spirit of the RKS model across facilities.

Improved Patient Welfare The data collection in the 12 facilities sought to collect the trends in patient numbers (pre- and post-RKS). This data is presented in Figure 6.6 (inpatients) and Figure 6.7 (out-patients). There seems to be a small increase in the in-patient load in the facilities surveyed (see Figure 6.6). When the pre-RKS period (two years data available in most cases) and the post-RKS formation-up period are compared, there is a 4 percent increase in in-patients17 after the RKS was set up, vis-à-vis no increase in the period two years before the RKS. In two out of six facilities where data was available, a declining trend has been arrested, and Figure 6.6 In-patient Load (pre- and post-RKS) in Select Facilities

210 Rajeev Sadanandan and N. Shiv Kumar Figure 6.7 Out-patient Load (pre- and post-RKS) in Select Facilities

there has been an increase in the number of in-patients. In three facilities there is a decrease in in-patients after the establishment of the RKS. If one were to consider the third year after formation of the RKS, the inpatient load has increased significantly, going up to 19 percent over the RKS formation year. However, no comparative 3-year data is available in the pre-RKS period to draw any conclusions. In the case of out-patients, a decline has been arrested and status quo maintained after the formation of the RKS (see Figure 6.7). While there was a 9 percent decline in the out-patients (RKS formation year compared to two years earlier), the out-patient volume has been maintained two years post RKS formation-up. When one looks at the data facility-wise, in four out of nine facilities there is a decline in the number of out-patients post RKS formation. In five out of nine facilities, the Out-Patient Department (OPD) numbers are picking up. In at least three facilities, the decline has been reversed from earlier years after the RKS formation year. When one considers the third year after RKS formation, there is actually a decline in the out-patient volume by 17 percent compared to the RKS formation year. Significantly, five out of the nine facilities experienced a decline in out-patients the year the RKS was set up. In the absence of more data, one can only hypothesize reasons for differential movement of in-patient and out-patient numbers. In India, getting admitted to a hospital is resorted to only in extreme conditions, at which point the cost of treatment is of less importance than the outcome

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of treatment. In the pre-RKS period, when facilities in government hospital did not inspire confidence of recovery, patients would have preferred to move to a private facility. If the RKS had improved the performance of hospitals and patient confidence in them, the number of in-patients who patronize government hospitals would have increased. Hospital charges would not deter them, as it would be less than what they would otherwise have had to pay in private facilities. But since the out-patients include many patients with less serious ailments, the cost effectiveness calculation would change with introduction of user fees for out-patients. They would also benefit less from improvements made with RKS resources. So if the assumptions of RKS are borne out, an increase in the number of inpatients and decrease in the number of out-patients is to be expected. It would have been ideal to examine how many of the add-on clients and ‘dropouts’ are from among the poor. However, data regarding the access of the poor (below poverty line) to the facilities is too sketchy for any meaningful analysis. Another analysis attempted was to look at user fee collections and the corresponding increase/decrease in patient volumes. As the break-up of in- and out-patient user fees was not available, this analysis was not possible. Policy statements of the Rajiv Gandhi Mission recognize the obligation of RKS to be sensitive to the needs of the poor, especially rural people. This is because rural people often spend additional amounts as access costs—the non-hospital-related costs of rural patients being hospitalized are higher than those for of the urban population, as per the NSS 52nd Round (NSSO 1998). But there are no instances of any support for accommodation or transport needs of rural patients.18 At least one doctor mentioned that rural patients traveled long distances but could be given only limited attention owing to capacity constraints. As discussed, most of the RKSs did invest in obtaining additional medicine for patients. But there was no evidence of a system (like the Life Line Fluid Stores operated by the Rajasthan Medical Relief Societies) to use economies of scale to make drugs and consumables available at much lower rates than the market rates. But it is to the credit of a decentralized decision-making mechanism that it responded to the felt needs of the poor who attended hospitals and spent a significant amount of resources on medicines. The targeting of subsidies to poor people was faulty. While the GO talks of self-certification and exempted categories, most of the facilities visited insisted on BPL cards (except PHCs where the patients were known to the staff). Hospital staff in the DHCs and CHCs reported instances of poor

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patients being denied subsidy as they had forgotten the cards or were not aware of their eligibility for subsidy. They also reported ineligible persons obtaining the subsidy based on recommendations or connections. One of the benefits of RKS mentioned by the staff is the reduction of nuisance patients turned away due to the disincentive of paying user fees. But since the access to treatment is so low in Madhya Pradesh, it is highly probable that the poor could turn to other local practitioners and obtain poor quality treatment rather than travel to the city, pay the user fees and yet not be sure of obtaining treatment. This scenario was vehemently denied by the senior doctors who protested that the user fees were extremely low. Any system that promotes access of the poor has to be sensitive to the manifold constraints faced by them. They are denied knowledge regarding the system, have difficulty in approaching formal service providers due to inequities in power, and are diffident in demanding their rights. Unless these constraints are addressed, systems designed to subsidize their consumption would not be successful. Many such examples of facilitation and intermediation to ensure access to their rightful subsidies are available in India. That the RKS has not put in place such a system reflects the low priority given to poor patients in the RKS scheme. Diversion of subsidies to the not-so-poor is not unique to the RKS. But the program does not have any system to prevent it. It reduces the funds available to the poor, denies the possibility of sustainability through cross-subsidization and does not reduce the incentive for the non-poor to access the subsidized government health system. Given the present income profile of patients of government hospitals, the lack of resistance to user fees is understandable—they were paying well below the consumer surplus they received for services of improved quality. The government health system of Madhya Pradesh has not met expectations, especially in addressing the health needs of the poor, particularly the rural poor.19 Except for subsidies paid for transportation to hospitals for institutional delivery, there is no system to offset this additional expense. Government hospitals are used more by the rich than the poor. As a result, net subsidies to the higher income quintile are more. Hence, any improvement of hospital facilities would benefit the rich more than the poor unless safeguards are built in to the system. This would consist of an income-differentiated user fee and a conscious system to ensure access of the poor. Unless such a component is built into the RKS, it cannot be said to be a reform that helps the poor access services. User fees, if implemented without these safeguards, could depress further the low utilization of health care services by the poor, as has been noticed in other countries.20

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Patient Satisfaction Survey In order to gauge user satisfaction with the RKS in the 12 facilities visited, a rapid patient satisfaction survey was conducted using a modified World Health Organization (WHO) tool. The variables measured include:       

Accessibility. Availability of medicines. Timely service. Attitude of staff. Ease of obtaining subsidies. Ease of registration and paperwork/administration. Overall satisfaction (sufficient to recommend hospital).

In all, 223 patients in 12 facilities were administered the survey, a mix of in- and out-patients. The sample size in district facilities was 159, CHCs 54 and PHCs 10 patients.21 Not all patients answered all the questions. Figure 6.8 summarizes satisfaction scores. The main results of the survey: 











Fifty-seven percent patients were satisfied with accessibility, with about 30 percent not satisfied (balance uncertain). Forty-six percent were satisfied with the availability of medicines, while 39 percent were not. In PHCs, 50 percent were not satisfied. On the issue of timely service, 57 percent of surveyed patients were satisfied, while 25 percent were not (balance uncertain). Surprisingly, over 90 percent of PHC patients were satisfied. Seventy-three percent were satisfied with the attitudes of the staff, while 11 percent were not satisfied. Significantly, only 37 percent were satisfied with ‘the ease of obtaining subsidy’, while over 52 percent reported being unsatisfied and 12 percent were uncertain. A large percentage—60 percent in PHCs and 65 percent in CHCs—report non-satisfaction with respect to access to subsidies. About 72 percent of all patients were satisfied with the overall experience, with 23 percent not satisfied. In the case of PHCs, 40 percent were not satisfied.

Primary health centers seem to have the maximum dissatisfaction levels, pertaining primarily to the lack of medicines and the difficulty of accessing subsidies. In the case of CHCs, access to subsidies and the lack of availability of medicines seem to be key issues as well.

214 Rajeev Sadanandan and N. Shiv Kumar Figure 6.8 Patient Satisfaction Scores in Select Facilities Surveyed

Given the sample size of the satisfaction survey (both number of facilities and samples), one will need to be cautious about extrapolating the results. At best they are indicative. However, it is to the credit of these hospitals to have high overall satisfaction scores of about 72 percent. This compares well with hospitals in Andhra Pradesh, where overall satisfaction scores have been around 70 percent (Institute of Health Systems 2001). Overall, there has been no significant positive impact usage attributable to the RKS. Though patient satisfaction seems to be reasonably high at 72 percent, no evidence exists for directly attributing this satisfaction to RKS. The impact of the user fee on usage is unclear. Even more unclear is the access of people living below the poverty line, which is crucial. Anecdotal evidence and patient satisfaction data seems to suggest that people have difficulties accessing subsidies. This could be one contributory reasons for a drop in usage among out-patients. Targeting of the poor using self-certification methods is a key aspect of the RKS. This appears not to be working well in the facilities studied. Presentation of BPL cards is being insisted upon, and it is likely that this is not having a positive impact on the attendance of the poor. This is a serious cause for concern.

Review of Experiences Similar to RKS Introduction of decentralized planning, budgeting and purchasing for government health services and implementation of user charges for these

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services has been a preferred strategy for health sector reform by donor agencies and some state governments (World Bank 1987). This has had a considerable influence on health sector reform in many states. In a review of health sector reform in nine Indian states conducted by the Government of India, systems similar to Rogi Kalyan Samities were reported from eight of them (GoI 2004). Institutions such as the Hospital Development Society in Kerala, the Medical Relief Society in Rajasthan, Chikitsa Prabandhan Committee in Uttaranchal and Aspatal Kalyan Samity in Himachal Pradesh are similar enough to warrant the assumption that they have common roots with RKSs. Several common threads run through the functioning of such hospitals: 











These units are registered as autonomous organizations under the respective Societies’ Registration Acts of the states. They have a comprehensive set of laudable objectives, without clear articulation about how they would be achieved and adequate powers and capacity to achieve them. They have a limited extent of autonomy which covers charging user fees, engaging non-technical staff on contract and outsourcing support services. Ownership and maintenance of assets has also been transferred to some units. The user fees generated are kept in a separate bank account and not at the government treasury. Powers to take expenditure decisions regarding these funds are vested with local decision-makers. Initially these reforms started at tertiary level hospitals. But, encouraged by the response, they have been extended to lower levels, usually by means of government orders. Most of the societies are administered by a board comprising government officials and representatives from civil society.

However the degree of decentralization allowed to peripheral units varies from state to state. This is reflected in the way the societies differ from each other in some crucial aspects: 

The role of PRI institutions: They are represented in most of the societies. But their extent of involvement varies. In Kerala, where hospitals have been transferred to local PRIs, the committee is headed by the PRI president/chairperson. In Rajasthan, while the MLA is nominated to the society board, PRIs are not recognized as important stakeholders.

216 Rajeev Sadanandan and N. Shiv Kumar 





Mechanisms to identify persons eligible for exemptions: In Himachal Pradesh, the poor have to carry an IRDP card with them to become eligible. Karnataka uses ration cards to identify the poor. In Kerala, hospital authorities use their own discretion to do so. Systems for financial and performance accountability: In Himachal Pradesh, a representative of the audit wing of the Finance Department sits on the General Body. The state has also conducted an external evaluation of the society and incorporated recommendations of the evaluation into program guidelines. In Kerala and Rajasthan, a regular audit by a chartered accountant is mandatory. Innovations attempted by societies: In Rajasthan, the Medical Relief Society started Life Line Fluid Stores to provide drugs and surgical items at no-profit rates. In the Sahbhagini Nagar Vikas Yojana, the government matched public contribution for purchase of equipment up to 50 percent of the total cost. These initiatives were started by individual societies and then popularized by the state government through directives.

An evaluation of the Himachal experience showed that since the society was constituted without consultation with major stakeholders, it was opposed by employees, who feared privatization through the back-door, and by the public, who resented having to pay for services which were previously free of cost. The performance of societies varied; the crucial determinant being the presence of a creative and dedicated person in charge. In Kerala, during an interim period, the government was forced to suspend collection of user fees due to a political agitation. But when hospitals were handed over to PRIs for management, user charges were reinstated, as the PRIs found that additional resources were vital to improving services. Rajasthan recovers 10–15 percent of the hospital budget from user fees, the rates charged at times going up to 50 percent of market rates. While the Medical Relief Society is perceived to have improved services, the challenges posed by a lack of systems for proper utilization of surplus funds to ensure free services for the poor as well as adequate planning and accounting remain to be addressed. The lack of capacities among hospital administrators to create a participatory, transparent and efficient system for collection, management and utilization of resources; draw up and execute contracts for outsourcing and procurement; and prevent the government from reducing investment in the health sector by discounting the

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resources collected are constraints that stand in the way of scaling-up the role of Medical Relief Society in the health sector in Rajasthan. The RKS was thus part of a reform process that saw similar institutions being set up in different states in India. The performance of the RKS should also be seen in the context of similar initiatives and experiences in other states of India.

Summary of Study Conclusions The RKS has been a useful source of additional resources, which have come as a support to hospital managers badly affected by budgetary cuts, especially non-salary components. This has helped in some ways to mitigate the adverse impact of the shortage of funds and has reversed the deterioration in infrastructure and services. RKSs have cumulatively raised Rs 777 million rupees, adding about 3 percent to the health budget. But this amounted to about 44 percent of the total non-salary expenditure on government hospitals from the regular budget in 2001–02. A variety of local resources have been mobilized and used—70 percent of all income is from user fees, 16 percent from donations, and 12 percent from IGAs. At 92 percent, resources mobilized at the district and CHC levels account for the bulk of income raised by RKSs. PHCs have not raised any significant resources (only 8 percent of the total) nor applied them in great measure. Without clear guidance to PHC managers (medical officers), many of the RKSs at the PHC level are operating at a sub-optimal level. Resources raised have been applied to local facility priorities in the major (district, CHC) facilities. About 66 percent of funds raised have been spent on priorities decided by the executive and governing bodies. The priorities have largely been around construction, equipment, repairs, and maintenance. These investments have led to visible improvements in equipment, infrastructure, and cleanliness in the facilities. Although these are important, the investments do not necessarily seem to have been driven by user perspectives or preferences. Also, expenditure that should have been met out of the state budget is being borne from RKS funds (e.g., X-ray consumables). The poor condition of infrastructure, lack of essential equipment and the shortage of supplies has been reduced but not eliminated by the RKS. This indicates the limitations of the RKS as a financing strategy. It can be an additional financing source, but cannot supplant the need for

218 Rajeev Sadanandan and N. Shiv Kumar

augmented state funding. The objective of providing additional resources has met some immediate and pressing needs and also resulted in positive outcomes for hospital services, patient satisfaction, and staff morale. RKS resources alone are not enough to make up for consistent reduction in budgetary allocations. Observations show that poor infrastructure, such as inadequate operation theatre facilities, badly maintained toilets and lack of needed equipment, continue to exist even in RKS hospitals.22 For health system reforms to happen, sustained pressure on policy-makers by voters, especially on behalf of the poor, is needed. The success of the RKS in meeting immediate needs may take pressure off the government for raising budgetary resources, but the RKS cannot be a replacement for long-term investments from the government. It is not and cannot be a replacement for deeper reforms and stronger budgetary support from the government. Without clear guidelines, income and expenditure can be booked in a non-uniform way across facilities. This makes the data being collected amenable to only broad analysis and less reliable for in-depth analysis. The booking of large expenditures under the head of ‘other expenses’ is indicative of the problem. The quality of management practices and governance varies across facilities. Where there are interested individuals, particularly collectors or active elected representatives, initiatives have been noteworthy. Staffing has been augmented using the RKS system, through contract hiring. However, the staff so hired has usually been at the Class IV level, used in maintenance and cleaning. The contribution of RKS to improved management practices is largely limited to the space it provides for greater local decision making. Superintendents and senior doctors have been enabled to take decisions on hospital processes. This has improved staff morale and enabled them to provide better services. Motivated doctors have been able to generate support for services, which help them practice their specialties. In the process, they have been able to repay the costs incurred through increases in user fees. Although the level of participation may not be as high as desirable, the process of decision making is much better than in the past when all decisions were centralized. Decisionmaking processes increasingly respond to local needs and pressures, although there is always more room for participation even in the RKS. A mechanism for local participation and contribution has been established. Persons who wish to make contributions need to be assured that

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their resources would be used well. In the early stages, when the RKS had a high profile, it was reported that a large number of donations were received. This is an example that any collector interested in raising resources for hospitals can emulate. There are no user feedback systems in place. Given this, the service provider adapts to user feedback through the elected representatives on the General Body of RKS societies. Even here, there is not much evidence of users influencing hospital management. Capacity remains a problem in the RKS system. Staff have not been adequately oriented and there is no mechanism to monitor the functioning of societies. Decentralization of decision-making is an integral component of the success of the RKS. Given the lack of management capacity in hospital administration, generally run by clinicians, strong management systems such as standardized record-keeping and accounting procedures, monitoring of procurement processes, and hand-over and takeover procedures are necessary to ensure the proper institutionalization and sustainability of hospital reform in Madhya Pradesh. There is neither a monitoring and evaluation system with indicators, nor any systems for collection and analysis of data. Nor is there a forum to share the experience of managers on implementation of RKS and to learn from their experiences. Areas where the RKS aims to contribute, but does not seem to have made much progress, include the development of private sector collaboration arrangements, the capacity building of staff, improving internal management, and monitoring of national programs. The RKS does not appear to have had a significant positive impact on usage. In fact there is a fall in the out-patients in the facilities studied. However, patient satisfaction seems to be reasonably high at 72 percent, though no evidence exists for directly attributing this satisfaction to RKS. One of the major weaknesses of the health system in Madhya Pradesh is inadequate access to the poor. This is especially so in the case of hospitalization services. Hence, any change in systems has to protect the poor from adverse impact. This is more so when user fees form part of the changes. Systems put in place to protect the interests of the poor do not appear to be working well in the RKS. Hospital managers do not recognize this as an area of concern, and no monitoring systems been put in place to gauge the impact of user fees on the poor. Hence, it is more than possible that the introduction of user fees may result in a further deterioration of access.

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Replicating the RKS Model Nationally Considering the fact that RKS has now been endorsed as an integral part of the National Rural Health Mission, a detailed study of similar societies to examine efficiency and equity parameters is urgently needed. The experience of the RKS in Madhya Pradesh offers important lessons and implications for the adoption/adaptation of this model in other states: 











Strong M&E systems: There is a need to develop and implement strong monitoring and evaluation systems, which provide ongoing information on the performance of RKS facilities. This information needs to feed into facility management and governance at local level as well as overall policy-making at the state level. Checking for exclusion: It is important that data regarding the access of the poor (in-patient and out-patient) facilities are carefully tracked and analyzed, and adequate measures taken so that exclusion does not occur, especially when measures to identify the poor, such as self-certification, fail to work well. Scale up support and quality control: The rapid scaling-up of the RKS in Madhya Pradesh underlines the need for adequate handholding support and facilitation by a state-level agency to ensure common standards across facilities. Capacity building is a major challenge for the autonomous administration of hospital facilities in models such as RKS. Patient feedback: It is essential to create mechanisms for improving feedback to local hospital administrators and policy-makers through internal monitoring, as well as external feedback, for example through report cards conducted by independent organizations. Regional clubbing of resources: Some facilities have more capacity to raise resources than others (e.g., CHCs vs. PHCs). Mechanisms need to be developed to allow for some level of pooling of resources at the district or regional levels, so that funds can be channeled to facilities that require, but cannot generate, additional resources. Financial management: There is a need to develop standard accounting protocols, fund utilization guidelines, and a strong audit and financial reporting mechanism.

General Body I/C Minister of the District∗ President Zila Panchayat Mayor of Municipal Corporation Collector Superintendent of Police Chief Medical Officer MLAs of District President of Health Committee Municipal Corporation/Municipality Senior MO of Hospital Municipal Commissioner CEO Zjila Panchayat Ex. Eng. PWD & PHED Secretary, Red Cross President, IMA Two Donors (donated Rs 50, 000) Nominated by Chairman Two Social Workers Nominated by Chairman

District Level

MLA of the Area∗ SDM President of Janpad Panchayat President of Municipality President of Health Committee of Municipality CEO of Janpad Panchayat One MLA of the Area SDO, PWD, and PHED Two Donors (donated Rs 20,000) Nominated by Chairman Sr. MO Nominated by CMHO Block MO/I/CM&HO MO Hospital

Tehsil and Block Level

(Annexure 1 continued)

Janpad Panchayat Member of Area∗ President Nagar/Gram Panchayat President of Municipality President of Health Committee of Nagar/Gram Panchayat Nagar/Gram Panchayat Female Member Sub-Engineer, PWD, and MPEB Two Donors (donated Rs 10,000 Nominated by Chairman) Tehsildar/Nayab Tehsildar I/C MO Hospital

Other Health Institutions/Dispensary/PHC

Annexure 1: Governing and Executive Body Membership

(Annexure 1 continued)

∗Chairperson and Secretary.

Executive Body Collector∗ Municipal Commissioner CEO Zila Panchayat Chief Medical Officer Senior MO of Hospital Ex. Eng. PWD One Donor Civil Surgeon cum Hospital Suptd

District Level

Sub-Divisional Magistrate∗ President, Janpad Panchayat CEO Janpad Panchayat SDO. PWD Sr. MO Nominated by CMHO Block MO/I/C M & HO

Tehsil and Block Level

Tehsildar/Nayab Tehsildar∗ President of Health Committee of Nagar/Gram Panchayat Sub.Eng. PWD and MPEB I/C MO Hospital

Other Health Institutions/Dispensary/PHC

Rogi Kalyan Samitis 223

Notes 1. Not all PHCs are fully covered. 2. According to the MP HDR, the relative lack of population density and the location of tribal villages in remote forest areas are some of the reasons for poor health services. 3. Even the rich obtain 90 percent of their immunization from the public sector. 4. The MP HDR too refers to non-health indicators as an explanation for decline in the decadal population growth rate (GoMP 1995: 53). 5. Assuming that other factors which are structural determinants of good health do not worsen. 6. The poor (those below the poverty line) are exempt from paying any user fee. They only have to ‘self-certify’ that they are poor and below the poverty line 7. This was supplemented by another GO in 1999. 8. Data not available in usable form or not available at all. 9. Directorate of Health & Family Welfare. Data up to 2003–04. 10. There is evidence from the 12-facility survey that these have been based on the hospital management needs. 11. Like renting of facilities. 12. This lack of data is what prompted the researchers to launch an in-depth study in 12 facilities, which has provided some more depth to the data. 13. One hundred and seventy-two of 285 facilities were selected from the list, as they seemed to have the clearest data. 14. Standard deviation on mean varying from 97 to 494 percent. 15. An additional district visited, other than the four districts (12 facilities) where detailed studies were conducted. 16. Rs 4.5 million in the year 2003–04. 17. Only one facility had an increase in beds during this period. Even after removing this facility, the in-patient increase rate largely remains the same. 18. Hospitals have provided space to philanthropic individuals and groups to set up support centers to feed poor people. This initiative appeared to be independent of the RKS. Neither did the managers mention it, nor were any funds spent on it. Reports of their activities were received from the local public with whom we interacted. 19. The MP HDR reports 90 percent vacancies of specialists and poorer health outcomes in rural areas. This is a pan-Indian phenomenon. 20. See, for instance, Yoder (1989) and Gertler et al. (1987) for a discussion of the impact of user fees in Swaziland and Peru respectively. 21. Only these numbers were available during the visit 22. A case in point is the MYH, where the first RKS was set up. The hospital is currently in fairly poor shape in terms of infrastructure.

References Chaurasia, A.R. 2004. ‘Rogi Kalyan Samitis’, Background paper prepared for workshop on ‘Attaining the Millennium Development Goals in India: Role of Public Policy and Service Delivery’, New Delhi, June 17–18, 2004.

224 Rajeev Sadanandan and N. Shiv Kumar Duggal, R. 1997. ‘Health Care Budgets in a Changing Political Economy’, Economic and Political Weekly, 32 (20–21) (May 17–24): 1197–1200. EPOS Consultants. n.d. Review of District Budgets for Community Health in Action in MP: Synthesis Report. New Delhi: EPOS Consultants (India) Pvt Ltd. EPOS Consultants, Options and Vimarsh. 2000. ‘Reform Ideas at Work’, ECTA Working Papers. EPOS, Options and Vimarsh. Gertler, P., Locay, L., and Sanderson, W. 1987. ‘Are User Fees Regressive? The Welfare Implications of Health Care Financing Proposals in Peru’, Journal of Econometrics, 36 (1/2). Gopalakrishnan, R. and Agnani, M. 2001. ‘Swasth Jeevan Sewa Guarantee Yojana: Moving Towards Decentralised Management of Health Care in Madhya Pradesh’, Rajiv Gandhi Missions, Occasional Paper no. 8. Government of India (GoI). 2000–2001. ‘National Family Health Survey’ (NFHS II). Available at: http://www.nfhsindia.org/pnfhs2.htm. ———. 2003. Health Information of India 2000–01. New Delhi: Central Bureau of Health Intelligence. ———. 2004. Health Sector Reforms in India: Initiatives from Nine States. New Delhi: Ministry of Health and Family Welfare. Government of Madhya Pradesh (GoMP). 1995. Human Development Report (HDR) for Madhya Pradesh (MP), 1995. Bhopal: Government of Madhya Pradesh. Institute of Health Systems. 2001. ‘Periodic Analysis of Hospital Performance: The Andhra Pradesh Vaidya Vigyan Parishad (APVVP), December 2001’, Hyderabad: Institute of Health Systems. McKeown, T. 1976. Modern Rise of Populations. London: Arnold. Misra, R., Chatterjee, R., and Rao, S. 2003. India Health Report. New Delhi: Oxford University Press. Mohanty, S.R. 2000. ‘Rogi Kalyan Samiti: Community Participation to Improve Health Services’, Paper presented to the Global Development Network. Nandraj, S., Muraleedharan, V.R., Baru, R., Quadeer, I., and Priya, R. 2001. Private Health Sector in India. Mumbai: CEHAT. National Sample Survey Organization. 1998. Morbidity and Treatment of Ailments, NSS Fifty-second Round, July 1995–June 1996. New Delhi: Government of India. Prabhu, K. Seeta. 2003. ‘Financing Human Development during Fiscal Stringency: Strategies and Options for Indian States’, Paper presented at conference on ‘Critical Rreflections on State Human Development Reports’, Goa. UNDP and GoMP. 2001. ‘Decentralisation: New Opportunities’, Consultation organized by the Government of Madhya Pradesh, with UNDP support: Workshop Report (August 25 and 26). World Bank. 1987. ‘Financing Health Services in Developing Countries: An Agenda for Reform’, A World Bank Policy Study, Washington, DC: World Bank. ———. 2003. World Development Report 2004: Making Services Work for Poor People. Washington, DC: Oxford University Press. Yoder, R.A. 1989. ‘Are people willing and able to pay for health services?’, Social Science and Medicine 29 (1).

Chapter 7 Rajasthan’s Experience in Improving Service Delivery in Education Prema Clarke and Jyotsna Jha

Introduction Education, a critical sector for the overall development of any country, has had a chequered history in the Indian subcontinent. Since Independence in 1947 there has been much variation in the progress made in education across Indian states, with some states lagging behind and other states surging ahead. More recently, the increased attention given to the importance of developing education, both within the subcontinent and internationally, is reflected in the ‘perceptible acceleration’ (Kingdon et al. 2004) of education, particularly in some of the northern states. During the 1990s Rajasthan achieved remarkable progress in improving education. This case study seeks to understand and analyze Rajasthan’s experience with educational reform during this period.1 The progress made is particularly reflected in the significant increases in literacy and enrollment in elementary education. Deaton and Dreze (2002) point to the impact of ‘public action’ on improvements in education in both Rajasthan and Madhya Pradesh. In contrast, Uttar Pradesh and Bihar are states where public initiatives were few. Thus, the successes in education can be attributed to the proliferation of both governmental and nongovernmental initiatives in the 1980s and 1990s. Rajasthan in the 1980s and most of the 1990s offered a favorable context for innovation in education. Policy reform, a supportive environment

226 Prema Clarke and Jyotsna Jha

with several ongoing small-scale experiments in education, and the broader ideology of empowerment and equity prevalent in the state, especially focusing on women and socially disadvantaged communities, spurred the creation of these programs. These programs were also internally well designed with many innovative features. Rajasthan in fact served as a laboratory for educational innovation in the 1980s and 1990s, throwing up concepts that have now been adopted in many other Indian states, including the use of para-teachers, school-mapping and the development of village education registers, adult education by NGO groups, and a focus on empowerment and equity in the state’s vision of education. Adequate financing was available to ensure that these initiatives were effectively implemented. In addition, new ways of addressing the critical challenges of enhancing education and, more broadly, literacy were introduced. To a large extent, such strategies of educational innovation did not interfere with the government system. The impact of programs to improve education was magnified by the presence of NGOs that forged links within and across groups and communities, ensuring that educational reforms in Rajasthan would be underpinned by a dense network of civic engagement. While significant advances occurred in educational outcomes in Rajasthan during the 1980s and most of the 1990s, challenges to their sustainability became evident by the end of the 1990s. Reduced financing and state policies that placed less emphasis on collaboration with nonstate actors, particularly NGOs and Panchayati Raj Institutions (PRIs), negatively influenced outcomes in education. The first section of this chapter traces the achievements and the more recent decline in education in Rajasthan over the last few decades. The second section discusses the various initiatives that introduced new and creative paradigms in the education sector to improve service delivery and accelerate progress in education. The third section deals with the reasons for the success of these initiatives in critical areas, such as the involvement of the community in education and the education of women and children living in remote areas. The fourth section discusses the causes of the decline of these initiatives and the critical challenges that remain. The magnitude of these challenges suggests that considerable reform is required at the state level to sustain the earlier gains in order to further develop education in the state.

Educational Outcomes in Rajasthan Rajasthan, a northwestern Indian state, was one of the most educationally backward states at the time of India’s independence. Historically, the state,

Improving Service Delivery in Education 227

formed in 1956, was carved out of 19 princely states and three politically and administratively distinct territories. Unlike many such states in other parts of India, this area did not witness any major initiatives to promote education among the masses during the pre-independence period.2 In 1961, in the first Census after the state was formed, the state had the lowest literacy rate in the country at 18 percent. The female literacy rate of 7 percent was abysmally low (Nambissan 2001). An analysis of available indicators for education, including literacy rates, elementary school enrollment, retention, and infrastructure availability demonstrates the substantial progress made in education in Rajasthan during the 1980s and 1990s.3

Rajasthan’s Achievements in Education during the 1980s and 1990s Increased Literacy Levels When India became independent, Rajasthan was one of six states with literacy rates lower than the national average of 29 percent. The five other states were Himachal Pradesh (20 percent), Bihar (22 percent), Orissa (26 percent), Madhya Pradesh (21 percent) and Uttar Pradesh (21 percent). Over the last four decades, the progress made with respect to literacy in Himachal Pradesh, although not a fully independent state until 1971, has undoubtedly been the highest (77 percent) among these six states. The progress made in Himachal Pradesh, however, can be explained largely by its status as a special category state.4 This status has allowed the state to receive substantial financial assistance from the central government, causing the per student expenditure in Himachal Pradesh to be one of the highest in the country. In comparison, the remaining five states are lowincome states, without any additional funding for education. Four aspects can be highlighted with respect to Rajasthan’s achievements in literacy. First, out of the five states, Madhya Pradesh and Rajasthan are the two states that have made significant progress. While the literacy rate for Rajasthan is slightly lower than Madhya Pradesh, the increase in literacy has been higher (Table 7.1). The annual growth rate for Madhya Pradesh was about 2.8 percent and 4.5 percent in the 1980s and 1990s respectively, and for Rajasthan 3.6 and 5.8 percent. Second, the annual growth rate of female literacy in Rajasthan at 11.7 percent in the last decade has been particularly spectacular, the highest among all states. Third, considering the challenge of improving the literacy levels of Scheduled Castes (SCs) and Scheduled Tribes (STs), Rajasthan portrays a substantial

228 Prema Clarke and Jyotsna Jha Table 7.1 Annual Growth Rate (Percent) of Total and Female Literacy in Selected States State (Literacy Rate in 2001) Bihar (48) Himachal Pradesh (77) Madhya Pradesh (64) Orissa (64) Rajasthan (61) Uttar Pradesh (57)

1961–71 0.50 8.54 2.68 1.88 2.26 1.92

(2.29) (22.1) (5.93) (5.84) (4.37) (4.78)

1971–81 2.95 3.06 3.02 6.03 2.57 2.33

(5.43) (5.25) (7.29) (5.44) (3.07) (3.10)

1981–91 2.72 3.10 2.86 0.02 3.59 3.26

(4.43) (4.43) (2.73) (3.76) (5.51) (5.49)

1991–2001 2.35 2.07 4.50 2.95 5.83 3.78

(4.72) (3.06) (7.45) (4.73) (11.73) (6.99)

Source: Census data. Note: Figures in parentheses show the growth rates for females.

increase in the literacy rates for SC and ST females (Figure 7.1). The literacy growth rate in Rajasthan among SC females was 31 percent and among ST females 49 percent. Figure 7.1 Literacy Growth Rate for SCs and STs in Rajasthan (1991–2001)

Source: Census data.

Fourth, the increase in the Gross Enrollment Ratios (GERs), based on government statistics and data from the National Sample Survey Organization (NSSO), at the primary and upper primary levels has been remarkable in the state.5 In contrast, such increase in enrollment at the secondary level is not evident in Rajasthan, as the public action initiatives in education were confined to elementary education. In Figure 7.2, the Selected Educational Statistics (SES) of the Ministry of Human Resources

Improving Service Delivery in Education 229 Figure 7.2 Elementary Gross Enrollment Ratios in Rajasthan

Source: GoI (Various years), Education in India and Selected Educational Statistics.

Development (MHRD) record a steady increase in girl’s enrollment at both primary and upper primary levels until the late 1990s. Data from SES is confirmed by the National Family Health Survey (NFHS), which documents increases between 1993 and 1999 (see Table 7.2). Rajasthan registers some of the highest increases, especially for rural girls at both primary level (29.6 percent) and upper primary level (16.3 percent). In Figures 7.3 and 7.4, which compare six states, the improvement in GER is sharper at the primary level than at the upper primary level. For example, the GER for the primary level, which was 45 percent in 1987 (just above the GER for Bihar) rose to 75 percent in 1990, about three percentage points lower than Himachal Pradesh. Reducing school dropout rates (Figure 7.5) is a challenge for most states in India. Dropout rates in Rajasthan decreased in elementary education from 77 percent in 1989 to 54 percent in 1998 at primary level and from 80 to 60 percent at upper primary level. Adequate physical infrastructure and numbers of teachers is a reflection of the state’s commitment to education and is also crucial for improvements in education. In the 1970s, probably due to insufficient financing, the number of schools increased but not the number of teachers. In the following two decades, there was a substantial expansion in the number of schools and teachers (see Figure 7.6). Between 1961 and 2001, the number of primary schools rose from about 14,000 to 34,000, and the number of teachers from about 34,000 to over 100,000. At the upper primary level, during this same period, the number of schools rose from about

68.0 98.9 80.1 85.4 87.4 83.0

53.0 98.9 73.9 81.0 66.0 71.4

57.0 94.0 61.0 75.8 69.9 69.5

34.0 88.5 47.3 63.0 36.4 45.4

1999

19.0 10.4 26.6 18.0 29.6 26.0

11.0 4.9 19.1 9.6 17.5 13.5

Change

33.0 85.1 44.5 52.5 28.6 38.2

64.9 93.1 69.7 72.9 75.2 75.1

1993

Rural

Source: NFHS-1 and NFHS-2 (as cited in Kingdon et al. 2004).

Male Bihar Himachal Pradesh Madhya Pradesh Orissa Rajasthan Uttar Pradesh Female Bihar Himachal Pradesh Madhya Pradesh Orissa Rajasthan Uttar Pradesh

1993

Age 6–10

48.7 95.3 54.9 64.8 44.9 57.1

71.6 98.2 75.4 79.9 82.8 80.4

1999

Age 11–14

15.7 10.2 10.4 12.3 16.3 18.9

6.7 5.1 5.7 7.0 7.6 5.3

Change

69.3 95.2 81.7 78.8 72.4 70.3

83.0 97.9 83.9 89.7 82.5 77.3

1993

72.1 98.1 87.8 82.7 82.7 83.3

81.0 99.5 92.8 85.2 88.5 87.1

1999

Age 6–10

Table 7.2 Enrollment Increases between 1993 and 1999 in Selected States

2.8 2.9 6.1 3.9 10.3 13.0

–2.0 1.6 8.9 –4.5 6.0 9.8

Change

65.6 92.0 81.4 78.2 71.2 68.4

86.2 94.0 85.9 86.2 87.0 76.8

1993

Urban

78.2 97.7 80.0 77.0 75.5 80.0

78.6 98.2 86.6 78.3 88.9 81.3

1999

Age 11–14

12.6 5.7 –1.4 –1.2 4.3 11.6

–7.6 4.2 0.7 –7.9 1.9 4.5

Change

Improving Service Delivery in Education 231 Figure 7.3 Gross Enrollment Ratios at Primary Level in Selected States

Source: National Sample Survey Organization data. Figure 7.4 Gross Enrollment Ratios at Upper Primary Level in Selected States

Source: National Sample Survey Organization data.

1,400 to 16,000 and teachers from 14,000 to over 120,000. Though the growth of formal schools at the primary level has been lower than in upper primary and secondary levels, the needs at primary level have been addressed through alternative schemes (see Table 7.3). About 25,000 primary schools have been established through these schemes. Consequently, 89 percent of the habitations now have a primary school within a distance of 1 km, as against 75 percent in 1993. Rajasthan, thus, made notable progress in education, especially considering its literacy status in the first census after the state was formed.

232 Prema Clarke and Jyotsna Jha Figure 7.5 Dropout Rate in Primary and Upper Primary Levels in Rajasthan

Source: GoI (Various years), Annual Report and Selected Education Statistics. Figure 7.6 Increase in the Number of Schools and Teachers in Rajasthan

Source: GoI (Various years), Selected Educational Statistics.

In addition, access to schools was greatly widened, as evidenced by a distinct surge in enrollment at the primary level in Rajasthan. Dropout rates also showed a declining trend during the 1980s and most of the 1990s. Finally, a major expansion in both the number of schools and teachers took place during this period.

Improving Service Delivery in Education 233 Table 7.3 Coverage of School Facilities in Selected States Primary (within 1 km) State Bihar Himachal Pradesh Madhya Pradesh Orissa Rajasthan Uttar Pradesh

Upper Primary (within 3 km)

1993

2002

1993

2002

96,470 (88) 20,806 (59) 83,612 (82) 60,289 (82) 47,711 (75) 169,421 (80)

75,949 (89) 183,772 (88) 64,678 (80) 26,877 (75) 64,935 (89) 74,370 (83)

87,625 (80) 22,666 (65) 63,423 (62) 56,503 (77) 41,219 (64) 166,893 (79)

67,748 (80) 163,862 (78) 63,399 (78) 27,814 (77) 59,227 (81) 65,960 (74)

Source: NCERT (1998, 2004). Note: Figures in parentheses show the percentage of habitations covered.

Declining Trends in Education Beginning in the Late 1990s The progress made in education was however not sustained, and a declining trend began to manifest itself from the late 1990s onwards. The decline in education is based on an analysis of trends in enrollment and retention. It is also based on recent data available on completion rates, learning levels, teacher absenteeism and public perceptions of education. Even though detailed data on these indicators were not available for the whole of the last decade to assess trends, discussion of the state’s performance in these areas does strengthen the need for renewed attention and creative strategies to reverse these declining trends in education. First, enrollment at primary and upper primary levels began to decline in the late 1990s and early 2000s (see Figure 7.2). The enrollment decline for girls began earlier (in the late 1990s) than for boys (in the early 2000s). Though the rate of growth for girls’ enrollment has been continuously higher than that of boys at all levels of school education, sharp gender disparities continue to exist, as girls constitute only about 36 percent of total enrollment at the primary level, 29 percent at upper primary level, and 27 percent at secondary level.6 This shows that a large proportion of girls are not being educated. A much faster change in girls’ participation is required for gender disparity to be further reduced. Second, dropout rates (see Figure 7.5), which were decreasing slowly, began to increase again. Amongst the six states compared in this chapter, Rajasthan now has the highest dropout rate for girls (74 percent) and the second highest for boys (55 percent) at primary level. For girls, the range for the other states is between 22 percent (Himachal Pradesh) and

234 Prema Clarke and Jyotsna Jha

62 percent (Bihar). For boys, the dropout rate in Bihar is only about three percentage points higher than that of Rajasthan. Third, completion rates at both primary and upper primary levels are low. In Rajasthan, only about 42 percent of all 12-year-olds and 39 percent of all 16-year-olds completed primary and upper primary levels respectively in 1999 (see Table 7.4). High dropout and low completion levels at primary and upper primary levels have resulted in low enrollment ratios at secondary level for both boys and girls, especially for the latter. Table 7.4 Completion Rates (1999) in Selected States States Bihar Madhya Pradesh Orissa Rajasthan Utter Pradesh

Primary Completion Rate (for 12-year-olds)

Upper Primary Completion Rate (for 16-year-olds)

33.32 84.45 57.99 41.96 43.40

35.61 72.80 50.98 39.03 46.67

Source: World Bank (2003b). Note: Completion rates for Himachal Pradesh were not available.

Fourth, student learning levels are low, as shown in a study conducted in several states. In Pratham’s ‘dipstick’ study (Pratham 2004) of writing and mathematical abilities, conducted on 50 children from five villages in two blocks in one district in Rajasthan, children were asked to write a dictated sentence; if there were only two mistakes, the child was reported to be able to write. In mathematics the test consisted of recognition of numbers from 1 to 100, and 2-digit subtraction. The number of children in Rajasthan in the 7–10 age group without these skills was high— 61 percent in writing and 79 percent in mathematics. Fifth, teacher absenteeism (see Table 7.5) is high, preventing students from having adequate instructional time. According to the World Development Report 2004 (World Bank 2003c), 23 percent of the teachers were absent when researchers visited the sampled schools. In contrast, considering the absenteeism rate in the five other states compared with Rajasthan, teacher absenteeism in Madhya Pradesh was only 18 percent and Himachal Pradesh 21 percent. Orissa’s rate of absenteeism was similar to that of Rajasthan, while absenteeism in Uttar Pradesh and Bihar was higher.

Improving Service Delivery in Education 235 Table 7.5 Teacher Absenteeism and Learning Levels in Selected States Writing (% of Students without Skill)#

State Bihar Himachal Pradesh Madhya Pradesh Orissa Rajasthan Uttar Pradesh

Teacher Absenteeism Rate*

7–10 Age Group

37.8 21.2 17.6 23.4 23.7 26.3

78 33 88 36 61 86

11–14 Age Group 41 5 41 21 23 51

Subscription (% of Students without Skill)# 7–10 Age Group

11–14 Age Group

79 53 93 58 79 95

45 13 57 29 32 66

Sources: *World Bank 2003c; # Pratham 2004.

Public Initiatives to Reform Education in Rajasthan Four public initiatives or projects have contributed to Rajasthan’s improved performance in education. Two of these initiatives worked exclusively in education: Shiksha Karmi and Lok Jumbish. The Shiksha Karmi project (SKP) addressed the challenge of providing access and quality education to children living in difficult terrains, and the Lok Jumbish project (LJP) addressed the challenge of increasing girls’ participation in education and motivating local communities to become involved with schooling. Improving female literacy was particularly difficult in a state marked by a history of gender imbalances and discrimination against women. Two other initiatives with a broader empowerment agenda have also played an important role in improving education in Rajasthan—the Women’s Development Program (WDP) and the Mazdoor Kisan Shakti Sangathan (MKSS). The WDP focused on empowering economically and socially disadvantaged women and the MKSS’ mission was to raise the state’s awareness of its responsibility to the poor. The four initiatives are dealt with in chronological order below.

The Women’s Development Program (WDP): Focusing on Women’s Empowerment and Education The WDP, started in 1983, was the first program of its kind to initiate stateNGO partnerships for development programs.7 Drawing its mandate from

236 Prema Clarke and Jyotsna Jha

the Sixth Five-Year Plan (1980–85) and the national as well as international focus on women during the late 1970s, the goal of the WDP was to empower women and improve their economic conditions through educating and training them. Influenced by feminist and liberal discourses, the objective of the program was to transform the approach to women’s issues from from one of being powerless and treated with compassion to operating as equal partners with male members of the family in terms of literacy and in all spheres—cultural, social, and economic. The importance given to empowerment was a major break from past initiatives, which emphasized instruction in good practices and financial allocations within the project (Economic and Political Weekly 1992). The WDP highlighted the role and function of the ‘facilitator’ (Das 1992). The village-level facilitator or sathin, deliberately selected from among the most marginalized groups in the village, was expected to facilitate the change process. A block-level government functionary, known as the pracheta, supported her. The criterion for the selection of the pracheta was her sensitivity and empathy to rural women, and the capacity to operate within a different worldview. The pracheta acted as the link between the sathin and the district-level project structure, the District Women’s Development Agency. The WDP transformed the notion of training from being a one-time activity using the lecture method to an active, continuous process in which both the trainee and trainer are transformed. After initial identification, the sathins underwent 25 days of training. The final selection was made only at the end of the training, on the basis of the performance in the training. Unlike the usual training, which included lectures on ‘cleanliness’, ‘nutrition’, and ‘child development’, the WDP training used a process of dialogue to develop women’s abilities to question, reflect, share, and discover. The practice of monthly meetings, known as jajam, offered continuous professional development for the sathins. In addition, intensive camps were organized, known as shivirs, in response to issues identified by sathins. Since the prachetas played the most crucial role of selecting and supporting sathins, their training focused on the internalization of the new approach to women’s development. Through this program, women were mobilized on a number of issues, e.g., enforcement of minimum wages; provision of drinking water and female education; fair wages for famine relief work; and social evils, such as violence against women (Rajagopal and Mathur 2000). Sathins become leaders, with the ability to take initiatives, coordinate, and train. Although no study exists to associate the two, most observers partially attribute the

Improving Service Delivery in Education 237

perceptible growth in female literacy to the WDP. The project, which was initially launched in six districts, expanded to 14 districts and then to 32 districts.

