Paradigm Shift from Government to Governance: Introduction
The rise in the popularity of the term governance is closely linked with the redefinition of the state’s role. In the post-World War II period, the state was seen as an engine of growth, but with the failures in development performance, it began to be blamed for all that had gone wrong. Ineffective development policies, poor implementation of these policies, and inefficient and incompetent absorption of international aid triggered the search for alternative frameworks for policymaking and institutions for delivering public services.
As the evidence of the ineffectiveness of public administration as an instrument of development mounted, the development strategy also began to emphasise freeing the market and liberalizing economic policies. Governance began to be closely linked with such policies of economic reforms, and the goal of public administration and that of the state began to be seen as one that supported the liberalization of the economy.
The introduction of economic reforms and acceptance of a neo-liberal ideology as a strategy of development in 1991 brought with it the impetus to transform government into what came to be known as governance. This move towards governance has changed India’s entire context of public administration. It demands loosening the earlier view in which public administration was seen as a major instrument of delivering goods and services to the people. In this lesson, we intend to explore how governance within this neo-liberal framework impacts public administration in India and the kinds of tensions it has created between the demands of the new styles of government functioning and older traditional ways of doing work.
Governance: Content and Meaning
Governance is understood in many ways, but there is a baseline agreement that governance refers to developing governing styles in which boundaries between and within the public and private sectors have blurred. What previously was indisputably government roles are now increasingly seen as more common generic societal problems which political institutions and other actors can resolve. The main point is that political institutions no longer monopolise governance orchestration. The concept of governance indicates a shift away from well-established notions of how the government sought to resolve social issues through a top-down approach. The emphasis is on the reduced role of the state and the acknowledgement that it is no longer the only actor that steers society.
Network relationships of three actors – state, market and civil society became the core thrust of the idea of governance. Governance in its avatar during the neo-liberal era is seen as an interactive process where the government frames policies in collaboration with other non-state actors. There is a network of relationships; no one actor can easily dominate; it will depend on a particular exchange process. The monopoly of political institutions in providing services is diluted; the private sector and institutions of civil society fill in the space previously occupied by these institutions. New forms of institutions emerge, which find expression in blurring boundaries between the public and private sectors. A range of participative agencies that respond to collective concerns arise.
The focus is on the production of public policy and the contribution of public and private actors to it. As pointed out, ‘policy networks are sets of formal institutional and informal linkages between governmental and other actors structured around shared if endlessly negotiated beliefs and interests in public policy making and implementation. These actors are interdependent and policy emerges from the interactions between them.’
At the formal level, policy networks have emerged as public institutions where government, business and civil society interact. These interactions lead to policy outputs. In operational terms, governments have instituted advisory bodies and various kinds of Councils where representatives of government and two other actors – business and civil society are members. Such policy networks differ from lobby groups, whose role is influencing the government to get outputs in their favour.
At the informal level, governance means opening up government activities to non-government actors. It is no longer a preserve of hierarchical decision-making, which is often secretive and closed. The three actors, state, market and civil society, interact more frequently in the public domain and attempt to formulate public policies together. This is distinct from an understanding of lobby groups who tend to influence the government to frame/bend policy in their favour. It is a fundamental change towards a more open government that is willing to listen and become one participant among the three in policy making.
Apart from policy networks, there can be operational networks too. These networks are implementation tools delivering public goods and services that one single actor cannot do. Increasingly, the government has adopted the mode of seeking cooperation from one or the other actors in implementing public interest programmes. Such cooperation has taken the form of what has come to be popularly known as public-private partnership. This type of partnership is widely being promoted as a strategy of governance in delivering goods and services in many sectors.
The governance agenda then underlines curbing the state’s role and expanding the space for market and competition. Competition is accepted as a powerful tool and essential dimension of economic, political and social life. In extolling the virtues of the market and competition and laying stress on the past failures of the state, the governance agenda virtually condemns the state for having suppressed the energies of society. Because the state is an alien oppressor, the curtailment of state activities becomes a people-friendly, democratic venture, almost to the extent that state contraction or dissatisfaction is presented as synonymous with democratisation.
Its emphasis on civil society and its institutions has to be seen in this perspective of strengthening democracy and in constructing an informal sector that can harness people’s entrepreneurship through community institutions and interpersonal relationships. In the good governance discourse, democracy emerges as the necessary political framework for successful economic development, and within this discourse, democracy and economic liberalism are conceptually linked: bad governance equals state intervention; good governance equals democracy and economic liberalism.
In this agenda of good governance, the conceptualisation of civil society proceeds on the assumption that power and exploitation are associated with the state, while freedom and liberty fall in the realm of civil society. This leads to a kind of romantic view of civil society where the existence of institutions outside the state becomes a sufficient basis for assuming that state power is curbed and greater democratisation is taking place. In this perspective, the concept of civil society carries with it a notion of something worthy and of value. It is considered good in itself, and its creation is a worthy goal to be pursued.
