The flip side of privatisation

The headquarters of WorldCom in Clinton, Mississippi, in the United States. - REUTERS

Recent experiences prove that privatisation is not always the panacea for the ills of the public service system and that public institutions do not always mean inefficiency.

MOST of us have, at some time or the other, heard it said, or said ourselves, that such and such public service is corrupt and inefficient and, if the government had any sense at all, it would have got the service privatised. It has been said about the railways, municipal services, medical institutions, and many public sector undertakings. The assumptions behind this are that the services run by public agencies are not just inefficient but rank with corruption, and if they were handed over to the private sector they would be made efficient and clean in a relatively short time. In other words, private sector management and control is generally seen to be synonymous with order, efficiency and honesty.

To a large extent, the images of the two make people take to these assumptions easily. The image of the private sector is of a smart young man in a dark suit - or a smart young woman impeccably dressed - who is bright, helpful and friendly. The image of the publicly run service is of a man - or a woman - dressed in a crumpled bush shirt or shabby salwar kameez, who is sullen, morose and not infrequently rude. The one gets down to work right away, and if he or she confers with colleagues it is in low, soft tones, even whispers; the other spends a great deal of time talking loudly with colleagues, often laughing uproariously at some remark or the other, engaging in what they consider witty repartee, while the public wait in exasperation to get their work done.

And we have to admit that very often the images correspond to what actually happens in the workplace. A visit to the check-in counters of Jet Airways or Air Sahara, and another to Indian Airlines, will make this fairly clear. True, Indian Airlines has improved its working to an extent, but only to an extent. There still are many of their employees who do their work sullenly, with no trace of any warmth or interest in the traveller - to them it is a question of getting their allotted work done. The story is the same in the banks - again, in foreign banks there is basic attitudinal difference; the employees there want to help, and are friendly, and quick. In public sector banks, the staff spend a great deal of time gossiping with one another, walking across to do so, leaving counters unmanned, and thanks to the very strong, often aggressive, unions, supervisors rarely interfere or reprimand staff for this kind of behaviour. Not that this is true of all public sector banks everywhere; far from it. There are staff in some who are helpful and efficient, but it is the general attitude one is talking about.

And then we have those monuments to inefficiency, insolence and rank, brazen corruption - the municipal corporations and the police. After visiting a police station it is not uncommon for one to want to take a bath, and the feeling is the same after spending a few hours in a corporation office, something many unfortunately have to do. All this is true; it is true that every so often, senior and middle level officials in government organisations like the police and customs and excise departments are arrested and hauled off to jail for dishonesty. It is equally true that even so, the inefficiency and dishonesty among the lower level staff continue as they have always done. Not very long ago, a Special Commissioner of the Delhi Police was arrested for possessing assets disproportionate to his known sources of income - but that has not stopped the local traffic constable from collecting his hafta from truck drivers.

Now, while we know all this, and are rightly indignant about the widespread corruption and inefficiency in such offices and departments, we do not often look at the other side of the clean, bright image of the private sector. A few days ago, a major journal ran a cover story on the manner in which the Indian unit of a multinational company has been systematically defrauding its bankers and financiers. Around the world we have examples of the most powerful corporate tycoons doing all this and worse; the former CEO of Enron is reported to have defrauded his company in connivance with another reputed international firm. Recently the CEO of Worldcom, another U.S. giant, has surrendered before a court, having been on the run for some time to avoid arrest on similar charges. Here in India we have the example of the CEO of Flex Shoes being similarly apprehended on the charges of fraud and cheating. And there have been other corporates at various levels who have fixed account books, and made large amounts for themselves at the expense of their companies, that is, of the shareholders of their companies.

And as far as efficiency is concerned, the residents of Delhi will tell you that the handing over of the distribution of power to private companies has not, to put it mildly, ushered in an era of happiness for them. For a while, the private companies could, and did, take refuge behind the excuse that what they had inherited was a shaky, old and worn-out system on the verge of collapse, but now it has been more than two years and still the outages, breakdowns and blackouts continue, promising a very uncomfortable summer indeed. Add to that the one area in which they have been very quick and efficient - raising the rates and inflating bills. It has reached such a stage that the statutory power authorities have had to step in and ask the private companies to explain why there are so many complaints of inflated bills.

AND, to set this off, we have the publicly funded and managed Delhi Metro, headed by E. Sreedharan, a senior railway officer. The Metro has become a byword for efficiency, for work being done strictly on schedule, and for a clean image - perhaps the only agency about which the public have no bitterness when negotiating the traffic snarls that have been caused by the construction of the Metro lines in such congested places as Connaught Place and Barakhamba Road. Everyone forgives the Metro, because it has the image of an agency that works, and works cleanly.

So let us pause before we demand privatisation as a panacea for all the ills we are faced with in public life. It does not always work in the way we have been led to believe. In Britain today, the government is actively considering taking back the railways from private operators, who have succeeded in virtually running the system into the ground. Privatisation of work and services the government has no business to have taken on in the first place - like hotels - and the offloading of companies and undertakings it clearly does not have the ability to run is one thing; and from that point of view can be something that has to be accepted as a means of reducing government expenditure. But to do so on the grounds that privatisation will automatically mean efficiency and clean management is an ill-conceived and entirely fanciful proposition.

The trouble is that the issue has become politicised, and that inevitably means that it becomes extremely difficult to see it on its own. Additionally, it means that irrespective of any benefits or problems that may ensue once privatisation has been taken up for a service or organisation, the results will be interpreted by different groups to suit their political ends, and the true result will not emerge, if indeed it ever does. All that can be done is to build and sustain pressure on the government to get out of activities with which it ought not to be involved, and concentrate on those with which it should, like education, health, the supply of drinking water and other essential services. Only then will a perspective emerge, hopefully.