The Shiksha Karmi Project (SKP): Educating Children in Remote Areas SKP, started in 1987, addressed two critical issues. First, there were a large number of habitations (an estimated 6,000) in which there were no schools. This situation was probably due to the national norm, which allots a school only for a village with a population of 200. The SKP established a model for addressing access requirements of impoverished children living in backward areas as well as rocky and remote terrains. Mechanisms for addressing the educational needs of children living in such areas with populations less than 200 had hitherto not been included in any significant way in the activities of the state’s Department of Education. In the SKP, community members, parents, and elected officials in the local government were made aware of the importance of education and their abilities/ right to establish a school in their village. The Gram Sabha had to vote on the need for a school. On the basis of this decision a school was sanctioned and a shiksha karmi (education worker) was appointed.8 The SKP in Rajasthan provided access to three types of schools: regular schools, schools with flexible timings (Prehar Pathshalas) and non-formal schools to encourage girls’ education (Aangan Pathshalas). Second, the quality of education in remote areas was extremely poor, mainly due to the frequent non-appearance of teachers in an estimated 5,000 out of the 33,005 primary schools in Rajasthan. Teachers who taught in these schools lived far away in other parts of the district and often belonged to a higher caste. In order for teachers to be motivated and committed to instructing students from remote and deprived communities, the project took the position that the initial educational qualification of the teacher was less important than the teacher’s roots in the community. If the teacher belonged to the community, then the shiksha karmi training program, using the same curriculum as in regular schools, would ensure that he or she acquired the necessary skills to be a good teacher. In the SKP lies the genesis of the ‘para-teacher’, now adopted by several states across India. Gram Sabhas identified suitable candidates with a Grade 8 education (candidates with a Grade 5 education were accepted if they were women). A selection committee examined these candidates with representatives from the Board, a local NGO, the Panchayat Pradhan, the

238 Prema Clarke and Jyotsna Jha

Block Development Officer (BDO) and a WDP member. Candidates also took written exams in various subjects and went through induction training before they were recruited. Para-teachers are paid Rs 1,800 per month. The employment of individuals from the community with lower basic qualifications and lower pay scales also meant that a model of teacher training had to be developed that would ensure that the local teacher or shiksha karmi possessed the necessary knowledge and skill to instruct students. The teacher training program would need to nurture the prior knowledge of the teacher as well as supplement the teachers’ knowledge with what they would have acquired if they were secondary school graduates with a teaching diploma.9 The methodology of teacher training developed in the SKP is one of the most significant contributions of this program. Evolving from practice and using the trial and error method, a group of individuals made up of education department officials and educators conceptualized a program of in-service training that would ensure that a student with only a Grade 8 education could become an effective teacher. By the mid-1990s, the program covered 202,000 students (of which 84,000 were girls) spread over 2,697 villages in 146 blocks in all 32 districts in the state. There existed 2,700 day schools, 4,335 flexible schools, and 97 schools for girls. Twenty of the day schools are now regular primary schools. The achievement of students in these schools was found to be comparable to students in regular government schools.

The Mazdoor Kisan Shakti Sangathan (MKSS): Struggling for Greater Accountability through Access to Information The objective of MKSS (the ‘Organization for the Empowerment of Workers and Peasants’) established in 1990 was more broad-based, using ‘modes of struggle and constructive action to change the lives of its primary constituents: the rural poor’ (Roy and Dey n.d.: 4). The MKSS initiated a grassroots-level movement that brought into focus, at both state and national levels, the citizen’s right to be able to scrutinize official records. The MKSS has been particularly instrumental in fighting for the right to information. This project used the tool of jan sunwai, or public hearings, to build demand for the client’s right to scrutinize official records, a crucial check against arbitrary governance. This grassroots initiative, with the support of other organizations and groups, developed into a movement

Improving Service Delivery in Education 239

for the Right to Information. This movement succeeded in getting the Rajasthan Right to Information Bill (2000) passed, influencing the national demand for such a bill. Alongside the passage of the Right to Information Bill (2000), amendments were made in the Panchayati Raj Act, giving the Ward Sabha (a group of 50–80 households) legal status and the right to conduct social audits of work carried out in its area. The jan sunwais and the amendments to the Panchayat Raj Act throughout the 1990s allowed communities to scrutinize school records and functioning, and thereby introduced some level of accountability in education. The MKSS also led the Right to Food campaign, which ultimately led to the Supreme Court’s ruling in 2001 mandating the provision of cooked midday meals in all government primary schools in the country. After this ruling, Rajasthan was the first state that started serving cooked midday meals in all government-run primary schools.10 Similar mobilization in the state on the issue of drought and food security led to the distribution of grains to all poor families in the state in 2002–03. This initiative is considered to have helped thousands of families facing one of the most severe droughts in recent years, indirectly preventing a decline in school participation.

The Lok Jumbish Project (LJP): Motivating the Community to Participate in Education The LJP, started in 1992, was founded on the premise that a working educational system could only be created if there was sufficient civic engagement—the community needed to be motivated and directly involved with education. It also believed that improving the quality of education and introducing decentralized management would make the system better. One of the reports on the LJP captures the intentions of this project succinctly: ‘The role of Lok Jumbish is that of developer, demonstrator, catalyst and transformer of the mainstream education system from the outside’ (SIDA and the Governments of India and Rajasthan 1993: 14). The most important contribution of the LJP was the establishment of Village Education Development Committees (VEDC), which ensured that persons closest to the school were mobilized. They were made aware of the importance of education and their role in making this system work. The head of the local government or Gram Panchayat, including women, were members of the VEC. The LJP made use of local NGOs to appoint

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and train ‘social animators’ to mobilize the community by initiating two critical processes —school mapping and micro-planning. School mapping, based on household surveys, enumerates the number of children in the village, the number attending school, those not attending, and the reasons for non-attendance. This information is contained in a map of the village, school facilities and households. The map symbolizes the community’s acquisition of systematic knowledge about education in their own village. A village register is also created to monitor progress, which is to be updated each year. Based on the school mapping exercise, plans at the village level (micro-plans) are prepared outlining the course of action. The LJP introduced sub-district-level management structures, which were crucial for improved service delivery in education. Before the establishment of LJP, the center of control was at the district level and there were no institutional structures at the block or cluster level to manage education. LJP introduced the Block Management Committee, as well as an executive body in the form of the Block Steering Group (BSG). The BSGs were given the responsibility of reviewing and ensuring the implementation of the village micro-plans. This included powers to sanction school construction as well as teacher positions. The District Education Officer (DEO) and BDO represented the formal system in this committee. A female officer on the committee represented the LJP focus on women’s development. The BSG was entrusted with the task of dividing the block into clusters. A ‘Mobilizing Agency’ was established at the cluster level to oversee activities in the cluster. LJP also created space for teacher unions by including them in the annual planning and review exercise. LJP covered 9,755 villages (out of over 39,000) in 58 blocks (out of 241) in Rajasthan. Three hundred and eighty-three new primary schools were opened through LJP. Flexible educational programs and hostels were introduced for tribal children. Residential programs were established for girls (Mahila Shikshan Vihar and Balika Shikshan Shivir) and working children (Sahaj Shikshan Kendra). There was a lot of learning across programs, and the influence of one program on the other is discernible. Training designed to facilitate the development of a skill is a common element across the SKP, LJP, and the WDP. SKP focused more on enhancing the technical skills of teachers to instruct students, while the mission of LJP and WDP was to train facilitators to help communities and women participate in the development of education. The establishment of institutional structures close to the grassroots level were seen to be critical across programs.

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Explaining the Impulse for Reforming Education in Rajasthan The contextual environment provided an impetus for both NGOs and the government to work together and establish innovative and far-reaching programs, such as LJP and SKP. In addition, the success of these initiatives depended on the soundness of their design and the support provided for implementation.

Contextual Factors Supportive of Educational Reform The Mandate from the Top: National Policy within a Federal System All these initiatives, rather than being compelled by state policy, have received their mandate from national policy formulations in education. The constitutional position of education in India as a concurrent subject allows national policy to influence state systems. The 1986 National Policy on Education with its comprehensive approach to developing education, and the establishment of the National Adult Education Program (1978) and the National Literacy Mission (1988) have informed and supported the many education projects in the state. Similarly, the mandate of the Sixth Five-Year Plan (1980–85) provided the base for the evolution of the WDP. One may ask why the 1968 National Policy on Education, which was also fairly progressive, did not have an impact on state activities in education. Perhaps, this could partly be because Anil Bordia, a prominent figure in the education bureaucracy in Rajasthan, discussed in more detail later, was part of the national scene and played an important role in formulating the 1986 National Policy. Through Bordia, the implementation of national policies in the state assumed a certain urgency and impetus.11

NGOs and Social Movements as Sources of Change When the four initiatives were introduced, there was a network of organizations working in small pockets across Rajasthan as harbingers of change and development of the state. Mohan Singh Mehta, a native of Rajasthan and one of the earliest thinkers and activists in education, provided a supportive environment for these networks to develop. Mehta started the Vidya Bhawan School in 1931.12 This school focused on ‘character

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formation, social obligation, and awareness about nature and rural surroundings, where a spirit of adventure was inculcated and a sense of determination was stimulated to make youth responsible citizens’ (Seva Mandir n.d.). This school and a few other educational institutions with a similar philosophy were established in the state during the same period, producing a critical group of committed and socially conscious leaders in the state. Mehta also started Seva Mandir (SM) (ibid.), an adult literacy program, in the rural areas of Udaipur in the late 1960s. Overall, this early emphasis on adult education and literacy through the SM program has influenced the development of adult education in the state, and highlighted the need to improve other areas in education. Bunker Roy can be credited with the initial modeling of grassroots reform in Rajasthan. Roy, an outsider to the state, with a strong service ethos and emphasis on equity, started the Social Work and Research Center (SWRC). The mission of SWRC, started at Tilonia in Rajasthan in 1972, was to motivate talented urban youth to work at development alongside the rural poor in an integrated manner, following a ‘common sense’ approach. It promoted the notion of development in partnership with the deprived, as opposed to a paternalistic or benevolent approach. The SWRC developed into the Barefoot College, which institutionalized education for the local community.13 The Barefoot College also established night schools in the early 1980s for children who were engaged in cattle grazing and other work during the day. These night schools, run by local individuals with little formal education, emphasized ‘learning by doing’ (Mehra 1997). The SWRC has had a remarkable influence on the conceptualization of both the SKP and LJP. The method of educating and empowering children facing various forms of deprivation informed the formulation of many of the subsequent projects in education. In addition to the above reformers, a number of organizations including non-governmental organizations (NGOs), Community-Based Organizations (CBOs), and Citizens’ Groups played a critical role in creating demand and an environment for reform.14 The early support of Rajasthan’s leadership for land reforms, evident in the introduction of the Jagirdari Abolition and Resumption Bill in 1952, encouraged NGOs and CBOs to work in the state as brokers between the disadvantaged and the state administrators. The relatively peaceful atmosphere in the state also supported the establishment of NGOs and CBOs from within and outside the state.

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Towards a Negotiated Vision of Education There are different interpretative schools in the discourse on ideology. One interpretation considers ideology as akin to a cultural worldview including beliefs and values, shared by groups or a society in order to make sense of and bring order to their lives. Weiner’s discussion of Indian worldviews in his book The Child and the State in India (1990) fits this understanding of ideology. According to Weiner, the ‘belief system of the state bureaucracy’ based on the social ordering of the differentiated caste system was responsible for the low levels of literacy and school participation in India. Children from the lower castes, according to this worldview, were not entitled to education and freedom. This hierarchical worldview, which was somewhat consensual and accepted by all of Indian society, informed education policy and service delivery in education, argues Weiner. In a different vein, Lant Pritchett (2003) refers to the concept of ‘regime ideology’ as a driving force behind education policy. Regime ideology, as discussed by Pritchett, refers to a unified configuration of ideas, which the state wants to transfer to its populace. Schools, thus, become one important site through which it educates willing pupils into the ideology that the regime wants to replicate. It is this vested objective that fuels the government’s efforts at educational expansion and efficiency. As per this interpretation, educational expansion is closely tied up with the state’s interest in successfully influencing the beliefs and values of its citizens so that they are in conformity with what the regime considers to be appropriate. In Rajasthan, however, the regime’s vision of education was developed consensually with civil society through a process of negotiation, contestation, and acceptance. The government, NGOs, and social movements were able to forge a common vision of the goals of educational reform that emphasized participation, empowerment, and equity. The surge from the grassroots appears to have played a critical role in the development of this consensually driven vision that shaped educational reform in Rajasthan during the 1980s and much of the 1990s. Bureaucrats and politicians, two of the most powerful networks in the state, unofficially subscribed to this fluid or negotiated ideology driven by civil society. It is worth noting that the architect of the SKP and LJP, Anil Bordia, was a member of the Indian Administrative Service (IAS), while Aruna Roy, an important figure in the MKSS, had once been part of the IAS. Bordia’s position and power in the bureaucratic network was cemented

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by the various influential positions he held over the course of his career in the field of education, both within the state and at the national level: state Development Commissioner, state Secretary for Education, Joint Secretary, Director-General of India’s National Adult Education Program, national Additional Secretary of Education and the national Secretary of Education. During his tenure at the national level, he led the formation of the 1986 NPE, one of the most significant landmarks in the Indian educational landscape.15 It was through Bordia that national policies came to bear on the state. Using his position within the bureaucratic network, Bordia initiated external partnerships for the first time in the history of Indian education to address state concerns in the education sector. The partnership in the case of Rajasthan involved collaboration between the Union government, the state and the bilateral donor agency, Swedish International Development Agency (SIDA). Roy’s influential role in fostering the regime ideology through the MKSS was recognized when she became the recipient of the Magsaysay award, valued as the Asian Nobel prize, for community leadership and international understanding in 2000. Thus, located as they were in positions of power and influence in the bureaucracy, Bordia and Roy’s ideology became associated with the ideology of the regime. Bordia, Roy and others brokered a vision of education that blended civil society perspectives with those of the state. This vision was also broadly shared by both the Congress and Bharatiya Janata Party (BJP), at least through the late 1990s. Indeed, one of the most striking features of educational policy in Rajasthan until 1998 was its bipartisan nature. Chief ministers from both the Congress and the BJP remained committed to a vision of education that emphasized community participation, female empowerment, and working in close association with Rajasthan’s NGOs. This in turn greatly facilitated education reform in the state.

Critical and Effective Program Interventions Education Financing and Donor Support During the period when numerous public action initiatives were being introduced in the state, the state’s fiscal situation did not deteriorate, allowing the state to increase its level of funding for education. Additional financing that was required for the various initiatives was made available mainly through external donor partnerships. The introduction of parateachers with low salaries also allowed the needs of the education sector to be further addressed.

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Education is particularly resource-intensive, employing the highest number of civil servants and providing schools for every village and habitation. The situation is particularly demanding in the states that are economically not very advanced, with a relatively poor spread of education and high population growth. Rajasthan’s economy is primarily supported through farming. However, the land is predominantly arid (except for some parts in western Rajasthan brought under the Indira Gandhi Canal) and farming can therefore barely be sustained. In spite of this, during the 1980s and 1990s the state has performed somewhat better in terms of income growth as compared to many other states in the country. The Net State Domestic Product (SDP) increased by about 14 percent at current prices and 4 percent (Government of Rajasthan 2002b) at constant prices during this period. Due to the fairly stable fiscal situation in the state, the expenditure on education increased and to some extent kept pace with the expanded requirements in education. Expenditure increased from Rs 1,441 million in 1980 to Rs 8,163 million in 1990 and then to Rs 32,104 million in 2001, the rate of growth being significantly higher in the 1980s as compared to the 1990s (see Table 7.6). The rate of increase in education expenditure has also been higher than the growth in SDP over the last two decades. Moreover, the proportion of SDP (4.5 percent) spent on education in Rajasthan is higher than the all-India average of 3.3 percent. More specifically, elementary education expenditure per capita in real terms increased by 3.3 percent per annum in Rajasthan (Kingdon et al. 2004) between 1991 and 1998.16 Table 7.6 Expenditure on Elementary Education in Rajasthan Year 1970–71 1980–81 1990–91 2000–2001

Education Expenditure as Percent of State Domestic Product

Percentage Expenditure on Elementary Education

2.5 3.5 4.5 4.6

37 54 53 58

Source: GoI, Analysis of Budgeted Expenditure on Education (1992–93 to 1999–2000).

State funding for education was complemented by donor contributions. The WDP was supported by UNICEF, and the SKP and LJP by the SIDA. The expenditure on the SKP was much smaller than the LJP, with the share of foreign aid being about Rs 228 million during the period 1987–97.17

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The total expenditure on the LJP was about Rs 2,739 million during the period 1992–2003, about half of which was provided by SIDA.18 Donor funding amounted to about 8 percent of total expenditure on elementary education during this period. Overall, the role of externally aided projects has been critical in supporting and promoting innovative approaches and reform. In later years, after the introduction of District Primary Education Program (DPEP) in 1998 and the Sarva Shiksha Abhiyan (SSA) in 2001, the size of resources coming through external aid in the form of central assistance also increased.19 However, as the analysis in this chapter will show, though the size of resources grew, the space for innovations shrunk in the later years. One of the radical fiscal measures to address increasing expenditure in education, specifically with regards to teacher salaries, involved the hiring of contract teachers, commonly referred to as para-teachers. Para-teachers, introduced in the SKP project, are paid a third of the salary of regular teachers. There has been criticism regarding the low salary given to these teachers. However, in response to this criticism, it can be noted that India has one of the highest private and public sector teacher salary differentials in the world (Howes and Murgai 2004). Only Ghana, Cote d’Ivoire and some regions of Brazil match the salary differential between private and public school teachers in India. Even such a low wage by public sector standards in India is more or less on par with what teachers are paid in the private sector.20

Internal Technical Soundness The internal technical soundness of the projects was in part due to the involvement of highly skilled and knowledgeable individuals from within and outside government. For example, the autonomous research body, Institute of Development Studies in Jaipur, was consistently involved in conceptualizing, evaluating and fine-tuning project components. In addition, the involvement of SIDA allowed a different perspective and experience to inform various dimensions of the projects. Experiences from other parts of the world were also brought to bear on the design and implementation through the critical actors’ exposure to education reform and community mobilization.21 Both SKP and LJP operated through an independent ‘Board’ established under the Societies Registration Act. The board was responsible for implementing the program in a flexible and autonomous fashion. However,

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unlike NGO boards, there was substantial representation from the government, with the Education Secretary being the chairman or secretary of the board. The government’s role on the board symbolized authority, legitimacy and openness to partnerships to improve education. The direct transfer of funds to the board also eliminated the possibility of the absorption of funds into the state exchequer. The establishment of sub-district governance structures at the block and cluster levels in the LJP was also a significant contribution. The SKP and LJP concept of a board and LJP’s sub-district level structures have had far reaching impact in India through the DPEP, which uses registered societies and sub-district level structures to implement its program in 18 states in India. Both SKP’s method for developing teachers’ skill and knowledge and LJP’s community mobilization program included internationally accepted best practices. In SKP’s teacher training program, periods of training at a centralized location were interspersed with periods of classroom teaching, thereby allowing teachers to connect training content with their own instructional practice. The training, which included both subject content knowledge as well as pedagogy, had a systematic and comprehensive focus on the development of literacy skills. Most significantly, regular, facilitated reflection took place in the classroom and school through the two to three day visits of trainers. This kind of on-site support helped teachers understand their own practice and gave them an opportunity to engage trainers with their own specific questions and difficulties. In LJP, the school mapping and micro-planning processes used were internationally recognized strategies for helping communities become involved with schooling. The management practices instituted in the SKP were some of the most progressive. These practices include: 1. An introduction of an incentives framework, involving a defined career path and financial increments. The career ladder allowed an SKP teacher to finally reach, after three years of service and secondary education certification, the benefits and salary scale of a regular primary grade teacher. 2. Clear assessment criteria for both classroom performance and teacher expectations. 3. A defined monitoring structure, which consisted of community perceptions of the teacher’s performance, and an SKP team’s assessment of the teacher’s commitment, technical strengths, and weaknesses.

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The autonomous SKP Board could also dismiss a para-teacher who was not performing well. 4. A working grievance redressal and reverse accountability structure. At every level, space was provided for SKP teachers to express their personal complaints and problems. In addition, a vichar manch (a local council) gave teachers an occasion to express their opinions, thus holding the SKP staff accountable to the SKP teacher.

Development of Freedom and Social Capital Recent studies in education have shown that the delivery of educational services is relatively poor in areas where individuals and groups are without freedom and voice (PROBE 1999; Jha and Jhingran 2005; Pratichi 2002). Freedom, according to Sen (1999) allows the client to evaluate and exercise human agency. Citizens or beneficiaries, as the ultimate users, are critical in the service delivery chain, and government functioning can be made more effective if they can assess services and demand improvements. Information, however, is a prerequisite to be able to exercise freedom and voice. The MKSS movement has enabled communities to become more informed and better prepared to demand effective and efficient services from the government.22 The National Economic and Social Forum (2003: 3) defines the organization of people into networks ‘with shared norms, values, and understandings that facilitate co-operation within or among groups’. Social capital becomes productive in that it improves the functioning of society through organized action. Scholars identify three dimensions of social capital and these dimensions are relevant to this discussion. Bonding social capital refers to networks made up of individuals or groups with the same identity or characteristics. For instance, people from the same caste would possess a high degree of bonding capital. Bridging social capital builds networks between individuals or groups, which differ from each other but work together for the same cause. Linking social capital develops networks across hierarchical divisions. Social capital played a significant role in the success of Rajasthan’s educational reforms. Bridging social capital is represented through the networks that developed between the government, NGOs, academic institutions, and, to some extent, the media. By design, all four projects discussed above created space for partnership and dialogue with NGOs. The operational autonomy that characterized these partnerships enabled NGOs to work in the projects in their own way, while adhering to the

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shared objectives and certain broad features of the project.23 In this way, the NGOs brought their own experiences to bear on the projects, while maintaining the overall integrity of the project. Both learning within the projects and external assessments of activities were facilitated by NGO involvement. Academic institutions and the media were also part of this network. For example, the Institute of Development Studies in Jaipur was directly associated with monitoring and evaluating projects. The media became part of the network by providing proper coverage and space for diverse opinions to be expressed.24 Both the LJP and WDP sought to strengthen bonding social capital and develop bridging and linking social capital. Systematic training, the appointment of facilitators, and scheduling of inclusive and interactive meetings were used as ways to develop social capital among those involved with these programs. Similarly, in the LJP, bonding social capital was developed through the establishment of the Village Education Committee (VEDC). Bridging and linking social capital that built networks across status and caste was essential for the success of these projects. Through the shivirs the WDP allowed bridges to be formed across several groups of women. For instance, the shivirs nurtured associations between the sathins selected from a lower caste and prachetas appointed from a higher caste. In LJP, connections were developed at ‘Field Centers’, where 20–22 VECs gathered together. In SKP, bridges were maintained through the sustained trainee– trainer relationship. The importance of linking social capital in the Indian context is highlighted in Krishna and Uphoff ’s (1999) study of social capital in 64 villages in Rajasthan. This study found that those villages that had strong social capital could be made more productive with ‘capable agency.’ Bordia and Roy could be identified as ‘capable agents’ committed to developing linking social capital. The structure of SKP, LJP, and WDP, with the direct involvement of government and NGOs, nurtured linkages across different levels of society, and, most importantly, between the grassroots and centers of power. To conclude this section, an ethos that demanded change and innovation was necessary for the success of public action initiatives to improve education in the state. In addition, sustained financing was critical to implementing the multiple, well thought through and effective strategies that were put in place for addressing the aspirations and literacy needs of different communities.

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The Problem of Sustainability The Decline of the Public Action Projects of the 1980s and 1990s By the second half of the 1990s, it became increasingly apparent that these projects had not been adequately locked in, institutionalized, or scaled up. The original design of the LJP and other major programs were also significantly modified to the detriment of programmatic efficacy. The SKP succeeded in bringing into sharp focus the need for providing schooling to children in remote areas. It also contained a prototype for addressing this need, which influenced the education reform program in Madhya Pradesh and later became part of the national strategy of the DPEP and the SSA. To its credit, in 1998 the state government through the implementation of the Rajiv Gandhi Pathshalas (RGPs) scheme did adapt the SKP model. This scheme expanded SKP-type schools across the state. Though this scheme succeeded in making access to primary education almost universal, the schools did not fully preserve the innovative and critical elements of this project. For example, teacher training in the RGP scheme was reduced in length and made more formal in nature. The process of the gradual promotion of the teacher with adequate inbuilt accountability also did not find a place in the RGP scheme. Similarly, the practice of community involvement in the selection of the local teacher was not given sufficient importance, and was thus in many cases not followed. The 1998 state elections resulted in a change of government and, unexpectedly, a fracturing of the bipartisan consensus that had developed in education policy over the past two decades. LJP staff were accused by some elements in the new regime of having become politicized. The critical and contentious exchanges resulted in the new regime undercutting the decentralized and debureaucratized trajectories of educational practices in the state. The community-driven decision-making structure and processes followed in the LJP were never fully adopted in any of the projects that followed.25 Furthermore, the space that was created for diversity and collaboration with NGOs continued only in small projects, such as Janshala, but did not find a place under large initiatives like DPEP.26

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Similarly, the essential features of the WDP were not retained when the program was scaled up to cover the whole state. The revised model, which was introduced with the scaling-up of this program, has been severely critiqued by academic institutions, NGOs, and women activists. For example, the bottom-up approach of selecting sathins, which was central to the WDP, did not find a place in its new form (Rajagopal and Mathur 2000). The objective of the programs, which was to transform attitudes and social relationships, ceased to be paramount. The focus of the networks changed and moved to the formation of self-help groups, which do not threaten restrictive and embedded norms, especially those related to women.

Explaining the Declining Impact of Public Action Initiatives Beyond the change of government in 1998, there were several other factors that contributed to the erosion of the programs that had transformed Rajasthan’s educational landscape in the preceding two decades.

Lack of State Policy on Education While national policy provided the initial impetus for reform, it was important for the various initiatives to be located within an overall vision and coherent state policy for education. The Kerala experience is relevant here. The missionary efforts in education in Kerala, similar to SKP and LJP in Rajasthan, did not contribute to major developments in education in that state. Large-scale expansion took place in the second half of the 19th century, when an ‘integrated and well-thought-out educational policy was articulated and put into action’ (Krishnan 1997: 210). Expansion of the school system, the establishment of vernacular schools, and financial incentives for the private sector to establish schools were three main aspects of this policy. As the World Development Report puts it: ‘Having a common negotiated vision of the objectives of public support for schooling makes it easier to move to other stages of improving the quality of schooling …’ (World Bank 2003c: 115). For Rajasthan to enter into the next stage of educational development, the state needs to conceptualize a comprehensive policy and action plan. All the elementary education programs, including the DPEP and SSA, would be supported by the presence of such a policy statement.27

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Redefinition of Rajasthan’s Vision of Education The negotiated ideology of empowerment and equity that was in place during the 1980s and 1990s was again contested and to a large extent rejected when there was a change in regime in 1998. The new regime did not uphold the twin themes of empowerment and equity in the same way as the previous regime. The new government adopted a more bureaucratic approach to implement its vision, which involved marginalizing independent NGOs. The program began to be monitored by state-registered NGOs and academic centers rather than autonomous and independent agencies, which in turn contributed to the deteriorating quality of the programs.28 In the process, the new vision increasingly resembled the state’s view of education rather than a commonly shared perspective as was the case in the past. The earlier vision of empowerment and equity also brought with it internal resistance. Alsop et al.’s study (2003) of democratic processes in Rajasthan found that the majority of the sampled villagers in the state did not believe in changing inequitable social relationships. Similar sentiments are portrayed in the reaction to the sathins in the WDP at the local level. Sathins faced resistance from the community because of their intent to overturn offensive community beliefs and social practices, such as child marriage and wife beating. The sathins’ opposition to traditional gender relations and socio-economic hierarchies also resulted in hurting vested interests, leading to localized political opposition. Resistance from below to a more negotiated regime ideology may have coincided with similar sentiments at the bureaucratic and political levels. The state’s educational bureaucracy, which had chafed at the independence displayed by the societies responsible for running programs, such as Shiksha Karmi and Lok Jumbish, now flexed their muscles in a bid to reclaim lost ground.

Reduced Financing Both the SKP and LJP were affected by the decision of SIDA to withdraw its funding in 1998 in the wake of India’s nuclear tests. Soon after, DPEP brought with it substantial funding, which made it appealing for the state to implement DPEP rather than explore ways to rapidly scale up locally successful programs. DPEP was based on a specific set of ‘guidelines’ given to states for the usage of funds. Furthermore, since SKP covered only remote areas and LJP only covered a quarter of the state, the government felt a genuine need to pursue education reform across the state to ensure universal literacy. The DPEP happened to be a program that could be

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implemented in several districts with central government funding. Thus, DPEP became effective in 1999 just as the future of LJP was being debated.29

The Declining Importance of Social Capital With the change in regime and ideology, and the loss of support from the critical actors of reform, bridging and linking social capital became tenuous and fragile. In the new regime, bridging social capital began to decline with the weakening role of NGOs, CBOs, academics, and the media in service delivery. The dissolution of these networks was evident in the wide-ranging protests that marked the closing of LJP. In the case of the four initiatives, especially through the ‘agency’ of Bordia and Roy, linking social capital was significantly extended across social and administrative boundaries. In the new regime, with the diminishing role of the NGOs and no replacement for the agency of Bordia and Roy, the focus and energy that surrounded linking social capital also declined. Even though there was an expansion of services through the scaling-up of WDP and the implementation of DPEP, the new government’s trust in NGOs and commitment to establishing real links with the beneficiaries of government services became blurred and uncertain. Women’s groups and VECs were left to function within their own micro-contexts.

Lack of Integration with Existing Governmental Structures The various programs introduced during the 1980s and 1990s had a limited impact on state-level reform processes because of the failure to adequately integrate them into the formal governmental structure. Smallscale mission mode enterprises in education do provide new paradigms and frameworks for improving service delivery. However, unless these enterprises make a purposive effort to forge linkages with the official administrative system, their impact is likely to be limited in scope. For example, the personnel and resource implications for scaling up the LJP experiment were never enunciated in the original project documents. Neither was this issue taken up in any significant way in the course of program evaluation. It is important to specify ways in which ‘systematic learning … and replication’ (World Bank 2003c: 122) will take place, and to plan for the incorporation of these lessons into the overall design of any small-scale initiative. This exercise would have necessarily included

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strategies for broader institutional reform in the sector. The lack of integration also appears to be an artifact of working through societies that are located outside the mainstream system. If these projects had been implemented through the education department, institutional reform would naturally have had to accompany the introduction of new initiatives. Institutional reforms crucial for long-term sustainability might, for instance, cover changes in the areas of teacher management, system monitoring, and staff capacity building.

Current Challenges in Teacher Management in Rajasthan Personnel Policies While the SKP introduced para-teachers and focused on their effectiveness, there were no measures undertaken to improve the conditions of the large number of teachers already working in the system. Specific issues relating to the large teacher workforce that need to be addressed in order to improve efficiency include haphazard recruitment and transfers, as well as the absence of an incentive system. The state does not have any statutory policies related to these areas and decisions are based on guidelines issued by the education department from time to time. These procedures appear to be ad hoc in nature and could lead, for example, to transfers based on political rather than educational considerations. The new state government, elected in 2004, has recentralized the recruitment of teachers at primary and upper primary level, which was so far decentralized to the district level. Previous selections were based on merit, taking into account marks obtained and the level of participation in various activities, with those having a degree from the same district being awarded extra points. The recent move abolishes this system by centralizing recruitment in the hands of the Rajasthan Public Service Commission. The government perceives that centralized recruitment would on the one hand, ensure better quality teachers as a result of open competition, and on the other hand, prevent unscrupulous practices being followed by the Zilla Parishads. From the point of view of teacher absenteeism and the proven experience of the SKP, centralization does not appear to be appropriate at this point. Teacher unions have also opposed this move. Moreover, the Panchayati Raj Act has not been amended in the

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Assembly to incorporate this change, which has led to further confusion. The centralized process of recruitment is also more expensive and timeconsuming, as it involves screening a vast number of applications and making arrangements for conducting exams and eventual hiring (Jha et al. 2001). The ambiguity involved has already resulted in a number of court cases against the move, leading to a stay on the first round of recruitment.30 Most importantly, it would affect backward areas adversely, as teachers selected through this process would resist appointments to schools in remote areas. In the light of all these issues, decentralized recruitment with clear criteria for inter-district transfers appears to be preferable. In the case of transfers, although some criteria are developed from time to time, they are not necessarily followed in all cases.31 The transfer of teachers and educational administrators is considered to be one of the most politically sensitive areas, often marked by corruption and patronage.32 Teachers are a large community and the power to transfer is seen as a tool for exercising influence. For all these reasons, politicians are opposed to having a statutory policy to regulate transfers.33 Recently, the state has announced a draft transfer policy that suggests a nonnegotiable three-year service in rural areas for new recruits. The fate of this policy will only be known when it is placed in the Assembly during the next few months. Teachers, the largest group of providers in education, require both clearly defined incentives and criteria for monitoring performance. With regard to the former, there are several ways in which the incentive structure could be constructed. There could be financial, non-financial, and personal/career incentives based on school and student performance. The SKP did institute limited financial incentives for additional enrollment. Financial incentives could be appropriate for low-paid teachers. However, since the regular teachers are being paid high salaries, non-financial incentives would be more appropriate. It is important for teacher incentives to be linked to educational outcomes such as student enrollment, retention, and learning. Systematic community affirmation, departmental recognition, or giving teachers additional mentoring responsibilities are possible non-financial incentives that could be explored. At the secondary level, encouraging teachers’ participation in the decision making of schools is clearly an incentive for better performance.

256 Prema Clarke and Jyotsna Jha

Monitoring and Evaluation Teacher absenteeism, which can in turn lead to high dropout rates and insufficient learning in schools, reflects a basic lack of accountability in schools, including weak monitoring systems. In Rajasthan, as in most parts of India, district officials in the education department are responsible for the monitoring of schools. Inspections are held with or without prior information, and can be of varying duration (half a day, one day, or two days). Longer duration inspections are meant to provide subject-specific inputs, whereas shorter inspections mainly focus on other problems, such as management irregularities, attendance, and physical infrastructure. Inspection norms, as stipulated in the state’s Education Code, focus more on the minimum number of schools to be visited and the number of days to be spent on inspection by officers at each level, rather than ensuring that all schools are inspected at least once or twice a year.34 Most significantly, the norms ensure that ‘inspection’ takes place, but it does not guarantee school functioning. Table 7.7 shows the shortfall in the inspections at elementary level. Clearly, the monitoring system in place does not ensure adequate functioning of all schools. Table 7.7 Inspection Targets, Achievement, and Shortfall in the School System in Rajasthan Year

Number of Officers

Number of Schools to be Inspected as Per Norm

Number of Schools Inspected

32 31 34 34 31

3,680 3,952 4,278 4,269 4,124

2,680 3,037 3,209 2,891 2,743

1995–96 1996–97 1997–98 1998–99 1999–2000 Source: GoR 2000.

The size of the educational administration has remained largely the same and has not kept pace with the expansion of the school system through the opening and up-gradation of a large number of schools. In addition, there are a large number of vacancies (see Table 7.8). Heavy administrative responsibilities, shortage of adequate staff, lack of commuting facilities, long travel distances, and insufficient budgetary provisions are the main reasons for fewer and shorter inspections. A large

Improving Service Delivery in Education 257

number of legal cases regarding transfers, promotions, and pensions keep officials busy, and reflect poorly on the existing redressal system within the administration.35 The service records of teachers at the elementary school level are not fully computerized, leading to inefficiencies. The administration spends significant time and resources in manually updating and processing the information. The details are also subject to negligence as well as manipulation, leading to litigation, and court cases.36 Table 7.8 Vacancies in the Department of Education in Rajasthan Category of Staff Administrative staff Academic staff Office staff Sub-ordinate staff Total

1998–99 Sanctioned Posts Posts Filled 1,285 179,078 2,741 8,128 191,232

896 163,201 1,913 5,766 171,776

1999–2000 Sanctioned Posts Posts Filled 1,308 179,247 2,745 8,046 191,346

899 167,615 2,049 5,593 176,156

Source: GoR 2000.

It is clear from the above discussion that, barring a few exceptions, the state has not taken any major initiative to re-engineer processes related to teacher management and overall system monitoring, critical areas that have to be addressed to improve the quality of service delivery in education. In order to support the institutionalization of the new processes introduced in the 1980s and 1990s, and to ensure statewide reform, business process re-engineering especially those related to teachers will have to take place.

Renegotiating the Role of Civil Society The shift away from involving NGOs as major collaborators in implementing education projects has undermined the efficacy of these projects. It is important to reclaim the earlier role of NGOs in improving education service delivery. It would be useful to create an environment for advocacy groups and communities to demand quality education more forcefully, especially regular teacher attendance and adequate student learning as part of the process of reforming education in the state. The three-tier PRI structure has expanded client participation to a large extent. Observers with close contact at the grassroots level claim that the practice of reservation in the three tiers of local government has enabled

258 Prema Clarke and Jyotsna Jha

dalits, tribals and women to emerge as powerful collective groups that cannot be easily ignored. Performance in terms of improved service delivery is increasingly becoming important for political survival in the Panchayats. However, the struggle for power between the bureaucracy and PRIs on the one hand, and between state-level political leaders and PRIs on the other constrains their evolution as influential institutions. For instance, recentralization of the recruitment of teachers in the state is one such example of how bureaucracy and state-level politicians succeeded in reversing the delegation of power to Zilla Parishads.

Conclusion Several major initiatives introduced in the state during the 1980s and 1990s underpinned Rajasthan’s effort to improve educational outcomes. These initiatives included the WDP focusing on women’s empowerment and education; the SKP providing education to children living in remote areas; the LJP dealing with girl’s education and community mobilization; and the MKSS, which by ensuring the right to information improved accountability, including in education. These initiatives augmented the number of schools and teachers available and influenced increases in overall literacy, enrollment in elementary education, and retention. Several factors together enabled the establishment and development of these initiatives in the state. First, the initiation of these projects in Rajasthan was largely driven by national policy. Second, NGOs created a positive environment for the success of these projects by contesting traditional ideologies that placed less emphasis on the education of children from lower castes and disadvantaged communities. Third, the development of a common vision for education in Rajasthan, upholding empowerment and equity (and shared by the state and NGOs alike) supported the effective implementation of the public action initiatives during this period. Fourth, these initiatives were sustained by adequate financing by the state, augmented with funds from the central government and external donors. Fifth, the technical soundness of these projects contributed to their ability to improve service delivery in education. For example, methods used for the training of teachers, women’s groups, and community members were derived from internationally accepted best practices. Sixth, the projects focused on developing voice and social capital by supporting citizen involvement through the formation of productive networks across different groups and levels of society.

Improving Service Delivery in Education 259

The factors discussed above were not sufficient, though, to ensure that the experiences and gains of the 1980s and 1990s were locked in and sustained. In addition to national policy, a coherent state policy for developing education would have facilitated the continuation of these interventions. The importance of a consensual vision of education becomes apparent when there is a reversal and the vision becomes bureaucratized. By the late 1990s, neither the system as a whole nor the critical actors within the system remained committed to a negotiated view of education. This change in the state’s view of education has led to a diminishing emphasis on the role of NGOs and the need for fostering social capital. Finally, critical actors in Rajasthan chose the easier path of starting new alternatives and implementing them through autonomous societies, rather than working on changing the mainstream system. This case study shows that alongside such creative initiatives, it is important to address systemic issues in the education sector as a whole in the state especially institutional and governance reform.

Notes 1. The authors wish to thank, in addition to the editor, Lant Pritchett, Maitreyi Das, Christine Helen Allison, and Geeta Kingdon for their comments on earlier drafts of this chapter. 2. For instance, much before independence, the Maharaja of Baroda (part of modern Gujarat), the Maharaja of Mysore (part of modern Karnataka), and the King of Travancore (part of modern Kerala) during their tenure took initiatives that led to an initial spread of mass education. 3. Other indicators which are important to understand the status of education, such as completion rates and instructional time, could not be included in this analysis as there was no information available for this period or for earlier periods. 4. ‘Special Category State’ is a designation given by the central government to states that have difficult terrains, dispersed populations, and certain other constraints. These states receive significant additional plan investments from the central government as compared to other states. 5. GER is the total enrollment in a specific level of education, regardless of age, expressed as a percentage of the official school-age population corresponding to the same level of education in a given school year. 6. Based on enrollment data provided in GoI, Selected Educational Statistics, 2001. 7. The well-known Mahila Samakya national program has its roots in Rajasthan’s WDP. 8. The well-known Education Guarantee Scheme in Madhya Pradesh adopted the SKP model of establishing schools in remote areas. More recently, the national elementary education program—the Sarva Shiksha Abhiyan—has introduced this intervention across India for hard-to-reach children.

260 Prema Clarke and Jyotsna Jha 9. Research in developing countries has shown that a teacher’s basic qualifications are more important than a teaching degree. The training provided in a formal teacher training program is usually quite substandard. 10. Tamil Nadu, Kerala, Gujarat, and Orissa were serving cooked midday meals for several years. The Supreme Court ruling was meant for those states that distributed dry grain instead of a cooked meal. 11. Bordia however did not at the time focus on the importance of simultaneously developing state policies and specifying state outcomes in education. Bordia, in fact, had an aversion to setting timelines and targets in education. 12. Mehta, after serving as revenue officer and education minister in Mewar state, went on to become Rajasthan University’s vice chancellor in the 1950s and early 1960s. 13. The term ‘barefoot’ originally comes from Chinese health workers who were trained to assist their own rural communities in the 1960s. 14. While NGOs are registered bodies, CBOs may not be registered. CBOs are usually collectives of people coming together for a common cause. 15. This policy outlines the nation’s commitment to eradicate illiteracy and to provide five years of primary education for all children. The policy also stipulated that education expenditure should be 6 percent of GDP, and that 50 percent of this be on primary education. 16. This was only surpassed by Maharastra, Orissa, Karnataka, and Assam. All others states had lower or negative increases in per capita expenditure on elementary education. 17. In case of SKP, SIDA funded 90 percent of expenditure through GoI. GoR provided the remaining 10 percent during the first phase (1987–94). Thereafter it became 50 percent each for GoI and GoR, the GoI money coming from SIDA. 18. The contribution of SIDA, GoI, and GoR was in the ratio of 3:2:1 in the LJP. 19. DPEP was introduced in 1999 in selected districts in Rajasthan. It is a centrally sponsored project with a funding ratio of 85:15 between GoI and the state government respectively. The central share comes through external sources, this being the World Bank in the case of Rajasthan. SSA is another centrally sponsored project being implemented in the entire country with the state government providing a 25-percent share. During the initial years of the SSA, the external agencies did not have a role, but are now providing support. 20. Since the establishment of SKP, states with severe teacher shortages and insufficient funding, such as Bihar, Uttar Pradesh, and Madhya Pradesh, have decided to hire a substantial number of para-teachers. Due to their low formal education, para-teachers are also known to perform better in the lower grades than in the higher grades. 21. Bordia’s tenure at UNESCO’s Institute for Education Planning in Paris from 1980 to 1982 gave him an opportunity to participate in the international discourse on education. He also participated in the path-breaking UN World Conference ‘Education for All’ held in Jomtien, Thailand in 1990. About 1,500 people, representing 155 governments, 33 intergovernmental bodies, and 125 non-governmental organizations, institutes, and foundations attended this conference. Roy was exposed to the international discourse on feminism and oppression. 22. The importance of access to information is reiterated by Alsop et al.’s study (2003) of PRI members in three districts in Rajasthan. This study found that the higher the access to information, the greater the participation of elected officials. With each additional source of information, the increase was about three percentage points.

Improving Service Delivery in Education 261 23. For example, Digantar, a NGO that has been running schools in the outskirts of Jaipur with an alternative pedagogical approach, was encouraged to run the Alternative Schooling centers, known as Sahaj Shiksha Kendras, following a different approach from others, as long as it adhered to basic financial norms and overall objectives. 24. During the LJP controversy, local Hindi newspapers gave ample space for both the government and to others holding diverse views. 25. In 1999, the Department for International Development (DFID) came forward to support a revised form of the LJP project in the 13 districts not implementing DPEP with World Bank funding. 26. Janshala is a primary education project started in 1997, operational in about 138 blocks and urban centers (in non-DPEP districts) in eight states, with the financial support of the UN system. Bodh, an NGO running schools for children coming from deprived situations in the slums of Jaipur influenced the state to take urban deprived children as the target group in the Janshala project. Bodh was the main resource agency for teacher training and training of other NGOs involved in implementing the project in four cities in Rajasthan. 27. The way in which the PRIs, established in 1994, were used to develop education after DPEP was introduced is an example of a need for a coherent and long-term state policy. During the second year of DPEP, the responsibility for implementation was transferred to the PRIs, without elucidating the role of either the education department or the block and cluster authorities. Due to the ensuing confusion, the decision was reverted two years later. This transfer and re-transfer adversely affected educational progress in the state. 28. GoR has recently established a ‘Women’s Resource Centre’ to facilitate research, orientation and training. 29. DPEP is similar to SKP and LJP in that it provides financial support to school construction, improvements in teaching and learning, community mobilization, and management practices. It differs from these programs in that it is norm-based, restricting expenditure in each of these areas. 30. The experience of Bihar, which introduced similar changes in the early 1990s, has been mixed. While it led to the selection of highly qualified teachers in some cases, it also led to teachers leaving their jobs for other jobs whenever the opportunity arose. More seriously there was considerable resistance and subversion in the posting of teachers to remote districts. 31. For instance, the government developed a draft transfer policy for teachers and made it public on Teachers’ Day (September 5, 2004). But simultaneously, a large number of arbitrary transfers were taking place during the same period. 32. In our interactions with teachers, teacher union representatives and educational administrators, they cited ongoing ‘rates’ for transfer of teachers and administrative officers to different positions and places. 33. In the late1990s, a committee under the chairmanship of Bordia had submitted a report recommending a transfer policy based on an objective set of criteria. The then government made a move to make this into a law, but the Assembly did not pass it. 34. For instance, a DEO (elementary) should inspect at least 120 schools every year. Similarly, according to the provisions laid down in Rule 345 of the Rajasthan Panchayati Act, at least 15 schools are to be inspected by the Education Extension Officer and Senior Deputy Education Officer in a month.

262 Prema Clarke and Jyotsna Jha 35. Currently about 9,000 court cases are pending in the state. 36. State education officials intend to computerize teachers’ service records with a small contribution from each teacher. A prominent teacher union representative expressed their agreement to such an initiative. However, this intervention does not yet have political sanction, and it is not clear whether this intervention would receive political support.

