Getting governance right

Business Standard, 1 December 2003

Government can sometimes be the theatre of the absurd. A branch of the Delhi government, the Department of Prohibition, does its best to preach the ills of drinking. Indeed, the Department of Prohibition is so enthusiastic about its work that it spends Rs 1.6 crore a year on publicity against liquor in Delhi alone. Interestingly, all this was done even while their own survey of 293 people who drink found that 292 knew the hazards of drinking.

At the same time, the Delhi State Industrial Development Corporation runs 83 liquor retail outlets to sell Indian made foreign liquor and country liquor. So we have one arm of the Delhi government digging holes and another that is filling them up. This corporation seeks to ensure the availability of genuine liquor to the customers at approved rates. They are going strong at it, and plan to open more outlets.

Another similar agency, the Delhi Tourism and Transportation Development Corporation runs another 38 retail outlets for country liquor and 93 outlets for Indian made foreign liquor. More than half the staff of the corporation works in these outlets - which gives us a sense of how important selling liquor is, in the problems of tourism and transportation.

Each of these corporations has large sales, and they generate profits from the liquor business. Through their efforts, the Delhi government can today proudly say that it has effectively provided adequate good quality liquor at reasonable prices to the people of Delhi.

However, it cannot say the same thing about the provision of water. The Delhi Jal Board is unable to provide water to 25 per cent of Delhi's population. The supply of water in most colonies is available for far fewer hours than is the supply of liquor. The total cost borne by Delhi households on account of strategies devised to compensate for water shortages such as pumps, tankers, storage etc. is estimated to be 6.5 times higher than what they pay DJB. The full cost will be even higher when we count the cost of all the Aquaguard filters that have been purchased.

These facts, and many more striking absurdities about the Delhi govenment, can be found in the State of Governance Delhi Citizen Handbook 2003 published recently by the Centre for Civil Society (CCS).

This book has gained much prominence in recent weeks. CCS deserves to be complimented for having created such an interesting product, at a remarkably low cost in terms of resource inputs. Myriad other think tanks in Delhi should take a hard look at this book, for it can give them ideas for the role that they can play in improving governance in the country.

At the same time, the book falls short of a full view of the status of public goods outcomes in Delhi, what the Delhi government should be doing and what areas it should get out of.

The field of public economics emphasises the need to refocus the State on the provision of public goods. Activities such as the sale of liquor might have begun at a time when spurious liquor was creating negative externalities. Today, there is a need to close down these activities, which would free up resources which can be devoted to providing public goods.

This is a crying need because Delhi is desperately lacking in elementary public goods. In some cases, like selling liquor, there is no role for the government, and the Delhi government should just get out of these functions. In other cases, as in DJB, the failure of the government is arising because of its attempt to produce, rather than to procure and provide, certain services. Its true role lies not in production of these goods, but in provision, or in ensuring provision.

When government goes into business, we get perverse outcomes where businesses go into governance. Citizens of Delhi are turning to private security companies for providing law and order. The provision of drinking water is an obvious failure. Not only is the supply inadequate, the quality of the water is bad. The market for bottled water indicates the willingness of people to pay for clean water. The government has a long way to go before it can ensure 24 hour supply of clean drinking water.

Primary education is in no better shape, even though more than half the employees of the Delhi government work in the Directorate of Education. The Delhi government runs 1,011 schools and the Municipal Corporation of Delhi runs another 1,826 schools. Even though the MCD spent over Rs 400 crores over 1997--2002, the quality of the education is astonishingly poor. One study found that more than 80 per cent of the children who pass class V from MCD schools do not know how to read or write their names.

A 2002 report observed "Directorate of Education is ill equippled to handle the management of government schools... Right from the Director of Education to the Education Officers, all remain busy through out the year either for administrative work or litigation work and they can hardly spare enough time to look after the academic work...Those who join the Education Department start pursuing for their transfers to more lucrative departments and are not interested in working in the schools."

Even if the existing schools are improved, it is estimated that there are over 5 lakh children living in the 1,200 slums of Delhi. These children do not have access to education. It would need over 1,000 new schools to be set up to provide them education. Their existence calls for a complete overhaul of the way in which Delhi's Department of Education functions.

One key department of the Delhi government, which can produce genuine public goods, is the Department for the Prevention of Food Adulteration. It is pitifully understaffed. If one inspector were to visit one establishment per day, then all establishments would be covered in 17 years. The headcount of inspectors has stayed unchanged at 37 since 1960.

Instead of devoting resources to such public goods, the Delhi government fritters them on agencies like the Delhi Energy Development Authority. This agency is engaged in giving out solar water heating systems to the residences of ministers and senior government officials. It has distributed solar lanterns to members of parliament, ministers and government officials. It has made made huge losses on battery run bus services. Even after reports of gross mismanagement and irregularites, the agency has yet to be closed down.

After the dust settles from these elections, the Delhi government needs to take a good hard look at what it does. Certain functions are about public goods, and belong, and others need to given up. For each of the surviving areas, there is a need to find innovative institutional mechanisms to foster the provision of public goods.

The author is at NCAER. These are her personal views.

Ila Patnaik

Ila Patnaik