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Improving Service Delivery in Education 263 Government of Rajasthan. 2004b. Transfer Rule and Regulation (Draft). Jaipur: Department of Education. ———. Various years. Annual Report. Jaipur: Department of Elementary Education. ———. Various years. Annual Report. Jaipur: Department of Secondary Education Grootaert, Christiaan. 2001. ‘Does Social Capital help the poor’, Local Level Institutions, Working Paper No. 10. Washington, DC: World Bank, Social Development Unit. Hooja, Meenakshi and Hooja, Rakesh. 1998. ‘Panchayati Raj in Rajasthan—Policy Issues and Concerns’, IJPA, 44 (3): 469–603. Howes, Stephen and Murgai, Rinku. 2004. ‘Subsidies and salaries: Issues in the restructuring of government expenditure in India’, Paper prepared for the IMF-NIPFP conference on fiscal reform, January, New Delhi. Institute of Development Studies. 1983. Exploring Possibilities. Jaipur: IDS. ———. 1991. WDP—Emerging Challenges. Jaipur: IDS. Jan Samachar (Multilingual News and Feature Agency devoted to Rural Issues). 2005. ‘A profile: Shri Bhairon Singh Shekhawat’. Available at: www.jansamachar.net/display. php3?id=&num=1918&lang=English. Jain, Sharda and Mathur, Alok Kumar. 1996. Attempting Non-Formalisation of Formal Education. Jaipur: Sandhan Research Centre. Jenkins, Rob. 1997. Rajput Hindutva: Caste Politics, Regional Identity, and Hindu Nationalism in Contemporary Rajasthan. Working Paper, Department of Politics and Sociology, Birkbeck College, University of London. Jha, Jyotsna and Jhingran, Dhir. 2005. Elementary Education for the Poorest and other Deprived Groups: The Real Challenge of Universalization. New Delhi: Manohar. Jha, Jyotsna, Saxena, K.B.C., and Baxi, C.V. 2001. Management Processes in Elementary Education: A Study of Existing Practices in Selected States in India. Delhi: European Commission. John, Mary. 1999. ‘Democracy in the Night Schools of Rajasthan’, Journal of Family Life, 5 (1). Available at: http://www.barefootcollege.org/html/school-democracy.html. Kingdon, Geeta, Cassen, R., McNay, K., and Visaria, L. 2004. ‘Education and Literacy’, in T. Dyson, R. Cassen, and L. Visaria (eds), 21st Century India: Population, Environment and Human Development. Oxford: Oxford University Press. Krishna, Anirudh and Uphoff, Norma. 1999. ‘Mapping and Measuring Social Capital: A Conceptual and Empirical Study of Collective Action Conserving and Developing Watersheds in Rajasthan’, Social Capital Initiative Working Paper no. 13, Washington, DC: World Bank. Krishnan, T.N. 1997. ‘The Route to Social Development in Kerala: Social Intermediation and Public Action’, in Santosh Mehrotra and Richard Jolly (eds), Development With a Human Face: Experiences in Social Achievement and Economic Growth. USA: University Press Oxford. Kumat, R.S. 1998. ‘Adjusting Recruitment Policy for Good Governance in Backwards Areas: Rajasthan Experiment’, IJPA, 44 (3). Lok Jumbish. Various years. Annual Report. Jaipur: Government of Rajasthan. ———. 1998. Project Document: Phase III 1998–2003. Jaipur: Government of Rajasthan. ———. 2004. Phase III Report: 1999–2004. Jaipur: Government of Rajasthan. Majumdar, Manabi. 2001. ‘Educational Opportunities in Rajasthan and Tamil Nadu: Despair and Hope’, in A. Vaidyanathan and P.R. Gopinathan Nair (eds), Elementary Education in Rural India. New Delhi: Sage Publications. Mehra, Sunil. 1997. ‘Little people do big things’, Outlook, December 29, p. 72.

264 Prema Clarke and Jyotsna Jha Muralidharan, Karthik, Riboud, Michelle, and Sundararaman, Venkatesh. 2004. ‘Presentation on Teacher Absence in India’, ASCI Conference, Hyderabad, July 2–3. National Council of Educational Research and Training. 1998. Sixth All India Educational Survey, Volume II. Delhi: NCERT. ———. 2004. ‘Seventh All India Educational Survey’. Available at: http://gov.ua.nic.in/ aises/. National Economic and Social Forum. 2003. ‘The policy implications of social capital’, Forum Report No. 28. Dublin: Government Publications Sales Office. National Institute of Educational Planning and Administration.1996. Educational Administration in Rajasthan (Report prepared by Baldev Mahajan, R.S. Tyagi, and Shanta Agarwal). New Delhi: Vikas Publishing House.. Nambissan, Geetha B. 2001. ‘Social Diversity and Regional Disparities in Schooling: A Study of Rural Rajasthan’, in A. Vaidyanathan and P.R. Gopinathan Nair (eds), Elementary Education in Rural India. New Delhi: Sage Publications. Paul, Samuel, Balakrishnan, Suresh, Gopakumar, K., Sekhar, Sita, and Vivekananda, M. 2004. ‘State of India’s Public Services: Benchmarks for the States’, Economic and Political Weekly, 39 (5): 920–933. Pratham Resource Center. 2004. ‘Is Every Child in School and Learning? Rapid Assessment of Learning Outcomes.’ August 31. Pratham Resource Center. Pratichi Trust Team. 2002. ‘The Delivery of Primary Education: A Study in West Bengal’, Pratichi India Trust. Pritchett, Lant. 2003. ‘When will they ever learn? Why all governments produce schooling’. BREAD Working Paper No. 031, London. Pritchett, Lant. 2004. ‘Towards a new consensus for addressing the global challenge of the lack of education’, Copenhagen Consensus Challenge Paper. Washington, DC: Center for Global Development. PROBE Team. 1999. The PROBE Report: Public Report on Basic Education in India. New Delhi: Oxford University Press. Rajagopal, Shobita and Mathur, Kanchan. 2000. ‘Women’s Empowerment through State Benevolence’, Economic and Political Weekly, August 12: 2908–910. Rajasthan Shiksha Karmi Board. 1994. Rajasthan Shiksha Karmi Project. Jaipur: Government of Rajasthan. Ramachandran, Vimala. 2001. ‘Community Participation in Primary Education’, Economic and Political Weekly, June 23: 2244–250. ———. 2003. ‘Lok Jumbish—Rajasthan People’s Movement for Education for All’, Case Study Commissioned by the World Bank, New Delhi. Ramachandran, Vimala and Sethi, Harsh. 2001. ‘Rajasthan Shiksha Karmi Project: An Overall Appraisal’, Desk Study Commissioned by SIDA, Embassy of Sweden, New Delhi. Roy, Aruna and Dey, Nikhil. n.d. ‘Fighting for the Right to Know in India.’ Available at: http://www.freedominfo.org/case/mkss/essay.htm. Saran, Rohit. 2004. ‘There’s something about Himachal’, India Today, August 16, pp. 42–45. Sen, Amartya. 1999. Development as Freedom. New York: Alfred A Knopf, Inc. Seva Mandir. n.d. An Overview. Udaipur: Seva Mandir. Available at: http://sevamandir.org/ annualrep-web/annual-report-web_files/Overview.htm. SIDA Monitoring Mission. 1996. Towards Education for All in Rajasthan: Lok Jumbish and Shiksha Karmi Projects. Stockholm: Department for Democracy and Social Development, Education Division, SIDA, Sweden.

Improving Service Delivery in Education 265 SIDA and the Governments of India and Rajasthan. 1993. ‘Lok Jumbish—Learning Together’. New Delhi: SIDA and the Governments of India and Rajasthan. Shiksha Karmi Resource Unit. 2001. Project Document. Bikaner: Government of Rajasthan. Weiner, Myron. 1990. The Child and the State in India: Child Labor and Education Policy in Comparative Perspective. Princeton: Princeton University Press. World Bank. 2003a. A Review of Educational Progress and Reform in the District Primary Education Program, Phase I and II. South Asia Human Development Series. Washington, DC: World Bank. ———. 2003b. Equity in Enrolment and Completion in Elementary Schooling in India. South Asia Human Development Series. Washington, DC: World Bank. ———. 2003c. World Development Report 2004: Making Services Work for Poor People. New York: Oxford University Press.

Chapter 8 The Political Economy of the Public Distribution System in Tamil Nadu A.K. Venkatsubramanian

Introduction ‘The Public Distribution System (PDS) is a major instrument of Government’s economic policy for ensuring availability of foodgrains to the poor at an affordable price as well as for ensuring food security of the poor. PDS is an important Constituent of the Strategy for poverty eradication and is intended to serve as a safety net for the poor who are nutritionally at risk’ observes the Standing Committee on Food, Consumer Affairs and Public Distribution (2004–05) of the 14th Lok Sabha in its report submitted to the Lok Sabha (Standing Committee 2004, para 2.71). With about 476,000 retail outlets catering to about 224 million households and distributing about 24 million tons of foodgrains, the Public Distribution System (PDS) is one of the biggest distribution networks in the world. To distribute this amount of foodgrains to such a large number of customers through thousands of retail points day after day involves procurement, storage, movement, and distribution on a mammoth scale. This is a tremendous responsibility for any one organization to assume. The PDS is operated under the joint responsibility of the Government of India and state governments. The responsibility of the Government of

The PDS in Tamil Nadu 267

India relates to procurement, storage, transportation and the bulk allocation of foodgrains to state governments. It is the responsibility of state governments to sub-allocate the foodgrains within a state, and deliver commodities to fair price shops for issue to consumers holding family cards. Thus, state governments perform a very important role in achieving the aims of the PDS in ensuring availability of foodgrains to the poor.

Tamil Nadu: A Well-functioning PDS Tamil Nadu’s PDS is the one of the best in the country. A survey conducted by the National Council of Applied Economic Research (NCAER) indicates that Tamil Nadu has the highest rate of usage of PDS among households of any Indian state (NCAER 1996). In Tamil Nadu, 82.4 percent of all households reported using PDS, compared to 78 percent in Kerala, 70 percent in Karnataka, 66.4 percent in Andhra Pradesh, 50.7 percent in Maharashtra, 34.2 percent in Madhya Pradesh, 23 percent in Rajasthan, and only about 5 percent in Uttar Pradesh and Bihar. An exhaustive study by the Public Affairs Centre (PAC) covering basic services ranks Tamil Nadu’s PDS as the best in the country in terms of ease of access, level of usage, reliability, and user satisfaction (PAC 2002). Table 8.1 Per Capita Purchase and Income Gain from PDS in Rural Areas Per Capita Purchases of Cereals through PDS (Kg/Month)

Per Capita Income Gain (Rs/Month) to Poor Due to PDS in Cereals

States

Poor

Non-poor

All

Poor

Non-poor

Tamil Nadu Andhra Pradesh Bihar Gujarat Himachal Pradesh Karnataka Kerala Madhya Pradesh Maharashtra Orissa Uttar Pradesh West Bengal

3.49 2.56 0.20 1.11 3.53 1.50 5.49 0.44 1.14 1.71 0.27 0.45

3.30 2.30 0.32 0.92 2.93 1.50 4.53 0.32 1.13 1.46 0.20 0.27

3.34 2.33 0.26 0.95 2.97 1.50 4.62 0.36 1.13 1.58 0.25 0.32

20.28 13.26 0.80 4.69 10.66 7.73 18.39 1.36 5.13 10.02 0.84 2.42

25.49 14.02 2.11 4.75 3.65 9.94 17.06 0.95 4.43 7.79 0.39 1.33

Source: Reddy and Rao (n.d.).

268 A.K. Venkatsubramanian

The findings of the PAC study mirror earlier studies. For instance, the National Sample Survey (NSS) 55th Round (1999–2000) furnishes data regarding average monthly household purchase through PDS. According to the 55th round, the quantity of foodgrains purchased from PDS is the highest in Kerala, followed by Tamil Nadu. But the number of households reporting purchases from PDS across all states is the highest in Tamil Nadu. It should be noted here that the per capita allocation of foodgrains from the Government of India is normally much higher in Kerala than in Tamil Nadu, which might explain the higher per capita purchase of rice in Kerala (the population of Tamil Nadu is roughly twice that of Kerala). Using NSS data, the National Institute of Rural Development, Hyderabad, studied the per capita purchase and income gain from PDS in rural areas. Here also Tamil Nadu is second with regard to per capita purchases, and first with regard to per capita income gain, despite the higher per capita allotment of foodgrains to Kerala by the Government of India (Reddy and Rao n.d.).

The Structure of PDS in Tamil Nadu Fair Price Shops Tamil Nadu has a wide network of fair price shops, served by a matching network of godowns, catering to more than 15 million family cardholders who regularly draw their entitlement for essential commodities from these shops.1 The government has prescribed guidelines that no family cardholder is to travel more than 2 km to access a fair price shop. The district collectors have been empowered to open fair price shops in tribal and communally sensitive areas even if the guidelines are not satisfied. Normally, a full-time shop shall have a minimum of 800 cards and not more than 1,000 cards in urban areas. Full-time shops in other areas shall have a minimum of 500 cards and not more than 800 cards, so as to ensure economic and operational viability. Most fair price shops are in the cooperative and public sector. The government in 1980 chose cooperatives as the primary instrument for extending fair price shops to all villages across Tamil Nadu. Personnel staffing fair price shops are employees of these cooperative societies. In addition, women’s self-help groups (SHGs) run 373 full-time shops across the state. Tamil Nadu also possesses a vast network of warehouses to store foodgrains—228 godowns with a total storage capacity of 2,317,546 metric tons.

The PDS in Tamil Nadu 269 Table 8.2 Fair Price Shops in Tamil Nadu (April 2004) Agency Tamil Nadu Civil Supplies Corporation Cooperatives (under the Registrar of Cooperative Societies) Other cooperatives (Fisheries, Plantations, etc.) Women’s groups Mobile fair price shops Total

Full-time

Part-time

Total

1,091 21,677

58 4,593

1,149 26,270

151 373 36 23,328

7 156 0 4,814

158 529 36 28,142

Source: GoTN 2004a.

Indeed, Tamil Nadu’s civil supplies corporation has the largest storage capacity of any such corporation in India’s states.

Scale of Issue The distribution of essential commodities is regulated by issue of family cards to households. Nearly 15.25 million family cards were in circulation on May 31, 2004. Each family is entitled to a maximum of 20 kg of rice and 2 kg of sugar per month. The prices at which essential commodities were issued in fair price shops are shown in Table 8.3. Table 8.3 Prices in Fair Price Shops Commodity

Price per Kg

Rice Rs 3.50 Sugar Rs 13.50 Wheat Rs 7.50 Kerosene Rs 8.40–9.00∗ ∗The price varies in this range, depending on the distance from the oil terminal. Source: GoTN 2004a.

Allotment and Off-take Tamil Nadu’s offtake of essential commodities was also extremely high, as Tables 8.4 and 8.5 demonstrate. Offtake was also very high in the Anthyodhaya Anna Yojana (AAY) scheme intended for the very poor (see Table 8.5). Rice is the most important commodity distributed in the PDS, both in terms of volume and value. Hence this study will be confined largely to rice distribution under PDS.

270 A.K. Venkatsubramanian Table 8.4 Allotment and Off-take of Commodities from April to July 2004 Rice (MTs)

Wheat (MTs)

Sugar (MTs)

Month

Allotted

Off-take

Allotted

Off-take

Allotted

Off-take

April May June July

192,144 193,875 194,044 205,870

169,241 (88%) 170,317 (88%) 168,824 (87%) 184,680 (90%)

10,000 10,000 10,000 10,000

4,649 (46%) 4,115 (41%) 4,666 (47%) 5,268 (53%)

10,828 24,974 24,974 24,974

12,465 (115%) 13,568 (54%) 14,338 (57%) 15,213 (61%)

Source: GoTN (2004a). Table 8.5 Allotment and Off-take for Rice in the AAY Program Rice (MTs) Month April May June July

Allotment

Off-take

21,638 21,690 21,697 21,576

20,151 (93%) 20,441 (94%) 20,315 (94%) 20,686 (96%)

Tables 8.4 and 8.5 corroborate the conclusions of the PAC study regarding access, usage, and reliability in the PDS in Tamil Nadu. This situation was not achieved overnight, but evolved over a period of time— in fact, over a period covering more than three decades. To trace the evolution of the PDS in Tamil Nadu, we have to go back in history to that crucial year, 1967, when the Dravida Munnetra Kazhagam (DMK) came to power in the elections, defeating the Congress Party, which had continuously been in power in the state for two decades since independence.

The Politics of PDS The Impact of the 1967 General Elections The year 1967 marked a watershed in the political and social history of Tamil Nadu. It was the year of general elections, and the way Tamil Nadu voted that year brought about a permanent change in the social, political, and cultural life of the state. At that time, there was statutory rationing in Madras city and Coimbatore, and informal rationing through a system of family cards in some other parts of the state. The rationale behind

The PDS in Tamil Nadu 271

statutory rationing was that the large working population in these major cities needed to be assured of a regular supply of foodgrains at reasonable prices. In statutory rationing areas, open market transactions in rice were not permitted. Therefore, the government took upon itself the entire responsibility of distributing rice in these areas. In family card areas, open market transactions in rice were freely permitted. In these areas, rice was issued by government in lean months, when there was some difficulty in obtaining rice in the open market. This was also a period of various controls. Under the Guest Control Order, there were restrictions on serving cereals to more than 25 persons in any gathering. There were also restrictions on serving rice preparations after 5.00 pm on Mondays and Thursdays in hotels. There were also restrictions on movement of foodgrains. Permits were required even to move foodgrains for the consumption of one’s family in the city from one’s own land in rural areas. These restrictions proved irksome to the public. Despite having undertaken the sole responsibility of distributing rice in statutory rationing areas, the government did not fulfill its obligation effectively. The procurement of rice in 1966 was not adequate to maintain even the limited distribution in statutory rationing areas. As a result, statutory rationing collapsed in Madras just prior to the elections in 1967. The DMK promised in its election manifesto to supply three measures of rice per rupee (one measure of rice is roughly equivalent to 1.5 kg). In the election the Congress Party, after holding office for two decades, was defeated. Commenting on the electoral result, The Hindu, the leading English newspaper of south India observed in its editorial dated February 24, 1967, headlined ‘Congress Debacle in Madras’: Neither the rice situation which was mishandled in the rationed area nor the mounting cost of living which had generated widespread discontent fully explain the general rout of the Party over the whole State though they were the two most powerful factors operating against the Congress. (emphasis added)

The new DMK government declared food policy to be the ‘most central issue’ of the government. The food minister stated in the Legislative Assembly on July 11, 1967 that when the government took over, rice stocks had dwindled to such a point that the government could meet demand in Madras for only two days and for 50 days for Tamil Nadu as a whole. The day the DMK took over on March 8, 1967, the minister added, total

272 A.K. Venkatsubramanian

rice stocks stood at 105,597 metric tons (MT) compared to 238,105 MT at the same time the previous year. The minister also emphatically stated that it was the considered view of the government that if the price of rice came down, then the price of all other commodities would automatically fall as well. The government realized that it could not fulfill its electoral promise of giving three measures of rice for a rupee to all the people. It opted instead to give one measure at a rupee, that too only in statutory rationing areas. The experience of 1967 has left a lasting impression on the minds of the political class in the state. There is a firm belief that electoral outcomes are decided on the floor of fair price shops. Thus, it is of paramount importance for the government to keep the price of rice down and make it available at inexpensive rates to the masses. The various actions of subsequent governments in Tamil Nadu were largely influenced by this outlook, which emanated from the electoral defeat of the Congress in 1967.

Center–State Relationship in PDS In framing a food policy, the state government is not totally free. The food policy for the whole country is decided by the Government of India (GoI). Dividing the country into various zones and restricting the movements within and between zones were all policies that fell under the ambit of GoI. More importantly, release of foodgrains from the central pool was done only by GoI. Further, a state government wanting to buy rice from another state required the permission of the central government. The food credit from the Reserve Bank of India was also controlled by the central government. The DMK believed that it would not be in the interest of the state government to be permanently dependent on the GoI for release of rice from the central pool. The state government therefore established the Tamil Nadu Civil Supplies Corporation in 1972. The Tamil Nadu Civil Supplies Corporation began procuring paddy directly from farmers in the Cauvery delta, processing it through its hulling agents, storing it in its godowns, and distributing it to various parts of the state through its transport contractors.

A Fair Price Shop in Each Village The next stage in the evolution of the PDS in Tamil Nadu began when the AIADMK Party under M.G. Ramachandran (MGR) came to power in the 1977 elections. The new government also attached great importance to

The PDS in Tamil Nadu 273

food policy. The new government used the governor’s address to the Legislative Assembly on July 7, 1977 to announce its goals in this area:2 The objective of the Government will be to ensure a remunerative price for the grower and a reasonable price for the consumer by eliminating the scope for exploitation by middlemen. The policy which will be followed by the Government will neither be purely producer-oriented nor consumer-oriented, but essentially people-oriented and will aim at reconciling the interest of the producer and the consumer.

The governor then continued: It will be my government’s endeavor to build up a network of retail points in the public sector including the cooperative sector to ensure equitable distribution of essential commodities at reasonable prices. We propose to extend the scheme of Fair Price Shops so that each of the about 16,000 revenue villages will have at least one Fair Price Shop in the village itself.

This policy was vigorously put into practice: The number of fair price shops rose from 9,300 in 1977 to 17,536 in 1982. Some of the shops opened in the rural areas were not economically viable in view of the small number of cards attached to them. The government came forward to extend a subsidy to cooperatives to make the shops viable. This subsidy amount has increased over the years and is now approximately Rs 200–300 million per annum.

Strong Political Commitment to the PDS The next major development in the PDS was when, with effect from January 1, 1996, prior to general elections, the AIADMK government raised the scale of issue of rice per card from 12 kg a month to 20 kg and reduced the price. However, the party lost the election. The DMK, which came to power, could not afford to restore the status quo ante by reducing the scale of issue back to 12 kg per card per month. The demand for rice went up. As against monthly offtake of 132,000 tons in December 1995 before the upward revision of the scale of issue, the monthly off-take in December 1996 was 208,600 tons. The state government requested the GoI to increase the monthly allotment of rice from 145,000 tons to 225,000 tons. But the GoI could not agree to this huge upward revision. Undaunted, the state government purchased 200,000

274 A.K. Venkatsubramanian

tons from the open market in Andhra Pradesh, and 150,000 tons from the Food Corporation of India (FCI) under the open-market-sale scheme. There were transport bottlenecks in bringing the stock to Tamil Nadu. The Minister for Food stated in the Assembly: ‘Unmindful of the extra transport charges involved, the State Government would resort to road movement to maintain the continuity of supply of rice under the Public Distribution System.’3 Such strong political commitment to maintain the PDS for rice at any cost has been a salient feature of the food policy of successive governments of Tamil Nadu. This commitment is best summed up by the food minister in his policy note placed before the assembly during the budget session of 1998, when he stated, ‘It is not an exaggeration if it is said that the success of Public Distribution System is the parameter for the successful governance of a State.’4

Political Commitment Triggers Effective Implementation of PDS Measures for Monitoring The Inspection Regime Strong political commitment after 1967 in turn galvanized the administrative system to ensure effective implementation of PDS in the state. The monitoring regime was especially vigorous. An elaborate system for monitoring and inspecting fair price shops has been prescribed and is largely followed. A large number of officials have been employed by the cooperative department to monitor the shops run by cooperatives. In all, some 600 officials are involved in the supervision of fair price shops. Targets for inspection of fair price shops have been fixed for all staff. At the district level, there is a Deputy Registrar in each district exclusively for PDS. They have to inspect 50 shops per month. Under them are Cooperative Sub-Registrars and Senior Inspectors of Cooperative Societies. Together, all cooperative department officers have to inspect 16,925 shops per month.5 A similar drill exists for the officers of Tamil Nadu Civil Supplies Corporation, which runs most of the remaining shops in the state. In addition, district officials right from the Collector down to Special Revenue Inspectors have a monthly target of inspection of fair price shops.

The PDS in Tamil Nadu 275

Each Collector has to inspect 10 shops, Additional Collectors 20 shops, District Supply Officers 30 Shops, Revenue Divisional Officers 20 Shops, Taluk Supply Officers 30 Shops, and Special Revenue Inspectors 40 shops. During this inspection, they have to verify the entries in about 20–50 family cards. They also have to verify the stock register, and verify from the public whether shops are kept open according to schedule. The Tamil Nadu Civil Supplies Corporation has also issued elaborate instructions to ensure proper weighing of rice bags before they are dispatched to the shops. Electronic weighing machines have been introduced in almost all godowns. Machine stitching of the sacks has also been introduced. The supervisors of the fair price shops are also invariably present at godowns when the sacks are weighed and loaded. They also accompany lorries taking stocks from godowns. There is also an elaborate system of reporting and review of the PDS. The stock position and the offtake are reported to headquarters on a weekly basis. Review meetings are also held on a weekly basis by District Collectors, the Commissioner of Civil Supplies, Registrar of Cooperative Societies, and the Chairman and Managing Director of the Tamil Nadu Civil Supplies Corporation. The Secretary to the government holds a monthly review meeting with all top officials in the PDS. When an emergency arises, this meeting occurs once a week.

District Level Monitoring: The Role of the Collector In Tamil Nadu, the district administration has always been crucial for governance. The District Collector as the head of district administration functions as the eyes and ears of the government. The collectors are also relatively senior compared to other states, which, unlike Tamil Nadu, have a Divisional Commissioner between the District Collector and the state government. Over the years, all governments have taken care to maintain the status of the Collector as the head of the district. The Collector also chairs the District Development Council. The Collector plays a very crucial role in monitoring the PDS. The collector personally inspects a number of fair price shops. The District Supply Officer and District Revenue Officer, pivotal officers for the implementation of PDS, all work directly under the Collector. The Collector holds a weekly review meeting attended by the district heads of the cooperative department as well as the Tamil Nadu Civil Supplies Corporation. Collectors are personally held responsible for the smooth functioning of PDS in their districts throughout the year.

276 A.K. Venkatsubramanian

At the Collector’s conference, which is generally held half-yearly or yearly, the public distribution system is always reviewed. This conference is presided over by the chief minister with all ministers in attendance. The conference is guided by the chief secretary. No Collector wants to be criticized by the chief minister or the chief secretary at the conference. This makes Collectors alert and alive to the PDS in their districts.

State-level Monitoring Review meetings are also held by the three heads of departments involved in the PDS: the Commissioner of Civil Supplies (responsible for regulating PDS), the Registrar of Cooperative Societies (responsible for managing fair price shops), and the Managing Director of the Tamil Nadu Civil Supplies Corporation (responsible for procurement, storage and movement of the foodgrains from godowns to shops). The Secretary for Cooperation, Food and Consumer Protection also holds weekly meetings with the three heads of departments. This meeting is also attended by the representative of the Food Corporation of India (FCI). In this meeting, all problems relating to movement, quality, and distribution are reviewed. With the use of information technology, the monitoring system has improved. It is now possible for the Secretary to monitor daily stock positions across districts from the office in the Secretariat in Chennai. The movement of stocks from godowns to shops is also effectively monitored. There is a fixed time chart and route chart for tracking the movement of foodgrains. MLAs are given access to this information. At the highest level, the chief minister plays a crucial role in the smooth functioning of PDS. Tamil Nadu has had a series of strong chief ministers who have held unchallenged sway over their parties. With such strong chief ministers, all possessing a high-level of commitment to PDS, it is not surprising that the administrative apparatus ensures the smooth running of the system.

Measures to Enhance Transparency in PDS Ensuring greater transparency in PDS was one of the reasons for the adoption of the Tamil Nadu Right to Information Bill, 1997, by the legislative assembly. As its preamble makes clear: In order to provide the public the right of access to information about the administration and to enable them to get details about the schemes of the Government implemented by various departments, the works executed by

The PDS in Tamil Nadu 277 various departments, the quantity of rice, and other essential commodities supplied to each of the shops under public distribution system and their stocks and to pave the way for the people to question irregularities in the system, the Government have decided to bring a legislation. (emphasis added)6

Following this, the government also issued orders in August 1997 permitting all civil supplies authorities to release information on the flow of food stocks in and out of fair price shops to elected representatives and the public. It also made available beneficiary registers by shop as well as information on individual withdrawals, and also issued a citizens’ charter obliging shops to provide information on their timings, prices, stock positions, and grievance redressal processes. Notice boards were placed in all shops to provide such information to consumers. Yet, despite this, awareness of the citizens’ charter for PDS appears to be low. According to a study conducted jointly by the PAC, Bangalore, and Catalyst Trust, Chennai, in 1999–2000 (PAC and Catalyst Trust 2001), only 6 percent of the respondents were aware of the existence of the Citizens’ Charter. When the government passed orders making the registers maintained in the fair price shops public in 1997, there were relatively few requests from consumer groups or NGOs to gain access to these records.

The Cost of PDS in Tamil Nadu Issue Price of Rice under PDS in Tamil Nadu The PAC and Catalyst Trust (2001) study cited earlier examined PDS only from the point of view of user satisfaction. It did not take in to account the cost of maintaining PDS in Tamil Nadu. The Government of Tamil Nadu firmly believes that keeping the price of rice under control will automatically ensure keeping the prices of other essential commodities under control. Thus, the government kept the price of rice under the PDS very low even when the open market prices were high. Further, the State Issue Price under PDS was fixed lower than the Central Issue Price, and such low prices in the state PDS continued unchanged, even when the Central Issue Prices were raised. For instance the Central Issue Price of rice was raised from Rs 2.89 per kg in 1990 to Rs 5.37 in 1993. But the State Issue Price was raised to only Rs 2.5 in 1993 and Rs 3.5 in 1994, only to slip back to Rs 2 in 1995 (see Table 8.6).

278 A.K. Venkatsubramanian Table 8.6 Open Market Price, Central Issue Price, and State PDS Price of Rice (Rupees per Kg), 1978–96 Year

Open Market Price

1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

1.60 1.65 2.00 2.90 2.71 3.71 3.12 3.38 3.52 3.75 4.17 5.54 4.37 4.90 5.67 6.81 6.85 8.35 9.15

Central Issue Price 1.50 1.50 1.65 1.75 1.88 1.88 1.88 2.17 2.31 2.39 2.44 2.89 2.89 3.77 4.37 5.37 5.37 5.37 5.37

State PDS Price 1.60 1.60 1.60 1.75 1.75 1.75 1.75 1.75 1.75 1.75 1.75 2.00 2.00 2.00 2.00 2.50 3.50 2.00 2.00

Source: Government of Tamil Nadu, Policy Notes of Cooperation, Food and Consumer Protection Department, 1996–97.

In 1997, the GoI introduced the Targeted Public Distribution System (TPDS), which classified families as either Below-Poverty-Line (BPL) or Above-Poverty-Line (APL) and set different prices for foodgrains distributed to the two categories. Tamil Nadu did not adopt this classification, but instead took a policy decision to issue family cards on optional basis. Accordingly, families which preferred to draw rice under the PDS were issued pink-colored cards, and families which did not prefer rice were issued yellow-colored cards and made eligible for either an additional quantity of 3 kg of sugar or 5 liters of kerosene per month in lieu of the rice foregone. The price fixed by the Tamil Nadu government for rice under PDS for all families, regardless of poverty levels, was even lower than the Central Issue Price for rice for the BPL population after 1997 (see Table 8.7). In fact, the State Issue Price for rice in Tamil Nadu is the lowest in the country, particularly with regard to the APL population (see Table 8.8).

The PDS in Tamil Nadu 279 Table 8.7 Open Market Price, Central Issue Price, and State PDS Issue Price (Rupees per Kg) after 1997 Average State Open Market Price of Rice

Year

Common

Fine and Superfine

1997 1998 1999 2000 2001 2002 2003

8.53 9.09 10.10 10.55 10.36 10.69 11.79

9.50 10.44 11.45 11.60 11.38 12.02 12.41

Central Issue Price BPL

Common

Grade A (Fine and Superfine)

3.50 3.50 3.50 5.90 5.65 5.65 5.65

3.50 3.50 3.50 5.90 5.65 5.65 5.65

State PDS APL Issue Price Grade A (Fine and Fine and Superfine) Common Superfine 7.00 7.00 9.05 11.80 8.30 8.30 8.30

2.00 2.00 2.00 3.50 3.50 3.50 3.50

3.75 3.75 3.75 3.50 3.50 3.50 3.50

Source: Government of Tamil Nadu, Policy Notes of Cooperation, Food and Consumer Protection Department, 2004–05. Table 8.8 Present Prices of Rice (Rupees per Kg) Under PDS in Some Major States

APL BPL

Andhra Pradesh

Gujarat

Karnataka

Kerala

Maharashtra

West Bengal

Tamil Nadu

9.00 5.25

10.00 3.00

9.00 3.50 (yellow card)* 6.15 (green card)$

8.90 6.20

10.00 6.00

9.00 6.50

3.50 3.50

Source: GoTN (2004a). Notes: *Issued to poor. $ Issued to non-poor.

The Fiscal Cost of PDS in Tamil Nadu In order to maintain low prices under PDS, the Government of Tamil Nadu is bearing heavy subsidies. The subsidy bill has increased also greatly over the last 20 years (see Table 8.9). The outgo of a huge subsidy is only part of the problem. Because of the huge difference between the open market price and the PDS issue price of rice, which is now of the order of about Rs 8.50 per kg, there is an irresistible temptation to divert rice to the open market.

280 A.K. Venkatsubramanian Table 8.9 Food Subsidy (Rupees in Million) from 1980–81 to 2003–04 Year 1980–81 1981–82 1982–83 1983–84 1984–85 1985–86 1986–87 1987–88

Amount 18.1 239.9 516.8 790.0 839.0 790.0 650.0 1,176.1

Year

Amount

1988–89 1989–90 1990–91 1991–92 1992–93 1993–94 1994–95 1995–96

1,845.3 2,087.9 2,193.1 3,160.0 3,610.0 3,350.0 3,170.0 6,150.0

Year 1996–97 1997–98 1998–99 1999–2000 2000–2001 2001–02 2002–03 2003–04

Amount 8,740.0 9,050.0 9,050.0 11,450.0 15,400.0 12,400.0 12,400.0 8,000.0

Source: Government of Tamil Nadu, Policy Notes of Cooperation, Food and Consumer Protection Department, 2003–04.

Diversion from PDS to Open Market Diversion of all commodities allotted for the PDS to the open market is prevalent in all Indian states. The Tata Economic Consultancy Services (TECS), New Delhi, undertook a study for the Ministry of Food and Consumer Affairs, GoI, to ascertain the extent of diversion of PDS commodities. The study estimated the diversion of four commodities: wheat, rice, sugar, and kerosene (see Table 8.10). Considering the extremely low issue price of rice under PDS in Tamil Nadu, one would have expected a much higher percentage of diversion of rice to the open market. Perhaps, the intense inspection drill of the fair price shops by the officials enforced by the government and the wide usage of PDS by cardholders are responsible for the relatively low percentage of rice diversion in the state.

Bogus Cards Diversion of PDS stocks to the open market is facilitated by the presence of a large number of bogus cards. The existence of bogus cards has been a recurring phenomenon. Even at the time of statutory rationing, there were bogus cards. In fact, in the 1967 budget session of the Assembly, the Food Minister claimed that more than 36,000 cards were examined in Madras city, and 3,266 were found to be bogus and eliminated. Later on, when the issue price of rice under PDS was artificially pegged at a very low level, the problem of bogus cards assumed menacing proportions. The total number of cards has hovered at about 16 million between July 2001 and March 2003, but the number of households in

The PDS in Tamil Nadu 281 Table 8.10 State- and National-level Diversion from PDS Estimated Diversion (%) Name of the State Tamil Nadu Andhra Pradesh Arunachal Pradesh Assam Bihar Delhi Gujarat Karnataka Kerala Madhya Pradesh Maharashtra Manipur Megalaya Mizoram Nagaland Orissa Punjab Rajasthan Tripura Uttar Pradesh West Bengal National

Wheat

Rice

Sugar

24 15 47 61 44 53 23 30 28 20 26 48 62 63 100 39 69 31 27 46 40 36

33 19 56 64 64 53 21 18 23 24 30 19 54 54 46 54 40 36 33 49 34 31

28 16 23 52 47 25 18 19 25 32 22 37 39 41 24 28 6 17 13 36 24 23

Source: TECS (1998: II–4, Table II–1).

Tamil Nadu, as per the 2001 Census, stands only at approximately 14 million. At worst, this implies the existence of some 2 million bogus cards. In order to tackle the problem, the government has invited applications for new family cards. A staggering 5 million application forms have been received by the government seeking new cards. So long as rice is being issued in the PDS at extremely low rates, both for the APL and BPL population, the attraction of possessing a card, including a bogus one, will continue unabated.

Extent of Possible Diversion in a Fair Price Shop A reasonable estimate of diversion has been made by the popular Tamil weekly Kumudham in its issue dated December 31, 1998. In Table 8.11 we can see Kumudham’s estimate of the profit that may accrue to a fair price shop in a month by selling commodities in the open market.

282 A.K. Venkatsubramanian Table 8.11 Probable Monthly Profit in a Fair Price Shop through Diversion to Open Market PDS Issue Open Market Profit Commodity Price (Rs/Kg) Price(Rs/Kg) per Kg (Rs) Rice Sugar Wheat Kerosene

3.75 11.40 5.60 2.80/per liter

5.50–6.50 13.00–15.00 6.50–7.50 8.00/liter

Total

2.00–4.00 2.00–3.00 1.00–2.00 5.20/liter

Total Average Profit (Rs)

4,000 kg @ Rs 3/kg = Rs 12,000 400 kg @ Rs 3/kg = Rs 1,200 2,000 kg @ Rs 1/kg = Rs 2,000 500 liters @ Rs 5.20/liter = Rs 2,600 17,800

Source: Kumudham, December 31, 1998.

An interesting offshoot of the Kumudham story is the reaction of the unions of the staff employed in the PDS shops. The union claimed that staff were subjected to pressures for illegal gratification from inspecting officials, local anti-social elements and political bosses. It is not that there are no legal instruments to arrest diversion of commodities meant for public distribution to the open market. The Essential Commodities Act, 1995, and Prevention of Black-Marketing and Maintenance of Essential Commodities Act, 1980, together give wide-ranging powers to the state government for ensuring effective implementation of the PDS. Tamil Nadu also has a special enforcement cell to check diversion, located in the office of the Commissioner of Civil Supplies, headed by an Additional Director General of Police and supported by field units in the districts. However, the effectiveness of this cell seems to be very poor considering the quantum of seizures effected by it in 2003–04, as Table 8.12 shows. Table 8.12 Seizures of Diverted Rice in Tamil Nadu in 2003–04 Quantity (MT) PDS rice seized PDS rice distributed (approximate)

499.10 2 million

Value (Rs) 5.86 million 23.50 billion

Source: Government of Tamil Nadu, Policy Notes of Cooperation, Food and Consumer Protection Department, 2004–05 (Annexure 6).

It is clear that in relation to the total off-take of rice from the PDS in Tamil Nadu, the total quantum seized is extremely insignificant.

The PDS in Tamil Nadu 283

Attempted Reforms in PDS in Tamil Nadu The government was and is fully aware of the existing ills in the PDS, particularly the existence of bogus cards, bogus issues, and the diversion of PDS commodities. This awareness has prompted the government to undertake reforms in PDS with respect to targeting, price fixing, procuring, and restricting the movement of foodgrains.

Reforms during the Period 1991–96 The government marginally raised the price of rice in view of the high subsidy, but withdrew it in a matter of days for political reasons. However, the government proceeded with other reforms. The government had the power to obtain 50 percent of the stock purchased by licensed hullers/ traders as levy at the procurement price fixed by the government. This necessitated setting up check-posts at every district border to ensure that any movement of foodgrains was effected only after payment of the levy. The government took a decision to suspend the levy in view of the fact that the cost, time and energy spent in collecting the small share of 6 percent to the total procured quantity was disproportionate. 7 The open market price fell generally, and more sharply in the traditionally deficit areas. This reform remains in place. The government also wanted to target the PDS more effectively. In 1982–83, when the state was reeling under a severe drought, the government was compelled to confine the issue of rice to family cardholders having a monthly income of less than Rs 1,000. The next serious attempt at targeting came on April 21, 1992. In fact the chief minister made a special statement, in which she mentioned that the full benefits of PDS did not go to those people for whose benefit the system was started, and further that the cheap rice intended for distribution under PDS was being diverted to the open market and that the government had therefore decided to confine distribution of rice under PDS only to 9 million (out of 12.5 million) family cardholders with monthly incomes under Rs 750 per family. But the very next day, given the political sensitivity of the issue, the chief minister was forced to retract her statement.8 The government also changed the system of monopoly procurement under which the farmers in the Cauvery Delta had to sell their surplus paddy to the Tamil Nadu Civil Supplies Corporation at prices fixed by

284 A.K. Venkatsubramanian

the government. Other private dealers were not allowed to purchase paddy or rice in these areas. Monopoly procurement necessitated movement restrictions at taluk and district levels, and spot checks in rice mills and wholesale shops. All these created general dissatisfaction. Further, the production of paddy had also increased considerably over the years. Taking all these factors into account, the system of monopoly procurement was scrapped in May 1993 and a system of parallel procurement introduced in its place. Under this system, farmers were given full freedom to decide to whom, where, and at what price paddy could be sold. The Government of India too was trying to restructure the PDS at this time. It introduced the Revamped Public Distribution System (RPDS), under which foodgrains were allotted at reduced rates to all people in special and difficult areas like drought-prone areas, hill areas, desert areas, etc. In 1997, the GoI introduced the Targeted Public Distribution System (TPDS), under which foodgrains were made available at specially reduced rates for BPL families and at a higher rate for APL families.

Reforms during the Period 1996–2001 In the meantime, in the 1996 elections the AIADMK was voted out, and the DMK came back to power. The AIADMK government did not accept RPDS, which aimed at all families in poor areas. The DMK government did not accept TPDS, which aimed at poor families in all areas. The policy of the state government has always been to cover all in all areas. Thus the state government did not opt for the APL and BPL classification system, but instead decided to give rice to all those who opted for it. To induce people not to opt for rice, an additional quantity of sugar or kerosene was offered in lieu of the rice foregone. The system of universal entitlement at extremely cheap prices continued. In the meantime the subsidy burden also increased, touching a new height of Rs 15.4 billion in 2000–01. In elections held in May 2001, the DMK lost, and the AIADMK came back to power.

Reforms during the Period 2001–04 As soon as the new government took over, it placed a White Paper on Tamil Nadu Government Finances in the Legislative Assembly on August 18, 2001 to inform members of ‘the extent and causes of the serious financial crisis confronting the state’. The White Paper dealt exhaustively

The PDS in Tamil Nadu 285

with the fiscal costs of PDS and set the stage for further reforms in the system.

Targeting As a first step towards weeding out bogus cards, the government introduced a coupon system according to which each rice cardholder would be given a rice coupon book free of cost. Cardholders could draw rice in the PDS outlets by tendering coupons. However, coupon books were to be issued only to the person whose photo has been affixed in the family card and not to any other person. Each rice cardholder had to personally collect rice at PDS outlets by producing family cards as well as tendering the rice coupon. Another innovation was to convert the cards of those who did not want to purchase commodities from fair price shops, but still needed them for identification purposes, into ‘Honorary’ cards. It was further ordered that families with a monthly income of Rs 5,000 and above would be eligible only for ‘Honorary’ cards.

Price Changes Mounting subsidies forced the government to revise prices. In October 2002, the government revised the price of PDS rice to Rs 3.5/kg for the first 10 kg and Rs 6/kg for the next 10 kg. However, this order was also cancelled a year later. It was clearly politically unpalatable to increase the issue price of rice under PDS.

The Effect of National Assembly Elections in 2004 The pace of reform in PDS is never smooth in Tamil Nadu, since PDS is an extremely sensitive political question. The AIADMK alliance did not win a single seat out of the 39 Lok Sabha seats in Tamil Nadu during the 2004 national parliamentary elections. This electoral defeat was a severe jolt to the government and all these measures were reversed.

Replicating the Tamil Nadu Model in Other States Status of PDS in other States PDS allocations have generally been made on the basis of past off-take. States with a good network of godowns and fair price shops as well as

286 A.K. Venkatsubramanian

adequate arrangements for transport and monitoring were able to lift more from the central allocations. In this process, poorer states without these advantages could not lift their share of the central pool and lagged behind in terms of usage. Before the introduction of the Targeted Public Distribution System (TPDS) in June 1997, PDS was generally catering to more efficient states, which were food-deficient but had relatively more per capita income. States with a larger share of BPL families had only a small share in overall allocation (see Table 8.13). Table 8.13 Percentage Share of National BPL Population and Allocation of Foodgrains before TPDS (1995–96): Comparing Poorer and Richer States

Poorer States

% Share of BPL % Population in Share in the Country Allocation

Uttar Pradesh Bihar Madhya Pradesh Orissa

16.29 14.65 9.10 8.28

4.32 3.44 3.14 2.78

Total

48.32

13.68

Richer States Andhra Pradesh Kerala Maharashtra West Bengal Karnataka Tamil Nadu

% Share of BPL % Population in Share in the Country Allocation 5.57 2.62 10.31 7.95 4.90 7.81 39.16

15.65 11.60 9.73 9.49 5.88 4.32 56.67

Source: GoI (n.d.).

It is obvious that states with substantial BPL population, amounting to 48.32 percent of the total in the country, had a share of only 13.68 percent of PDS allocations, while states with a smaller share of the BPL population (39.16 percent) cornered 56.67 percent of all allocations. The worst sufferers were Bihar and Orissa. The High-Level Committee appointed by the Ministry of Food and Public Distribution has observed that ‘in States like Bihar, Orissa and Uttar Pradesh, there is less need for the Public System to make physical cereals supplies available throughout the year. It remains important to assure affordable supply at times of seasonal distress and of course in the event of agricultural failure. But the most important problem in this region is of adequate income to purchase food which is normally relatively cheap’ (Jenkins and Goetz 2002).

The PDS in Tamil Nadu 287

Hallmark of PDS in Tamil Nadu: A Strong Political Commitment ‘Universal coverage is the hallmark of the Public Distribution System in operation in our State,’ declares the 2004–05 Policy Note of the Cooperation, Food and Consumer Protection Department of Government of Tamil Nadu. In fact, it is not only universal coverage but universal coverage at extremely low prices that is the hallmark of Tamil Nadu’s PDS. But it is doubtful if any other state will either be willing or have the financial capacity to adopt the Tamil Nadu model, sustained by a very heavy subsidy from the government. The political commitment to PDS and the perception on the part of both major political parties that electoral outcomes are determined on the floor of the fair price shops are largely absent in other states.

Monitoring Systems The most critical factor in the implementation of the PDS in a state is ensuring that the foodgrains allotted by the central allocation is lifted from the godowns of the FCI, stored in the state godowns, and transported to the fair price shops and from there to the individual households. This requires a fairly efficient administrative machinery and an effective system of monitoring at each stage. Tamil Nadu has over the years evolved a good system of monitoring through an elaborate system of reporting and review at various levels. Some of the existing features of the Tamil Nadu model have been incorporated in the Public Distribution System (Control) Order, 2001, issued by the Ministry of Food and Public Distribution in November 2001 (GoI 2001: 11). Other states, particularly those with a substantial BPL population, should adopt these measures.

Infrastructural Facilities Tamil Nadu has a good network of godowns in the state sector under the Tamil Nadu Civil Supplies Corporation and the Tamil Nadu Warehousing Corporation. A similar network of godowns could be developed in other states, possibly using idle storage capacity in other departments or programs. Lack of godowns will generally be a handicap, as is the case in Delhi, where the State Civil Supplies Corporation does not have godowns of its own but relies solely on lifting stocks straight from FCI godowns and transporting them directly to fair price shops.

288 A.K. Venkatsubramanian

A network of fair price shops in the public or cooperative sector as in Tamil Nadu can be adopted. Another alternative will be to entrust the fair price shops to the Panchayats. In urban areas, cooperative societies or self-help groups of consumers or Residents’ Welfare Associations can be entrusted with the responsibility of running the fair price shops to prevent leakages.

Civil Society Activism Tamil Nadu’s PDS owes its efficiency more to political commitment and administrative competence than civil society action. Even though the Tamil Nadu Right to Information Act refers specifically to the PDS, and even though the government had issued orders to make fair price shop registers available to the public, the response from NGOs has been poor. In some other states, such as Delhi, civil society organizations have profitably used Right to Information laws for the benefit of PDS cardholders. The NGO Parivartan has used the Delhi RTI law to expose corruption in the state’s PDS by insisting on access to stock registers maintained at privately-run fair price shops to compare official entries relating to food stocks received from government warehouses with field surveys to verify what households actually received. The NGO’s efforts showed that a very high level of rice, wheat, and other commodities such as oil, intended for Delhi’s poor, was diverted to the open market (Parivartan 2004). Parivartan volunteers were physically intimidated on several occasions; and attempts were made to secure a stay order from the Delhi High Court to prevent the release of stock registers on the grounds that doing so violated the privacy rights of fair price shop owners. Indeed, an analysis of the PDS in Tamil Nadu and other states shows that there are at least four essential parameters for any public program like PDS to succeed. These are:  

 

Strong political commitment for the success of the program. Administrative efficiency in translating political commitment into eventual success through proper monitoring. Availability of essential infrastructure facilities. Civil society activism to ensure that the program is implemented for the benefit of the intended beneficiary in the intended manner.

These parameters are interlinked. Political commitment can galvanize the civil service into action. Political commitment itself can in turn be a

The PDS in Tamil Nadu 289

consequence of pressure by civil society. Delhi’s model focuses more on activism, while Tamil Nadu’s is based more on political commitment.

Restructuring PDS National-level Issues Today there is a huge surplus of foodgrains in the FCI godowns, well beyond prescribed buffer stock norms, and the government is also incurring huge food subsidy costs. In the light of growing food stocks and food subsidy, many doubts have been raised about the cost-effectiveness of the PDS. The overall food situation in the country has also changed. As observed by the Standing Committee of Parliament: In the first two decades after independence, there was scarcity of foodgrains and the country was solely dependent on imports. But now the production scenario of the country has totally changed and the country has become a food-surplus State from a food deficit State. Now the problem is … the proper management of surplus stock of foodgrains. (Standing Committee 2004: para 2.2)

Similar views have also been expressed by the Working Group on Public Distribution System and Food Security for the Tenth Five-Year Plan (2002–07) in its report of November 2001. Some of the observations and recommendations made by the group are listed below (GoI 2002): 







The main factor that has contributed to the excess stock is the fact that in recent years there has been a tendency among successive governments to fix minimum support prices for paddy and wheat in excess of the levels prescribed by the Commission for Agricultural Costs and Prices (CACP). While this increases the farmers’ incentive to produce more, it has raised market prices and reduced the demand for cereals. A high level of buffer stock is maintained through expansion of bank credit, which crowds out non-food credit and/or raises the cost of credit to the economy. A high level of food subsidies will also lead to a large fiscal deficit and can generate inflationary pressures. The capacity of the poor to purchase food can be ensured in two ways. One can either raise the levels of income of the poor or one

290 A.K. Venkatsubramanian





can supply foodgrains to the poor at subsidized prices. Employment generation programs for the poor seek to ensure that the poor have sufficient purchasing power. Stabilization of cereal prices should continue to be one of the important objectives of food policy. This can be achieved through the operation of a buffer stock combined with timely intervention by the FCI in domestic markets and a liberal import-export policy for foodgrains. The Essential Commodities Act and State Agricultural Produce Marketing Acts are hampering the growth of free trade in agricultural goods and the development of a modern agro-processing industry in the country and need to be reviewed.

State-level Issues in Tamil Nadu Evolving an Exit Strategy A crucial question for restructuring PDS in Tamil Nadu relates to issue price of rice. Tamil Nadu had all along opted for universal distribution of rice at an extremely low price. This may be found to be difficult to maintain in future. Tamil Nadu cannot afford to keep its issue price of rice at extremely low levels for all cardholders. The state may be compelled to opt for universal entitlement but at a higher price; or an extremely low price but only to a targeted population. Universal and extremely low price for distribution will prove to be financially crippling in the years to come. The state will thus have to evolve an exit strategy over a period of time.

The Need for Political Consensus The question really is how to bring about the necessary change. Unfortunately, political parties have viewed PDS only from the point of view of electoral politics. Each party, while in power, appreciates the impossibility of sustaining the PDS with very heavy subsidies. Each party is also afraid that any reform in PDS, which will necessarily involve social costs, will be exploited by the opposition for electoral gains. In view of the apprehension about the opposition exploiting any dissatisfaction that may arise, much-needed reforms in PDS are not undertaken or, if undertaken, are given up at the slightest sign of political opposition. Hence the need of the hour is to create a political consensus for restructuring the PDS.

The PDS in Tamil Nadu 291

Conclusion Running the PDS as it exists now in Tamil Nadu is a massive operation. In terms of access, usage, reliability, and satisfaction of the cardholders, the PDS in Tamil Nadu is indeed a success. The successful running of PDS owes its origin and continuous maintenance to the strong political commitment exhibited by successive governments over the last threeand-a-half decades. Political commitment has underpinned administrative efforts to implement PDS effectively. But there is a heavy cost in running PDS in its present form. In its anxiety to keep the price of rice as low as possible in the PDS, and thereby keeping the prices of essential commodities at a low level in the open market, the state government was prepared to incur a huge subsidy, which grew from Rs 18.1 million in 1980–81 to Rs 15.4 billion in 2000–2001. Unfortunately, not all the subsidy actually went to the poor and the needy. The state did not differentiate between the population below and above the poverty line and issued rice for both sections at an extremely low price. Thus, the difference between the PDS issue price and open market price widened year after year. Unscrupulous elements joined together and exploited the situation by diverting substantial quantities of rice to the open market. This was done cleverly, without denying the entitlement of legitimate cardholders, but by creating bogus cards and effecting bogus issues. Vested interests now oppose and thwart reforms that could put an end to diversion of rice to the open market and thereby also to their illegal profit. The ills of the PDS were not unknown to the government. Several attempts were made to reform the PDS by way of targeting it to the poor and also by price adjustments. But the reforms did not last long. Somehow, the political perception was that electoral fortunes would be adversely affected if serious reforms took hold in PDS. It was politics which made a success of PDS. It is again politics which comes in the way of reform in PDS. Now the government finds itself riding a tiger, which it finds difficult to dismount. Yet the country is self-sufficient in food at the macro level. The number of people below the poverty line is coming down, albeit slowly. PDS is no longer the sole issue for the government. Other vital sectors like primary education, primary health, sanitation, and drinking water merit the government’s attention much more. Thus, the time has come to wean

292 A.K. Venkatsubramanian

away the government from its preoccupation with the PDS and to make it concentrate on these vital sectors. Unless meaningful reform in PDS is made through political consensus and public action, the existing ills of the PDS will continue. The enormous sums by way of subsidy meant for the poor and the needy will be diverted and misappropriated. The ‘safety net’ intended for the poor will be hijacked and used as a hammock by unscrupulous elements.

Notes 1. Government of Tamil Nadu, Policy Notes of Cooperation, Food and Consumer Protection Department, 2004–05. 2. Governor’s Address to the Tamil Nadu Legislative Assembly on April 7, 1977. 3. Government of Tamil Nadu, Policy Notes of Cooperation, Food and Consumer Protection Department, 1996–97, p. 3. 4. Government of Tamil Nadu, Policy Notes of Cooperation, Food and Consumer Protection Department, 1998–99, p. 10. 5. Government of Tamil Nadu, Government Order 486, Cooperation, Food Consumer Protection dated 9.7.2004 (Chennai: 2004). 6. Government of Tamil Nadu, Tamil Nadu Government Gazette Extraordinary No. 214, dated April 17, 1997. 7. Government of Tamil Nadu, Policy Notes of Cooperation, Food and Consumer Protection Department, 1992–93. 8. Proceedings of the Tamil Nadu Legislative Assembly (April 21 and 22, 1992).

References Government of India, Ministry of Civil Supplies, Consumers Affairs and Public Distribution. 1993. National Policy on PDS: Report of the Committee of Ministers. New Delhi: Government of India. Government of India, Ministry of Civil Supplies and Public Distribution, Department of Consumer Affairs and Public Distribution. 1997. Focus on the Poor—Guidelines for the Implementation of Targeted Public Distribution System. New Delhi: Government of India. Government of India, Ministry of Food, Consumer Protection and Public Distribution. 2001. ‘Public Distribution (Control) Order 2001’. New Delhi: Government of India. Government of India, Ministry of Consumer Affairs, Food and Public Distribution. 2002. ‘Report of the High Level Committee on Long-Term Grain Policy Department of Food & Public Distribution’. New Delhi: Government of India. Government of India, Planning Commission. 2002. Report of the working Group on Public Distribution System and Food Security for the 10th Five Year Plan (2002–2007). New Delhi: Government of India. Government of Tamil Nadu. 2001. White Paper on Tamil Nadu Government’s Finances. Chennai: Government of Tamil Nadu.

The PDS in Tamil Nadu 293 Government of Tamil Nadu. 1967–68 to 2004–05. ‘Policy Notes of Cooperation, Food and Consumer Protection Department, placed on the Table of Tamil Nadu Legislative Assembly’. Chennai: Government of Tamil Nadu. Government of Tamil Nadu, Civil Supplies and Consumer Protection Department. 2004a. At a Glance – July 2004. Chennai: Government of Tamil Nadu. Government of Tamil Nadu, Registrar of Cooperative Societies. 2004b. Bird’s Eye View of PDS as on 31.7.2004. Chennai: Government of Tamil Nadu. Jenkins, Robert and Goetz, Anne Marie. 2002. ‘Civil Society Engagement and India’s Public Distribution System’, Paper prepared and presented at the ‘Making Services Work for Poor People’ World Development Report (WDR) 2003/04 workshop, held at Eynashm Hall, Oxford on November 4–5. National Council for Applied Economic Research (NCAER). 1996. Human Development Profile of India: Inter-State and Inter-Group Differentials. New Delhi: NCAER. Parivartan. 2004. Report of Jansunwai on Public Distribution System. New Delhi: Parivartan. Public Affairs Centre. 2002. State of India’s Public Services: Bench-Marks for the New Millennium. Bangalore: Public Affairs Centre. ———. n.d. The State of Tamil Nadu’s Public Services: Bench-Marks for the New Millennium. Bangalore: Public Affairs Centre. Public Affairs Centre and Catalyst Trust. 2001. Citizens’ Audit of Public Services in Rural Tamil Nadu. Bangalore: Public Affairs Centre. Reddy, B. Sambi and Rao, K. Hanumantha. n.d. Assessment of Targeted Public Distribution System in Rural India. Hyderabad: National Institute of Rural Development. Standing Committee on Food, Consumer Affairs and Public Distribution System. 2004. ‘First Report of the Standing Committee on Food, Consumer Affairs and Public Distribution System (2004–05) of 14th Lok Sabha’, Paper presented to the Lok Sabha on August 25. Tata Economic Consultancy Services. 1998. ‘Study to Ascertain the Extent of Diversion of PDS Commodities’. New Delhi: TECS.

Chapter 9 Human Development in Tamil Nadu and Karnataka: A Comparison Sangeeta Goyal

Introduction India’s federal structure provides laboratory-like conditions to understand the nature of economic and social development. The states function under a common constitutional framework, yet great diversities in outcomes are found across them. Some states have done remarkably well in wellbeing-related attainments, whereas a few are yet to take off in human development terms. Some states have done well along some dimensions of well-being, but less well along others. The per capita incomes of states and their human development attainments are only weakly related at any point in time, bringing out the importance of factors, not necessarily correlated with income, in the attainment of people’s well-being.

Human Development in Tamil Nadu and Karnataka Tamil Nadu and Karnataka are among the more progressive Indian states in economic and social development. Economic growth in the two states has been largely similar, but from 1981 onwards Tamil Nadu has achieved greater success in human development than Karnataka.

Human Development in Tamil Nadu and Karnataka 295

Table 9.1 shows the Human Development Index (HDI) for Tamil Nadu, Karnataka, Punjab, and Kerala, and for India as a whole for 1981, 1991 and 2001. In 1981, Karnataka and Tamil Nadu ranked sixth and seventh respectively by HDI among Indian states. By 1991, Tamil Nadu had pulled ahead to occupy third position after Kerala and Punjab, while Karnataka occupied seventh place. Between 1981 and 1991, the HDI increased by nearly 36 percent for Tamil Nadu, the highest rate of change among the 15 major states. It increased by only 19 percent for Karnataka. This was the third lowest rate of change among Indian states, higher than only Punjab and Kerala, and lower than the average rate of change for India at 26 percent. The two states maintained their relative rankings in 2001, though in the 1990s there was a slowdown in human development in Tamil Nadu and an acceleration in Karnataka. Between 1991 and 2001, the percentage rate of change in the HDI was greater for Karnataka than for Tamil Nadu, at 16 percent versus 13 percent; and both states experienced a rate of change lower than the all-India average of 23 percent. Table 9.1 State-wise Human Development Index (1981, 1991, 2001) 1981

1991

2001

State

Value

Rank

Value

Rank

Value

Rank

Karnataka Tamil Nadu Punjab Kerala India

0.346 0.343 0.411 0.500 0.302

6 7 2 1

0.412 0.466 0.475 0.591 0.381

7 3 2 1

0.478 0.531 0.537 0.638 0.472

7 3 2 1

Sources: GoI (1999–2000); Census of India 2001, Series I—India, Population Provision Totals, Paper 1 of 2001, Registrar General & Census Commissioner India, New Delhi, 2001.

The HDI is a composite index, which takes into account per capita income, life expectancy at birth, literacy rates, and mean years of education in the population. In 1980–81, per capita income was Rs 1,644 in Tamil Nadu and Rs 1,666 in Karnataka, increasing to Rs 5,541 and Rs 4,975 respectively in 1990–91. Life expectancy at birth increased from 56.9 in 1980–85 to 63.3 in 1991–95 in Tamil Nadu, and from 60.7 to 62.5 in Karnataka. In 1981, the literacy rate was 52.63 percent in Tamil Nadu and 43.92 percent in Karnataka. By 1991, the literacy rate in the former had reached 73.47 percent, while in the latter it was 67.04 percent. Thus, by 1991, Tamil Nadu outperformed Karnataka along all the dimensions

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Sangeeta Goyal

of the HDI. However it did particularly well in the education and health sectors. In empirical studies, higher per capita income is generally found to be correlated with lower infant mortality rates, higher life expectancy, and higher literacy rates—in short, with better human development outcomes. Economic growth is undeniably instrumentally important for countries to attain their human development goals. Higher average incomes lead to greater availability of private and public resources with which to pursue human development and reduce poverty levels. Indian states however differ in their experiences regarding the relationship between economic growth and social and human development attainments. Both Tamil Nadu and Karnataka have grown at a higher rate than the average Indian state in the last two to three decades, as can be seen from Figure 9.1. But the level and rate of growth of per capita income have been largely similar in the two states, so that income differences do not seem to account for their differential performance in human development terms.1 The relationship between poverty reduction and human development in the two states is not quite clear and requires further analysis. Between 1970–71 and 1992, poverty declined more in Tamil Nadu than in Karnataka, and this could have led to greater effective demand for health and education in the former than in the latter. But between 1983 and 1992, while poverty continued to decline at a fast rate in Tamil Nadu, it did so only minimally Figure 9.1 Real per Capita Income, 1980–81 to 2000–01

Source: www.indiastat.com.

Human Development in Tamil Nadu and Karnataka 297

in Karnataka (by less than 3 percentage points compared to Tamil Nadu’s nearly 10 percentage points). Human development in Karnataka, on the other hand, progressed at a faster rate than Tamil Nadu, although the latter maintained a lead over the former. Economic growth per se is neither a necessary nor a sufficient condition for human development. Poor countries such as Sri Lanka have been able to improve the well-being of their people through sustained government interventions in the fields of education, health, and nutrition. In fact, the experiences of Sri Lanka, Kerala and other regions show that both economic growth and public action (as in government intermediation in the social sectors) are important for human development attainments and their sustainability. In this chapter, we analyze the relative performance of Tamil Nadu and Karnataka in a more disaggregated and contextualized manner. This will allow us to take a closer look at specific policies, their interrelationships (if any) and the extent of their success. It is important to contextualize success (and failure), as policies are not undertaken in a vacuum and their outcomes very much depend on the nature of the politics and society in which they are played out. In the early 1980s, a number of large-scale interventions in health, nutrition, and family planning were initiated and/or continued in Tamil Nadu, such that by the end of the decade infant and child mortality had registered remarkable declines in the state, with concomitant gains in the expectancy of life at birth. Fertility too fell drastically, so that by the mid-1990s Tamil Nadu had attained below replacement level fertility. In education, Tamil Nadu had historically done better than the average Indian state and it continued to make steady progress in this sector over time. Human development indicators also improved in Karnataka along all these dimensions but these increments seemed to have been more by way of movement along trends than the result of focused and widespread interventions aimed at removing or reducing particular deprivations. Second section of this chapter discusses the education sector in Tamil Nadu and Karnataka. In the next section, the health sector is analyzed. In the fourth section, political and social factors that have enabled human development in Tamil Nadu are analyzed. In section five, policy lessons derived from the experiences of the two states are discussed, followed by the concluding section. This study is based on secondary data—mainly census data, the rounds of the National Sample Survey, the National Family Health Surveys and information collected and reported by other researchers—and focuses especially on the decade of the 1980s.2

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The Education Sector Tamil Nadu’s achievements in the education sector seem to be a case of steady progress over time and the result of both supply side and demand side factors. On the supply side, emphasis on providing schools seemed to have pushed education in the state. On the demand side, lower fertility combined with a desire towards economic betterment of children seems to have led to greater participation in the schooling system, enabled by access to schools. Various incentives, especially the early introduction of the midday meal scheme, seemed to have increased enrollment of children in schools. Male, female and overall decadal literacy rates for the two states between 1971 and 2001 are given in Table 9.2. Historically, Tamil Nadu has always outperformed Karnataka in the spread of literacy. Until 1981, Karnataka’s performance was close to the all-India average while Tamil Nadu was better placed than both. Since then, both states have outperformed the average Indian state in literacy gains, with Tamil Nadu maintaining its lead over Karnataka. Table 9.2 Literacy Rates (1971–2001) State Karnataka All Male Female Tamil Nadu All Male Female All India All Male Female

1971

1981

1991

2001

36.83 48.51 24.55

43.92 55.67 31.68

56.04 67.26 44.34

67.04 76.29 57.45

45.40 59.55 30.92

52.63 65.58 39.37

62.66 73.75 51.33

73.47 82.33 64.55

34.0 46.0 22.0

44.0 57.0 30.0

52.0 64.0 39.0

65.0 76.0 54.0

As can be seen from Table 9.2, the overall literacy rate in 1971 in Tamil Nadu was 45.04 percent, with male literacy rate over 60 percent. Karnataka’s overall literacy rate in 1971 was 36.83 percent, which was only slightly better than the Indian average of 34 percent. In both states,

Human Development in Tamil Nadu and Karnataka 299

however, the female literacy rate was only half the male literacy rate—the gender gap in literacy rates was around 29 percentage points in Tamil Nadu and 24 percentage points in Karnataka. Between 1971 and 2001, the literacy rate in Tamil Nadu increased by 28 percentage points and in Karnataka by 30 percentage points. Between 1981 and 1991, and again between 1991 and 2001, female literacy rates increased by around 13 percentage points in both states. In Karnataka, however, urban and male literacy rates increased by much more, so that by 2001, urban male literacy rates in the two states had nearly converged. The current educational gap between the two states is driven largely by differences in literacy rates between rural and urban areas, particularly for females. Educational development in a region depends on the evolution of factors determining the supply of and demand for education. In India, the presence of publicly provided schools—the quantity and quality of schooling that is available to the majority of the population—is the major determinant of access to education. The availability of an adequate quantity and quality of publicly provided schooling in turn depends on past and current public expenditure on education and also on the allocation of the education budget across different levels of schooling. Economic growth does not seem to provide a strong explanatory basis for the differential performance of the two states in educational achievements, particularly between 1981 and 2001 (as mentioned earlier, economic growth has been largely similar in the two states). As a percentage of gross domestic product (GDP), education expenditure in the two states has also been more or less similar, with Tamil Nadu spending an average of 2.95 percent and Karnataka spending 2.75 percent annually respectively between 1980–81 and 1999–2000, and 2.88 percent and 2.77 percent respectively between 1980–81 and 1990–91. In terms of the allocation of the education budget, Karnataka spent a higher percentage on elementary education compared to Tamil Nadu: 53 percent by Karnataka on an average annually compared to 47 percent by Tamil Nadu. Figure 9.2 shows the real per capita expenditure on education (all levels) for Karnataka and Tamil Nadu. Between 1980–81 and 1990–91, though real per capita expenditure on education was higher in Tamil Nadu every year, the difference between the two states was small. If we look at the 1990s however, per capita education spending was substantially greater in Tamil Nadu but it was Karnataka that made greater gains in literacy during this period.

300

Sangeeta Goyal Figure 9.2 Real per Capita Expenditure on Education (in Rs), 1980–81 to 2000–01

Participation in Schooling It is clear from available data that more people choose to send their children to school in Tamil Nadu than in Karnataka. The extent of participation in schooling by households at any given time is determined by a combination of supply side and demand side factors operational at the micro level. On the supply side, public provision of schooling is a crucial determinant of the number of children attending school, especially in rural and remote areas, where schooling non-participation is often due to lack of a school. Tamil Nadu’s head-start in education over Karnataka was enabled by early provision of a wide network of schools, though by 1992–93 access to a primary school, even in rural areas, was no longer a constraint in both states (see Table 9.3). There was almost universal access, with over 90 percent of the population in both Tamil Nadu and Karnataka having a primary school or section located within 1 km of their habitations. Table 9.3 Percentage of Population (Rural) with a Primary School/Section

Within habitation Within 1 km Within 2 km Source: NCERT (1998).

Karnataka

Tamil Nadu

India

91.11 96.58 99.00

77.6 99.53 99.86

77.81 93.76 98.00

Human Development in Tamil Nadu and Karnataka 301

Education has been an important feature of the social and political agenda of Tamil Nadu from pre-independence times. It received further political thrust post-independence in the 1950s and 1960s during the tenure of the Congress chief minister of Tamil Nadu (1954–63), K. Kamaraj, who wanted to ensure that there was a school in every habitation in the state. Experience around the world, both of countries that are rich today and of currently developing countries, shows that those countries that invested early in providing schools as a policy priority have higher proportions of their population that are literate. In 1971, Tamil Nadu’s overall literacy rate was 11 percentage points greater than that of the average Indian state. For educational progress, however, not only should there be a wide network of (well-functioning) schools but also widespread utilization of the schooling facilities provided. In India, access to schooling is not only a question of physical access; barriers to schooling are also social and economic, with schooling opportunities and outcomes being systematically determined along class, caste and gender dimensions and rural-urban residence. Moreover, these disadvantages tend to build up cumulatively—the chances of a poor, rural low-caste female attaining any level of schooling is very low. In the case of Tamil Nadu, participation in schooling has been more widespread, with higher rates of participation in the younger age-groups, especially at the primary school level, compared to Karnataka. Table 9.4 shows the gross attendance ratio in primary and upper primary schools by gender and rural-urban residence for Karnataka and Tamil Nadu in 1995–96 (Government of India 1998). For comparison with the average Indian performance in this regard, the overall figures for India are also shown. Karnataka’s gross attendance ratios for all persons in both primary and upper primary schools were similar to the all-India figures, whereas Tamil Nadu outperformed the two. For urban males and females, the gross attendance ratios in both primary and upper primary sections were nearly the same in the two states. In rural areas, however, there was much greater participation in schooling in Tamil Nadu than in Karnataka, for both males and females but especially for females. Table 9.5 shows the age-specific attendance ratio (ASAR) for the age groups 6–10 years and 11–14 years by gender and rural/urban location in 1992–93. Schooling participation was lower in the younger age groups in Karnataka than in Tamil Nadu. Moreover, in the former the gaps between rural and urban areas in the ASAR for both males and females (but particularly for females) were large, translating into lower average ASAR for the state overall. The median number of years of schooling

302

Sangeeta Goyal Table 9.4 Gross Attendance Ratio by Gender and Rural-urban Residence in Primary and Upper Primary Schools, 1995–96

State Karnataka Rural Urban All Tamil Nadu Rural Urban All India Rural Urban All

Male Grades I–V VI–VIII

Female Grades I–V VI–VIII

All Grades I–V VI–VIII

89 100 NA

66 81 NA

77 96 NA

40 82 NA

84 98 87

55 82 61

104 100 NA

84 90 NA

92 99 NA

71 80 NA

98 99 98

77 85 80

90 102 NA

70 87 NA

72 98 NA

47 80 NA

81 100 85

59 83 65

Source: Government of India (1988). NA = Not available. Table 9.5 Age-specific Attendance Rates by Gender and Rural/Urban Location (1992–93) Male State Karnataka Rural Urban Total Tamil Nadu Rural Urban Total

Female

Total

6–10 Years

11–14 Years

6–10 Years

11–14 Years

6–10 Years

11–14 Years

76.4 87.6 NA

67.2 80.1 NA

64.8 85.4 NA

46.4 72.5 NA

70.8 86.5 79.7

56.9 76.3 71.2

90.8 94.4 NA

77.7 78.5 NA

83.6 94.7 NA

62.8 83.6 NA

87.3 94.5 89.7

70.2 77.1 72.7

Source: IIPS (1995b), IIPS (1995c). NA = Not available.

attained by 10–14-year-olds was 4.8 years in Karnataka, more than a year less than the median of 5.9 years in Tamil Nadu. A higher rate of participation in the schooling system implies greater demand for education by households. Demand for education can be higher for a number of reasons, including lower poverty levels, lower schooling

Human Development in Tamil Nadu and Karnataka 303

costs and smaller household size (the quantity-quality trade-off may be operational at the household level and households may choose fewer children and invest more in the human capital of each child), and when parents perceive greater benefits from schooling. If there is a quantity-quality trade-off operational at the household level, and there is evidence of this for India (Bhat 1995), then a reduction in household size can boost the demand for education. There has been a rapid decline in fertility in Tamil Nadu. Between 1981 and 1991, fertility declined from 3.4 to 2.2 in Tamil Nadu, whereas in Karnataka the total fertility rate fell from 3.6 to only 3.1. This sharp decline in fertility in Tamil Nadu plausibly increased the demand for education in the state. Moreover, this reduction in fertility in Tamil Nadu in recent years has occurred largely among illiterate women, whose main motivation to reduce family size seems to have been the desire to send their children to school and improve their economic prospects (ibid.). Even though schooling in India is in principle provided ‘free’ by the government, there are both direct and indirect costs of schooling. Households in Tamil Nadu seem to value schooling more, given their greater willingness to pay for schooling services. Data from the 52nd round of the National Sample Survey (NSS) given in Table 9.6 show that the average annual expenditure per student in primary and upper primary schools in rural and urban areas was greater in Tamil Nadu than in Karnataka. Rural households in Tamil Nadu spent twice more on a primary school student and nearly a third more on an upper primary school student compared to households in Karnataka. In urban areas, the average cost to a household of sending a child to a primary or an upper primary school Table 9.6 Average Annual Expenditure per Student, 1995–96 (in Rupees) State Karnataka Rural Urban All Tamil Nadu Rural Urban All Source: NSSO, ‘Sarvekshana’ (2000).

Grades I–V

Grades VI–VIII

132 778 294

372 1,096 602

267 897 464

556 1,322 827

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was around 15 percent higher in Tamil Nadu. The greater expenditure by households in rural Tamil Nadu on schooling per student may be due to combination of factors such as costs of schooling being higher and households buying more schooling services per child.3 There is also evidence that parents are willing to spend more on education if the quality of the local school is better (Schulz 1999; Case and Deaton 1999). Quality of schooling is hard to measure, including as it does multiple outputs, not all of which are conducive to straightforward quantification. However, some indicators such as the availability of basic school infrastructure, the pupil–teacher ratio, the presence of adequate and relevant teaching and learning materials, and, more importantly, the presence of qualified and trained teachers have been used to measure school quality. The greater presence of female teachers also seems to be positively correlated with greater school participation, especially by girls. Table 9.7 provides a comparison of selected school quality indicators for the two states from the Sixth All-India Educational Survey 1992–93 (NCERT 1998). Table 9.7 Selected School Quality Indicators (Primary Schools), 1992–93 Percentage of Primary Schools With

State Tamil Nadu Karnataka All India

Separate Pupil– Percentage Percentage Drinking Urinals for Teacher of Trained of Female Water Urinals Lavatory Girls Ratio Teachers Teachers 62.34 23.94 44.23

19.97 4.57 18.93

12.57 3.31 10.86

24.24 3.76 17.33

37.19 39.20 40.00

99.8 93.8 85.3

48.90 31.20 31.60

Source: NCERT (1998).

Compared to the all-India average, school infrastructure was better in Tamil Nadu. In Karnataka, on the other hand, not only was school infrastructure worse than the all-India average, but in absolute terms it seems to have been abysmally poor. On teacher-related school quality indicators, Tamil Nadu again had better measures but the differences between the two states were narrow. In general, a higher share of female teachers has been characteristic of countries or regions that have made rapid educational progress, especially in the education of females (Mehrotra and Jolly 1997). The share of female teachers in total teaching staff was nearly half in Tamil Nadu compared to only a little more than a third in Karnataka.

Human Development in Tamil Nadu and Karnataka 305

School Incentives As we have seen in Table 9.6, parents incur substantial expenditure on the schooling of their children. Costs of schooling affect the likelihood that parents, particularly poor rural parents, will send their children, especially girls, to school. Household costs of schooling can be reduced by providing incentives, monetary and/or non-monetary, to students. All the states in India offer several cash and non-cash incentives to attract students to schools, particularly girls and children belonging to poor and minority households. Among cash incentives are exemption from tuition fees, scholarships, and concessions towards transport. Non-cash incentives include free textbooks, uniforms and stationery and provision of midday meals in schools. In 1986–87, very miniscule percentages of girls and boys in rural and urban areas of both states received scholarships, though 70 percent of students in rural areas in both Tamil Nadu and Karnataka received free textbooks and stationery (Tilak 1996). The one large-scale intervention that Tamil Nadu has undertaken in the education sector is the scheme, launched in 1982 under the auspices of the then Chief Minister M.G. Ramachandran, of providing nutritious midday meals in schools. It is the largest school and pre-school feeding program in India and is maintained up to this day. It was started as a scheme to provide a midday meal to children between five and 14 years of age, but was extended to include children between two and five years and old age pensioners aged 60 and above, and certain non-age-specific categories of people such as destitute widows and the disabled. The intent of the program was to provide adequate nutrition to economically disadvantaged children to improve the health and nutritional status of children, to develop their mental and physical ability and to increase the enrollment in schools and reduce dropouts. Thus, the purpose of the scheme was twofold: to improve children’s nutritional status and to boost school enrollments and daily attendance.4 In 1986–87, 81 percent of students in rural areas and 41.2 percent in urban areas received free midday meals in Tamil Nadu, compared to only 22.4 percent in rural areas and 14.1 percent in urban areas in Karnataka (National Institute of Nutrition 1999). As a result of the midday meal scheme, enrollments and attendance in schools have gone up substantially, and dropout rates have declined in Tamil Nadu. Though no proper statistical analyzes have been conducted to anchor these claims, smaller, local studies attest to them (Dreze and Goyal 2003; Swaminathan et al. 2004).5 In Karnataka, the midday meal scheme was introduced statewide only in 2002.

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Educational Failures in Tamil Nadu and Karnataka Even though Tamil Nadu has higher literacy rates and more children in the state go to school, the educational transition in the state is by no means complete. Though the enrollment ratios in the younger age groups are higher in Tamil Nadu than in Karnataka, the latter seems to have performed better in retaining children in school, as can be seen from Table 9.8 which uses data from the 52nd round of the NSS. Not only is Tamil Nadu’s performance in this respect inferior to Karnataka, it performs worse than the all-India average. Dropping out is particularly high among rural girls where nearly half who enter primary school leave before completing this level of education. The dropout percentage is high for urban girls as well in Tamil Nadu. Karnataka, it would seem, has more difficulty in getting children to school but does a better job of keeping them there. Table 9.8 Dropout Rates from Primary School, 1995–96 State

Male

Rural Female

Persons

Male

Urban Female

Persons

All Persons

Karnataka Tamil Nadu All India

27.5 25.3 30.4

26.7 47.4 36.9

27.2 36.6 33.2

15.8 26.0 22.4

18.0 33.9 21.9

16.7 24.3 22.2

24.4 34.4 30.4

Source: NSSO, ‘Sarvekshana’ (2000).

Both Tamil Nadu and Karnataka have a substantial child labor problem, though this pernicious phenomenon has declined in both states over time. In both states, child work participation rates have been greater than the all-India average, and they have been especially high in Karnataka for boys belonging to the 10–14 age group. For girls in this age group too, work participation rates have been higher than the all-India average in both states. Table 9.9 shows the work participation rates for male and female children living in rural areas belonging to the 10–14 years age group, using data from rounds of the NSS. As the NSS counts as labor only those who are ‘gainfully’ employed, these estimates should be considered as a lower bound on the true proportion of child labor, which is likely to be much higher, as many children work in productive activities as unpaid labor. Child work participation rates have reduced over time in both states for both boys and girls. The decline in boys’ work participation rate has been faster in Tamil Nadu. Decline in girls’ work participation rates has

Human Development in Tamil Nadu and Karnataka 307 Table 9.9 Trends in Rural Child Work Participation Rates (Principal Status) Male Child Workers (10–14 Years) State Karnataka Tamil Nadu All India

Female Child Workers (10–14 Years)

1982–83

1987–88

1993–94

1982–83

1987–88

1993–94

35.41 26.17 21.28

23.4 17.6 19.3

20.3 13.1 11.2

27.64 27.17 16.97

20.7 24.1 18.3

18.4 19.4 10.4

Source: Chaudhuri and Wilson (2002)

been slower compared to boys in both states, and nearly a fifth of girls in the 10–14 age category are employed as principal or main workers in both Tamil Nadu and Karnataka.

Regional and Group Disparities Even as literacy rates across districts have tended to become less divergent over time, there continue to be large variations across them in both states. The mean deviation in literacy rates between districts declined from 7.1 percent in 1991 to 5.1 percent in 2001 in Tamil Nadu, and from 8.6 to 7.6 percent in Karnataka. The ratio of literacy rates between the districts with the highest and the lowest literacy rates was nevertheless 1.48 for Tamil Nadu and 1.41 for Karnataka in 2001. In both states, the speed of convergence in male literacy rates has been much faster. In Karnataka, however, not only is there a greater spread in literacy rates across districts, the problem of low literacy remains acute, particularly for rural females. In 1991, two districts in Karnataka had rural female literacy rates less than 20 percent, six districts had rural female literacy rates less than 30 percent and 14 districts had rural female literacy rates less than 40 percent! In Tamil Nadu, while there were no districts with rural female literacy rates below 30 percent, six districts had rural female literacy rates below 40 percent. In 2001, in only one district in Tamil Nadu (Dharmapuri) was the female literacy rate below 50 percent. In Karnataka, on the other hand, three districts—Gulbarga, Raichur, and Koppal—had female literacy rates below 40 percent even in 2001. In both states, scheduled castes (SC) and scheduled tribes (ST) have lagged behind other groups in education and literacy. Literacy rates for females belonging to these groups was below 30 percent in both states in 1991 as can be seen in Table 9.10.

308

Sangeeta Goyal Table 9.10 Literacy Rates, Scheduled Castes and Scheduled Tribes, 1991 SC Literacy Rates

State

Male

Female

Karnataka Tamil Nadu

49.69 58.36

25.95 34.89

ST % of SC Literacy Rates in Total Total Population Male Female Total

38.06 46.74

16.38 19.18

47.95 35.25

23.57 20.23

36.01 27.89

% of ST in Total Population 4.26 1.03

Source: GoI, Selected Educational Statistics, 1999–2000.

Educational (and other) disadvantages tend to be cumulative. Educational deprivation can be particularly acute if a person is a female belonging to a backward caste, and living in a rural or remote region. In Karnataka, the literacy rates for rural females belonging to SCs ranged from a shocking low of 6.5 percent in Raichur to 43.42 percent in Dakshin Kannada and the average rural SC female literacy rate was only 19.23 percent. Females in urban areas fared much better and the average literacy rate across all districts for urban SC females was 47.64 percent. In Tamil Nadu, rural SC female literacy rates ranged from 19.87 percent in Periyar district to 71.04 percent in Kanniyakumari, and the average literacy rate across all districts for this group was 30.3 percent. Females in urban areas again fared relatively better with 51.68 percent average literacy.

The Health Sector In the 20 years between 1971 and 1991, Tamil Nadu achieved what can be termed as a health breakthrough, as is evident from the data provided in Table 9.11. The infant mortality rate declined by nearly 50 percent, from 113 per 1,000 live births to 53 per 1,000 live births. Under-five child mortality fell by more than two-thirds—from 40.7 to 12.6 per 1,000 live births, registering the fastest rate of decline in child mortality in India after Kerala. Life expectancy at birth for the population as a whole increased from 49.6 in 1971 to 63.7 in 1997, a gain of 14.1 years. Karnataka had better health indicators in 1971 compared to Tamil Nadu, but made slower progress in the following two decades. Infant mortality rate in Karnataka fell by only 19 percent—from 95 to 77 per 1,000 live births between 1971 and 1991. Under-five child mortality fell from 37.5 to 16.6 per 1,000 live births in 1997, a decline of 55 percent. Life expectancy at birth increased from 55.2 in 1971 to 62.9 to 1997, a gain of 7.7 years, which was only about half the gains made by Tamil Nadu during the

Human Development in Tamil Nadu and Karnataka 309 Table 9.11 Selected Health and Demographic Indicators, 1971–2001 State Karnataka Crude birth rate Crude death rate Infant mortality rate Under-five Child mortality rate♠ Life expectancy at birth** Total fertility rate Tamil Nadu Crude birth rate Crude death rate Infant mortality rate Under-five Child mortality rate♠ Life expectancy at birth** Total fertility rate

1971

1981

1991

1997

2001

31.7 12.1 95.0 37.5 55.2 4.4

28.3 9.1 69.0 24.2 60.7 3.6

26.9 9.0 77.0 23.6 62.5 3.1

22.7 7.6 53.0 16.6* 62.9 2.5

22.2 7.6 58.0 NA 61.7/65.4† 2.4§

31.4 14.4 113.0 40.7 49.6 3.9

28.0 11.8 91.0 35.1 56.9 3.4

20.8 8.8 57.0 16.1 63.3 2.2

19.0 8.0 53.0 12.6* 63.7 2.0

19.1 7.7 49.0 NA 65.2/67.6† 1.85§

Source: GoI 1999, 2002. Notes: * Relates to the year 1996. ** The data is average for the years 1970–75, 1981–85, 1991–95 and 1992–96 and 1996–2001. † Male life expectancy at birth/female life expectancy at birth. § Estimated for 1994–2001. NA = Not available. ♠ Under-five child mortality refers to the number of children aged 12 months to 5 years (up to the end of the fourth year) who die in a year, per 1,000 live births.

same time period. The health gains made by Tamil Nadu over a very short time period are very impressive but, as in education, this picture is not without its mixed aspects. In the post-1991 period, Karnataka has made more progress in the health sector, with Tamil Nadu registering relatively modest improvements. It is well known that as health indicators reach high levels, further improvements are slow and more difficult to achieve. However, Tamil Nadu’s health gains, though remarkable, still lag considerably behind Kerala, and there is a lot of room for further improvements. It is keeping this in mind that the slowdown in Tamil Nadu has to be viewed.

Factors behind the Health Transition In the case of present-day developed countries in general, the health transition has been achieved over a hundred years, as living standards rose, education spread, governments undertook public health measures to contain and eliminate communicable diseases, and the use of modern medical technology became commonplace. Health transitions in the

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developing world, on the other hand, where they have occurred, have generally taken place at low levels of economic development and within relatively shorter time periods. From Table 9.11, we can see that for Tamil Nadu the 10 years between 1981 and 1991 were a period of remarkable, almost dramatic health achievements. Between 1971 and 1981, Karnataka’s health gains were larger than Tamil Nadu’s. But in the following 10 years, Tamil Nadu surged ahead at a remarkable pace and by the end of the decade, it had not only overtaken Karnataka but made substantial progress in absolute terms. Post-1991, there has been some catching up between the two states. In the discussion that follows, we first take a look at the macro-level economic factors that are associated with the health attainments in the two states in the short and long runs, and then proceed to discuss the specific interventions that plausibly provided a successful route to remarkably lower mortality in Tamil Nadu.

Income and Poverty Higher per capita incomes and lower poverty increase the demand for health and health care, and there is substantial empirical evidence of a positive association between income and health outcomes (Gertler and Van der Gaag 1990; Preston 1975). Higher income levels are associated with lower infant and child mortality rates, higher life expectancy, improved nutrition and lower fertility. In both states, incomes have risen and health indicators have also improved over time. Concentrating on the period between 1981 and 1991, the decadal rate of change in per capita net state domestic product was 35 percent in Karnataka and 49 percent in Tamil Nadu. However, Tamil Nadu did exceedingly well in reducing infant and child mortality rates, increasing life expectancy at birth, and reducing fertility, whereas Karnataka’s performance on the health and demographic fronts was quite lackadaisical. The difference in health and demographic outcomes in the two states over this period, it would seem, cannot fully be accounted for by differences in economic growth alone. There is evidence that the poor spend as much as a fifth of their annual income on medical care (Deolalikar and Vashishtha 2000) and higher incomes for the poor can be expected to increase their demand for health and health care goods and services. Just as in the education sector, the relationship between poverty reduction and health gains for the two states is not very clear. Poverty declined in Tamil Nadu between 1981 and 1991, and plausibly contributed to gains in the health sector. But when we look

Human Development in Tamil Nadu and Karnataka 311

at the relative performance of the two states in the period between 1991 and 1997, there is a reversal. Income growth and poverty reduction are higher in Tamil Nadu as compared to Karnataka, where poverty barely declined. But this time it is Karnataka that outperforms its neighbor in improvements in all the selected health and demographic indicators. The above discussion provides a good entry point to raise a hoary issue with respect to inquiries into the removal of deprivation and ill-being in poor countries. Should countries wait for the beneficial trickle-down effects of economic growth for improvement in the well-being of their people,6 or should they tackle deprivations head on with purposeful public interventions? A regression of infant mortality rates for 1981–91 on real per capita state GDP, controlling for a time trend and state, shows that while infant mortality rate and per capita income are negatively correlated, the latter is not significant. However, in a similar regression using data points for the entire period between 1981 and 1997, income is significantly and negatively correlated with the infant mortality rate.7 While these regressions are of necessity crude, they allow us to say something about the relative efficacy of economic growth and public action in removing various deprivations, include health deprivations. The influence of income is slow, and the effect of higher incomes may take a longer time period to register. In the short to medium term, other factors that are healthenhancing and that are not correlated with income can make a substantial contribution to the improved health status of the population. Both income growth and direct public intermediation are important and the either/or framework of analysis is misguided. There are policy interventions that can bring about remarkable changes in the short run (as has been the case with Tamil Nadu, especially in the 1980s). In the long run, however, more resources will be required for sustainability and further improvements.

Public Expenditure on Health and Provision of Health Care Services In developing countries, the poor are the preponderant users of publicly provided health care facilities. It is public expenditure on health that determines the availability of the quantity and quality of these public goods. The health status of the population is influenced by the level and composition of public expenditure on health. A factor common across successful health achievers among poor countries, such as Sri Lanka, Costa Rica, Cuba, and China, is the higher amount of public resources devoted by these countries to the provision of health- (and education-) related public goods and services. Using cross-country data, Anand and Ravallion (1993)

312

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find that the positive association between GDP per capita and life expectancy disappears once poverty, measured by the head count index and provision of public services measured by public expenditure on health, are controlled for. We note here that although richer states have the ability to and often do spend more on social sectors including health, there is no direct relationship between the resources available to a state and its commitment to such expenditures. Richer and poorer states alike can spend less or more on these sectors depending on their ideological and political priorities. A higher level of public expenditure on health does indicate greater state commitment, though it is entirely possible to spend a lower total level of expenditure well and a higher level of expenditure inefficiently. In Table 9.12, we can see that in both Tamil Nadu and Karnataka, the share of revenue expenditure on health in the government’s total revenue expenditure was more than double the all-India average. Tamil Nadu spent a greater but declining share of its total revenue expenditure on health compared to Karnataka. In terms of health expenditure per capita, the differences between Tamil Nadu and Karnataka were too small to account for the vastly different health outcomes in the two states between 1981 and 1991. Perhaps the lesson here, as in education, is that the outcomes that we see in the later decades are the fruits of greater investments made earlier on. Table 9.12 Public Expenditure on Health 1970–71 Revenue expenditure on health as percentage of total government revenue expenditure Karnataka Tamil Nadu All India Expenditure on health per capita (Rs) Karnataka Tamil Nadu All India

1980–81

1991–92

6.32 8.66 3.84

6.74 7.66 3.29

5.96 6.72 3.11

5.44 6.76 6.11

16.28 18.23 17.35

64.3 66.82 60.13

Source: Duggal et al. (1995).

For developing countries in general, differences in mortality and morbidity are largely dominated by differences in infant and child mortality (Schulz 1999), and poor health status and high mortality are often attributable to the inadequate supply of curative and preventive care services, especially immunization and prenatal care. Locational access to a basic health care facility, especially in the rural areas of developing

Human Development in Tamil Nadu and Karnataka 313

countries where most of the poor live, therefore has an important bearing on the health status of the people, and is especially critical for the health of women and children. Tamil Nadu’s relatively superior health outcomes by 1991 depend at least partly on the greater level of inputs and the mix of inputs in the health system. Table 9.13 shows selected aspects of the health infrastructure and personnel in Tamil Nadu and Karnataka between 1971 and 1991—the quantity and type of facilities, their location in rural and urban areas, and the labor input mix of doctors and nurses. The data provided refers to availability per 100,000 population. As can be seen from the table, there are more hospitals per 100,000 people in the rural areas of Tamil Nadu as compared to the rural areas of Karnataka. In terms of availability of beds per 100,000 population in both rural and urban areas, the two states are largely similar. Whereas there are more primary health care centers (PHCs) per 100,000 people in Karnataka, Tamil Nadu, has more sub-centers per 100,000 people. Sub-centers are the first point of contact of people with the public health system; they provide primary health care services to habitations and villages in rural areas. The closer a health care facility is located to people’s homes, the greater the likelihood of its utilization, as it reduces the cost of accessing health care. According to the National Family Health Survey I (1992–93) nearly 57 percent of villages in Tamil Nadu had access to some form of health facility within the village, compared to 35 percent of villages in Karnataka. The median distance to any health care facility was zero km, a sub-center 1 km, and a primary health center 6 km for Tamil Nadu. For Karnataka, the median distance to any health care facility was 2.4 km, a sub-center 3.3 km, and a primary health center 8.2 km. However, between 1990 and 2001, the number of sub-centers in Karnataka increased from 7,793 to 8,143, whereas their number remained nearly constant in Tamil Nadu over this period, increasing from 8,681 to 8,682 (Health Information of India, 2001–02). During this same time period, the number of community health centers in Karnataka also increased substantially from 156 to 249, but remained constant at 72 for Tamil Nadu. It is not only the provision of different types of health care facilities and their location but also the labor input mix of the health care system that reveals the level of care towards which the system is biased. India’s ratio of nurses to physicians, and of non-physician personnel (nurses, midwives, and health workers) to physicians, is one of the lowest in the world (Deolalikar and Vashishtha 2000). This leads to serious distortions in the health care system. Doctors are costly to train and are geared towards providing secondary and higher levels of care. When we look at the labor input mix in Table 9.13, the striking aspect that emerges is the ratio of

NA NA 0.64

NA NA 92.41 NA NA NA

1.10 9.61

NA NA 84.61 26.43 6.29 0.24

1.19 8.89

1976

NA NA 0.65

NA = Not available.

Source: Duggal et al. (1995). Notes: * per 100,000 population.

Hospitals Rural* Urban* Total* Beds Rural* Urban* Total* Doctors* Nurses* Ratio of Nurses to Doctors PHCs* Sub-centers*

1971

1.14 12.20

13.99 264.10 86.25 51.05 13.94 0.27

0.18 1.73 0.63

1981

Karnataka

1.75 18.00

14.02 255.84 86.58 NA NA NA

0.16 1.66 0.61

1986

2.13 19.31

11.58 244.64 82.42 NA NA NA

0.08 2.02 0.67

1988

3.66 25.17

9.31 232.25 78.26 98.58 52.21 0.52

0.08 1.90 0.64

1991

1.74 13.90

NA NA 67.07 45.56 34.34 0.75

NA NA 0.74

1971

Table 9.13 Selected Health Infrastructure Indicators

1.41 10.63

NA NA 92.87 NA NA NA

NA NA 0.79

1976

1.18 10.47

12.46 233.29 85.23 65.69 51.75 0.78

0.30 1.75 0.78

2.15 20.85

14.97 227.58 86.44 NA NA NA

0.32 1.68 0.78

1986

Tamil Nadu 1981

2.37 23.19

12.37 236.95 88.41 NA NA NA

0.25 1.76 0.76

1988

1.17 23.71

11.94 234.85 88.17 81.94 60.94 0.74

0.24 1.68 0.73

1991

Human Development in Tamil Nadu and Karnataka 315

nurses to population in Tamil Nadu—it is not only higher than Karnataka but has been substantially so over time. In 1971, whereas there were only 6.29 nurses per 100,000 people in Karnataka, there were 34.34 nurses per 100,000 people in Tamil Nadu, nearly five-and-a-half times more. There is evidence that the density of nurses has a strong correlation with the infant mortality rate, indicating their importance in antenatal and postnatal care (Caldwell 1986). The density of nurses also acquires significance with view to the greater utilization of maternal and child health care services by women when there are female health workers present.8 The ratio of doctors to nurses in Karnataka in 1971 was 0.25 compared to 0.75 for Tamil Nadu. As can be seen from Table 9.13, the pattern is repeated over time, though in 1991 the ratio of nurses to doctors doubled and the number of nurses to 100,000 people also went up substantially to around 51 in Karnataka, a ratio achieved by Tamil Nadu a decade earlier.

Utilization of Health Care Services Focus on antenatal and postnatal care, immunization of mother and child, and institutionalization of births in a health care facility with births being attended by trained medical workers are critical factors in the reduction of infant mortality, especially neo-natal mortality which accounts for almost 60 percent of infant mortality in India. From the experiences of Kerala, Costa Rica, and Sri Lanka, Caldwell (1986) identifies these factors as a subset of underlying conditions that enabled these regions in achieving unusually low mortality in very short periods of time at low levels of economic development. The presence of health care facilities does not by itself guarantee improved health outcomes—these facilities have to be used for them to influence health status. In much of India, due to the very low quality of service and care provided by public health facilities, they remain grossly underutilized. One of the striking contrasts between Tamil Nadu and Karnataka is the much greater utilization of maternal and child care services in the former as compared to the latter, as can be seen from Table 9.14 which provides data from the two rounds of the National Family Health Surveys. The most striking contrasts between the two states is the percentage of mothers who give birth in a health care facility or under assistance of a health care professional and the percentage of mothers and children who are immunized. Even in 1998–99, only 51.1 percent mothers in Karnataka gave birth in a health care facility compared to 79.3 percent in Tamil Nadu, and only 60 percent of children between one and two years in the former had received all vaccinations compared to 88 percent in the latter.

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Sangeeta Goyal Table 9.14 Selected Health Service Use Indicators (1992–93 and 1998–99) Mothers Receiving Antenatal Care (%)

1992–93 Karnataka Tamil Nadu India 1998–99 Karnataka Tamil Nadu India

For Births in the Last 4 years Births Deliveries Mothers Children Fully Delivered Assisted by Receiving Immunized in a Health a Health ProTetanus (Age 12–23 Facility (%) fessional (%) Vaccination (%) Months) (%)

83.5 94.2 62.3

38.0 63.0 26.0

51.0 71.0 34.0

69.8 90.1 53.8

52.2 64.9 35.4

86.3 98.5 65.4

51.1 79.3 33.6

59.1 83.8 42.3

74.9 95.4 66.8

60.0 88.8 42.0

Sources: National Family Health Survey I, 1992–93 (IIPS 1995); National Family Health Survey II, 1998–99 (IIPS 2000).

Traditional disparities along the lines of class, caste and rural/urban residence exist in Tamil Nadu as in other Indian states, including Karnataka. However, Tamil Nadu has been more successful in extending coverage to the harder to reach and more vulnerable population groups, especially the poor and uneducated in rural areas. Unless the so-called unreachable population sub-groups are brought under the fold of the public health system, overall health and mortality decline will remain a distant goal. Socio-economic differentials in the use of health care facilities are less pronounced in Tamil Nadu than they are in Karnataka. In 1992–93 in Tamil Nadu, 55 percent of children born to illiterate mothers had received all vaccinations, compared to only 41.2 percent in Karnataka. While 73.3 percent of children in urban areas and 60.3 percent of children in rural areas had received all vaccinations in Tamil Nadu, these proportions were only 57.6 percent and 49.9 percent for urban and rural areas respectively for Karnataka. For children belonging to SCs, 59.1 percent had received all vaccinations in Tamil Nadu, compared to 46.7 percent in Karnataka (IIPS 1995a, 1995b).

Mortality Decline, Fertility Decline and the Family Planning Programme Along with a health transition, there has also been an interrelated demographic transition in Tamil Nadu. Between 1981 and 1991, the crude birth rate in Tamil Nadu declined from 28 to 20.8, whereas in Karnataka it

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declined from 28.3 to only 26.9. The total fertility rate, which was 3.7 in 1981 in Tamil Nadu, fell to 2.2 in 1991, with a below-replacement fertility rate of two in urban areas and a total fertility rate of 2.3 in rural areas. For Karnataka, the total fertility rate declined from 3.6 to only 3.1 during the same time period; the rural and urban total fertility rates were 3.3 and 2.5 respectively. Fertility and mortality are closely connected. Decline in infant mortality rates implies that households have to plan fewer births to ensure that a certain number of infants survive. On the other hand, fewer births mean that each child that is born has a greater chance of survival, as there are more resources available on average (including the underlying health status of the mother). There is evidence that parents take greater care of children in smaller families (Caldwell 1986; Caldwell et al. 1985). A larger number of births also imply shorter birth spacing, which raises the risk of infant deaths. Thus, fertility decline and mortality decline can have the tendency to reinforce each other. It is also possible however, that both fertility decline and mortality decline occur independently, as a result of other causal factors such as rising income and education levels.9 10 A striking difference between the fertility transitions of Kerala and Tamil Nadu is that in the latter the transition has occurred at relatively lower levels of literacy (and relatively higher levels of infant mortality) compared to the former. While demographic transition theory suggests that mortality decline precedes fertility decline and this factor must have contributed to the fertility decline in Tamil Nadu, reductions in the two seem to have occurred more or less contemporaneously in the state. The rapid fertility decline in Tamil Nadu has been attributed by many to its effective family planning program, which was vigorously pursued in the 1970s and 1980s, and efficiently managed (Mahadevan et al. 1997; Antony 1992). Efforts were made to fill all vacant field posts. Senior bureaucrats, including the chief secretary of the state administration, took an active interest in the program over an extended period of time. Health administrators and health workers, particular the female staff, were galvanized into committed action. According to Antony (1992, 1994), health workers, especially the auxiliary nurse midwives (ANMs), living in villages in close contact with people and going from house to house to promote family planning, were influential in the diffusion of the small family norm. From the demand side as well, there was widespread use of family planning services, and the couple protection rate in Tamil Nadu among reproductive age couples in 1991 was 57.3 percent, ranking third after Punjab (75.8 percent) and Gujarat (57.8 percent) (Ravindran 1999).

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Fertility transition in Karnataka, at least up until 1991, proceeded at a very slow pace. A family planning program has been active in the state since the 1950s, and was extended to all districts by 1964, but family planning was not pursued as vigorously and effectively as in Tamil Nadu. The slower decline in fertility in Karnataka is also due to the relatively higher fertility levels of the five backward northern districts of Bellary, Bidar, Gulbarga, Raichur, and Bijapur. These districts had average total fertility rate of over four even in 1991. The northern districts have much poorer health and other infrastructural facilities compared to the rest of the state. There is a concentration of backward communities in this region and female literacy levels are very low (Sekher et al. 2001; GoK 1999). Infant and child mortality rates were as high as 79 and 119 respectively in Bellary district (compared to Dakshin Kannada district, where they were 29 and 46 respectively).

Food and Nutritional Interventions A large proportion of infant and young child deaths in India are due to malnutrition, and nutritional interventions targeted at infants and children can greatly reduce morbidity and mortality among them. All the states of India undertake some form of food and nutritional intervention, but in Tamil Nadu food and nutrition receive overwhelming priority among social welfare policies. Food provision programs of some sort for children have existed in the state since 1956, and in the 1980s there were as many as 25 such programs that were operational. These various feeding programs were organized under three schemes in the early 1980s: the Chief Minister’s Noon-Meal Scheme (NMS), the Tamil Nadu Integrated Nutrition Project (TINP), and the Integrated Child Development Scheme (ICDS). The main beneficiaries of these feeding programs are children, though old-age pensioners and pregnant and nursing mothers were also included later. ICDS, however, is a centrally sponsored scheme that is operational in all Indian states, including Karnataka. In 1990–91, the ratio of nutrition expenditure to total revenue expenditure in Tamil Nadu was 4 percent compared to Karnataka’s 1.6 percent (Dev et al. 2004). In 1993–94, expenditure on food was Rs 38.8 billion in Tamil Nadu. This was a hundredfold increase from 1981–82 (Harris-White 2004). Due to various interventions (and due to secular increases in standards of living), malnutrition in children has over time declined in both Tamil Nadu and Karnataka. The decline, however, has been greater in the former. In 1975–79, 59.6 percent of rural children in Tamil Nadu and 64.3 percent rural children in Karnataka were undernourished (Radhakrishna and Ravi 2004).

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In 1992–93, in Tamil Nadu 43.1 percent of male and 49.7 percent of female children below four years of age were underweight. In Karnataka, on the other hand, which had a lower incidence of poverty, 52.9 percent males and 55.8 percent females were underweight.11 By 1998–99, the proportion of underweight rural children declined to 39.4 percent in Tamil Nadu and 47.2 percent in Karnataka.

Politics, Governance and Society In the earlier sections, we have looked at some of the more important proximate determinants of well-being and the role they might have had in bringing about the differential human development attainments in the two states covered in this study. Two things stand out from the analysis: the strong welfarist agenda that exists in Tamil Nadu from very early on and its apparent absence in Karnataka; and the greater utilization of public services, especially by women, in Tamil Nadu as compared to Karnataka. It is without doubt true that in Tamil Nadu, a strong political will and commitment towards social welfare has historically played a very important role in the undertaking of policies that have led to its successes in the field of human development. This has remained true irrespective of the regime in power. Political commitment, moreover, has been backed up by a bureaucracy and administrative structures that have been more effective compared to many other Indian states in the translation of policies into delivery of services to the intended beneficiaries. The administration of family planning, the public health system, and the midday meal programme all bear evidence to the better management of public welfare in the state.

Political Leadership and Political Competition Policies are not without their histories and contexts; choices made by political leaders can make all the difference. In India, within the framework of a common constitution that provides the federal structure containing the different states, the practice and pattern of politics vary considerably across them. There seems to be a strong element of path dependency in contemporary politics and public action in terms of the kinds of public policies that get priority in any state (Harris 2003). The political history of a state and the current nature of the party system and political competition within a state are important factors determining whether and

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what kind of pro-poor and pro-human development policies are undertaken and implemented. In Tamil Nadu, politics is characterized by institutionalized welfarism (Harris 2003), whereas in Karnataka political arrangements are more patronage-based (Manor 2004). Conflicts in Karnataka have been managed by the politics of accommodation, wherein political power and resources were shared to some extent even with political rivals (Jenkins 1999). Neither of the two main parties in Karnataka tried to mobilize political support by pursuing welfarist policies (Crook and Manor 1998; Harris 2003). The power of the middle class and the middle castes, which exercised local influence over wide areas, was rarely challenged by the state in Karnataka (Harris 2003). In Tamil Nadu, where two rival parties, the DMK and the AIADMK (both regional parties), have alternately formed governments, the nature of politics has been more pro-poor, with the lower classes and castes exercising considerable influence in the politics of the state. There is a much higher level of political mobilization and participation of these groups through the party system in Tamil Nadu than in Karnataka. The political agenda and the pattern of political competition was set by the charismatic film star-turned-politician M.G. Ramachandran (MGR), who projected himself as the benefactor and protector of the poor, especially of poor women, an image that was already a part of the popular imagination through his immensely successful feature films. He initiated a number of welfare policies that consolidated this image, and these policies found ready acceptance among the people, especially the illiterate and the poor. Women were an important source of votes for MGR, and in his public speeches he addressed them as ‘thaaikulam’ or the ‘community of mothers’. Women were in the majority among his supporters and fans, and his influence on their behavior and attitudes was supposed to be considerable (Pandian 1992; Subramanian 1999) and has been considered an important factor in the widespread acceptability of the family planning program in the state. MGR’s party, the AIADMK, was a breakaway faction from the rival DMK, which had itself emerged from the anti-Brahminical Dravidian reform movement in the early 1920s. Both the DMK (headed by M. Karunanidhi) and the AIADMK share a common ideological commitment to a social reformist agenda (Subramanian 1999). Moreover, political competition between the two parties has ensured that welfare policies implemented by the rival were not nullified when the opposition was in power.

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The Administration of Public Welfare In developing countries where much public welfare is provided by the state, the quality of functioning of the bureaucracy and administration, which are the implementing agencies of public policies and programs, is a crucial factor in the successful delivery of basic services to the people. In many poor countries, public administration is often lackadaisical and corrupt, largely due to enervated leadership and weak accountability mechanisms. This is also the case with public administration across Indian states. If the more successful Indian states in human development terms are compared with their relatively less successful counterparts, the quality of public administration emerges as one of the factors responsible for their differential performance. Tamil Nadu’s success in the field of human development is to some extent attributable to its better-managed public administration across sectors. There is good coordination between the three directorates of the health department (public health, family welfare and medical services), so that the work of each is in synergy with the others. Strong accountability relationships characterize the public health system in the state. A review mechanism running from the top of the administrative hierarchy to the bottom has been institutionalized, so that there is constant and continuous monitoring of programmes and front-line providers, especially the village health nurses (VHN), who are responsible for much of the work of the public health centers. Weekly reviews at the block level and monthly reviews at the district level provide for the monitoring of performance, and checks and balances in the attainment of goals. Currently, the maternal mortality rate in the state is personally audited by the Chief Secretary. Measures have been taken in the past, and continue to be taken in the present, to engage and motivate the VHNs. Among the more recent measures has been the provision of loans to them to buy mopeds in order to make them more mobile, and also an initiative to provide them with adequate housing in the villages. Tamil Nadu also distributes free and good quality medicines and drugs, which are procured and distributed through the Tamil Nadu Medical Services Corporation, an accredited organization which has been much lauded for its efficient functioning. According to the officials of the Health Department, the provision of free and good quality drugs has strengthened the credibility of the public health system among the people, and is a strong motivating factor in their use of public health facilities.

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Fertility decline in the state, which accelerated in the late 1970s and through the 1980s, was enabled by the presence of a strong family planning program. While such programs were introduced in all the states in India in 1952 and were variously successful, the Tamil Nadu model spearheaded by Mr T V Anthony, who was the district collector in the district of Thanjavur from 1969 to 1972, proved to be very effective. The publicity campaign for the programme consisted of a strong Information, Education and Communication (IEC) component, the use of print and broadcast media, and inviting famous personalities including the chief minister M. Ramachandran and film stars of the era to spread the message of family planning. The success of the programme in the district of Thanjavur and the publicity it received motivated the district collectors of other districts to do the same in their districts. This led to a healthy developmental competitiveness and to the diffusion of family planning across the state. There is a complementarity between the means of birth control and death control (Dreze and Sen 2002). The family planning programme in Tamil Nadu was combined with the provision of maternal and child health care services.12 The ANMs working in the sub-centers provided not only family planning services but also antenatal and post-natal care and immunization to pregnant mothers, infants, and children. From the users’ perspective too, there is complementarity in the utilization of these two sets of services—people who are satisfied with the quality of one are more inclined to use the other services provided by the health facility (Retherford and Ramesh 1996). That this was the case in Tamil Nadu is brought out by the very high coverage of women with respect to antenatal care and immunization (see Table 9.14). The success of family planninggenerated externalities that aided mortality decline. The Chief Minister’s Noon Meal Scheme in Tamil Nadu is the largest scheme of its kind in the world. Introduced in the early 1980s, and gradually covering the entire state, the scheme has throughout been ably administered and managed. While some leakage from the system can be expected, the scheme has been largely successful in both its conception and administration. This has been made possible by the provision of adequate resources for the scheme, which, apart from food, includes providing space, infrastructure, and personnel. From field visits made to primary schools in Tamil Nadu, researchers have reported the efficient organization and management of the scheme in terms of provision of infrastructure and supplies (cooking sheds and utensils) and personnel (cooks and helpers), such that it did not interfere with the teaching and learning activities in the school (Dreze and Goyal 2003). Teachers and parents

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were appreciative of the scheme and its salutary effects on educational improvements (Swaminathan et al. 2004). Its acceptance by parents and by people in general has also added to the accountability of local-level providers. Its importance in the political agenda has kept it relatively inured from leakage and protected it from becoming another vehicle for patronage and rent seeking. Public administration of welfare in Karnataka has not been as successful in translating policies into human development outcomes. There has been a family planning programme in the state from the 1950s onwards, but it has functioned like family planning programmes in other states—without a strong and committed bureaucratic leadership working its way down to the front-line providers. In the field of nutrition, the noon-meal scheme came very late to the state—it was introduced only in 2002. Education in the state has progressed over time without any particular emphasis though the situation has changed somewhat in recent years.

Women’s Status in Society It is now widely accepted that the status of women in society exerts a powerful influence on health and demographic outcomes. Women’s education, their freedom to earn income outside the home, the potential for income-earning opportunities for women, their right to own property, and their representation in the public sphere are important dimensions of their position in society. The importance of women’s education for fertility and mortality decline is now well recognized (Dreze and Murthi 2001; Murthi et al. 1995; Basu 1992). As we have seen above, in Tamil Nadu a higher percentage of women overall and in rural areas are educated than in Karnataka. However, in Tamil Nadu fertility has declined even among illiterate and less educated women. This deviation from the general experience of other low-income countries that have achieved rapid fertility transition has been attributed by some to the greater autonomy and stronger agency of women, including illiterate and poor women, in Tamil Nadu. The degree of women’s autonomy can be judged by their exposure to the world outside the home, their interaction with the outside world, especially economic interaction, and their participation in decision making, both within the household and in the public sphere. An interesting study by Alaka Basu (1992) in the slums of New Delhi. comparing migrant women from Uttar Pradesh and Tamil Nadu, found that the latter were freer in their movement outside the home, in their interaction with the outside world, in taking decisions

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with respect to uses of household income, and in working in the informal sector; they also had lower fertility rates. Similarly, the social and economic lives of the women from Uttar Pradesh were also a reproduction of their lives in Uttar Pradesh, with social interaction confined to the household and other neighborhood women. According to the NFHS I (1992–93), 31.1 percent of women in Tamil Nadu were employed outside the home for cash compared to 21.1 percent in Karnataka. The percentage of women reporting involvement in decisions regarding their own health care was 61.1 percent in Tamil Nadu and 49.3 percent in Karnataka. There was also greater acceptance of family planning by women in Tamil Nadu, even among the illiterate and the backward castes. In a telling piece of data, while over 90 percent of illiterate women in Tamil Nadu considered it acceptable to have family planning messages broadcast in public, less than two-thirds of illiterate women in Karnataka found it acceptable. Cultural factors such as kinship structure and nuptiality may also have contributed to women’s relative greater autonomy in Tamil Nadu. As mentioned earlier, the greater degree of female autonomy in Tamil Nadu has also been traced by some to the anti-Brahminical Dravidian movement that arose in the 1920s and 1930s in Tamil Nadu. The welfare agenda in Tamil Nadu overall has been influenced by Dravidian ideology as espoused by Periyar in pre-independent India. The emphasis by the Dravidian movement on education and job reservations for the non-Brahminical groups of society created both a value for education in society and established the political importance of these groups. The Dravidian movement, moreover, had a special focus on women and their empowerment, exhorting them to be self-reliant and to throw off the burden of frequent child-bearing by practicing contraception, and even to give up the institution of marriage. This message of self-reliance and stronger agency role for women was carried on through the medium of feature films, especially those of M.G. Ramachandran, and influenced both the social and the political behavior of women.

Policy Lessons What policy lessons can we draw from Tamil Nadu’s success in improving health and education indicators in a short period of time, and Karnataka’s relatively inferior performance during the same time period? Multi-sector Interventions: In Tamil Nadu, interventions in different sectors generated synergies across them, plausibly leading to outcomes

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that were better than would have been the case had there been no positive feedback across them. Simultaneously intervening across related sectors can generate outcomes that are not additive but multiplicative, while simultaneously increasing the efficacy of each individual intervention. The family planning program motivated women to use public health care facilities, where they not only received family planning services but also maternal and child health care services. At the same time, interventions in the food and nutrition sector increased the efficacy of health interventions. The midday meal scheme had an impact on the nutritional status of children and also boosted school enrollments and attendance. The cumulative effect of rising literacy levels, especially female literacy levels, can be expected to have contributed to the improved health status of women and children, and reductions in fertility levels. Provision of Basic Infrastructure: We have already noted that there is a dense network of schools in Tamil Nadu; access is thus not a constraint in the progress of education. As has been noted above, the emphasis on the availability of schools dates from the tenure of K. Kamaraj as chief minister. Kamaraj had two points of emphasis: the provision of a school to every village in the state and the construction of roads. The high literacy rates in Tamil Nadu are considered by many—bureaucrats, academics and others—to be the cumulative results of the early provision of an adequate school infrastructure. The contribution of the availability of basic infrastructure to attainment of human development outcomes emerges not only in education but also in other fields. Time and again in interviews with civil servants in the departments of health and with other concerned individuals, Tamil Nadu’s better performance in the field of health was also attributed to the availability of easily accessible public health facilities. The norms laid down by the central government with respect to the provision of sub-centers, PHCs and hospitals have been more than fulfilled in the state. Quality of Service Delivery: As has been reiterated often enough, if the service is of poor quality, simply providing a service does not guarantee that it will be used. The quality of service delivery depends on both the availability of basic infrastructure and an institutional structure that is able to generate the right incentives, such that administrators and providers are motivated to deliver services which people find worth their while to use. Schooling infrastructure is better in Tamil Nadu compared to Karnataka. The organization and implementation of the NMS attests to the ability of the state to provide a public service that is appreciated and utilized by the intended beneficiaries—the poor. Similarly, the success of

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the family planning program in the state, in which the front-line workers have been the foot-soldiers in outreach, proves that it is possible to provide the right incentives and galvanize public sector personnel into becoming active agents of change. By all accounts, the administration and bureaucracy in Tamil Nadu seem to have been competent and committed, and services provided have as a result been of reasonable quality. Attempts at Universalizing Coverage: Another very important policy lesson that emerges from Tamil Nadu’s experience is that the rural/urban differential and the differentials between different socio-economic groups in the provision of social services have to be reduced for widespread improvement in human development indicators to take place. This has been the experience of other successful performers among developing countries as well. In Karnataka, urban human development indicators were more or less at par with those in Tamil Nadu, but statewide averages were lower because of the sharp differentials across areas and between population sub-groups. Political Leadership and Ideology: Whatever the political motivations behind the policies undertaken in particular social and political contexts, it can be said that when a political leader champions a cause, there is a greater likelihood of the policy being implemented well and meeting with success in terms of objectives and outcomes. In Tamil Nadu, a number of welfare policies were initiated and strongly supported by the chief minister, M.G. Ramachandran, in the early part of the 1980s. These were later kept on course and expanded by all governments that came to power in the state. Without the support of the state, in the sense of actions taken by the government to improve popular well-being, these development outcomes could not have been achieved in such a short period of time. On the other hand, Karnataka experimented with land reforms and democratic decentralization much before other states in India. But it did not pursue human development objectives with the same focus as did Tamil Nadu. Women’s status: The status of women (and their education levels) is considered to be one of the strongest influences on health and demographic outcomes. In Tamil Nadu, women enjoy more freedom at home as well as in the public sphere. Moreover, the interventions pursued by Tamil Nadu created conditions that had a bearing on improving women’s agency. Reduction in fertility releases women from the economic and health-related burden of constant child-bearing, and the depletion of physical, personal and other resources that accompany it. Incomplete success: Though Tamil Nadu is one of the better performing states in the Indian union, it has its share of educational failures, and its

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health transition is far from complete. A higher proportion of children enter the schooling system in Tamil Nadu, but a higher proportion also drops out. One count where Karnataka does better than Tamil Nadu is in keeping more children in school once they enter the schooling system. Within both states there are large regional variations in educational achievements. The literacy rates of scheduled castes and tribes lag considerably behind those of other groups. Since the 1990s, progress in literacy has slowed down in Tamil Nadu, and literacy rates for both males and females in Karnataka have been catching up with those of its neighbor. By 2001, Karnataka was around 6 percentage points behind Tamil Nadu in overall literacy, with near convergence in urban male literacy rates. Neither state, it seems, has been very successful in reducing the gender gap in literacy by more than a few percentage points from their 1971 levels. The male-female gaps in literacy rates within the two states were nearly similar in 2001: female literacy rates lagged behind male literacy rates by 19.84 percentage points in Karnataka and 17.78 percentage points in Tamil Nadu. Since the 1990s, mortality decline has stagnated in Tamil Nadu. Between 1990–91 and 1996–97, the infant mortality rate in Tamil Nadu remained nearly constant at 53 per 1,000 live births. While severe malnutrition has declined in the state, the incidence of malnutrition in absolute terms remains high.

Concluding Remarks This chapter has tried to probe the reasons for Tamil Nadu’s relative success in human development vis-à-vis Karnataka. Focusing mainly on the achievements within the short time period that we have designated as the breakthrough period, the lessons from Tamil Nadu’s achievements are twofold: first, much can be achieved in the field of human development in a relatively short period of time without waiting for economic growth, and second, Tamil Nadu’s success is partial and incomplete. During its breakthrough period, while it made remarkable advances in terms of some human development indicators—notably infant and child mortality, life expectancy and literacy rates—morbidity and malnutrition levels remained high, and there were wide variations in human development attainments within the state between regions and between socio-economic groups. School dropouts have been high in Tamil Nadu, and child labour continues to be prevalent in a significant way.

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Nevertheless, Tamil Nadu’s experience shows that a cluster of multisector key interventions can create synergies that feed positively into each other and lead to much improved human development outcomes in a short time period, without waiting for higher income levels (or even higher education levels). Karnataka, on the other hand, seems to have relied more on the conventional strategy of the benefits of economic growth to trickle down to the population at large. Karnataka’s achievements have also been undermined by the state’s neglect of its north-eastern districts, whose performance in education and health is more akin to the BIMARU states and much worse than the all-India average. As this study has largely focused on a time period of a decade and a half, economic growth as a determinant of human development outcomes has necessarily taken a backseat. However, in the long run, sustained human development requires resources that can come only from economic growth. Though even countries where economic growth has been negative during certain periods have experienced continued improvement in health status due to the persistent benefits generated by past investments, the question of whether things would not have been better if economic growth were to have been positive cannot be tested. In the long run, economic growth is essential for further improvements in people’s health status.

Notes 1. Seeta Prabhu (2001) compares Maharashtra and Tamil Nadu, where human development attainments have been similar but have been achieved via different routes. 2. Ideally, to trace progress over time, good time series data are required. However, such data are not available and in this study, more often than not, information from a single point in time has been used as evidence for claims. Moreover, different researchers and data sources use varying definitions and methodologies, which lead to differences in numbers reported. In such cases, the more reliable and credible data source has been used. 3. Another reason could be that more students in Tamil Nadu attend private aided and unaided schools, which are costlier to attend (NCERT 1998). 4. By ending classroom ‘hunger’, midday meals can also boost learning achievements as well as develop habits of hygiene in students such as washing hands before meals (Dreze and Goyal 2003). 5. The scheme has not been without its critics for being too expensive, for diverting resources away from other more important development activities, and not really having tackled the nutritional problem (malnutrition continues to be high in the state). Due to lack of information and inconsistencies in data that are available, it is not possible here to counter these criticisms or measure the relationship between this intervention and the achievements that have been claimed on its behalf.

Human Development in Tamil Nadu and Karnataka 329 6. Amartya Sen calls it ‘unaimed opulence’. 7. The results are available from the author upon request. 8. The greater density of nurses (as also the higher percentage of female teachers) may also reflect on the status of women in that society—greater exposure to the outside world, greater social and economic interaction with the outside world, greater willingness on the part of parents to educate their girls and more employment opportunities for women outside the domestic arena (Basu 1992). 9. Countries such as Burma, Zaire, Tanzania, Ghana, and Kenya achieved low mortality with high fertility levels (Caldwell 1986). 10. For this study, in a regression analysis of infant mortality rate on total fertility rate, controlling for real per capita state GDP, time and state for the years 1981–1991, the total fertility rate is significantly and strongly positively correlated to the infant mortality rate. However, when the same regression analysis is done for all years between 1981 and 2001, both total fertility rate and income are significantly correlated with infant mortality rate. This once again underlines the importance of economic growth for human development in the long run. But the relationship between fertility and mortality is not overwhelmed by the presence of income as a significant factor. 11. There is a greater incidence of malnutrition in the southern states due to the predominance of rice in the diet. Diets in northern states include cereals other than rice and also different kinds of legumes and pulses. 12. This is in contrast with Kerala where the ANMs did not promote or provide family planning services.

References Anand, S. and Ravallion, Martin. 1993. ‘Human Development in Poor Countries: On the Role of Private Incomes and Public Services’, Journal of Economic Perspectives, 7 (1): 133–50. Antony, T.V. 1992. ‘The Family Planning Programme—Lessons from Tamil Nadu’s Experience’, Paper presented at the Symposium on India’s Development in the 1990s, at the Nehru Memorial Museum and Library, Center for Policy Research, New Delhi. ———. 1994. ‘Second Regional Workshop on Strategic Management of Population Programmes Tamil Nadu, India—A Case Study’, Paper presented in Nanjing, China. Basu, A. 1992. Culture, the Status of Women and Demographic Behavior. Oxford: Clarendon Press. Bhat, P.N. Mari. 1995. ‘Levels and Differentials in Maternal Mortality in Rural India: New Evidence from Sisterhood Data’, National Council of Applied Economic Research, NCAER, Working Paper Series No. 87, New Delhi. Caldwell, J. et al. 1985., ‘Educational Transition in Rural South India’, Population and Development Review, 11 (1): 29–51. Caldwell, J. 1986. ‘Routes to Low Mortality in Poor Countries’, Population and Development Review, 12 (2): 171–220. Case, A. and Deaton, A. 1999. ‘School Inputs and Educational Outcomes in South Africa’, Quarterly Journal of Economics, 114 (3): 1047–84. Chaudhuri, D.P. and Wilson, E.J. 2002. ‘Nutritional Poverty, School Education and Supply of Child Labour: Explorations with States, Districts and Household Data for Rural

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India’, in N. Ramachandra and L. Massun (eds), Coming to Grips with Rural Child Work. New Delhi: Sage Publications. Crook, R.C. and Manor, J. 1998. Democracy and Decentralisation in South Asia and West Africa. Cambridge: Cambridge University Press. Deolalikar, A. and Vashishtha, P. 2000. ‘The Health and Medical Sector in India: Potential Reforms and Problems’, in S. Kahkonen and A. Lanyi (eds), Institutions, Incentives and Economic Reforms in India. New Delhi: Sage Publications. Dev, Mahendra et al. 2004. ‘Economic Liberalisation, Targeted Programmes and Household Food Security: A Case Study of India’, MTID Discussion Paper 68, International Food Policy Research Institute. Dreze, J. and Goyal, A. 2003. ‘The Future of Mid-Day Meals’, Centre for Development Economics at the Delhi School of Economics. Mimeo. Dreze, J. and Murthi, M. 2001. ‘Fertility, Education and Development: Evidence from India’, Population and Development Review, 28: 285–312. Dreze, J. and Sen, A. 1995. India: Economic Development and Social Opportunity. New Delhi: Oxford University Press. ——— 2002. Development and Participation. New Delhi: Oxford University Press. Duggal, Ravi, Nandraj, Sunil, and Vadair, Asha. 1995. ‘Health Expenditure Across States, Parts I and II’, Economic and Political Weekly, April 15 and 22. Gertler, Paul and Van der Gaag, J. 1990. The Willingness to Pay for Medical Care. Johns Hopkins Press. Government of India. 1998. ‘Attending an Educational Institution in India: Its Level, Nature and Cost’, NSSO 52nd Round, July 1995–June 1996, Report No. 439, Department of Statistics. ———. 1999. Compendium of India’s Fertility and Mortality Indicators, 1971–1997. New Delhi: Registrar General of India. ———. 1999–2000 & 2002–03. Selected Educational Statistics, New Delhi: Ministry of Human Resource Development, Department of Secondary and Hihger Education, Planning, Monitoring and Statistics Division, 2001 ———. 2002 (2004). Health Information of India. New Delhi: Central Bureau of Health Intelligence, Directorate General of Health Services, Ministry of Health and Family Welfare, Government of India, New Delhi. Government of Karnataka. 1999. Karnataka Human Development Report 1999. Bangalore: Government of Karnataka. Government of Tamil Nadu. 2003. Tamil Nadu Human Development Report 2003. Government of Tamil Nadu in Association with Social Science Press. Harris, John. 2003. ‘Do Political Regimes Matter?’, in Peter Houtzager and Mick Moore (eds), Changing Paths. Ann Arbor: University of Michigan Press. Harris-White, B. 2004. ‘Nutrition and its Politics in Tamil Nadu’, South Asia Research, 24 (1): 51–71. Indian Institute of Population Studies (IIPS). 1995a. National Family Health Survey (MCH and Family Planning): India. Bombay: IIPS. ———. 1995b. National Family Health Survey (MCH and Family Planning): Karnataka 1992–93. Bombay: IIPS. ———. 1995c. National Family Health Survey (MCH and Family Planning): Tamil Nadu 1992. Bombay: IIPS.

Human Development in Tamil Nadu and Karnataka 331 Jenkins, R. 1999. Democratic Politics and Economic Reform in India. Cambridge: Cambridge University Press. Kohli, A. 1987. The State and Poverty in India. Cambridge: Cambridge University Press. Mahadevan, K., Gurumoorthy G., and Ravindra Kumar, V.K. 1997. ‘The Successful Family Planning Strategies and Beyond’, in K. Mahadevan and M. Sumangala (eds), Welfare Model of Development and Demographic Transition. New Delhi: BR Publishing Corporation. Manor, J. 2004. ‘Explaining Political Trajectories in Andhra Pradesh and Karnataka’, in Rob Jenkins (ed.), Regional Reflections: Comparing Politics across Indian States. New Delhi: Oxford University Press. Mehrotra, Santosh and Jolly, Richard (eds). 1997. Development with a Human Face: Experiences in Social Achievement and Economic Growth. Oxford: Clarendon Press. Murthi, Mamta, Dreze, Jean, and Guio, Anne-Catherine. 1995. ‘Mortality, Fertility and Gender Bias in India: A District Level Analysis’, Population and Development Review, 21: 745–82. National Institute of Nutrition. 1999. Nutrition Trends in India. Hyderabad: National Institute of Nutrition. National Sample Survey Organization. 2000. ‘Sarvekshana’, June. New Delhi: Department of Publications. NCERT. 1998. Sixth All-India Educational Survey, 1992–93. Volumes I–VI. New Delhi: NCERT. Pandian, M.S.S. 1992. The Image Trap: M.G. Ramachandran in Film and Politics. New Delhi: Sage Publications. Preston, S. 1975. ‘The Changing Relationship between Mortality and Economic Development’, Population Studies, 29 (2): 231–48. Radhakrishna, R. and Ravi, C. 2004. ‘Malnutrition in India: Trends and Determinants’, Economic and Political Weekly, February 14, pp. 671–76. Rajan, S.I. and Jaikumar, A. 1992. ‘Ímpact of Noon Meal Programme on Primary Education: An Exploratory Study in Tamil Nadu’, Economic and Political Weekly, October 24–31. Ravindran, T.V.S. 1999. ‘Female Autonomy in Tamil Nadu, Unravelling the Complexities’, Economic and Political Weekly, April 17–24. Retherford, R.D. and Ramesh, B.M. 1996. ‘Fertility and Contraceptive use in Tamil Nadu, Andhra Pradesh and Uttar Pradesh: Some comparisons and implications’, NFHS Bulletin, No. 3, East-West Center Publications on Population and Health. (Series jointly published by the International Institute for Population Sciences, Bombay, and the EastWest Center Program on Population, Honolulu). Schulz. 1999. ‘Health and Schooling Investments in Africa’, Working Paper 801, Economic Growth Center, Yale University, New Haven, USA. Seeta Prabhu, K. 2001. Economic Reform and Social Sector Development: A Study of Two Indian States. New Delhi: Sage Publications. Sekher T.V., Raju, K.N.M., and Sivakumar, M.N. 2001. ‘Fertility Transition in Karnataka: Levels, Trends and Implications’, Economic and Political Weekly, December 22. Subramanian, N. 1999. Ethnicity and Populist Mobilization. New Delhi: Oxford University Press. Swaminathan, Padmini, Jeyaranjan, J., Sreenivasan, R., and Jayashree K. 2004. ‘Tamil Nadu’s Midday Meal Scheme, Where Assumed Benefits Score over Hard Data’, Economic and Political Weekly, October 30.

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Tilak J.B.G. 1996. ‘External and Internal Resource Mobilisation for Education for All’, in Devendra Thakur and D.N. Thakur (eds), Educational Planning & Administration. New Delhi: Deep & Deep Publications. Weiner, M. 1991. The Child and the State in India. New Delhi: Oxford University Press.

Chapter 10 Anti-Corruption in India: Issues and Strategies Vikram Menon

Corruption has been defined as the abuse of public office for private gain. A more elaborate definition adopted by Transparency International is that corruption involves ‘behavior on the part of officials in the public sector, whether politicians or civil servants, in which they improperly and unlawfully enrich themselves or those close to them, by the misuse of the public power entrusted to them.’ Heidenheimer (1970) identifies three types of corrupt behavior: public office-centered, market-centered and public interest-centered. Public officecentered definitions of corruption revolve around the violation of public trust placed in the office—in other words, deviation from bureaucratic norms of rationality, universalism, and achievement orientation in meeting responsibilities leads to corruption. This would include behaviors such as bribery, nepotism and misappropriation. Market-centered corruption refers to the situation in which officials look upon their position as an ‘authority’ to maximize personal gains by dispersing public benefits. Public interest-centered definitions stress the violation of common interest that provides indirect or direct benefits to public officials. In developing countries, however, where the universalization of bureaucratic norms remains weak, where authority is centralized and monopolistic, and where the notion of public benefit is filtered through various powerful social

334 Vikram Menon

structures including family, kinship and clan groups, and social affiliations, all or most of these definitions would hold true.

The Extent and Scope of Corruption in India While numerous administrative commissions have discussed the problems of corruption in India, there has been little rigorous assessment of the extent and scope of corruption across service delivery sectors. Transparency International’s Corruption Perception Index ranks India at number 88 out of 158 countries, which reflects the serious extent of corruption in India. When one considers India’s score against 15 Asian countries, India’s position becomes even less satisfactory. While a country’s rank can change simply because new countries enter the index or others dropout, scores indicate the actual ratings provided by respondents (the higher the score, the less the perceived corruption). A higher score is an indicator that respondents provided better ratings, while a lower score suggests that respondents revised their perception downwards. In a comparison of scores, India ranks relatively low at 10th place, just above Nepal, Vietnam, Pakistan, Indonesia, and Bangladesh. Table 10.1 Scores of 15 Asian Countries on Transparency International’s Corruption Perception Index (2003–05) Country

2003

2004

2005

Singapore Hong Kong Japan Taiwan Malaysia South Korea China Thailand India Philippines Nepal Vietnam Pakistan Indonesia Bangladesh

9.4 8.0 7.0 5.7 5.2 4.3 3.4 3.3 2.8 2.5 NA 2.4 2.5 1.9 1.3

9.3 8.0 6.9 5.6 5.0 4.5 3.4 3.6 2.8 2.6 2.8 2.6 2.1 2.0 1.5

9.4 8.3 7.3 5.9 5.1 5.0 3.2 3.8 2.9 2.5 2.5 2.6 2.1 2.2 1.7

Source: Compiled from Transparency International’s Corruption Perception Index 2003–2005).

Anti-Corruption in India 335

Micro-level studies that examine corruption across India are relatively few. In one study of the public distribution scheme cited by India’s former Central Vigilance Commissioner, 31 percent of the foodgrain and 36 percent of sugar meant for distribution was found to have been diverted. The total foodgrain subsidy for India amounts to around Rs 150 billion; Rs 50 billion is therefore lost to corruption (Vittal 2005). A more recent study done by Transparency International for India in 2005 (Transparency International 2005) studies the perception of corruption across a range of government services, including the police, judiciary, land administration, municipal services, government hospitals, electricity, PDS, income tax, water supply, schools and rural financial institutions. The survey, which looks at 10 sectors including medical services, judiciary, police and revenue administration, has found that citizens pay bribes amounting to Rs 210.68 million while availing one or more of these services. As much as 62 percent report first-hand experience of paying bribes and using ‘contacts’ to complete a task at a government office, and three-fourths of citizens believe that corruption has increased in public life over the last year. The study is the first national-level survey of corruption; it estimates not only the monetary value of petty corruption but also ranks public services and states according to the perception of corruption in service delivery. The study distinguishes between ‘need-based’ services where the public sector holds a monopoly and where citizen interaction is more sporadic (income tax, judiciary, police) and ‘basic’ services where private service providers exist and interaction is more intensive (health, education), and concludes that need-based services are perceived as more corrupt due to the monopolistic nature of provisioning and the fact that need-based services are vested with substantial powers, which makes the repercussions of not paying bribes, more serious. Perception surveys are imperfect tools to assess the extent of corruption since people’s perceptions are often filtered through a range of social and economic constructions that make comparisons between states and regions difficult. Nevertheless, the Transparency International study offers a rich insight into the nature and extent of corruption in India. According to the study, among the services surveyed, the police in India is seen as the most corrupt with 80 percent of the respondents claiming they had paid bribes. In the judiciary, 41 percent of those who paid bribes did so towards influencing judgment, 31 percent to speed up or delay judgment, and 28 percent to get routine jobs done such as listing of cases and gaining copies of documents. Need-based services, where the risks of not paying

336 Vikram Menon Table 10.2 Corruption in Service Delivery in India: Ranking of Services (2005) Services

Rank

Need-based Police (Crime/Traffic) Land Administration Judiciary (Lower Courts) Municipal Services Income Tax (Individuals) RFI (Farmers)

6 5 4 3 2 1

Basic Government Hospitals Electricity PDS Water Supply Schools

5 4 3 2 1

Source: Transparency International (2005).

a bribe seemed greater, were seen as more corrupt; corruption is greater where there are no alternative service providers (e.g., schools) and where the repercussions of not paying a bribe are high. The largest number of bribes paid are reportedly for medical services in rural and semi-urban areas. According to the survey, the total monetary value of petty corruption is over Rs 210 billion annually (Transparency International 2005), or approximately 0.75 percent of current national GDP. To put it in perspective, this amount, if distributed equally among the poor, could raise the annual income of each poor person by approximately Rs 850, and approximately halve the national poverty head count ratio.

Reasons for the Persistence of Corruption Just as it is impossible not to taste honey (or poison) that one might find at the tip of one’s tongue, so it is impossible for one dealing with government funds not to taste at least a little bit of the King’s wealth. Just as fish moving under water cannot possibly be found out as either drinking or not drinking water, so government servants employed in government work cannot be found out (while) taking money for themselves. – Kautilya, Arthashastra

While human greed is obviously a driver of corruption, structural incentives can serve to multiply the scope of such greed. From the point of view of tackling corruption there are two separate but complimentary

Anti-Corruption in India 337

strategies that need to be tackled. The first consists of the preventive approach—creating a set of rules, systems and processes that effectively provide checks on arbitrary and corrupt action by creating incentives for (or in many cases effectively forcing) providers and clients to conform to ethical standards. The second approach—the enforcement approach— consists of the establishment of anti-corruption laws and institutions that provide a legal framework for investigating corruption and enforcing sanctions and penalties on those found guilty of indulging in corruption.1 An examination of India’s anti-corruption strategy would suggest that both enforcement and prevention remain weak. The incentives for corruption abound in India and include:  

  

Poor enforcement systems Complex and non-transparent administrative systems of command and control Monopolistic service providers Underdeveloped legal frameworks Weak notion of citizens’ rights

The Problems of Enforcement One measure of the effectiveness of India’s anti-corruption strategy is the ability of its laws and institutions to effectively investigate and prosecute acts of corruption and serve as a strong sanction against corrupt behavior. An analysis of the enforcement mechanisms in India shows that both policies and institutions remain weak. These weaknesses have been caused due to a combination of factors—the historical roots of some of the policies and institutions which derive from the colonial period, when centralized command and control was a relevant model of administration; the accountability structures within which they work; and the limited nature of their engagement with the larger framework of anti-corruption activities (i.e., prevention and public awareness). In widely cited studies done in Andhra Pradesh and Orissa, the former head of Hong Kong’s highly successful Independent Commission Against Corruption noted the following problems (De Speville 2002): 

Official bodies responsible for investigating corruption allegations are administrative creations forming part of a department of the administration and are widely perceived to lack independence and administrative autonomy.

338 Vikram Menon 





The current process of investigation and prosecution or disciplinary action requires permissions that amount to interference, particularly in the investigation of senior officials. The general perception therefore is that the enforcement and prosecution is directed at more junior officers and not the senior officers. The existing strategy against corruption is inadequate in that it focuses entirely on enforcement, addresses only the public sector but does not address corruption in the private sector and the rest of the community, and fails to sufficiently engage the community in the effort. The resources invested in the effort against corruption are too limited, given the size of the public sector and the police force, let alone the private sector and the population as a whole.

The Weaknesses of Enforcement Agencies At the level of the central government, the Central Vigilance Commission and the Central Bureau of Investigation are the main agencies of enforcement, while the primary responsibility for vigilance in government departments and government undertaking is vested with the individual departments, which have Chief Vigilance Officers. While the enactment of the CVC Act and its notification in 2003 on the basis of the Supreme Court judgment has conferred statutory status on the Central Vigilance Commission and given it substantial independence, according to analysts there has been no material difference to the powers and functions of the Commission as a result of this statutory status (Vittal 2005). A review of the performance of the CVC from 1998 shows that while it has emerged as an independent body, it remains constrained by the limitations imposed by the Act and the jurisdiction of the Government of India under the Constitution (Vittal 2005). Further, the jurisdiction of the CVC is limited to the public servants of the Government of India. That leaves out all 30 state governments, which together have a much larger number of employees than the Government of India. Law and order is under List II of the Constitution and is a state subject. Hence, even the CBI cannot investigate corruption cases against the Government of India officials without the permission of the state government concerned. This is to be obtained on a voluntary basis from the state. While the majority of the states have given a general consent to the CBI to investigate cases against central government employees, some states like Karnataka insist on a

Anti-Corruption in India 339

case-by-case clearance. Further, in addition to the operational limitations, the CVC is in the ultimate analysis only a recommendatory authority. The commission’s role continues to be advisory and it still has to rely on Parliament taking serious note of instances of deviations from the commission’s advice by disciplinary authorities within departments from its annual report placed in Parliament. In practice, Parliament does not have either the time or the inclination to follow up on individual cases apart from those with political relevance. The Central Vigilance Commission is not meant to undertake direct investigation into complaints of serious irregularities by government servants or in government departments, and while the commission has decided to exercise powers conferred on it under the 2003 Act to summon records and look directly into serious complaints, given its human and financial resources this can only be exceptional. The commission will have to continue to rely on vigilance divisions in government organizations and public sector units, which remain weak.

Internal Vigilance in Ministries and Departments A major organizational problem is related to the human resources available for internal vigilance in the departments. Although there are meant to be formal vigilance structures headed by Chief Vigilance Officers in every ministry of the government, in practice, these institutions are largely ineffective. There are no full-time Chief Vigilance Officers in any department or ministry of the Government of India, and these posts are held as additional charge by a senior officer, which makes supervision and control difficult. In the case of many public sector agencies under the purview of the CVC, the posts of Chief Vigilance Officers are manned by public servants on deputation from other organizations. These public servants are placed on deputation to the agencies for a short term and go back to their parent departments. They may, therefore, not be able to develop the insights and continuous focus needed for locating and tackling corruption in the organization. In many other organizations, like the railways, which have a very large vigilance organization, the posts are manned by the employees of the department itself who are posted in from other parts of the organization and often suffer from problems of objectivity and independence (Vittal 2005)—it is quite likely that the public servants against whom they investigate and report against may become their managers. There remains a continuing perception that vigilance work is an additional and non-serious task, and the very low level of convictions

340 Vikram Menon

and enormous delays are a strong indicator of a tolerant attitude towards bureaucratic corruption.

Enforcement Agencies at the State Level Despite continuing weaknesses in vigilance enforcement at the central level, there remains a stronger thrust towards anti-corruption at this level, particularly given the fact that civic and court action have led to a greater public debate about corruption. At the level of the state governments, however, anti-corruption agencies are even weaker, and administrative institutions to check corruption remain weak and under-funded and open to political interference. Much of the corruption in service delivery happens at the level of the state, and strengthening enforcement mechanisms at this level is critical to better deterrence. One of the main structural weaknesses at the state government level is the multiplicity of agencies responsible for tackling corruption including Vigilance Commissions, Lok Ayuktas and police agencies like AntiCorruption Bureaus. States present considerable variety in the organization of their anti-corruption function. Thus, while a system of Vigilance Commissioners exists in eight states such as Andhra Pradesh, Assam, Bihar, Gujarat, Jammu and Kashmir, Meghalaya, Sikkim, and Tamil Nadu, 17 states also have Lok Ayuktas, who are generally retired judges of the High Court or Supreme Court. In addition all states have a separate anticorruption wing or bureau, normally headed by a police official. The idea of creating an ombudsman, called the Lok Pal (citizen grievance machinery) was mooted as early as 1967 through a recommendation of the Administrative Reforms Commission, which suggested the establishment of a non-partisan machinery for redressing citizen’s grievances and eradicating corruption, particularly political and high-level corruption. Since 1968, a Lok Pal bill has been introduced in Parliament on eight occasions but has never finally emerged as law—a clear case of the absence of political will and political consensus in India to tackle corruption. Many Indian states have created Lok Pal-like institutions in the form of the Lok Ayukta. The experience at the state level has been varied. It is generally felt across most states that the Lok Ayukta system has not worked. While there are instances of powerful Lok Ayuktas, as in Karnataka, where the organization of the Lok Ayukta has been given substantial authority and resources to support both deterrence and public awareness (see Box 10.1), most Lok Ayuktas remain under-funded and ignored. In Rajasthan, for example, while a Lok Ayukta was established in the 1970s,

Anti-Corruption in India 341

the office is not fully functional, remains without a head and has limited independence (World Bank 2005). In most states the Lok Ayukta is hampered by the fact that it has no independent investigating authority, and is dependent on government agencies to carry forward its investigations. Further, the Lok Ayukta largely functions as a recommendatory body and has limited powers to initiate action. In Orissa, under the Orissa Lok Pal and Lok Ayukta Act of 1995, the Lok Pal has statutory responsibility for investigating any allegation of corrupt action by any public servant and may use the service of any investigating agency. The legislation however has never been fully implemented, in that Lok Ayuktas have not been appointed and both offices are combined in the person of the Lok Pal. With a statewide remit to discharge, the Lok Pal has the assistance of a total complement of 19 persons, including support staff. Both in Orissa and Maharashtra, the Lok Ayukta is perceived as a grievance redressal organization rather than as an ombudsman for cases of corruption (Vittal 2005). Box 10.1 Karnataka’s Lok Ayukta—Authority and Structure

In purely legal terms, the Karnataka Lok Ayukta is the most powerful in the country. The Lok Ayukta Act in Karnataka gives the ombudsman broad jurisdiction over offenses relating to corruption and maladministration by public servants. Public servants are defined to include not only government officials but all state legislators and ministers including the chief minister. There are no limits on the power of the Lok Ayukta to conduct investigations; in addition the Lok Ayukta can initiate prosecutions directly. The power to prosecute, however, has never been used in the history of the institution, and it thus functions as a recommendatory body. While the 1984 law gave the Lok Ayukta the power to take cognizance of an offense without a formal complaint, this suo moto authority was withdrawn in 1986 by the legislature. The Lok Ayukta is appointed for a five-year term on the basis of a joint decision involving the chief minister, chief justice, speaker of the house, and leader of the opposition, and cannot be removed from office except for ‘proven misbehavior’ or ‘incapacity’, by a two-thirds vote of the assembly. Karnataka and Madhya Pradesh were the only states in India that chose to place their vigilance establishments, which enforce the Prevention of Corruption Act, under the Lok Ayukta, thus heading off the fragmentation of anticorruption institutions that has occurred in most Indian states. Karnataka’s Lok Ayukta is better endowed than any other in India, with an annual budget of Rs 72 million and 500 investigating officers. Source: World Bank 2006.

342 Vikram Menon

The Problem of Prosecutions Legal action against corrupt public servants involves two stages. The first is the stage of investigation by an agency. This may be a police agency like the CBI or state Anti-Corruption Bureaus, or by the departmental vigilance officers. Preliminary investigation is necessary to generate the relevant facts needed to prove guilt. The second stage is the stage of departmental inquiry by the inquiry officer, or prosecution in a court of law. One of the fundamental anomalies in the anti-corruption function in India endorsed through both law and government rulings is that prior permission from the appellate authority (normally the Cabinet Secretary at the center or Chief Secretary at the state level) is needed for investigations against prosecution of all-India service officers and politicians. At the center, the Government of India had in 1989 issued orders that the CBI cannot investigate corruption charges against officers of the level of Joint Secretary and above without its permission. In the landmark judgment delivered on December 18, 1997, the Supreme Court struck down the single directive number 4.7 (3) issued to the CBI by the Government of India, which requires prior sanction of the designated authority to initiate action investigation against officers of the government, public sector undertakings and nationalized banks above the level of joint secretaries to the Government. But the government introduced this change through an act of Parliament. While the original reason for putting in place a system of checks while taking forward investigations and prosecutions of senior officers was to avoid unwarranted harassment of officers and protect decisions made by them in the course of the their work, it is widely perceived that in the current Indian context this constitutes an unwarranted check upon the decision to investigate (which should be made by skilled professionals on purely technical and evidentiary grounds) and creates the potential for interference and manipulation. The process in India is clearly at variance with procedures utilized by the most effective anti-corruption agencies throughout the world and inconsistent with existing practices in other types of criminal investigation, in which even a sub-inspector of police is empowered to file a charge sheet against any senior civil servant without requiring clearance, and is a particularly draconian solution to the legitimate need to protect senior officers from unfound and malicious allegations. Permission to prosecute is rarely given and there are very few instances where all-India service officers have been convicted of offenses relating to corruption.

Anti-Corruption in India 343 Table 10.3 Cases Awaiting Sanction and Sanctions Received (2003), Government of India Month January 2003 February 2003 March 2003 April 2003 May 2003 June 2003 July 2003 August 2003 September 2003 October 2003 November 2003 December 2003

Prosecution Cases Pending

Sanctions Received

235 213 186 188 175 187 160 171 174 166 163 142

23 32 51 38 50 31 56 53 53 37 35 53

Source: Vittal 2005.

The multiplicity of agencies with overlapping jurisdictions, the difficulties of prosecuting high-level corruption, and the lack of technical and staff resources available to anti-corruption agencies has a major effect on registration and conviction. In the state of Andhra Pradesh, in 2003 only 13 of the 23 districts had vigilance offices. In Orissa the geographical spread of the Vigilance Department is restricted to only 10 districts— nearly half the state, which includes some of the poorest districts with the greatest influx of government funds, is completely unserved by a vigilance function. An analysis of the number of cases registered across a number of Indian states bears witness to the limited scale of state operations. The data presented in Table 10.4 starkly points to the limited response at the state level when compared to the scale of corruption. While this data is limited to registered cases, an analysis of conviction rates shows that only a fraction of registered cases result in conviction. While there are variations across India, with some states returning better figures, the conviction rate is largely poor. Thus, states like Rajasthan return a conviction rate of under 35 percent (World Bank 2005). When this is translated into actual numbers the story seems even bleaker—Rajasthan has only convicted 411 people for corruption in the last 10 years. While specific state-level data across India are unavailable, low conviction rates would imply that the ability of anti-corruption agencies to prepare cases is weak or that states are restricting prosecutions to only the most serious cases. Another reason could be the difference in judicial systems—for instance, the delays in

344 Vikram Menon Table 10.4 Registration of Anti-corruption Cases in Selected States in India: Scale versus Response State

1997

1998

1999

2000

2001

2002

Total

Maharashtra Orissa Andhra Pradesh Karnataka Madhya Pradesh Uttar Pradesh Bihar West Bengal

390 313 176 256 154 56 43 6

456 266 218 211 160 42 24 6

445 240 232 211 144 66 39 3

456 264 211 214 207 54 32 3

478 293 236 195 231 122 17 3

497 283 345 151 271 137 12 0

2,722 1,659 1,418 1,238 1,167 477 167 21

Source: Data from Government of Orissa, Vigilance Department, 2005.

processing cases, which weakens the evidence base. Either way, increasing the conviction rate remains a challenge.

Managing the Caseload A major weakness in the enforcement of anti-corruption measures is the nature of the judicial system in India. The Indian judiciary has an excellent reputation for independence, and has emerged as a very effective stabilizing force for protecting citizen’s rights in recent years. It is a Supreme Court judgment that led to the Central Vigilance Commission gaining statutory authority. The Supreme Court has been central to the effort of bringing greater transparency into the electoral process, ruling that candidates file affidavits regarding their criminal records at the time of filing of nominations. When justice is provided, it is sound justice; however, justice is often delayed and the enormous delays in the disposal of cases makes prosecution of those found corrupt extremely difficult. The fear of conviction should serve as a powerful deterrent to corruption. However, in India a combination of poor evidence and judicial delays effectively makes corruption a low-risk activity. There are enormous delays in the disposal of cases. The CBI, for example, has filed more than 6,000 cases— about 50 percent of them have been pending for more than five years, and 75 percent for over two years. The criminal conviction rate in India is about 6 percent. At the state level, pending cases are even higher in number, and the low levels of conviction and delays in judicial process have been an important factor in the failure of state anti-corruption bodies in bringing the guilty to book. In Orissa, according to analysis done by the Anti-Corruption Bureau, there are over 1,800 cases pending in trial courts.

Anti-Corruption in India 345 Figure 10.1 Trial Courts in Orissa: Pending Cases in Courts

Source: Data from the Vigilance Department, Government of Orissa, 2005.

Even when special courts have been formed, the rate of disposal has not been significantly high. Despite having four special courts in Orissa, these courts are able to dispose of only 70 cases a year. With 200 cases being added every year, it would take decades for current cases to be disposed off. The analysis done in Orissa shows that 12 percent of the defendants die before their case comes to trial; the evidence base collapses and memories blur, making prosecution an impossible task. Despite the structural problems that affect anti-corruption institutions, there have been instances where strong Vigilance Commissioners, supported by an enabling political environment, have been able to make some fundamental changes in enforcement (see Box 10.2). Andhra Pradesh, for example, saw a significant improvement in the performance of its Anti-Corruption Bureau and Vigilance and Enforcement Department. Box 10.1 and Figures 10.2 and 10.3 chart the performance of the Andhra Pradesh ACB from 1997 through 2002. Between 2001 and 2003, the number of trap cases went up by 71 percent and the number of disproportionate assets cases by 83 percent. Even more impressive, the number of disproportionate assets seized in these raids increased by an extraordinary 154 percent from Rs 136.4 million to Rs 346.3 million (nearly $7.4 million). Other indicators also show significant positive trends. The number of convictions increased by 115 percent; the number of dismissals from service increased by 25 percent; and the

346 Vikram Menon

number of gazetted and non-gazetted officers booked increased by 25 and 68 percent respectively. The only area where performance did not improve was a drop in the number of departmental punishments. Box 10.2 Andhra Pradesh: Reforms in Enforcement (2000–2004) 



















G.O. No. 1825 (April 4, 2001) was issued to establish a high-level anticorruption committee chaired by the Chief Secretary, tasked with reviewing the progress of investigation into complaints and monitoring the disposal of ACB cases. In order to prevent tampering with evidence and facilitating speedy investigation, instructions were issued to the Director General, ACB, that in all cases of successful ‘traps’, the accused officers should not be granted bail in a routine manner but should be sent into judicial restraint (May 19, 2003). In order to facilitate the seizure of assets acquired by corrupt means in disproportionate assets cases, instructions were issued to the Director General, ACB, for attaching properties under the relevant Sections of Criminal Law Amendment Ordinance 1944, and for placing the accused officer under suspension (June 10, 2002). Instructions were issued to maintain an annual list of officers of doubtful integrity and to obtain the clearance of the Vigilance Commission for promotions of senior officers. Reporting relationships have been changed for the Vigilance Enforcement Department, so that its reports are now sent through the Vigilance Commissioner, providing added weight and sanction. G.O. Ms. No. 174 (June 9, 2003) was issued to bring the Commissionerate of Inquiries under the administrative control of the Vigilance Commission. G.O. Ms. No. 232 (August 6, 2003) was issued to create a list of officers of doubtful integrity, a list of suspect officers, a list of points or places of corruption, and a list of unscrupulous contractors, suppliers and firms, among others. Augmenting ACB staff by the sanction of 5 additional posts at the level of Deputy Superintendent of Police and 12 additional post of Sub-Inspector of Police, to facilitate the creation of five new ranges in addition to the existing fifteen. The passage of G.O. Ms. No. 280 (September 9, 2003) to fix a minimum tenure of three years for deputation of personnel to the Anti-Corruption Bureau, and to allow their premature transfer only with the approval of the Vigilance Commissioner. An additional pay increment of 30 percent was sanctioned to all staff of the ACB by G.O. Ms. No. 280 (May 9, 2003).

Source: World Bank Internal Analysis, October 2003.

Anti-Corruption in India 347 Figure 10.2 Cases Registered in Andhra Pradesh (1997–2002)

Figure 10.3 Andhra Pradesh ACB Performance (1997–2002)

Preventive Vigilance: The Role of Government Departments The primary responsibility for taking forward anti-corruption measures within Indian state governments lies with anti-corruption agencies including Anti-Corruption Bureaus and Vigilance departments, normally headed by police officers. Tackling corruption is generally seen as a

348 Vikram Menon

specialized task for the anti-corruption agency, not as a cross-cutting responsibility that every department and unit of government is responsible for. In India, this has resulted in enforcement from a policing perspective, becoming the major measure to fight corruption. This, in turn, derives from the fast that the legal framework for fighting corruption, i.e., the Prevention of Corruption Act primarily defines and describes a set of criminal activities, the investigation and containment of which is a police function. This has meant that internal vigilance at the departmental level has often been ignored and under-resourced. Internal departmental vigilance systems across Indian states tend to be seen, with almost no exceptions, as a second order priority. What this results in at the state level is an ineffective mechanism, wherein one underfunded police-led department is attempting to investigate and prevent generalized large-scale and petty corruption that emerges out of weak policies and systems in regulatory and service delivery departments across governments. Given the current legal framework, while ultimate responsibility for enforcement still needs to vest with the Vigilance Department, the responsibility for preventive vigilance needs to be mainstreamed into individual line departments, with external mechanisms for scrutiny remaining in place. This will institutionalize the anti-corruption function and make it more sustainable in the medium to long term.

Enforcement within Departments While internal vigilance units need to be empowered to focus the department or organization concerned on the issue of corruption and to support better prevention by analyzing processes that are vulnerable to corruption, departments need to particularly focus on management of internal disciplinary processes. Besides prosecution under the Prevention of Corruption Act for corrupt behavior, departments and organizations of government can initiate inquiries against regular employees for misconduct and lack of probity. Elaborate provisions are available in the rules relating to various services within the context of constitutional protection against arbitrary dismissal or punishment. The rules cover different stages like charge sheets, appointment of inquiry officers, conduct of inquiries, suspension of employees, and decisions on inquiry reports for imposition of punishment or otherwise. The major punishments include dismissal, demotion, and removal, while minor punishments include censure and stoppage of increments. The disciplinary authority is required to consult the UPSC and Central Vigilance Commissioner (CVC) for Group A and other designated

Anti-Corruption in India 349

officers before a final decision on punishment. The employee has the right of appeal to government or to go in for litigation before the Central Administrative Tribunal (CAT) or High Court (Beschel and Sundaram 2002; see also Sundaram 2003). The general picture is one of long delays; inefficient conduct of inquiries by departmental officers; costly litigation; and poor monitoring of inquiries at various stages. For example, recent evidence from Orissa (see Figure 10.4) shows that there are over 2,100 departmental inquiries pending across Orissa government departments. Figure 10.4 Departmental Inquiries Pending in Orissa Government Departments (2005)

Source: Data from Vigilance Department, Government of Orissa, 2005.

Officials agree that the certainty rather than the severity of punishment is the real deterrent. Most inquiries fail to result in swift and exemplary punishment for those guilty of misconduct, or in early resolution of cases for the innocent. Progress of inquiries is not effectively monitored. The rules and case law have become so prolix as to frustrate meaningful intervention. In numerous cases, after the tortuous proceedings of a disciplinary inquiry have been completed, the punishment actually awarded is minor. Several years may be expended doing something that could have been completed in a few months had minor penalty proceedings been decided and acted upon at the initial stage. The employee suffers due to the lengthened process; the government system is tainted; and, due to the passage of time, in the perception of others, the link between the act and the punishment is forgotten (Varma 2002). This is unsatisfactory both for the individual and for the maintenance of discipline. It is a long-held view that the certainty and not the severity of punishment acts as a deterrent for others. The shorter the time gap between the recognition of an

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infringement and the award of punishment (even if not severe), the greater the impact and the deterrent effect upon others. If governments in India are committed to tackling corruption within departments, there is an imperative need to streamline disciplinary processes within departments and reduce the backlog of cases. Proposed reforms include the setting up of review committees to deal with the backlog of cases, formulation of an administrative law to replace present rules, laying down time limits for completion of inquiries, avoiding procedural lapses, appointment of competent officers on full-time basis, installing computerized systems for effective monitoring of progress, reducing unnecessary consultation with oversight bodies, and instilling greater urgency of review in departments. The demand for diluting constitutional provisions that provide excessive security to employees is born of frustration over many court orders that upset executive decisions to terminate or punish employees. The answer perhaps is not to dilute government job security, but to install and enforce measures for greater accountability and better management of inquiries. This will send a strong message about the efficiency of the administrative mechanisms to enforce integrity within government.

Focusing on Preventing Corruption While strengthening enforcement frameworks will substantially support a better anti-corruption function, the scale of government operations, India’s geographical and demographical profile, and the fiscal situation that most state governments find themselves in makes expansion of vigilance activities difficult. Enforcement can act as a deterrent; it cannot however, serve to completely prevent corruption. If corruption is to be tackled at its source, a much more long-term strategy is required that is based on prevention and public awareness. The roots of corruption in India lie in outdated administrative procedures and rules; the development of an administrative apparatus that has effectively developed systems that are non-transparent in order to maintain its command and control style of administration; poor monitoring and evaluation systems that cannot audit outcomes effectively; and an underdeveloped citizen focus in administration. Added to this are the poor levels of information available to citizens about the rules of the game and their rights vis-à-vis service providers. If corruption is to be tackled over the long term, it is imperative that India’s central and state governments need to undertake reforms that institute better institutional

Anti-Corruption in India 351

transparency and accountability particularly by developing better policies, systems and procedures. Corruption fundamentally affects the way citizens access services and affects the poor disproportionately. Creating more transparent systems at the points where service providers engage with clients; creating better human resource management systems that measure performance and serve as a check to the misuse of authority; creating better monitoring and evaluation systems to track and measure expenditures and outcomes; and having more robust financial and procurement systems are all areas that will bring about a better anticorruption function.

The Anatomy of Corruption: The Need for Better Analysis Corruption across the globe is not a static phenomenon. While politicians, administrators, and civil society stakeholders across India speak extensively of the need to create transparency and accountability in government, there is extremely limited analysis available that elaborates on how such reforms will actually affect corruption at the cutting edge. This is due to the fact that there are very few baseline surveys and limited analyses on how existing policies and service delivery mechanisms actually create the scope for corruption. There is, therefore, a need to continuously analyze administrative systems from the perspective of rules and procedures that are vulnerable to corruption, in order that constant modification can be made in the design of programs and projects. There are very limited micro-studies available in India that track the interaction between citizens, service providers, systems, and rules in the context of corruption and bribery. One such study done in Orissa starkly brings out the issues of corruption in service delivery. The participatory analysis shows that corruption is present in practically every single institution in varying degrees, and exists particularly where the determining authority lies in the hands of a few people (Praxis 2003: 28). The term ‘corruption’, as defined by the people, broadly encompassed bribes in cash and kind for getting signatures and approvals, charging a fee where a service is supposed to be free, and buying products from the poor at a rate lower than the one stipulated by the government. It also includes actions such as distributing less than the sanctioned amount of food, using cheaper materials for construction of houses for the poor, and withholding subsidies. ‘Free’ supplies, subsidies, and services specially designed

352 Vikram Menon Table 10.5 The Anatomy of Corruption: Accessing Death Compensation in Jagatsingpur District of Orissa Stages 1. List of dead persons prepared independently by ANM, police & anganwadi worker and sent to CDMO, BDO, Tehsildar & Collector 2. List sent to magistrate for finalization 3. Legal heir requires Form 4 from panchayat office/ANM to be filled and verified 4. Form to be certified by ANM 5. ANM sends certified form to PHC clerk 6. Legal heir has to make an affidavit at tehsil office along with treasury challan 7. Affidavit and challan deposited in PHC 8. PHC matches affidavit with magistrate’s report and sarpanch list 9. Death certificate issued 10. Heir deposits death certificate 11. Tehsildar authorizes death date and issues cheque to legal heir. Witnesses needed: ward member, sarpanch, government servant, woman member (SC) and OBC member

Time

Difficulty*

Bribe Paid

60 days

10

Rs 500

15 days 3 days

3 4

2 days 3 days 1 day

1 1 1

1 day 7 days

2 1

– Rs 250 (Sarpanch) Rs 30 – Rs 50 (Affidavit) – –

30 days 3 days 45 days

9 3 10

Rs 300 – Rs 1,500

Source: Praxis (2003). Note: * Respondents were asked to rank on a scale of 1 to 10 what they felt were the most difficult and time-consuming government processes that hampered their ability to access the service.

for the poor end up being quite costly to them, making a mockery of government poverty reduction programs.

Administrative Reforms to Prevent Corruption In the example of accessing death compensation in Orissa, a citizen has to go through 11 stages, deal with multiple levels of bureaucratic and political approval, and pay bribes of over Rs 2,000 to access a death compensation of Rs 75,000. What is also clear from this example is that while it is assumed that decentralization in India will lead to greater transparency, it can also expand the number of players in the corruption game. Discretion without accountability, whether in political or administrative structures, can result in corruption becoming institutionalized. Reducing the layers of approvals and levels of interface between clients and service providers is vital if corruption is to be tackled. A study in Andhra Pradesh illustrates the interaction between institutional factors, process- and

Anti-Corruption in India 353 Table 10.6 Factors Facilitating Corruption in India Transaction Related 



 

















Transaction intensity and dispersal Level of discretion to official Exposure to public view Availability of substitutes for product/service Degree of monopoly in supply of service Possibility of excluding customer (or groups of customers) from service Scope for collective action Size of loss relative to victim’s income Bribe as proportion of total cost of transaction Is the loss to citizens direct or indirect? Control over benefits by official Availability of information to user about service

Process- or Organization Related 









 









Definition of responsibilities unclear Distribution of workload inequitable Examination of case at many levels Complexity/opaque nature of rules Internal control systems ineffective External vigilance ineffective Framework of laws/rules constraining discretion Organization culture, e.g., (a) Proportion of direct recruits, (b) Bribing for attractive posts. Intensity of interactions with citizens (e.g., police, motor vehicles) Extent of utilization of ICT applications Percentage risk of being caught; percentage risk of conviction; probability of being awarded deterrent penalty.

Institutional Factors 

     



 



 



Decentralization (official/political) Rule of law Impartial judiciary Swift legal redress Levels of Education Levels of urbanization Civil society effectiveness Extent of internalization of notions of ‘public office as trust’ Patron-client networks Colonial style administration (viewing citizen as subject) Competitive partisan politics Vigorous press/media Per capita income growth Distribution of income (more equal)

Source: Centre for Good Governance (2003).

organization-related factors, and transaction-related factors that allow corrupt practices to flourish. In practice, it is often difficult to separate out the different factors at work. Transaction- and process-related factors that facilitate corruption flourish in environments where institutions are weak, i.e., where contracts are not enforced, where the rule of law is weak, and civil society is ineffective. Studies have shown, however, that despite the complexity of these relationships, if the facilitating factors, particularly at the ‘transaction’ and ‘process’ levels are identified, it is possible to suggest and implement remedial measures (Centre for Good Governance 2003: 54–55).2 Individual micro-studies need to be conducted at the level of every organization, since processes and factors and rules are unique to different organizations. In general, however, if India is to tackle corruption at the level of service delivery, it will have to deal with fundamental administrative reforms

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across all these levels. The next section deals examines some critical areas of reform from an anti-corruption lens.

Potential Areas for Reform Business Process Re-engineering Using Information Technology Institutions and organizations are not set up to be corrupt—they become so. Understanding how incentive and disincentives work within the context of the political economy of institutions and organizations and using this understanding in designing reform initiatives is critical if reform is sustainable. This dictum holds true for technology-driven reform as well. Computerization has the potential to change the entire relationship between clients and service providers as long as the process of computerization and the design of the reform program takes into consideration the underlying human and organizational factors and the vested interests that caused the breakdown of the original system. The computerization of railway reservations serves as a good example of a reform program that resulted in the near eradication of corruption (see Box 10.3). Recognizing who the ‘losers’ and ‘spoilers’ are, and providing for them, is critical to success. Box 10.3 Computerization of Railway Reservations—Applying Information Technology to Reduce Discretionary Powers

A successful example of improvement in transparency in India over the last two decades is the computerization of the railway passenger reservation system. More than 10 million people travel by Indian Railways everyday, and the railway reservation system was known for corruption, delays, and harassment. From the 1980s onwards, the railways undertook a massive computerization of the passenger reservation system. The opposition of organized labor was overcome by ensuring that no one was declared jobless or surplus. Hygiene motivation factors like air-conditioned offices meant a higher level of comfort for staff. Staff found that they had had to work fewer hours to finalize accounts and complete standard procedures. Thus, job security was combined with a better work/life balance, and the levels of corruption in the reservation system came down drastically, with productivity having gone up by more than 300 percent. The computerization of railway reservations is a good example of how information technology can be used to both improve the quality of service provisioning and support a reduction in corruption.

Anti-Corruption in India 355

Online Citizens’ Charters on key services are another example of using the power of ICT to usher in more transparency and accountability. Both the Central Government and a number of Indian state governments have invested in Citizens’ Charters. By publicly committing to standards and norms, the assumption is that agencies can hold themselves to account. While information technology and e-governance have been hailed as instruments that can generate citizen-focused government and dramatically alter the ease of public access, e-governance in itself will not solve the problems of corruption. While land records can be placed and updated online, evidence from Indian states suggests that this has not in itself solved the more fundamental problem of fraudulent records. Citizens’ Charters without back-end re-engineering of processes, without grievance redressal mechanisms in place, and without citizen awareness will not lead to better transparency-related outcomes. Analysis shows that in many cases, government websites seldom get updated and therefore, public information is rendered obsolete. ‘The cutting edge of the Internet is its dynamic interface and if that organizing principle is truncated, the relevance of the medium ceases to exist. The problem of the last mile also looms large’ (IT for change, http://www.dqindia.com/content/top_stories/103101501.asp). Teledensity patterns in India are highly skewed and this, along with the fact that rural literacy is low, means that the reach of the internet and computer-based applications remains exclusive and limited. The likelihood of online facilities provided by governments being accessed by rural populations and poor people is extremely low. While e-governance might work in literate urban centers, diffused rural populations may not be advantaged enough to access online systems. Neither are civil society groups in India engaged with the government on the basis of what is available on the net, nor are governments willing to invest enough in creative dissemination. While the Right to Information Act can put further pressures on stakeholders to make information available in a friendlier format, for e-governance to work, much more investment needs to be made to bridge the digital divide by connecting the new information now available on rights and responsibilities to the ‘voices of the unconnected’. As the Bangalore-based NGO, IT for Change, argues, any new paradigm shift brings with it new risks. The dictum holds good for e-governance too. Some of the unmanaged risks could include misuse of private information bases like land records and demographic profiles, and privacy and confidentiality issues arising from the lack of protection to personal identities of citizens. Another unmanaged risk is the potential for the emergence of new touts—kiosk operators who may overcharge, or middlemen in the procurement of IT hardware and software.3 There is a tendency to see

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computerization as the end product of reform. From an anti-corruption perspective it needs to be seen as a tool that can support reform—but a tool that needs constant supervision.

Procurement Reforms The Constitution of India authorizes the government, both at the central and state level, to enter into contracts. While some states like Karnataka and Tamil Nadu have enacted laws regarding procurement, most states continue to be governed by rules, directives, and procedures issued by departments, and codes and manuals of the Public Works Department. Many of these codes have their roots in pre-independence India, and while the framework has served the Government well for many years, many of the processes and systems that govern state procurement are now outdated, archaic, non-transparent, and open to irregularities, malpractice, and manipulation.4 Procurement reforms need to be a central plank of anti-corruption strategies. In most states in India there are no standard tender documents for the procurement of goods, services, or equipment. Existing tender documents often do not disclose eligibility rules, evaluation factors, and qualification criteria to judge the capability of suppliers and contractors. The quality of the tender documents is critical for deciding the levels of competition, process transparency, and risks. Technical specifications used for goods and machinery are more often descriptive than functional, leading to the favoring of specific vendors. Evaluation criteria are not developed, resulting in the treatment of all bids that meet the minimum specifications as equal, which often results in the government purchasing the cheapest and shoddiest. Overall procurement is an activity that provides extraordinary opportunities for corruption, and the nature of rules and processes provides space for both corrupt contractors and administrators. There is a need to tighten black-listing rules, as criminal proceedings are difficult for want of evidence.

Reforms in Human Resource Management Holding officers accountable to outcomes is a necessary pre-condition for maintaining accountability. The lack of performance management in the civil service, the poor quality of performance reporting, and the lack of rules covering norms for transfers and postings provide fertile ground for graft and corruption—a phenomenon noted by Robert Wade (1982; see also 1984) in the 1980s in his study of an Irrigation Department in a southern state. The frequent transfers of civil servants—a phenomenon

Anti-Corruption in India 357 Box 10.4 Recommendations for Corruption-Proofing Procurement 





      

Create a centralized procurement cell and an independent body to hear appeals; provide for Adjudication and Dispute Review Boards Introduce a Public Procurement Act and complimentary rules applicable to all government departments and organizations Standardize tender and contract documents applicable to all government agencies, and develop standard specifications for widely procured items Adopt open competitive bidding with wide publicity Phase out exemptions and monopolies Revise finance, public works, and account codes Introduce lumpsum design and build-management contracts where applicable Tighten black-listing rules Introduce third-party inspections or ex post quality audit Introduce e-tendering

noted across all Indian states—is a particular challenge facing India, and Wade notes how a market in postings had developed. It is well recognized that a nexus of politicians and administrators have ‘set’ rates for posts in government—the more lucrative the pickings and the more desirable the location, the more the cost. Having paid for a post, a civil servant has every incentive to recoup his investment through corruption. Rent seeking thus becomes institutionalized. There have been limited attempts to tackle this problem at the level of state governments. The issue of reforming the performance management system for civil servants has not been widely attempted by state governments (with the notable exception of Andhra Pradesh), while Karnataka is one of the few states that has attempted to deal with the issue of transfers. Learning from the Karnataka model, critical institutional changes to regulate transfers would include the creation of cadre management authorities for all regular civil service posts to screen transfers, raising the minimum tenure across all groups of civil servants, with clearly defined norms for premature transfers, notifying cadres exempted from transfers, imposing a quantitative ceiling on transfers, and creating a transfer database.

Conclusion There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done

358 Vikram Menon well under the old conditions and lukewarm (indifferent, uninterested) defenders in those who may do well under the new. – Nicolo Machiavelli, The Prince

A pragmatic strategy for containing and eliminating corruption in India will have to include the following elements: 1. 2. 3. 4.

understanding the dynamics of corruption in India, preventing corruption through agency-level reforms, strengthening the anti-corruption agencies, and strengthening public awareness.

Reducing the opportunities for corruption in public offices is critical. This is, however, far more difficult than it sounds, given the fact that the crusader against corruption will need to find allies from within a corrupt system. While there are sound examples globally (see Box 10.5) that combine these strategies, there are relatively few examples of this kind of reform in India. Individual successful cases in checking corruption can provide a model for evolving more effective strategies, which can then be extended to other areas. If India is going to tackle issues of corruption, it will need to fundamentally strengthen both the enforcement mechanisms and deal with a range of administrative reforms that include administrative delayering, reducing monopolies, business process re-engineering using information technology, better human resource management, and establishing more accountable procurement and contracting systems. Reforms in this area have been accomplished, albeit sporadically. Other chapters in this book comment on successful reforms in the telecom sector that reduced monopolies and provided better services and on the advantages brought in by the introduction of e-Seva (‘one-stop shops’ for citizen services in Andhra Pradesh). Examples remain limited, however, and successful reform has often been dependent on individual politicians and administrators. Expanding reforms will be difficult given that the nexus between political and administrative power structures generates major disincentives for reform. While short-term gains can be accomplished, sustainable change will require an expansion of public awareness and the generation of pressure for reform from the public.

Building Public Awareness: The Right to Information Laying down a statutory right to information has been one of the most significant reforms in public administration in India. Information is power,

Anti-Corruption in India 359 Box 10.5 Seoul City’s Anti-Corruption Programme

Measure Preventive  Deregulation





Elimination of zone jurisdiction system

Rotation of duties

Features 





Elimination of excessive regulations, especially in municipal administration, and clarification of unclear rules. Practice of assigning jurisdiction over a specific area to one individual in the fields of approvals, permits and inspections abolished. Officials now assigned on a daily basis to handle applications received from different areas. Officials (dealing in areas vulnerable to corruption, e.g., housing and building, sanitation, taxation, construction etc.) reshuffled across 25 districts.

Punitive 



Zero Tolerance of corruption Corruption report card to Mayor





‘One strike out’ system now means that an official receiving any illegal gratification, no matter how small, is liable to permanent removal from service. Pre-paid return postcards are sent to those who have business with the city government in fields prone to corruption. Mayor publicly reports on action taken.

Transparency 



Operating an OPEN (Online Procedures Enhancement for Civil Applications) system Establishing an AntiCorruption Index (ACI)





Administrative procedures closely related to civic rights placed on the internet to satisfy the civic right to know, and to prevent corruption and ensure transparency. The ACI is calculated on the basis of opinion polls of those who have actually submitted civic applications, for the purpose of encouraging sound competition among public servants and strengthening their commitment to the anticorruption drive.

Public–private partnerships 



System of joint inspection with citizens Citizen ombudsmen system and direct dialogue channels





Inspection of business and industry premises are carried out involving citizen volunteers who take part in joint public-private inspection teams. Citizen juries established to serve as ombudsmen to hear grievances directly and do on-site inspections. Various other channels of dialogue including hot-lines, etc.

Source: Centre for Good Governance (2003: 10–11).

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and control over information can lead to an unaccountable use of power. Therefore demystification of rules and procedures, complete transparency, and pro-active dissemination of relevant information amongst the public is potentially a very strong safeguard against corruption. Ultimately, one of the most effective systemic checks against corruption would be a system where the citizen has the right to take the initiative to seek information from the state and thereby enforce accountability. The Right to Information Act provides a strong national framework within which administrative reforms and public awareness can take place. It provides a framework for many critical reforms in basic administrative systems including basic reforms in file management, government rules and procedures, and audit. However, implementation of the Right to Information Act across India will face a number of constraints, given the vested interests at every level. If governments are serious about implementation, they need to invest and resource government institutions at the center, state and district with the capabilities to create and disseminate knowledge, and create a climate of incentives and disincentives that will allow for the such dissemination. It is not an easy task to move an administrative culture that has been constructed around power and inaccessibility to one based around transformative openness. The debate that generated the Right to Information Act arose out of the increasing realization that asymmetric information flows, where the supplier controls knowledge, lead to weak accountability norms and the possibility of unchecked corruption. While there is a need to build awareness amongst citizens about their rights with regard to the Act—i.e., provide citizens the relevant knowledge to hold service providers accountable and ensure that the resources that belong to them are used in the right way—there is equally the need to support better citizen participation in decision making. The best strategies for enforcement and prevention can still fail in India if the public is not engaged with the process and aware about the effects of corruption, the measures to combat it, and their own roles as citizens. At a more disaggregated level, this needs to take the form of communicating to users their rights vis-à-vis specific services, and empowering them with grievance redressal mechanisms. Public awareness campaigns are still not seen as a core area of government investment and continue to be an ‘add-on’, but such campaigns in partnership with civil society organizations are critical if India is to counter the growing trend of public passivity and mobilize the public support necessary for radical reform.

Anti-Corruption in India 361

Notes 1. For a review of comparative practice of legal instruments used to combat corruption, see Ofusu-Amaah et al. (1999). 2. The Centre for Good Governance carried out investigations of corruption-prone processes in four departments, including Town Planning, Transport, and Registration and Stamps. 3. See IT for Change website at www.dqindia.com. 4. For an excellent analysis of corruption issues in Government Procurement, see Centre for Good Governance (2003).

References Beschel, R. and Sundaram P. 2002. ‘Civil Service Rationalization In India: A Survey of Issues and Options’, World Bank Policy Note, New Delhi. Centre for Good Governance. 2003. Towards an Anti-Corruption Strategy for Andhra Pradesh. Hyderabad: Centre for Good Governance. Das, S.K. 2001. Public Office, Private Interest—Bureaucracy and Corruption in India. New Delhi: Oxford University Press. De Speville, Bertrand. 2002. ‘The Development of the Anti-Corruption Strategy for the State of Andhra Pradesh’, Unpublished report for the Department of International Development. Heidenheimer, A.J. (ed.). 1970. Political Corruption: Readings in Comparative Analysis. London: Holt. [Also quoted in Sangita, S.N., ‘Anti-Corruption Strategies, Concepts and Perspectives’, available at: http://cvc.nic.in/main4.htm.] Meagher, P. 2004. Anti-Corruption Agencies: A Review of Experience. Center for Institutional Reform and the Informal Sector, University of Maryland. Ofusu-Amaah, W., Soopramanien, R., and Uprety, K. 1999. Combating Corruption. Washington DC: World Bank. Praxis. 2003. The Accountable State. Bhubaneshwar: Praxis Institute for Participatory Practice. Public Affairs Centre. 2002. State of India’s Public Services. Bangalore: PAC. Quah, Jon S.T. 2003. ‘Combating Corruption in India: Some Lessons from Asian Experiences’, in Stephen Howes, Ashok K. Lahiri and Nicholas Stern (eds), State-level Reforms in India. New Delhi: Macmillan. Sundaram, P. 2003. ‘Human Resource Management in the Government of India’, World Bank, 2003, Draft Report, New Delhi. Transparency International. 2005. India Corruption Study 2005. New Delhi: Centre for Media Studies. Varma, Arvind. 2002. Streamlining Disciplinary Inquiry Proceedings. World Bank, New Delhi, Unpublished. Vittal, N. 2005. ‘Anti Corruption Enforcement in India—The Framework and Possible Reforms’, Draft Report for the World Bank, New Delhi. Wade, R. 1982. ‘The System of Administrative and Political Corruption: Canal Irrigation in South India’, Journal of Development Studies, 18 (3): 287–328.

362 Vikram Menon Wade, R. 1984. ‘Irrigation Reform in Conditions of Populist Anarchy: An Indian Case’, Journal of Development Economics, 14 (3): 285–303. World Bank. 2005. Rajasthan: Closing the Development Gap. New Delhi: World Bank. ———. 2006. Reforming Public Services in India: Drawing Lessons from Success. New Delhi: Sage Publications.

Chapter 11 Electoral Finance Reform: The Relevance of International Experience E. Sridharan

Service Delivery and Electoral Funding Reform This chapter examines possible reforms in India’s electoral financing regime with a view to improving the delivery of public services. When we talk of service delivery we primarily mean five services that are very important to the public, especially the poor: water, electricity, sanitation, health, and education. In India, these are largely state subjects. These services are largely produced by public investment but delivery mechanisms can vary and can be a mix of public, private, and community. There are broadly five options: (1) central/state government provision; (2) contracting out to the private sector and NGOs; (3) decentralization from state to local governments; (4) community participation; and (5) direct transfer to households. Thus, actual providers of these services can vary. This leads to three key relationships in service delivery: (1) between the public and actual providers; (2) between the public and policy-makers (politicians); and (3) between policy-makers (politicians) and actual providers. There are thus, three broad actors in service delivery (who may be individuals,

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organizations, governments or businesses): citizens/voters, politicians/ policy-makers, and service providers. Service providers can be divided into organizational providers (e.g., government departments, firms, and NGOs) and front-line professionals (e.g., teachers, doctors, nurses, electricity meter technicians, and water tanker drivers). Organizational providers (e.g., government departments, firms, and NGOs) and front-line professionals who work in/for them are lumped together as providers, but the distinction is important since members of the public directly interact with the professionals as individuals. Thus, in the triangular relationship between citizens/clients (of services), service providers and politicians/policy-makers, there are two routes of accountability between service providers and citizens/clients/ voters. One, is the short route of accountability or direct accountability of providers to clients in situations where there is direct client power over providers of services, e.g., if the local community has the power to appoint/ fire schoolteachers. The other is the long (or indirect) route of accountability, by which providers are accountable to the state (politicians/policymakers) and citizens/clients have influence (voice) over the state, assuming a well-functioning electoral system. The first part of this long route depends on the kind of compact between providers and politicians. If the provider is a government department, politicians have more direct control over the bureaucrats and front-line professionals who are in charge of service delivery. If the provider is a business or NGO or community organization to which service delivery has been contracted out, the compact is more indirect. The second part of this accountability relationship is that of voice—client/citizen/voter influence over politicians in a democracy. This relationship is mediated by political parties and is the key relationship for this chapter. ‘Raising poor citizens’ voice, through the ballot box and widely available information, can increase their influence with policy-makers—and reduce the diversion of public services to the non-poor for political patronage’ (World Bank 2003: 1). However, it must also be noted, ‘Even if there is a well-functioning electoral system, poor people may not be able to influence politicians about public services … they may vote along ethnic or ideological lines, placing less weight on public services … and they may vote instead for candidates who provide ready cash and jobs’ (ibid.: 6–7). Furthermore, ‘Clientelist political environments are those in which, even though the average citizen is poor, politicians have strong incentives to shift public spending to cater to special interests, to core supporters, or to “swing” voters’ (ibid.: 80).

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An important factor in shaping incentives for service delivery is whether political competitors make credible promises. The problem here in poor democracies is that promises on policies with long-maturing outcomes, such as improving education or health care quality, lack credibility because terms in office are too short to claim political credit for such outcomes. In such situations, promises of public works construction or jobs, which can be delivered soon after the election, are actually more credible and might become the currency of political competition. Where do political parties and party funding reform fit into this framework of service delivery? Political parties are civil society organizations that are intermediaries between citizens/voters and politicians; when in power they overlap with the state in that their leading personnel hold office. They occupy an intermediary position in the voice relationship between citizens/clients/voters and politicians/policy-makers. This is because in any large democracy, politicians do not deal with voters on a personalized basis during election campaigns or in inter-election interaction but through the party organization. Party organizations conduct election campaigns, carry messages from voters to leaders and vice versa (in addition to the media), mobilize support, and also provide the organizational mechanism for leadership selection through their internal formal or informal competitive processes. Thus, the responsiveness of party organizations to grassroots members and voters is a key link in the voice relationship. Second, political parties both shape the political economy and are shaped by it. In an important recent work, Kanchan Chandra (2004) puts forward the argument that in a ‘patronage democracy’ there are incentives towards the ethnification of political parties and that India is a case of a ‘patronage democracy’ (Chandra 2004). By ‘patronage democracy’ she means ‘a democracy in which the state monopolizes access to jobs and services and in which state officials have discretion in the implementation of laws allocating jobs and services at the disposal of the state’ (Chandra 2004: 6). She makes a case that there are considerable incentives towards ethnic (caste- and religion-based) voting in India, which explains the rise of caste- and religion-based parties. We can extrapolate that such parties will focus on providing patronage for their ethnic clientele rather than focus on improving service delivery in general. To some extent, this argument resembles one put forward by Pradeep Chhibber and Irfan Nooruddin (2004) that in Indian states with two-party systems there are incentives for the provision of public goods since the two parties would need to be broad-based, while in multi-party system states there are

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incentives to provide club goods targeted at the party’s clientele, since parties in such multi-party systems are likely to be more narrowly and ethnically (caste- and religion-) based (Chhibber and Nooruddin 2004). Third, rent seeking in public service delivery can play a role in raising funds for election campaigns. Therefore, reform of electoral finances in such a way as to reduce the incentive for corruption can be expected to be important for improved service delivery. If such reforms can be combined with party funding and, allied to this, intra-party democracy reforms, in such a way as to increase the voice of the ordinary voter/citizen in political parties and via parties on politicians/policy-makers in power, then party funding reform can potentially exert an influence on improving service delivery. It can potentially shift incentives towards competition for better broad-based delivery of services rather than clientelistic delivery. Hence, its importance in this set of studies on service delivery. In the second section of this chapter, which follows, we summarize the main points in the history of political finance reform in long-standing democracies. In the third section, we survey the history of political finance reform in India up to 1998. In the fourth section, we survey the developments in India since 1999. In the fifth section, we describe the various electoral finance reform proposals made since 1999. In the sixth section, we pull together the lessons drawn from international and Indian experience and derive a range of six policy options (and their implications) for India. In the final section, we assess the prospects for electoral finance reform including, centrally, the option of state funding of elections.

Electoral Finance Reforms in Democracies: The Main Features There are a variety of arrangements determining election finance around the world.1 The origins of election finance reform have three roots: corruption scandals, rising campaign costs, and public concern for equal opportunity for political participation as against excessive power to wealthy individuals and big business. The thrust of political finance reform across numerous countries in the 1960s and 1970s had four main characteristics: limits on expenditure including sub-limits on particular expenditures; limits on contributions from individuals and organizations; public funding, full or partial, of elections and/or parties; and reporting and disclosure of election, party, and candidate finances in some form as an administrative pre-requisite for implementation of any or all of the above.

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Limits on Expenditures and Contributions Limits on expenditures have been applied more frequently than limits on contributions to parties/candidates. Expenditure limits on the amounts candidates and/or parties may spend on election campaigns have been applied, usually limited to the formal period of the campaign rather than to general party expenditures. The goal is to reduce costs for all contestants, and thus, indirectly address the issue of equality of political opportunity. Contribution limits by individuals and organizations have been introduced primarily to address the problem of equality of opportunity by lessening dependence on a small number of wealthy donors, and making candidates more responsible to the grassroots. Ceilings on contributions may apply both to donors and recipients, i.e., recipient parties and candidates may face limits on amounts they receive from certain categories of donors and/or from any single donor, forcing them to broad-base their fund-raising efforts. Potential donors may face limits on how much they can contribute per candidate, per party or per year. In some countries, like the United States, there may be bans on certain organizations (like corporations and trade unions) from making election contributions to parties or candidates. However, intermediary organizations, like political action committees (PACs) in the United States, may be allowed to receive and channel corporate political contributions, though they too may face limits on amounts per donor as recipients and amounts per candidate as donors.

Public Funding Public funding of elections and/or parties was introduced from the mid1950s (Costa Rica 1954, Argentina 1955). Among stable democracies, it was introduced in Germany in 1959, and countries which followed suit were Austria (1963), France (1965), Sweden (1966), Finland (1967), Denmark (1969), Israel (1969), Norway (1970), The Netherlands (1972), Italy (1974), Canada (1974), The United States (1976), Japan (1976), Spain (1977), and Australia (1984) (Alexander 1989a: 14, Table 1).2 In most of these countries, there is also public subsidization of campaign expenses included in party subsidies. Subsidization of parties is the norm in Scandinavian countries, and in Austria, Germany, Italy, and Israel. In several other countries like the USA, UK, Australia, New Zealand, Canada, France, and Japan (until 1994) there is no public subsidization of parties, only of elections, wholly or partially, using a variety of mechanisms.

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Public funding, full or partial, can be organized into four categories, which exist in a variety of combinations in different countries. These are: first, direct grants/reimbursements to political parties/candidates not tied to particular expenditures; second, specific grants earmarked for particular items of expenditure; third, provision of certain services, free or subsidized, e.g., free media time on state-owned media; and fourth, indirect subsidies such as tax incentives and reliefs.

Reporting and Disclosure A variety of systems of reporting and disclosure have been implemented, simultaneously with limits on election expenditures and/or political contributions and public subsidies to parties/candidates. The general trend is towards greater transparency. The reporting interval is every campaign and/or annual. Expenditures are required to be reported in all cases; in most cases, so are contributions. Audit of accounts of political parties’ and/or candidates’ campaigns is commonly, but not always, required. Most countries have the further requirement of disclosure, i.e., it is not sufficient to file audited statements of accounts to the appropriate public authority in confidence (similar to the filing of income tax returns). These records must be made publicly available. This is an increasing trend generated by public pressure in many countries due to corruption scandals.

Patterns of Regulation The examination of electoral and party finance regulation reveals three patterns and four ideal-typical policy packages upon which one can draw to devise a system of election finance regulation for India. One is a minimalist pattern, another a maximalist pattern, and in between are various mixed patterns according to the level of state involvement in funding parties and/or elections. The minimalist pattern obtains where only elections are just partially and to a limited extent subsidized, usually through specific grants or staterendered services. The UK, Ireland, Australia, New Zealand, and Canada are examples of the minimalist pattern. The US pattern remains a variant of this minimalist pattern, even after the Federal Election Campaign Act of 1971 and the 1974 amendments limiting contributions (Alexander 1994: 41–49). Election funding is private and candidate-centered, but subject to strict reporting, disclosure requirements, and limits on contributions. Japan also falls into the traditionally minimalist pattern before

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and after the 1994 reforms, despite limited party financing (Shiratori 1994: 201–204) other than for elections. The maximalist pattern of state funding focuses on political parties, whether to parties, parliamentary groups, or party foundations (e.g., Sweden, Germany) rather than on elections. Under this pattern, public funding is not merely for elections but also for other party activities, and it is the main source of party finance. ‘Maximalist’ systems are commonly characterized by multi-level party funding, wherein national, regional and local governments fund corresponding party units. In between are a variety of mixed patterns, e.g., France (Avril 1994), The Netherlands (Koole 1989: 208–209; Koole 1994: 128), and among relatively recent democracies, South Korea (Park 1994: 175–78). These are not mainly state-subsidized party and electoral systems. In all three patterns, parties and candidates are allowed to raise private contributions in addition to state funding, but must observe regulatory requirements on expenditure and contribution limits, reporting and disclosure, and other matters. How can the various regulatory features—limits, public funding, reporting, and disclosure rules—be combined in a policy package to regulate party finance? There are currently four ideal-typical policy packages in existence: the Swedish, German, American and Canadian.3 The Swedish system is one of public funding to party head offices by grant at a flat rate but granting broad autonomy to the parties to spend as they think fit with minimal reporting and disclosure requirements. The philosophy behind this is that parties are viewed as voluntary organizations of civil society, whose privacy of internal organization and activities should be respected. Transparency is voluntarily practiced by the parties under an inter-party agreement dating from 1980. The German system is one of public funding, direct and indirect, plus private funding by both individuals and companies with no limits on contributions and expenditures, but with detailed regulation of the affairs of political parties to ensure internal democracy, transparency, and accountability. The American system is one in which parties and candidates are overwhelmingly privately funded, except for matching public funding in presidential races, but with bans on corporate or union contributions to candidates or parties; no limits on expenditure except for presidential candidates who accept public funding, but with detailed limits on contributions; and strict transparency laws administered by the Federal Election Commission. In effect, contributions by corporations and unions

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are allowed as soft money, i.e., expenditures in favor of issues/political positions undertaken without coordination with the candidate. The philosophy behind the system is that regulation of contributions and enforcement of transparency is in the public interest and helps avoid situations where candidates and parties are overly dependent on a few large donors. The Canadian system is one of diversified regulation, which in practice is a mix of the above three ideal types. There are spending limits for political parties and limits on provision of television time; public funding by partial reimbursement of campaign expenditures and tax credits for small donations to parties and candidates; plus detailed reporting and disclosure laws, including reporting the income and expenditure of political parties and candidates and disclosure of donations above a fairly small sum, all monitored and enforced by an independent public agency. In many countries political finance reform has had unanticipated consequences and this has prompted further rounds of reform. In the United States (Foster and Muste 1992; Bartels 1992; Alexander 1989b), the combined effect of the FECA amendments of 1974 (limited contributions) and the Supreme Court judgment of 1976 (Buckley versus Valeo) striking down expenditure limits for independent spending (not in consultation with candidates and their campaigns) by individuals and groups was that the sources of funds were capped but the costs were not. In a country where electioneering became increasingly television-intensive, the lack of expenditure limits led to competitive spending for greater exposure, hence, spiralling costs. The net effect was a mushrooming of political action committees (PACs) to bypass the contribution limits and bans on direct corporate funding. In Japan’s candidate-oriented electoral system, the Political Funds Regulation Law of 1975, which limited contributions, made it more difficult for candidates to rely on party or factional leaders to raise and redistribute huge sums from large contributors. It threw the burden of fund-raising directly on the candidates, making fund-raising their main preoccupation (Curtis 1992).

How Effective have Political Finance Reforms been? Four broad conclusions can be drawn from the literature. First, public funding has not frozen party systems, either by preventing alternation in power or by preventing the entry of smaller new parties, as in Germany, Austria, Italy, and Sweden (Nassmacher 1989; Alexander 1989a). Second, public funding does not necessarily reduce election spending. In several countries like Italy (1976–80) (Ciaurro 1989: 166–68), Spain

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(Del Castillo 1989), Finland, Austria (1978–85), and Israel (1981–88) (Mendilow 1992: 110–11), election spending rose despite public funding of parties, including of elections. This was traced to increased political rivalry, combined with the fact that private funds could be raised alongside public funding. Furthermore, parties could agree among themselves to increase the level of public funding (Austria, Israel). Third, if state funding is routed directly to candidates, bypassing the central party leadership, then lower-level leaders and party factions are strengthened and can demand policy changes or even threaten secession. Parties can come under pressure to decentralize and democratize. Fourth, corruption, in terms of kickbacks on government contracts and/or payments for government permits and licenses, has been significantly reduced in Western democracies compared to earlier decades, both under minimalist systems where there is a strict reporting and disclosure regime such as the USA, and under maximalist systems of party funding in Europe such as Germany where there is strict transparency imposed on party functioning by regulation of parties and reporting and disclosure regimes. So there can, in principle, be a range of reform options to reduce corruption, ranging from largely privately funded parties subject to strict reporting regimes to state funding of regulated political parties. These conclusions stress the key role of design in whether political finance reforms lead to reduced campaign costs, less corruption, and greater equality of political opportunity. We shall discuss possible options for election finance reform in India after reviewing the Indian case.

Political Finance Reform in India up to 1998 Traditionally, political parties in India financed themselves through private donations and membership dues.4 Company contributions to political parties were legal, subject to certain restrictions, and had to be declared in the company’s accounts. There were limits on election expenditure since the enactment of the Representation of the People Act (RPA), 1951. Talk about political finance reform began in the context of the debate on black money generation in the 1960s, and the nexus between black money and political fund-raising mentioned in the Reports of the Santhanam Committee on Prevention of Corruption (1964) and the Wanchoo Direct Taxes Enquiry Committee (1971). Company donations to political parties were banned with effect from 1969 without being substituted by state funding, thus, opening the door to the entry of black money.

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A key development was the amendment of the RPA in 1975 to nullify the Supreme Court’s judgment in the Kanwar Lal Gupta versus Amar Nath Chawla case of 1974 that party spending on behalf of a candidate should be included in election expenses for the purposes of the ceiling. Explanation 1 to Section 77(1) of the RPA was amended, by which party and supporter expenditure not authorized by the candidate did not count in election expenses. This made the limit on election expenditure largely ineffective. Political parties were exempted from income and wealth taxes from April 1979, provided they filed annual returns including audited accounts and identities of donors. The main development in the 1980s was the amendment of the Companies Act in 1985, which by Section 293A once again allowed company donations to political parties and individuals under certain conditions—most importantly, a ceiling of 5 percent of average net profit over the previous three years, subject to approval by the board of directors and disclosure in the profit and loss account. Yet, the desire of some donors for anonymity may still discourage them from disclosing contributions. In 1990, the National Front government set up the Goswami Committee on Electoral Reforms to look into the entire matter including election financing. The Goswami Report did not advocate state funding, except for limited support in kind for vehicle fuel (usually the main campaign expense), hire charges for microphones, issue of voter identity slips, and additional copies of the electoral rolls. It did not include spending by independent supporters in the election expenditure limit but made such unauthorized spending a penal offense as in the UK. It also advocated a ban on company donations to political parties. The report therefore, left an uncovered gap in the necessary election finance requirements of parties because, while banning company donations, it did not provide adequate state funding. In 1993, Indian industry became publicly concerned about the issue for the first time. The Confederation of Indian Industry (CII) set up a Task Force, which recommended that corporate contributions be made tax-deductible and that board decisions should be required to be confirmed by shareholders. The CII has also recommended state funding of elections, the funds to be raised either by a cess on excise duty or by contributions by industry to an election fund pool managed by the state, from which money should be distributed to parties by formula—in effect, an election tax on industry. 5

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Two important developments took place in 1996. The first was the Supreme Court’s notices to political parties in January to file returns required by the Income Tax and Wealth Tax Acts by February 20, in response to a public interest petition filed by an NGO, Common Cause, after the parties did not respond to notices issued by the Income Tax Department. The second important development was the Supreme Court’s order of April 4, shortly before the general elections held in late April and May, interpreting Explanation 1 of Section 77(1) of the RPA such that election expenditure by a political party would not be clubbed with that of a candidate for the purposes of the spending ceiling only if the party had submitted audited accounts of its income and expenditures, something that no party had done. As for the 1998 election, the RPA Amendment Bill passed in July 1996 by the United Front government, based on the Goswami Committee’s recommendations, did not touch upon the key issues of public funding and limits but did facilitate cost reduction by reducing the campaign period from 21 to 14 days. The expenditure limit, which had been kept artificially low at Rs 150,000 for Lok Sabha and Rs 50,000 for state assembly constituencies in most major states, until it was revised to Rs 450,000 and Rs 150,000 respectively for most states in 1994, was again revised upwards on December 31, 1997 to Rs 1,500,000 and Rs 700,000 respectively for major states. However, Explanation 1 to Section 77(1) of RPA was not amended. The other important development in the 1998 elections was the partial state subsidy in the form of allocation of free time for seven national and 34 state parties on the state-owned television and radio networks, totaling 61 hours on each of the two media. This had earlier been limited in 1996 to one television and two radio broadcasts of 15 minutes to each of such parties, on the basis of a formula based on a certain minimum time topped up by additional time in proportion to vote share in the last elections (Election Commission of India, Press Note, January 15, 1998). Reporting requirements of candidates were made more stringent on the basis of the April 1996 Supreme Court orders, candidates now having to furnish details of the expenditure incurred by their party and supporters. The Indrajit Gupta Committee on State Funding of Elections, in its report in December 1998, recommended partial state funding mainly in kind, but remained non-committal about Explanation 1 to Section 77(1) of the RPA. It recommended free TV and radio broadcast time on the state-owned media. It also recommended that private channels make available sufficient free airtime to recognized national and other parties

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during elections, and that private channels/cable operators be regulated so that a fair and balanced picture of the views of all parties would be available to the electorate. For partial state funding in kind, the Committee recommended supply of specified quantities of petrol and diesel, specified quantities of paper for printing election literature or identity slips issued to voters by candidates, supply of postage stamps, copies of the electoral rolls of the constituency, loudspeakers, telephone facilities, counting-day refreshments and food packets, all up to certain limits. Accordingly, the parties failing to maintain and submit audited accounts and income tax returns should not qualify for state funding. All parties receiving state subsidy for elections should file a complete account with the Election Commission in the format prescribed by the latter (Government of India 1998: 11–45, 55–56). All subscriptions or donations above Rs 10,000 received by the party should be by cheque or bank draft and be mentioned in the party’s accounts. The Committee also recommended a separate election fund to which the central and state governments should together contribute Rs 600 crore annually. However, most of the state governments expressed their inability to do so. The Gupta Committee failed to make any specific recommendation on the advisability or otherwise of allowing company donations to political parties.

Developments in 1999 and After The period since 1999 has seen some important changes towards more detailed reporting and disclosure about the legal, financial and educational backgrounds of candidates. In response to a PIL filed by a citizen’s group, Association for Democratic Reforms, the Delhi High Court in a judgment in November 2000 directed the Election Commission to collect data on the criminal records of candidates, if any, and make this available to the public along with details of assets of the candidate, his or her spouse and dependent relations, and educational qualifications of the candidate (Chhokar 2003). Despite challenges, this judgment was reaffirmed on March 13, 2003. The most significant development in political/electoral finance reform since 1999 has been the law called the Election and Other Related Laws (Amendment) Act, passed by the NDA government in September 2003, which made company and individual contributions to a political party 100 percent tax-deductible under Sections 80 GGB and 80 GGC of the Income Tax Act respectively (company contributions are still subject to

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the limits under Section 293A of the Companies Act, i.e., 5 percent of average net profit over past three years). This set up an incentive for the first time for companies and individual donors to donate openly by check. It also made it mandatory under Section 29-C of the RPA for political parties to submit to the Election Commission in Form 24-A a list of donations received of over Rs 20,000, failing which the party would not enjoy exemption from income tax. Section 13-A of the Income Tax Act was also amended under this law to make parties, in their declaration of income, list only donations of Rs 20,000 and above (not, as earlier, donations of Rs 10,000 and above) in their tax returns. While this law creates incentives for donors to contribute by cheque, it is not clear whether the incentive of a tax exemption on donations will outweigh the possible disadvantages of loss of anonymity. It should be borne in mind that similar tax incentives in France did not work fully in that over half the donors chose not to claim a tax benefit due to fear of loss of anonymity, despite confidentiality being assured by the system (International IDEA 2003: 47). The law changed the position under Explanation 1 to Section 77(1) of the RPA but still left loopholes for party and independent supporter spending without limit. It exempted costs regarding the travel of party leaders to a candidate’s constituency during an election campaign for propagating the program of their party from being counted as part of candidate’s expenditure. Such travel will not be deemed to be incurred on behalf of a candidate. Candidates now have to declare not only their own campaign spending but also that of their party and supporters in aid of their campaign. Yet, an important loophole that remains is that party spending and party supporters’ spending on propagating the party’s program, so long as it is not in favor of any particular candidate, will not count as candidate spending and can remain unlimited. The 2003 law also provides for free airtime for recognized political parties and candidates on all electronic media, thus potentially lowering the cost and increasing the reach of campaigning, but this provision remained unimplemented to its full potential apart from the state-owned media, since the rules for operationalizing it have not yet been framed. However, despite tightened regulation, one is forced to conclude that election finance reform to reduce costs, corruption, and the nexus between black money and political parties has not worked as well as hoped. Mounting election expenditures, for example, have made a mockery of limits, which were anyway unrealistic because of the non-inclusion of party and independent supporter spending. On election expenditure, the

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only detailed study is the National Election Audit ’99 (NEA ’99) conducted by the Centre for the Study of Developing Societies (CSDS 2002), of which the author was the National Co-coordinator. The findings are, in summary, as follows. Up to a certain level of expenditure, there is a clear relationship between expenditure and votes secured. The aggregate data of 24 sample constituencies (of which four were urban and 19 rural or predominantly rural) suggests that 57 out of 122 candidates who polled up to 3.4 per cent of total votes spent an average of Rs 0.27 million. Fifteen candidates who polled 3.5–16.5 percent votes spent in the range of Rs 3.5–6 million. The 50 candidates who retained their deposits and polled over 16.5 percent votes spent on an average Rs 7.3 million, including candidate, party, and independent supporter expenditures. Yet, the spending gap between winners and runner-ups was not all that large. The average winner spent Rs 8.3 million and the average runner-up spent Rs 6.8 million. We find a different expenditure pattern for national and regional parties. The national parties, but for a few exceptions, spent much more on average than the regional parties, even in the states where the state parties are very strong or had been in power before. That higher spending does not necessarily produce victory above a certain threshold is corroborated by the rapid turnover in power at the national level during the 1990s (see Tables 11.1 to 11.4), repeated again in the 2004 election, indicating that incumbency is not necessarily an advantage and could in fact well be a disadvantage. As can be seen (Table 11.2), the percentage of seats retained by the same parties hovers around the 50 percent mark in 1996, 1998 and 1999 and was 45 percent in 2004. For the BJP, only two-thirds of incumbent MPs were re-elected in 1996, 1998 and 1999, and 50 percent in 2004. The turnover of MPs (new MPs as a percentage of the total elected) was 63 percent in 1996, and 42 percent, 45 percent, and 46 percent in 1998, 1999, and 2004 respectively. For the Congress, the percentage of incumbent MPs re-elected dropped steadily from 66 percent in 1996 to 40 percent in 1999 to 30 percent in 2004, and the turnover of MPs increased from 53 percent in 1996 to 65 percent in 1999 to 79 percent in 2004. This is corroborated by both BJP and Congress sources, the former maintaining that parties have to spend a certain minimum to get their message across but beyond that minimum there is no correlation between spending and victory.6 One other noteworthy development after 1999 was the increase in October 2003 in the candidate expenditure ceiling to Rs 2.5 million for a Lok Sabha election and Rs 1 million for an assembly election.

INLD (1996–2000) RJD (1995–2000) TDP (1994–99) JD (1990–95) BJP (1995–98) BJP (1998–2002) Congress (1993–98) NC (1989–96) Congress (1993–98) Congress (1985–90) Congress/NCP (1999–2004) BJP (1990–93) Left Front (1987–91) Left Front (1991–96) Left Front (1996–2001) SDF (1999–2004) BJD led (2000–2004) Left Front (1998–2003) Congress (1999–2004)

Haryana Bihar Andhra Pradesh Bihar Gujarat Gujarat Himachal Pradesh Jammu & Kashmir Madhya Pradesh Maharashtra Maharashtra Rajasthan West Bengal West Bengal West Bengal Sikkim Orissa Tripura Karnataka

Source: Kumar (2004: 366, Table 14.4).

Party Re-elected

State 24 167 216 122 121 117 52 40 175 162 134 85 242 242 205 24 68 41 132

Seats in Previous Assembly 47 124 180 164 117 127 31 57 172 141 140 95 242 202 195 31 61 41 65

Seats in Present Assembly

Table 11.1 Seats Retained by Parties Re-elected in Assembly Elections (1989–2004)

22 94 141 89 89 87 27 30 103 89 84 54 217 189 162 24 50 23 38

Number of Seats Retained

91 56 65 72 73 74 51 75 58 54 63 64 90 78 79 100 74 56 29

Retention (%)

378 E. Sridharan Table 11.2 Pattern of Seat Retention in Lok Sabha Elections (1991–2004) Year of Elections

Number of Seats Retained by Same Parties

Number of Seats Won by Different Parties

247 282 267 266 302

296 261 276 277 241

2004 1999 1998 1996 1991

Source: Kumar (2004: 368, Table 14.5). Table 11.3 Performance of BJP Incumbents in Lok Sabha Elections (1991–2004)

Year of Elections 2004 1999 1998 1996

Number of Sitting MPs

Renominated

Re-elected

182 182 161 121

147 159 144 86

74 105 100 58

Other MPs of Turnover Party in the of MPs Incumbent Present for the Won (%) House Party (%) 50 66 69 67

64 77 82 103

46 42 45 63

Source: Kumar (2004: 370, Table 14.9). Table 11.4 Performance of Congress Incumbents in Lok Sabha Elections (1991–2004)

Year of Elections 2004 1999 1998 1996

Number of Sitting MPs

Renominated

Re-elected

113 141 140 244

69 103 101 157

30 40 52 66

Other MPs of Party in the Incumbent Present Won (%) House 43 39 51 42

115 73 89 74

Turnover of MPs for the Party (%) 79 65 63 53

Source: Kumar (2004: 371, Table 14.10).

Recent Proposals for Political Finance Reform In 1999 and thereafter, several proposals for election funding reform have been floated. In August 2001, Lok Satta, a Hyderabad-based NGO, proposed that corporate political contributions be made tax-deductible. The proposal includes tax-deductibility for both individual and corporate

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contributors, along with a whole package of other points, including very strict transparency measures for both parties and candidates, including declaration of assets of the person concerned and family members, and strict penal provisions. However, Lok Satta’s suggestion of tax-deductibility for transparent corporate contributions is restricted to corporates which do not receive state subsidy or have a decision, contract, or license pending with government. If government includes public sector companies and public financial institutions, this would rule out most major private corporations, as most would have decisions on contracts or loans pending. Lok Satta has also proposed public funding to recognized party candidates subject to intra-party democracy, reminiscent of the German model of regulation of party affairs by law (www.loksatta.org/ccer.htm, accessed on March 8, 2006). The Law Commission of India, in its 170th Report on Reform of Electoral Laws, and the Central Vigilance Commissioner have also recommended deletion of Explanation 1 to Section 77(1) of the RPA. However, the Law Commission in a comprehensive report has recommended making a suitable provision for the functioning of political parties and ensuring internal democracy, without which no state funding, even partial, should be allowed (Law Commission of India 1999). The Election Commission of India has proposed that political parties should be required to compulsorily maintain their accounts and get them audited by agencies specified by the Commission; if parties fail to do so they can be deregistered. The Commission also supports company contributions to political parties provided these are made in a transparent manner. The Commission is also for the inclusion of all expenditures by parties and supporters of a candidate in the election expenses of the candidate for the purpose of the ceiling on expenditure, and for the setting by the Commission of the ceilings at reasonable levels. The Election Commission tightened reporting and disclosure requirements in 1999 and 2004. Candidates in 2004 had to submit a day-to-day register of election expenses as well as an Abstract Statement of Election Expenses at the end of the campaign with expenditure incurred by the party and by other supporters in considerable detail, including vehicles used, expenditure on public meetings, and expenditure on the travel of party leaders. All this has been put on the Commission’s website as part of public disclosure. The National Commission to Review the Working of the Constitution, in its final report, recommends: (a) the deletion of Explanation 1 to Section 77(1) of the RPA, and realistic ceilings on expenditure by candidates

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(including parties and supporters’ expenditure) by the Election Commission, to be revised from time to time; (b) comprehensive transparency measures including the declaration of assets and liabilities by all candidates and their close relatives, the latter term to be defined by law, and such information to be made public; and (c) a shortening of the campaign period. However, it holds that any state funding of elections should be deferred until regulatory mechanisms governing the functioning of political parties are in place (see http://lawmin.nic.in/ncrwc).

Policy Lessons and Options for India International experience shows that state funding and other election finance regulation can have unanticipated consequences. Understanding the impact of election finance regulations on politicians’ incentives is critical for changing behavior. Deriving policy mixes from actual and possible variants of the three broad international patterns of election finance reform (minimalist, maximalist, and mixed) and from the four ideal-typical reform packages (Swedish, German, American, and Canadian) yields six possible options that are available for India in increasing order of magnitude of their distance from the status quo.

Private Funding with Stricter Reporting and Disclosure The first option would be a minimalist pattern of state regulation on the present model, but with stricter reporting and disclosure requirements. It would consist of limits on candidate spending but no state funding beyond what exists. Party spending would be allowed without limits if there is no mention of any candidate, but will be clubbed with candidate spending and deemed authorized by the candidate (whether it is so or not) if it identifies candidates. Private spending in aid of a candidate’s election will be allowed, but the existing tax incentives will encourage this spending to be channelized to parties as contributions which will have to be declared, bringing such spending under scrutiny. Under this option there will be no limits on contributions to political parties except that of 5 percent of average net profits over the past three years under Section 293A of the Companies Act. This option has potential problems. One is that if there are no limits on party expenditure so long as parties do not campaign for identifiable candidates and/or if they submit audited accounts (the latter being the

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present position), then there are no effective limits on campaign spending. Closely contested elections in an era of multi-party politics will make it difficult to restrain spending. Hence the imperative to raise funds by corrupt means will remain. Also, in a federal country like India, major parties have units at the central (national), state, district/constituency, and lower levels. If the requirement of audited accounts and transparency of expenditures and contributions is not applied down to the lowest levels of parties, transparency will not be achieved. Both expenditures and fund-raising can take place at lower levels of the party hierarchy. Finally, private spending may opt out of tax benefits out of fear of loss of anonymity.

Private Funding with Separate or Clubbed Party and Candidate Expenditure Limits The second option would be an extended minimalist option consisting of the first suggested option with either a separate limit on party expenditure in addition to limits on candidate expenditure or clubbed party and candidate expenditure with revised limits. This would introduce more effective limits on election spending and help restrain costs, provided there is strict monitoring of election expenditure as well as more stringent reporting and disclosure laws covering not only the election period for parties and candidates, but requiring annual audited accounts covering incomes and expenditures at all levels of the party organization. Detecting independent private spending will still be very difficult.

Private Funding with Expenditure and Contribution Limits A third option would be the same as the second but with limits on contributions, based on the US model. It would introduce limits on contributions by amount per donor for different categories of donors, all of which will have to be disclosed. This option will also face severe practical problems. For one thing, limits on contributions in the absence of state funding of elections (let alone parties) will work only if expenditure limits are effectively implemented. The lesson of the US and Japanese experience is that limits on contributions per donor do not work in the absence of effective capping of election expenditures, since costs are not capped while sources of funds are. Indeed, they generate more pressure for fund-raising from a larger number of donors, especially where parties or faction leaders are weak and candidates have to bear the burden of fund-raising. This is

382 E. Sridharan

what led to several corruption scandals in these countries. Additionally, limits on contributions will be extremely difficult to monitor in India, the bulk of contributions being made from unaccounted cash reserves and/or in kind.

Partial State Funding of Elections The fourth option is the introduction of partial state funding of elections along with limits on expenditures as in the second option above, representing a mixed option. This would partially reduce the pressure on political parties to raise funds, including by corrupt means, and would therefore contribute to transparency in administration. Partial state funding would be in addition to the existing forms of state funding, i.e. free media time on the state-owned media and tax benefits under Sections 80GGB and 80GGC of the Income Tax Act. However, it should be noted that from the point of view of strengthening the voice relationship between citizens/ voters/clients and politicians/policy-makers through broad-basing party funding, the current tax benefits neither preferentially support small contributions (unlike US’ and Canadian rules) nor do they exclude companies which are current contractors to government, i.e. ‘interested money’.

Comprehensive State Funding of Elections The fifth option is an extension of the fourth to include comprehensive state funding of elections. The issue that will remain is whether parties will be allowed to raise additional private funds for elections. As long as state funding covers only elections and not the inter-election activities of political parties, they will have to raise funds for such activities from private contributions. It will be very difficult to check the use of such funds for elections in addition to state support. The reporting and disclosure requirements—and related internal democracy, transparency, and accountability requirements—for political parties and candidates will have to be more stringent. The fourth and fifth options of partial and full state funding of elections raise a number of issues. The fourth option has several inherent difficulties in the Indian context, although it is in fact close to the Goswami Committee recommendations of partial state funding in kind only. First, it needs to be emphasized that state funding in cash or kind must be comprehensive, covering all major electioneering requirements, to be effective in removing the imperative to raise political funds in corrupt ways.

Electoral Finance Reform 383

Second, state funding of any kind raises the crucial issue of who is to be funded (parties or candidates), the related issue of the transparency of party accounts, and the even more critical issue of intra-party democracy. In several countries, funding parties has only strengthened the powers of party elites.7 But these features are essential for the financial accountability necessary for state funding in any setting.

State Funding of Political Parties A sixth option is the public funding of parties on the maximalist pattern. This can be either comprehensive funding of parties for all their activities including elections, or on a matching-grant formula basis against funds raised by the parties themselves, as in the Netherlands and, since 1994, in Japan. The other requirements of this option would be the same as for the fifth option. This option will be the most expensive. As has emerged in German Constitutional Court judgments, it is debatable in principle whether full state support to political parties is justified. Political parties are free associations of citizens for political purposes, and such free associations should be able to prove their independent viability by raising the bulk of their own funds—or so it can be argued. State support for political parties may only encourage the proliferation of opportunistic formations.

Service Delivery and Electoral Reform How do the graded set of options for election funding reform affect the prospects for improved service delivery? We would argue that such reform can create an enabling environment in terms of incentives and disincentives for politicians/policy-makers vis-à-vis citizens/voters/clients in a number of mutually reinforcing ways. First, state funding of elections/parties will provide a financial floor to parties and their candidates that will help reduce the incentive to raise party/election funds through corrupt means including corruption in service delivery. Second, stricter reporting and disclosure legislation (including rules to internally democratize parties, which have to be part of any state funding package but can also be introduced independently of state funding) will improve transparency of political parties to citizens/voters/clients of services, a condition which empowers the latter and helps check corruption. It also creates a virtuous cycle of democratic competition within

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political parties for election nominations, in which candidates exposed to be corrupt can expect to be weeded out over time. Third, reforms of the American and Canadian kinds in minimalist systems of largely private funding of parties/candidates, such as contribution limits and tax benefits for small contributions only (which are a policy option but not part of the present Indian policy), can push parties and candidates to broad-base their fund-raising away from small numbers of large donors to large numbers of small donors. This will strengthen the voice relationship between citizens and politicians by forcing parties to be better rooted in the concerns of ordinary citizens, and will help the latter exert greater influence over party affairs and over policy matters which affect their basic interests, including issues concerning service delivery. Electoral reform that (a) provides a financial floor to parties/candidates; (b) broad-based party funding by shifting dependence from large and ‘interested’ donors to large numbers of small donors; (c) makes party finance much more transparent by stricter reporting and disclosure rules; and (d) forces parties to follow procedures of internal democracy and accountability has the potential to in turn, transform the voice relationship between citizens/voters/clients of service and politicians/policy-makers towards one in which the former can enforce much greater accountability from the latter. Pressure from below can also push the state to enforce ‘compacts’ with service providers to improve quality. Therefore, electoral finance reform has the potential to shift incentives away from the patronage of organized ethnic or other interest groups to the broad-based improvement of service delivery to the public at large, including the poor.

Notes 1. We are heavily indebted to the work of Paltiel (1980, 1981, 1989), Gunlicks (1988), Alexander (1989a, 1989b), Pinto-Duschinsky (1989), Mendilow (1989, 1992) Ciaurro (1989), Del Castillo (1989), Koole (1989), Nassmacher (1989), Butler and Ranney (1992), Foster and Muste (1992), Kavanagh (1992), Hughes (1992), Charlot and Charlot (1992), Kaase (1992), Esaiasson (1992), Curtis (1992), Bartels (1992), Mitchell and Bretting (1993), Linton (1994), Hirose (1994), Levitt (1995) in the academic literature, and to the cooperation of several countries’ embassies in New Delhi. 2. See Alexander 1989a, p. 14, Table 1, for the above information. This is an inclusive list, i.e. it includes countries if any public subsidization of parties or elections is introduced at any level of government or for election to any office, howsoever limited the subsidization may be. Thus it includes, for example, France in 1965, although France is not generally considered a country with public funding of election until after the 1988 reforms. Similarly, party funding in Japan really began only in after the 1994 reforms on a matching grant basis.

Electoral Finance Reform 385 3. For further information on these four policy packages see Karl-Heinz Nassmacher (2003). 4. This account is indebted to the pioneering work of Pai Panandiker and Roy (1977, 1994), Singh (1986), Acharya (1986), Government of India, Ministry of Law and Justice (1990), Reddy (1992), Manor (1992), Confederation of Indian Industry (1993), Jain (1994), Sridharan (1999); and to several confidential interviews with politicians, industrialists and industry association executives both before and after the 1996 elections; to press reports and relevant reports; and to press notes of the Election Commission of India. 5. Interview with R.C. Bhargava, then chief executive officer of one of India’s largest companies, Maruti Udyog, and chairman of CII’s Task Force, 8 December 1995, and CII sources. 6. Interview with former BJP treasurer, V.P. Goyal, on January 4, 2005. 7. A point emphasized by industrialists and politicians across parties was that one of the most contentious issues in state funding will be the question of exactly to whom in the various parties will state funds be given and under whose control they will be placed.

References Acharya, Shankar N. 1986. Aspects of the Black Money Economy in India. New Delhi: National Institute for Public Finance and Policy. Alexander, Herbert E. (ed.). 1989. Comparative Political Finance in the 1980s. Cambridge: Cambridge University Press. ———. 1989a. ‘Money and Politics: Rethinking a Conceptual Framework’, in Herbert E. Alexander (ed.), Comparative Political Finance in the 1980s. Cambridge: Cambridge University Press, pp. 9–23. ———. 1989b. ‘American presidential elections since public funding 1976–84’, in Herbert E. Alexander (ed.), Comparative Political Finance in the 1980s. Cambridge: Cambridge University Press, pp. 95–123. ———. 1994. ‘American Presidential Elections 1976–1992’, in Herbert E. Alexander and Rei Shiratori, Comparative Political Finance Among the Democracies. Boulder: Westview Press, pp. 41–56. Alexander, Herbert E. and Shiratori, Rei (eds). 1994. Comparative Political Finance Among the Democracies. Boulder: Westview Press. Avril, Pierre. 1994. ‘Regulation of Political Finance in France’, in Herbert E. Alexander and Rei Shiratori, Comparative Political Finance Among the Democracies. Boulder: Westview Press, pp. 85–96. Bartels, Larry M. 1992. ‘The Impact of Electioneering in the United States’, in David Butler and Austin Ranney (eds.), Electioneering: A Comparative Study of Continuity and Change. Oxford: Clarendon Press, pp. 244–77. Butler, David, Lahiri, Ashok and Roy, Prannoy. 1996. India Decides. New Delhi: Living Media. Butler, David, Penniman, Howard R. and Ranney, Austin (eds). 1981. Democracy at the Polls: A Comparative Study of Competitive National Elections. Washington, DC: American Enterprise Institute. Butler, David and Ranney, Austin (eds.). 1992. Electioneering: A Comparative Study of Continuity and Change. Oxford: Clarendon Press.

386 E. Sridharan Centre for the Study of Developing Societies (CSDS). 2002. National Election Audit ’99: A Report on Election Expenditures in the Thirteenth General Elections to the Lok Sabha. New Delhi: Centre for the Study of Developing Societies. Chandra, Kanchan. 2004. Why Ethnic Parties Succeed: Patronage and Ethnic Headcounts in India. Cambridge: Cambridge University Press. Charlot, Jean and Charlot, Monica. 1992. ‘France’, in David Butler and Austin Ranney (eds), Electioneering: A Comparative Study of Continuity and Change. Oxford: Clarendon Press, pp. 133–55. Chhibber, Pradeep and Nooruddin, Irfan. 2004. ‘Do Party Systems Count? The Number of Parties and Government Performance in the Indian States’, Comparative Political Studies, 37 (2) (March): 152–87. Chhokar, Jagdeep S. 2003. ‘Reforming the Electoral System’, Seminar, 521, January 2003: 61–64. Ciaurro, Gian Franco. 1989. ‘Public financing of parties in Italy’, in Herbert E. Alexander (ed.), Comparative Political Finance in the 1980s. Cambridge: Cambridge University Press, pp. 153–71. Confederation of Indian Industry (CII). 1993. The Financing of Democracy and Elections. New Delhi: Confederation of Indian Industry. Curtis, Gerald L. 1992. ‘Japan’, in David Butler and Austin Ranney (eds.), Electioneering: A Comparative Study of Continuity and Change. Oxford: Clarendon Press, pp. 222–43. Del Castillo, Pilar. 1989. ‘Financing of Spanish political parties’, in Herbert E. Alexander (ed.), Comparative Political Finance in the 1980s. Cambridge: Cambridge University Press, pp. 172–99. Esaiasson, Peter. 1992. ‘Scandinavia’, in David Butler and Austin Ranney (eds), Electioneering: A Comparative Study of Continuity and Change. Oxford: Clarendon Press, pp. 202–21. Foster, Jody and Muste, Christopher. 1992. ‘The United States’, in David Butler and Austin Ranney (eds), Electioneering: A Comparative Study of Continuity and Change. Oxford: Clarendon Press, pp. 11–42. Geddes, Barbara. 1991. ‘A Game Theoretic Model of Reform in Latin American Democracies’, American Political Science Review, 85, 371–91. Gidlund, Gullan M. 1994. ‘Regulation of Party Finance in Sweden’, in Herbert E Alexander and Rei Shiratori, Comparative Political Finance Among the Democracies. Boulder: Westview Press, pp. 105–14. Government of India, Ministry of Law and Justice. 1990. ‘Report of the Committee on Electoral Reforms’ (Goswami Committee Report). New Delhi: Government of India. Government of India, Ministry of Law and Justice, Legislative Department. 1998. ‘Report of the Committee on Electoral Reforms’ (Inderjit Gupta Committee), Delhi: Government of India. Gunlicks, A. 1988. ‘Campaign and Party Finance in the West German Party State’, Review of Politics, 50: 30–48. Hirose, Takako. 1994. Two Asian Democracies: A Comparative Study of the Single Predominant Party Systems of India and Japan. New Delhi: Konark Publishers. Hughes, Colin A. 1992. ‘Australia and New Zealand’, in David Butler and Austin Ranney (eds), Electioneering: A Comparative Study of Continuity and Change. Oxford: Clarendon Press, pp. 88–109. International IDEA. 2003. Funding of Political Parties and Election Campaigns. Stockholm: International IDEA.

Electoral Finance Reform 387 Jain, R.B. 1994. ‘The Reform Efforts in India’, in Herbert E. Alexander and Rei Shiratori, Comparative Political Finance Among the Democracies. Boulder: Westview Press, pp. 159–72. Kaase, Max. 1992. ‘Germany’, in David Butler and Austin Ranney (eds.), Electioneering: A Comparative Study of Continuity and Change. Oxford: Clarendon Press, pp. 156–72. Kavanagh, Dennis. 1992. ‘The United Kingdom’, in David Butler and Austin Ranney (eds), Electioneering: A Comparative Study of Continuity and Change. Oxford: Clarendon Press, pp. 70–87. Kochanek, Stanley A. 1987. ‘Briefcase Politics in India: The Congress Party and the Business Elite’, Asian Survey, 27 (12): 1278–1301. Koole, Ruud. 1989. ‘The “modesty” of Dutch party finance’, in Herbert E. Alexander (ed.), Comparative Political Finance in the 1980s. Cambridge: Cambridge University Press, pp. 200–219. ———. 1994. ‘Dutch Political Parties: Money and the Message’, in Herbert E. Alexander and Rei Shiratori, Comparative Political Finance Among the Democracies. Boulder: Westview Press, pp. 115–32. Kumar, Sanjay. 2004. ‘Increasing Fluidity in Electoral Contests: Is This Mere AntiIncumbency?’ in Rajendra Vora and Suhas Palshikar (eds.), Indian Democracy: Meanings and Practices. New Delhi: Sage Publications. Law Commission of India. 1999. One Hundred and Seventieth Report on Reform of Electoral Laws, New Delhi: Law Commission of India. Levitt, Steven D. 1995. ‘Policy Watch: Congressional Campaign Finance Reform’, Journal of Economic Perspectives, 9 (1): 183–93. Linton, Martin. 1994. Money and Votes. London: Institute for Public Policy Research. Malbin, Michael J. (ed.). 1980. Parties, Interest Groups and Campaign Finance Laws. Washington, DC: American Enterprise Institute. Manor, James. 1992. ‘India’, in David Butler and Austin Ranney (eds), Electioneering: A Comparative Study of Continuity and Change. Oxford: Clarendon Press, 110–32. ———. 1989. ‘Party financing in Israel: Experience and experimentation 1968–85’, in Herbert E. Alexander (ed.), Comparative Political Finance in the 1980s. Cambridge: Cambridge University Press, pp. 124–52. Mendilow, Jonathan. 1992. ‘Public Party Funding and Party Transformation in MultiParty Systems’, Comparative Political Studies, 25 (1): 90–117. Mitchell, Neal G. and Bretting, John G. 1993. ‘Business and Political Finance in the United Kingdom’, Comparative Political Studies, 26 (2): 229–45. Nassmacher, Karl-Heinz. 1989. ‘Structure and impact of public subsidies to political parties in Europe: The examples of Austria, Italy, Sweden and West Germany’, in Herbert E. Alexander (ed.), Comparative Political Finance in the 1980s. Cambridge: Cambridge University Press, pp. 236–67. ———. 2003. ‘Introduction: Political Parties, Funding and Democracy’ in International IDEA, Funding of Political Parties and Election Campaigns, Stockholm: International IDEA, pp. 1–20. Pai Panandiker, V.A. and Roy, Ramashray. 1977, 1994 (original and revised editions). Financing of Elections. New Delhi: Centre for Policy Research. Paltiel, Khayyam Z. 1980. ‘Public financing abroad: Contrasts and effects’, in Michael J. Malbin (ed.). Parties, Interest Groups and Campaign Finance Laws. Washington, DC: American Enterprise Institute, pp. 354–70.

388 E. Sridharan Paltiel, Khayyam Z. 1981. ‘Campaign Finance: Contrasting Practices and Reforms’, in David Butler, Howard R Penniman and Austin Ranney (eds.). Democracy at the Polls: A Comparative Study of Competitive National Elections. Washington, DC: American Enterprise Institute, pp. 138–72. ———. 1989. ‘Canadian election expense legislation 1963–85: A critical appraisal or was the effort worth it?’ in Herbert E. Alexander (ed.), Comparative Political Finance in the 1980s. Cambridge: Cambridge University Press, pp. 51–75. Park, Chan Wook. 1994. ‘Financing Political Parties in South Korea: 1988–1991’, in Herbert E. Alexander and Rei Shiratori, Comparative Political Finance Among the Democracies. Boulder: Westview Press, pp. 173–86. Pinto-Duschinsky, Michael. 1989. ‘Trends in British political funding 1979–84’, in Herbert E. Alexander (ed.), Comparative Political Finance in the 1980s. Cambridge: Cambridge University Press, pp. 24–50. Reddy, G. Krishna. 1992. ‘The Role of Money Power in Elections’, Agarala Easwara Reddy and D. Sunder Ram, Electoral Reforms in India. New Delhi: Uppal Publishing House, pp. 195–216. Reddy, Agarala Easwara and Ram, D. Sunder. 1992. Electoral Reforms in India. New Delhi: Uppal Publishing House. Shiratori, Rei. 1994. ‘Political Finance and Scandal in Japan’, in Herbert E. Alexander and Rei Shiratori, Comparative Political Finance Among the Democracies. Boulder: Westview Press, pp. 187–206. Singh, L.P. 1986. Electoral Reform. New Delhi: Uppal Publishing House. Sridharan, E. 1999. ‘Toward State Funding of Elections in India? A Comparative Perspective on Possible Options’, Journal of Policy Reform, 3 (3): 229–54. World Bank. 2003. World Development Report 2004: Making Services Work for Poor People. New York: Oxford University Press.

About the Editor and Contributors

The Editor Vikram K. Chand is Senior Public Sector Management Specialist at The World Bank in New Delhi where he is involved in work related to administrative reform and public service delivery. He has a Ph.D from the Department of Government at Harvard University and has held research fellowships at the University of California, San Diego and the Watson Institute for International Studies at Brown University. Dr Chand has also taught at Brown and Wesleyan universities and has been an Associate Research Professor at the Centre for Policy Research, New Delhi. He served as the Principal Consultant to The Carter Center’s Mexican Elections Project in the 1990s, including being its representative for the 2000 Mexican Presidential elections. He has authored several articles on governance and other issues and has published a book on Mexico’s Political Awakening (2001).

The Contributors Suresh Balakrishnan is currently Chief Technical Advisor with the United Nations Development Programme for the Governance and Public Administration Reform Project in Xiengkhouang, Laos. He has over two decades of experience with monitoring and evaluation in the governance and development sectors, which spans training, research, and consulting. Dr Balakrishnan has worked closely with national, provincial and city governments, as well as non-governmental organizations in Asia and Africa, to strengthen service delivery. Over the last 10 years, he has been closely involved in the evolution of Citizen Report Cards, which are now being mainstreamed into public administration reform initiatives in several countries.

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Subhash Bhatnagar is an adjunct professor with the Indian Institute of Management, Ahmedabad (IIMA). He works half time as an e-government advisor for the Information Systems Group at the World Bank in Washington, DC. As a tenured professor from 1975 to 2003, he held various positions at the IIMA, including CMC Chair Professorship and Member, Board of Governors and Dean. His current interests are in e-government and ICT for rural development and he has advised World Bank client countries on e-government strategies. Professor Bhatnagar has published eight books including a book on ICT and Development: Cases from India (Sage, 2000) and a recent book on E-Government: From Vision to Implementation (Sage, 2004). Jonathan Caseley is a Research Associate at the Institute for Development Studies, University of Nairobi. He is a governance and public sector reform specialist with more than 12 years experience across a wide range of development sectors and levels of government. Dr Caseley’s research interests include public sector reform, organisational change, service delivery performance, and accountability. Prema Clarke is Senior Education Specialist at the World Bank. She has a Ph.D from the Harvard Graduate School of Education. Dr Clarke has worked extensively on educational reform in India through the Government of India’s District Primary Education Project, operating in 18 Indian states. She has also worked on secondary education in India. Prema Clarke has authored Teaching and Learning (Sage, 2001), which focuses on the relationship between pedagogy and culture. Sangeeta Goyal is an education economist based in the New Delhi office of the World Bank. She has a Ph.D in Economics from Columbia University, New York. Her current research focuses on public finance, service delivery and political economy issues in education in India in particular, and in developing countries in general. Jyotsna Jha is Advisor, Education and Gender at the Commonwealth Secretariat, London. She was awarded a Ph.D in the Economics of Education from Jawaharlal Nehru University, New Delhi in 1995. She has worked for both government and non-government organizations and for national and international agencies as an independent researcher. Dr Jha has conducted research and evaluation studies relating to various aspects of education policy, programming and financing. She has also

About the Editor and Contributors 391

worked closely with teachers and administrators on matters of equity issues in educational planning, research techniques, development of social learning curriculum and educational management issues. She is the coauthor of Elementary Education for the Poorest and Other Deprived Groups (2005). N. Shiv Kumar is Director of Catalyst Management Services Pvt Ltd—a consulting, research and training firm. He specializes in the evaluation of projects in the health and livelihood sectors. He advises governments and development agencies on reforms and governance. Vikram Menon is a Public Sector Management Specialist with the World Bank in New Delhi, particularly focusing on issues of anti-corruption and civil service reform in India and Nepal. He has extensive experience in working with development projects in the areas of governance and in sectors such as health and education. Dr Menon has also spent a number of years with the United Kingdom’s Department of International Development (DFID) as a Governance Advisor. He has a D.Phil from the University of Oxford. Rahul Mukherji is a Visiting Research Fellow at the Institute of South Asian Studies at the National University of Singapore. He is currently on leave from Jawaharlal Nehru University where he is an Assistant Professor at the Centre for Political Studies. Dr Mukherji has served as an Assistant Research Professor at the Centre for Policy Research in New Delhi, and has taught at the City University of New York and the University of Vermont in Burlington. He has held fellowships at the Rajiv Gandhi Foundation and the Australian National University. Dr Mukherji holds a Ph.D in political science from Columbia University. Rajeev Sadanandan is currently a research scholar at Jawaharlal Nehru University, New Delhi. He was a former Health Secretary, Government of Kerala. He has also worked as a consultant to the National AIDS Control Organisation, Government of India. His research interests focus on the financing and provision of health services. E. Sridharan is Academic Director at the University of Pennsylvania Institute for the Advanced Study of India (UPIASI) in New Delhi, a post he has held from its inception in 1997. He obtained his Ph.D in Political Science from the University of Pennsylvania, and was a Fellow at the

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Centre for Policy Research, New Delhi (1989–97). He has also held visiting appointments at the University of California, Berkeley, the London School of Economics, the Institute for Developing Economies, Tokyo, and the Center for the Advanced Study of India, University of Pennsylvania. Dr Sridharan is a political scientist with research interests in comparative politics and the political economy of development, party systems and coalition politics, and international relations theory and conflict resolution in South Asia. He is the author of The Political Economy of Industrial Promotion: Indian, Brazilian and Korean Electronics in Comparative Perspective 1969–1994 (1996) and has recently co-edited (with Zoya Hasan and R. Sudarshan), India’s Living Constitution: Ideas, Practices, Controversies (2005) and (with Anthony D’Costa), India in the Global Software Industry: Innovation, Firms Strategies and Development (2004). He is currently co-editing Political Parties in India with Peter de Souza and has published numerous journal articles and book chapters. A.K. Venkatsubramanian is currently a Trustee of the Catalyst Trust, an NGO based in Chennai. He joined the Indian Administration Service in June 1964 and retired in November 1997. During this period he held various administrative positions both in the Government of Tamil Nadu and the Government of India including as Secretary, Cooperation, Food and Consumer Protection, Government of Tamil Nadu (1990–93) and Secretary, Consumer Affairs and Public Distribution, Ministry of Civil Supplies, Government of India ( 1996–97). Mr Venkatsubramanian is the Convenor of the Citizens Action Network, a network of various Voluntary Organisations/Movements in Tamil Nadu. He writes in the Tamil daily Dinamani on issues relating to politics, governance and social change and also edits a monthly journal in Tamil, Kudimakkal Murasu (‘Citizens Drum’).

Index

access deficit charge (ADC), 83, 86, 88 accountability, accountability mechanisms/relations, 18, 29, 41, 44, 45, 81, 89, 125, 126, 136, 142–43, 150, 169, 177, 182, 198, 216, 257, 337, 356, 360, 364; between senior managers, front-line workers and private sector operations, 146–48; enabling citizen demand for, 148–49; and improved service delivery performance, 151–52; leveraging voice for, 172– 74; multiple and performance information, 153–54; reforms, 145–46; relationships prior to reforms, 143– 44; strengthening, 25, 45–46; through access to information, 238– 39; weak, 19 administration, administrative mechanism, 350 Administrative Reforms and Public Grievances (ARPG), 37 Administrative Reforms Commission (ARC), 340 Administrative Staff College of India (ASCI), 106, 107 agency process, restructuring, 25, 29–37 agency-level initiatives, 157 age-specific attendance ratio (ASAR), 301 All India Anna Dravida Munnetra Kazhagam (AIADMK), 23, 42–43, 44, 49, 272–73, 284, 285, 320 Andhra Pradesh, 274; Anti-Corruption Bureau, 345; Andhra Pradesh Technologies Services Limited (APTS), 104; CARD, 122, 126; Chief Information Officer’s (CIO) program, 54; corruption, 352; e-governance,

48; Electricity Company, 121; E-Seva directorate, 110–11, 112, 114; E-Seva program, 23, 27–29, 36, 46, 48, 50, 51, 53, 96, 355;—on wider scale, 116–23;—services provided, 97–98; —evolution over the years (1999– 2004), 99, 102–03; electoral reforms, 22–23; expenditure on elementary education, 18; hospitals, 214; Online portal, 102, 114; reforms, enforcement, 345–46; registration process, reforms, 31; research and development department, 132, 145; Road Transport Corporation, 102; vigilance system, 343 Anthyodhaya Anna Yojana (AAY), 269 anti-corruption agencies, 45–46 Anti-Corruption Bureau (ACB), 20, 344, 346, 347 application development process, 123 The Associated Chambers of Commerce and Industry, (ASSOCHAM), 80 Association for Democratic Reforms, 374 Association of Basic Telephone Operators (ABTO), 77, 80 Association of V-sat Service Providers, 77 Athreya Committee, See Telecom Restructuring Committee (TRC) Athreya, M.B., 65, 68 Atomic Energy Commission, 64 autonomy, 24, 35, 36, 38, 42, 64, 81, 174–75, 215

balance of payment crisis (BoP), 1991, 66, 67, 68

394 Reinventing Public Service Delivery in India Bangalore, 47, 54; city agencies, 31–35, 50, 157, 159, 165; Bangalore Agenda Task Force (BATF), 32–36, 37, 47, 161, 169, 171–73, 176, 180, 181–84; public summits, 37; Bangalore City Corporation (BCC/BMP), 32, 33, 35, 158, 163–64, 166–71, 173–74, 176; Bangalore Development Authority (BDA), 32, 33, 161, 170, 171, 174, 178, 182–83; Bangalore Electric Supply Company (BESCOM), 31, 161, 164, 167, 182; Bangalore Electricity Regulatory Commission, 175; Bangalore Metro Transport Corporation (BMTC), 170, 171, 174, 182, 183; Bangalore Water Supply and Sewerage Board (BWSSB), 31–32, 34, 161, 166, 175, 182–83; Clean Bangalore Campaign, 166; Comprehensive Development Plan, 167; key service providers, 158–59; profile of service delivery improvements, 158–59; regional transport offices, 32; role of media, 47; service delivery reforms, 53; Urban Development Authority, 164, 167, 182 Barefoot College, 242 Bellary, Karnataka: fertility, 318 Bharat Sanchar Nigam Limited (BSNL), 31, 49, 57, 59–60, 79, 82–83, 86, 90, 99, 161; public telephone system, 82 Bharatiya Janata Party (BJP), 26, 76, 244, 376 Bharti, 61; Bharti Cellular, 72; Bharti Telenet, 80 Bhoomi, See Karnataka, Bhoomi program Bidar, Karnataka: fertility, 318 Bihar: health expenditure, 190; literacy, 227; Public Distribution System (PDS), 267, 286; public action for education, 225; school dropouts, boys, 234; teacher absenteeism, 234 Bijapur, Karnataka: fertility, 318 bill collection systems, 171 BIMARU states, 328 Block Steering Group (BSG), 240 Bodh, 261n26

Bordia, Anil, 241, 243, 244, 249, 252 British Telecom, 68, 78 Build-Operate-Transfer (BOT), 132 Build-O w n-O perat e-and-Transfer (BOOT) model, 104 Bureau of Industrial Costs and Prices (BICP), 74, 75 bureaucracy, bureaucrats, 38, 40, 59, 63, 67, 89, 110, 130, 133, 144, 150, 166, 169, 241, 243–44, 258, 319, 321 business process re-engineering, 354– 55 business-to-consumer (B2C), 95, 97 Canada: funding of elections, 370 Carberg, Bryan, 62 CARD (Computer-aided Administration of Registration Department), 53, 109, 122, 126 caste distinctions, 23, 42, 243 C-DAC, 127, 131–33 CDMA technology, 80 cellular network/operations, 60, 72, 80, 81, 86, 89 Cellular Operators Association of India (COAT), 77 Center for Developing Societies (CDS), 20 Center for Development of Telematics (C-DoT), 26, 64, 86 Central Administrative Tribunal (CAT), 348 Central Bureau of Investigation (CBI), 20, 338, 342, 344 Central Issue Prices, 277 Central Vigilance Commission (CVC), 77, 338–39, 344, 348, 379 Chandra Shekhar, 65, 87 Chattisgarh, 186 Chief Executive Officers (CEOs), 126 China: mobile subscribers, 61; public expenditure on health, 311 Citibank, 65 Citizen Report Cards (CRCs), 31, 159– 60, 162–63, 170, 172, 181, 184; as public scanners, 177–79; as a trigger for civic action, 179–80 citizens and agencies, restructuring, 29

Index citizens’ charter, 45, 108, 133, 134, 141, 148, 149, 151, 354–55 citizens/clients (of services), service providers and politicians/policy makers, triangular relationship, 364–65, 384 citizens/voters, 364 Citizens’ Groups, 242 civic participation in health services, 199 civic pressure, 45 civil servants, civil service, 41; corruption, 333 civil society, role, 46–48, 51, 157, 159, 165, 172–73, 182–84, 215, 243–44, 257, 288–89, 355, 365; and city agencies, collaboration, 47, 165 client power and voice, 157 Commission for Agricultural Costs and Prices (CACP), 289 Common Cause, 373 communication participation, 22, 192, 363; and decentralization, 25, 41–44; in education, 40, 239–40, 247 Communications and Information Technology Ministry, Government of India, 67 Communications Ministry (MOC), Ministry, Government of India, 63–64 Community Based Organizations (CBOs), 242, 252 Companies Act (1985), 372, 380 competition, 21, 25–27, 31, 37, 49, 53, 117, 178 computerization, 28, 30, 46, 47, 48, 102, 107, 117, 120, 127, 128, 130, 131–34, 135, 153 Confederation of Indian Industry (CII), 80, 372 Congress, 22–23, 26, 35, 42, 71, 175–76, 244, 271, 272, 376 Constitution of India, 20, 338, 356; 73rd and 74th Amendment, 49 CorDECT technology, 124n 16 corporatization, 65, 68–69, 74, 78, 90 corruption, 19, 20–21, 27, 29, 30, 36, 38, 46–49, 51, 117–18, 125, 129, 137, 140, 148, 152, 163–65, 175, 182, 333, 357–58, 371; anatomy, 351–54; man-

395

aging caseload, 344–47; enforcement problems, 337–38; enforcement agencies at state level, 340–41; enforcement agencies, weakness, 338– 41, 348–50; extent and scope in India, 334–35; kickbacks, 371; reasons for persistence, 336–50; focus on prevention, 350–51; preventive vigilance, role of government departments, 347–50; potential areas for reforms, 354–57; prosecution problem, 342–44 cultural change, 151; prior to computerization, 153 customer-focus, 128, 129 customer relationship management, 62 customer satisfaction, 141 customization, 62 decentralization, 22, 24, 25, 39–41, 191, 194, 207, 214, 352, 363 Delhi, 45, 47; Non-Governmental Organizations, 51; Right to Information (DRTI), 48, 51, 288 democracy, democracies: electoral finance reforms, 366–71; patterns of regulation, 368–70 deregulation, 359 Dharmapuri, Tamil Nadu: female literacy, 307 Diagntar, 261n23 digital technology, 61–62 dipstick, 234 disinvestments, 74 Dravida Munnetra Kazhagam (DMK), 23, 42, 44, 49, 270, 271, 272, 273, 284, 320 Drishtee, 114–16 E-Choupal, 50, 51, 114 economic growth, 296–97, 311 Education Guarantee Scheme (EGS), See Madhya Pradesh, Education Guarantee Scheme education, educational, 225, 297, 363, 365; adult education, 242; adult literacy program, 242; deprivation, 308; elementary education, 225, 227; reforms in Madhya Pradesh, 41, 47,

396 Reinventing Public Service Delivery in India 49–50, 53, 225, 227, 234, 250; in Tamil Nadu and Kerala, 298–308 e-governance, 22, 27–29, 48, 355 Election and Other Related Laws (Amendment), 374 Election Commission, 374–75, 379–80 elections, electoral politics, 21, 22, 41; campaigns and public service delivery, 366; private expenditure, 380–82, 384; public funding, 21, 367–71, 382–83 Electricity Act 2003, 89 electronic service delivery, 118 Electronics Department (DoE), 62–63, 66–67, 87 e-mail, 77 employee participation, 128 Empowerment and Development Project, 18 empowerment and equity, 24, 226, 243, 251–52 E-Seva, See Andhra Pradesh, E-Seva program Essential Commodities Act (1995), 282, 290 family planning services, 42, 43, 297, 316–19, 325 Federation of Indian Chambers of Commerce and Industry (FICCI), 77 Finance Ministry, Government of India, 66 Five Year Plans, Sixth (1980–85), 63, 241; Seventh (1985–90), 63; Eighth (1990–95), 58 Food and Consumers Ministry, Government of India, 280 food and nutrition, 43, 318–19 Food and Public Distribution Ministry, Government of India, 286, 287 Food Corporation of India (FCI), 274, 276, 287, 289–90 foreign investment in telecom sector, 87–88 FRIENDS, See Kerala, FRIENDS front-line service delivery performance, 144, 146–48, 149, 151, 153–54 fund-based accounting, 47

Gandhi, Indira, 63, 86 Gandhi, Rajiv, 48, 64, 86 General Agreement of Tariffs and Trade (GATT), 63 Germany: public funding of elections, 367, 383 Goswami Committee on Electoral Reforms, 372–73 government-to-consumer (G2C), 95, 97 Grameen Sanchar Seva Organization, 83 Greater Mumbai Municipal Corporation, 35 grievance redressal systems, 172 Gross Domestic Product, 311, 312 Gross Enrollment Ratios (GER), 228–29 Group of Ministers on Telecom, 79 group on telecommunication (GOT), 78 GSM technology, 68, 80–81 Gujarat: computerization of inter-state check-posts, 48, 51; family planning, 317; reforms, 24 Gulbarga, Karnataka: female literacy, 307; fertility, 318 health, health care/health sector, 363, 365; deprivation, 311; provisions, public expenditure, 311–15; salary expenditure, productivity, 200; in Tamil and Karnataka, 297, 308–19 hierarchical distinctions, hierarchy, 36, 243, 381 Himachal Pradesh: Aspatal Kalyan Samity, 215; expenditure per student, 227; health care, 216; literacy, 227; school dropouts, girls, 233; teacher absenteeism, 234 Hong Kong: Independent Commission Against Corruption, 337 Hota Committee on Administrative Reforms, 21 human resource management, reforms, 356–57 Hyderabad; and Bangalore, competition for software companies, 168–69; E-Seva, 53, 96, 97, 99, 105–07, 110, 112; public-private partnership, 104; Hyderabad Metropolitan Water Supply and Sewerage Board

Index (HMWSSB), 149, 153; Hyderabad Water Supply and Sewerage Board (HWSSB), 35, 36, 45, 47 income and poverty, and infant and child mortality, link, 310–11 Income-Generating-Activities (IGA), 201 Income Tax Act, 374–75, 382 Income Tax and Wealth Tax Acts, 373 income tax simplification, 22 Indian Administrative Services (IAS), 24 Indian Medical Association, 192 Indian Paging Service Operators Association (IPSA), 77 Indian Railways, 66 Indian Telegraph Act (ITA), 1885, 58, 71, 72–73, 78, 80, 89 Indian Telegraph Amendment Bill (1995), 73 Indrajit Gupta Committee on State Funding Elections (1998), 373–74 Industrial Credit and Investment Corporation of India Limited (ICICI), 74–75 Industry Ministry, Government of India, 63, 66 infant mortality rate (IMR), 296, 310, 316 information communication technologies (ICTs), 115, 126, 132, 133, 145, 151, 153 Information Technology (IT), 27, 29, 31, 35, 36, 62, 67, 74, 76, 77, 86, 87, 95, 107, 112, 117, 122, 123, 174, 175; as a priority sector, 48; industry, 26; use in prevention of corruption, 354–55 Information Technology Ministry, Government of India, 67 Information, Education, Communication (IEC), 322 Infosys, 171 install, staff, operate and maintain (ISOM), 132, 133 Institute of Development Studies, Jaipur, 246, 248 institutional entrepreneurs, 183–84

397

institutional mechanisms, 47, 240 instruments for improving service delivery, 25–45 Integrated Child Development Scheme (ICDS), 318 Integrated Citizen Service Centres (ICSCs), 96, 108 International Monetary Fund (IMF), 65 International Organization for Standardization (ISO) 9000 certification, 30–31, 37, 138–39, 150; quality management system, 138 internet service providers (ISPs), 76, 87 Internet Service Providers Association, 77 inter-state agency competition, 31 ITC, 26, 50 jajam, 236 jan sunwai (public hearings), 238 Jan Swasthya Rakshak, 207 Janaagraha, 34 Janata Dal, 35 Janshala, 250 Japan: public funding of elections, 368–69, 383; telecom equipment market, 62 Jharkhand: role of media, 47 judiciary and court system, 21, 52; corruption, 335 Kamaraj, K., 301, 325 Kanwar Lal Gupta vs. Amar Nath Chawla case, 372 Kareer, Nitin, 128–38, 144, 146–47, 150– 53 Karnataka: Bhoomi program, 23, 27–29, 46, 48, 50, 51, 123n8; CARD Project, 109, 122; child labour, 306–07; civil service, 45; education sector, 298–308, 325, 327;—enrollment ratios, 306;—expenditure on, 299;— failures, 306–07; —female literacy, 299, 307–08, 318;—literacy, 295, 298– 99, 307–08, 327;—school incentives, 305;—schooling participation, 300–04;—urban and male literacy,

398 Reinventing Public Service Delivery in India 299; E-Seva, 96; electoral reforms, 22–23; expenditure on elementary education, 18, 42; female literacy rates, 44; health establishment, 44; health sector/health care, 308–19;— child mortality, 308;—crude death rate (CDR), 317;—fertility rate, 303; —food and nutrition intervention, 318–19;—infant mortality rate, 308, 317;—life expectancy at birth, 295, 308;—mortality decline, fertility decline and family planning programme, 316–18;—public expenditure, 312–13, 315;—services, utilization, 315–16; human development index (HDI), 41, 294–97, 324– 25, 326–28; income and poverty, 310–11; institutional changes, 357; land records, computerization, 48; land reforms and democratic decentralization, 326; Lok Ayukta, 34, 46, 47, 169, 182–83, 341; outsourcing, 117; per capita income, 295; political parties, 44; politics, governance and society, 319–24;—public welfare administration, 321–23;—status of women, 323–24; poverty decline, 296–97, 311; procurement reforms, 356; Public Distribution System (PDS), 267; public policies, 42; Registration Department, 53; registration process, reforms, 31; Right to Information Act, 173; transfer policies, 52; Karnataka Administrative Tribunal (KAT), 52; Karnataka State Road Transport Corporation; (KSRTC), 25, 35, 36–37, 53 Karunanidhi, M., 320 Kerala: FRIENDS, 27, 36, 53, 124n 18; education, 251; health, 187, 188, 216, 309;—life expectancy at birth, 308; —subsidies, 189; Hospital Development Society, 215; human development index (HDI), 41, 295; per capita allotment of food, 268; Public Distribution System (PDS), 267, 268 Khairatabad, 107 Koppal, Karnataka: female literacy, 307

Krishna, S.M., 31, 168 Kumudham, 281–82 Law Commission of India, 379 legal reforms, 52 liberalization, 58, 63, 65, 76, 77, 166 licenses, licensing, 26, 58, 71–73, 75, 76, 79, 81, 83, 87–88, 89 licensing conflicts and investment pessimism (1994–97), 69–70 life expectancy at birth, 295, 296, 312, 327 Life Line Fluid Stores, 211, 216 literacy rates, 43, 126, 225, 227–28, 295, 298–99, 327 Lok Ayuktas, 34, 46, 47, 169, 182–83, 340–41 Lok Jumbish program, See Rajasthan, Lok Jumbish program Lok Pals, 340–41 Lok Satta, Hyderabad, 378 Madhya Pradesh: Agricultural Produce Marketing Act, 27; APM Act, 52; population below poverty line (BPL), 186, 198, 199; Crude Death Rate (CDR), 186; decentralization, 191, 194; electoral reforms, 22–23; Education Act, 52; Education Guarantee Scheme (EGS), 24, 50, 53, 260n8; education reforms, 47, 49–50, 53, 250;—literacy, 227;—primary education, 41;—public action for, 225;—Rajiv Gandhi Pathshalas (RGP) scheme, 250;—teacher absenteeism, 234; human development index (HDI), 197; health/health care, 200; —community health centers (CHC), 196, 201–03, 206, 211, 217;—expenditure, 188, 190–91, 203, 211; —hospital reforms, 38–39, 47, 54;—hospitalization facilities, 188, 189;—infrastructure, 206, 217;—primary health centers (PHC), 192, 196, 201–03, 206, 208, 211, 217;—subsidies, 189, 212; —services, availability, 190–91;— underutilization, 212; Health and Family Welfare Department (DH &

Index FW), 191, 197, 200; mandi rules, 23, 26–27, 50, 51, 52; Ministry of Health and Family Welfare (MHFW), 187; para-teachers, 18, 53; political leadership, 27; political support for reforms, 49; Public Distribution System (PDS), 267; Rogi Kalyan Samiti (RKS), 38–39, 191–214, 217–20;— additional resources generated and applied, 199–206;—history, 193–95; —management practices and governance improved, 206–09, 217–20; —by-law, 193;—outcomes, 198– 214;—patient satisfaction survey, 213–14;—patient welfare, 209– 214;—review of similar experiences, 214–17; —source of finance, 192– 93; scheduled castes/scheduled tribes (SCs/STs) population, 197, 198; Total Fertility Rate (TFR), 186; Maharaja Yeshwant Rao Hospital (MYH), Indore, Madhya Pradesh, 39, 193, 194 , 198 Mahanagar Telephone Nigam Ltd., (MTNL), 49, 60, 64–66, 72–73, 79, 86 Maharashtra: CARD, 122, 126; E-Seva, 96, 109, 121; Lok Ayukta, 341; outsourcing, 117; payment, penalties and performance, 134–36; Public Distribution System (PDS), 267; public-private partnership, 121; Registration and Stamps (R&S) Department, reforms, 29–31, 36, 46, 48, 50, 53, 126, 127–42, 150– 52;—sub-registrar offices (SROs), 126–27, 129–137, 140, 141, 143, 146–49; setting service standards, 130–31 Mahila Samakhya, 260n7 malnutrition, 318, 327 Management Information System (MIS), 197, 208 Mandi, See Madhya Pradesh, mandi Manmohan Singh Committee, 22 market mechanism, 77, 115 maternal health program, 19 Mazdoor Kisan Shakti Sangathan

399

(MKSS), See Rajasthan, Mazdoor Kisan Shakti Sangathan media, role, in Bangalore, 47, 173, 177, 179, 180, 182; and senior managers, 150–51; role in service delivery, 252 Mehra, Usha, 72–73, 77 Mehta, Mohan Singh, 241–42 Metro Customer Care Center (MCC), 36 Midday meal program, 23, 52, 305, 325; Nutritious Midday Meal (NMM), 43 middle class, 126, 320 middlemen, 149 MKSS, See Rajasthan, Mazdoor Kisan Shakti Sangathan Monopolies and Restrictive Trade Practices (MRTP) Act (1969), 71 Mumbai, Maharashtra: registration services, 137–39 Mysore, 34 Naidu, Chandrababu, 109 National Adult Education Program (1978), 241 National Association of Software and Service Companies (NASSCOM), 74 National Commission to Review the Working of the Constitution, 379 National Committee on Communications, 77 National Council of Applied Economic Research (NCAER), 267 National Democratic Alliance (NDA), 374 National Family Health Survey (NFHS), 187, 229, 297, 313, 315 National Front, 372 National Health Mission, 39 National Institute of Rural Development, Hyderabad, 268 National Literacy Mission (1988), 241 National Policy on Education (1968), 241; (1986), 244 National Rural Health Mission, 220 National Sample Survey Organization (NSSO), 228 National Sample Survey (NSS), 297 National Task Force on Information Technology and Software

400 Reinventing Public Service Delivery in India Development (NTFIT), 26, 76–78 New Economic Policy (NEP), 1984, 64 New Telecom Policy (NTP), 1994, 67, 68–69, 75, 87; 1999, 74–80, 81 Nilekani, Nandan, 171 N-Logue, 116 non-governmental organizations (NGOs), 20, 53; in Bangalore, 34, 159, 171, 179–80; in anti-corruption, 355; in Delhi, 51; in education in Rajasthan, 40–41, 51, 54, 226, 237, 239, 246, 248, 250, 251, 252–53, 257, 258; in electoral reforms, 363, 364, 373, 378; in health reforms in Madhya Pradesh, 38; in Maharashtra, 36; and social movements as sources of change, 241–44; in Tamil Nadu, 288 Oil and Natural Gas Commission (ONGC), 66 one-stop shop, 118, 120 online service delivery, 99 organizational change, 128–29, 131, 143, 147 organizational mechanisms, 365 Orissa; caseload, 344–45; corruption, 349, 351, 352; health, 187, 198; health subsidies, 189; literacy, 227; Lokpal and Lok Ayukta Act (1995), 341; Public Distribution System (PDS), 286; Vigilance Department, 343; teacher absenteeism, 234 outsourcing, 62, 117, 216 Panchayati Raj Institutions (PRIs), role, in education, 41, 226, 237, 257; in health, 194, 215–17 parent-teacher associations, 47 Parivartan, 46, 54, 288 patronage democracy, 365 Paul, Samuel, 165 penalty system, 30, 36–37 performance monitoring system, 136–37 Periyar, See Ramaswamy, E.V. Planning Commission, 66, 186 policy-makers (politicians) and service providers, 157, 363–64 policy reforms, 225

political, politics, 20–21, 24, 38, 49, 51, 89, 150, 152; access and signaling, 25; commitment and support, 25, 41–44, 152, 157, 183;—for E-Seva, 109, 123; competition, 319–20, 365; economy, 51, 68, 89; governance and society, 319–24; leadership, role in service delivery, 22–23; multiparty system, 21, 365–66 political finance reforms, 366–70; effectiveness, 370–71; in India up to 1998, 371–74;—developments in 1999 and after, 374–78; policy lessons and options for India, 380–83; recent proposals, 378–80; and rent seeking in administration and service delivery, 21–22 Political Funds Regulation law (1975), 370 political will, 77, 79; crises and private participation, 66–73; and the telecom modernization, 63–66 politicians (policy-makers), 243, 254, 364; and administrators, nexus, 356; and the civil service, patterns of interactions, 24; corruption, 333 Posts and Telegraphs Ministry (MPT), 63 poverty reduction and human development, relation, 296 Prabhat Khabar, 47 pracheta, 236, 249 Praja, 36 Pratham, 234 Prevention of Black-Marketing and Maintenance of Essential Commodities Act (1980), 282 Prevention of Corruption Act, 341, 348 Prime Minister’s Office (PMO), 22–23, 26, 48, 49, 51, 62, 67, 72, 74, 76–79, 86–89, 90; political will, 63–66 Private Automatic Branch Exchange (EPABX), 64 private sector, 59, 363; banks, 106; corruption, 338; in E-Seva, 99, 112–14, 117; funding for elections, 380–82, 384; in health services, 198, 207, 209;

Index media, 126; in registration reforms, 36, 133, 135–36, 139–40, 146–48, 151, 153; investment in telecom sector, 26, 47, 53, 61–66, 68, 74, 76, 78, 82, 87, 89–90; wages, 18; See also publicprivate partnership privatization, 75, 79 process re-engineering, 36 procurement reforms, 356 program monitoring, 44 PROOF campaign, 173 property rights, 58 property tax computerization, 47 public administration, 21, 321–23, 358 Public Affairs Center (PAC), 31, 34, 35, 37, 43, 47, 54, 166–67, 171, 173–74, 178–80, 267–68, 270, 277 public and policy-makers (politicians), 363 public and service providers, 363 public apathy, 38 public awareness, 358–60 Public Distribution System (PDS), 266– 67, 335; biggest distribution network in the world, 266; joint responsibility of center and state, 266–67; need for political consensus, 290, 292; Revamped Public Distribution System (RPDS), 284; status in other states, 285–86, 287; in Tamil Nadu, 267–85, 287–91; Targeted Public Distribution System (TPDS), 278, 284, 286 Public Grievances Commission (PGC), 47, 52 public health care, 43 public hearings, use, 45, 54 public interest litigation (PIL), 45, 46, 168 public and private partnership (PPP), 28, 29, 86, 96, 104–06, 110, 120–22, 359; for E-Seva, 115–18; in health, 192; registration services, 132, 134; in service delivery reforms in Bangalore, 172, 174 public sector: corruption, 335, 338; funding for elections, 21, 367–71, 382–83; reforms in India, impli-

401

cation, of Maharashtra registration reforms case, 125, 152–54; service delivery accountability, 142–43; wages, 18 Punjab: family planning, 317; human development index (HDI), 295 QUALCOMM, 80 Raichur, Karnataka: female literacy, 307, 308; fertility, 318 Rajasthan, 45, 46; Block Management Committee, 240; civic mobilization, 48; corruption, 343; District Primary Education Program (DPEP), 246, 247, 250, 251, 252, 253; economy, 245; education/education reforms, See separate entry; health care, 215; land reforms, 242; Jagirdari Abolition and Resumption Bill (1952), 242; Lok Ayukta, 340; Lok Jumbish Program (LJP), 40, 52, 235, 239–40, 243, 245, 246, 247, 249, 250–53, 257; Mazdoor Kisan Shakti Sangathan (MKSS), 40, 46, 54, 235, 238–39, 243, 244, 257; Medical Relief Societies, 211, 215, 216, 217; Panchayati Raj Act, 239; Public Distribution System (PDS), 267; Public Service Commission, 254; Right to Food Campaign, 239; Right to Information Bill (2000), 239; Shiksha Karmi Project, 39–40, 51, 235, 237–38, 240–43, 245–47, 249–55, 257; State Domestic Product (SDP), 245; Village Education Committees (VECs), 239, 249; Women’s Development Programme (WDP), 40, 235–37, 240, 245, 249, 250, 252, 253, 257; Zilla Parishads, 254, 257 Rajasthan, education/education reforms, 39–41, 53, 226–35; achievements in 1980s and 1990s, 227–34; dropout rates, 40, 255; Education Code, 255; expenditure, 40, 245, 252; financing and donor support, 244– 46; gender disparity, 233, 235; girls education/enrollment, 40, 229, 233, 235, 237, 240; Gross Enrollment

402 Reinventing Public Service Delivery in India Ratios (GERs), 228–29; literacy, 227– 33;—female literacy, 39, 227;— Scheduled Castes and Scheduled Tribes (SCs & STs), 228; negotiated vision, 243–44; para-teachers, 237– 38, 246, 253; primary schools, 237, 239; public initiatives, 235–40;— decline of, 1980s and 1990s, 249–53, 258; public per-ception, 233; Selected Educational Statistics (SES), 228–29; school drop-out rates, 229, 232, 233;—role of social capital, 248– 49, 252–53; lack of state policy, 251; state funding, 245; problem of sustainability, 249–57; teacher absenteeism, 255; current challenges in teacher man-agement, 253–55;— monitoring and evaluation, 255–57; redefining vision, 251–52 Rajiv Gandhi Mission, 195 Rajiv Gandhi Mission on Health, 207, 211 Rajiv Gandhi Shiksha Mission (RGSM), 24, 37, 50 Ramachandran, M.G. (MGR), 42–43, 305, 320, 322, 324 Ramaswamy, E.V. (Periyar), 42, 49 Ramesh, Jairam, 63 Rao, P.V. Narasimha, 66, 67, 87 rationality, 333 reform process, reforms, reformers, 31; to prevent corruption, 352–54, 360; restructuring, 195; simplification, 21; strategy and tactics, 49–51 regime ideology, 243, 244 Reliance, 61, 81, 83; Reliance Infocomm, 85 rent-seeking, 24, 41, 48–49, 57, 69, 78, 89, 366 Representation of People’s Act (RPA), 1951, 55n2, 371–73, 375, 379 resource mobilization/utilization by agencies, 180, 182, 216 responsiveness, 142–43, 146, 160, 365 reward and penalty system, 30, 36–37, 135–37 right to information, 358–60 roaming PCO, 83

Roy, Aruna, 243–44, 249, 252 Roy, Bunker, 242 Rural Automatic Exchange Switches (RAX), 64 Rural Service Delivery Points (RSDPs), 113 rural-urban divide, 80, 82, 86 ryotwari system, 43 Sagar hub centers, 50 Sahbhagini Nagar Vikas Yojana, 216 Santhanam Committee on Prevention of (1964), 371 Sarin Committee (1981), 63 Sarva Shiksha Abhiyan (SSA), 246, 250, 251, 261n19 sathin, 236, 249, 250, 252 Satyanarayana, J., 123n10 school mapping exercise, 240 scientific waste management, 198 Selected Educational Statistics (SES), Ministry of Human Resources Development (MHRD), 228–29 self-assessment system for property taxation, 183 self-help groups (SHGs), 250, 268 Self-Respect movement, 42 service delivery: and electoral funding reform, 363–66, 383–84; systematic problems, 18–22 service providers, 363, 364 Service-Level Agreement (SLA), 121–22 Seva Mandir, 242 Shiksha Karmi Project (SKP), See Rajasthan Shiksha Karmi Project short distance changing area (SDCA), 80–81 Shyam Telelink, 80 silos, 37 Singapore model, 22 single window system, 107 social capital, 248–49 social safety net, 23 Social Welfare Research Center (SWRC), 40 Social Work and Research Center (SWRC), Tilonia, Rajasthan, 242 Societies Registration Act, 215, 246

Index software technology parks, 66 solid waste management, 46 Sri Lanka, 297; public expenditure on health, 311 staff behavior, 140, 148, 163, 164 stakeholders’ consultation, 128, 129, 152–53 Standing Committee on Food, Consumer Affairs, and Public Distribution (2004–05), 266 State Agricultural Produce Marketing Acts, 290 state funding for elections, 22 State Vigilance Commission, 20 Steel Authority of India Limited (SAIL), 66 Sterling Cellular, 72 Supreme Court of India, 342, 344 Surat: Municipal Corporation (SMC), 35, 36–37; plague, 193; role of media, 47; Municipal Corporation, 50, 51; population growth, 52; sanitation reforms, 50, 53 sustainability, 51–53, 111 Swabhimana (self-respect), 167 Swajal project, See Uttaranchal: Swajal project Swasth Jeevan Guarantee Yojana, 207 Swedish International Development Agency (SIDA), 244–46, 252 system monitoring, 253, 287 System Requirement Study, 127 Tamil Nadu: administrative system, 43, 44; civil service, 43; child labour, 306–07, 327; Dravidian parties/ideology, 23, 41, 51, 53, 324; education, 297, 298–308, 325–27;—enrollment ratios, 306;—expenditure, 42, 299, 303–04;—failures, 306–07, 326;— female literacy, 299, 307;—literacy, 295, 298–99, 301, 307, 325;—school incentives, 305;—school dropouts, 327;—schooling participation, 300– 304; health sector/health care, 42, 44, 297, 308–19, 321, 327;—crude death rate (CDR), 316;—food and nutrition intervention, 318–19;—

403

infant mortality rate, 308;—life expectancy at birth, 295, 308;— mortality decline, fertility decline and family planning programme, 303, 316–18, 322, 323, 325, 326;— public expenditure, 312–13, 315;— services utilization, 315–16, 325;— total fertility rate (TFR), 317; human development index (HDI), 41, 42, 294–97; income and poverty, 310– 11; multi-sector interventions, 324– 25, 328; Noon-Meal Scheme (NMS), 318, 322, 325; per capita income, 295; politics, governance and society, 319–24; political leadership and ideology, 326–27;—public welfare administration, 321–23;— status of women, 323–24, 326; poverty de-cline, 296–97, 310–11; procurement reforms, 356; Public Distribution System (PDS), 43, 267– 92;—bogus cards, 280–81;—cost, 277–83;—fair price shops (FPSs), 268–69, 272–73, 281–82;—food policy, 271;—food subsidy, 43;— Guest Control Order, 271;— inspection regime, 274–75;— diversion to open market, 280;— per capita allotment of food, 268;— political commitment/politics, 270– 77, 288;—reforms, 283–89;— restructuring, 289–90; quality of service delivery, 325–26; Right to Information Bill (1997), 276; ruralurban differentials, 326; sustainability of reforms, 51–52; Tamil Nadu Civil Supplies Corporation, 274–76, 282, 283, 287; Tamil Nadu Integrated Nutrition Project (TINP), 318; Tamil Nadu Medical Services Corporation (TNMSC), 44, 321; Tamil Nadu Warehousing Corporation, 287 Tatas, 76; Tata Economic Consultancy Services (TECS), 280; Tata Teleservices, 83 taxation, 374–75 teacher absenteeism, 41, 233, 234, 255

404 Reinventing Public Service Delivery in India teacher management, 253–55 technology, 22, 26, 48, 61–62, 120, 122; interests and policy ideas favoring competition, 62–63; and improvements in service delivery, 175 Telecom Board, 63 Telecom Commission, 64, 65 Telecom Department (DoT), 23, 26, 48– 49, 51, 57–59, 60, 62, 64–74, 76–80, 86; monopoly, 58–59; overstaffed, 58; predatory policies, 88; unilateralism, 72 Telecom Dispute Settlement Appellate Tribunal (TDSAT), 79, 81, 87 Telecom Policy, 1994, 26 Telecom Regulatory Authority Of India (TRAI), 26, 49, 58–59, 61, 69, 71–73, 77–80; Act, 1997, 73, 77; 1999, 88; 2000, 74–80, 87 Telecom Restructuring Committee (TRC), 26, 65, 68, 86–87 telecom sector, 48; bidding process, 69, 71; demonopolization, 49, 50, 61–62, 65–66, 76; problem of institution pre-conditions for private investment, 61–66; regulating conflicts of interest, 80–81; reforms, 22, 68; struggle for regulatory powers, 70–80 Telecommunications Research Centre, 64 telecommunications, 62, 67, 82; modernisation, 26 teledensity, 61, 81, 82, 86, 355; rural, 61, 82; urban, 82 telephone help-line, 137 Texas Instruments, 66 transactions, simplification, 25, 27–29 transparency, 19, 22, 48, 150, 164, 216, 276–77, 344, 351, 359, 370, 381 Transparency International, 333, 334–35; Corruption Perception Index (CPI), 20 transplanting lessons, 53–54 Twin Cities Network Services Project (TWINS), 96 UNICEF, 245 Union of India vs. TRAI case, 73

Union Public Service Commission (UPSC), 73, 348 United Front, 26, 373 United Kingdom, 71; election expenditure, 368, 372; Oftel, 62 United States of America, 71; Federal Election Campaign Act (1971, 1974), 368; Federal Election Commission, 369; funding of elections, 368, 369– 70, 371, 384; telecom equipment market, 62 Universal Service Obligation (USO), 61, 78, 83, 88 user fees, 47, 204, 212 user satisfaction, 160–62, 267 Uttar Pradesh: health, 187; literacy, 227; public action for education, 225; Public Distribution System (PDS), 267, 286; teacher absenteeism, 234 Uttaranchal: Chikitsa Prabandhan Committee, 215; Swajal project, 54 Vajpayee, Atal Bihari, 48, 66, 67, 87 value-added services, 68, 89 Vanasthalipuram, 107 Venkatsubramanian, A.K., 42 Videsh Sanchar Nigam Limited (VSNL), 61, 64, 66, 76–79, 85–86, 90 Vidya Bhavan school, 241–42 Vigilance Commissioners system/Vigilance Departments, 340, 345, 348 village public telephones (VPTs), 83, 85 Vittal, N., 66, 67, 68, 77 Wanchoo Direct Taxes Enquiry Committee (1971), 371 welfarist ideology, 23, 52, 53 West Bengal: expenditure on elementary education, 18 wireless-in-local loop (WLL), 61, 80–81, 83, 88 Women’s Development Programme (WDP), See Rajasthan, Women’s Development Programme World Trade Organization (WTO), 63, 73, 76; Dispute Settlement Panel, 73 zamindars, 43