Those promoting the ideology of liberalization helped the international donors and governments of the Third World shape an uncritical view of civil society and persuaded them to believe that it can be created through their aid and support policies. The view that ‘civil society could do no wrong and there was nothing it could not do’ was widely accepted among donor agencies. Non-governmental organizations sprang up like mushrooms, offering to strengthen civil society and as civil organizations in their own right. In many cases, they claimed to speak on behalf of civil society at large. In the development field, the role of NGOs was strengthened through donor aid and policies.
Governance as a concept thus began to encompass a wide array of issues relating to the restructuring of state-market-society relationships. What all this has meant is that the governance reforms agenda is very wide and complex. It ranges from reforming the entire gamut of state machinery to improve the delivery of goods and services, strengthening civil society to become an effective partner in socio-economic endeavours, and strengthening market mechanisms for greater efficiency. Existing institutions needed to be improved, and new institutions needed to be created where none existed. This is a daunting challenge, a challenge that India is facing with uneven success.
Partnership as Strategy of Good Governance
Across the world, partnership among the three actors – state, market and civil society is promoted as a good governance strategy. The partnerships promise to avoid duplication of efforts and are seen to draw on their complementary resources and capabilities to design more effective problem-solving mechanisms. They promise to increase the responsiveness of policies and create accountability by including other actors- market and civil society- in decision-making processes. They are also presumed to improve compliance with and implementation of political decisions.
In addition, the partnerships provide opportunities for the partners to learn from each other. It is widely believed that networks play a significant role in the processes promoting social and economic development. has argued that shared understandings are vital for the better functioning of economic decision-making. Shared understandings help overcome bureaucratic resistance and allow the state not to fall prey to social and political interests. Industrialists increase their ability to get necessary infrastructure and collective goods for future growth.
However, this optimism is not shared by many. Critics point out that these partnerships can be a strategy of the state to evade responsibility. Others point out that new institutions that lack democratic accountability can be created. Bureaucracy is responsible to the people’s representatives, and networks risk weakening traditional accountability mechanisms by shifting policy decisions to the realm of partnerships that can circumvent parliamentary control. A fear is also expressed that the corporate sector can use partnerships to embellish its own power and resources.
Despite these concerns, optimism about partnerships prevails, and a complex web of networks that has a far-reaching impact on the nature of the state and the functioning of democracy is emerging worldwide. The notion of governance is transforming the organisation of the state and its relationships with private sector and civil society actors. A considerable amount of scholarly attention is now being devoted to analyzing and debating this transformation of state and democracy. Attention is being directed towards improving understanding of the wider public policy system in which the institutions of government appear to be involved in processes of negotiation, bargaining and compromise with a host of other actors.
The strategy of pursuing public-private partnership as a strategy of development has led to establishing new kinds of institutions that are not necessarily and not always part of the government hierarchy The fundamental concern here is that, with the formation of new institutions of policy-making and delivery of services and goods, how do the various actors with divergent orientations work together to achieve the goals of efficiency and equity. What is the impact of these new institutions on the functioning of democracy and the state? The issue of accountability is at the forefront of all academic and people’s concerns. To whom are these partnerships accountable, and how? Who finds representation in these partnerships? Is the functioning of these partnerships transparent?
Indian Experience of Governance
Policy Networks: Partnership with Private Sector
India’s government adopted the new governance style enthusiastically as it began to prioritize the goal of raising the economic growth rate. In meeting this goal, the government saw its most important role in providing infrastructure, power, transport, roads, etc. However, these sectors demanded heavy investment, and the focus turned towards the corporate sector for financial and technological resources.
The 11th Five-Year Plan emphasised the strategy of public-private partnerships for finding these resources. In a speech, the Prime Minister reiterated that a synergy between public support and private initiative could help multiply the productivity of resource mobilization. The government sought an alliance with the corporate sector to pursue this goal. Broad linkages between the government and the private sector began to be established by forging new institutions of consultation and advice. The Prime Minister headed a Council of Trade and Industry that had leading industrialists on board. Other economic ministries followed, and channels were opened up formally for advice.
At the formal level, business organizations like FICCI and CII were represented in government advisory bodies, and these organizations reached out to policymakers to explain their demands. Liberal-minded prime ministers sought support for their policies from these organizations. In 2004, the Finance Minister requested ‘the CII and FICCI to address some of our friends in the Left parties and convince them to increase the FDI cap’. In 2009, the finance minister, addressing a convention, exhorted CII to play a stellar role in making the Indian growth story a continuing one.
Other ministries, particularly those of Human Resource Development and Health, followed the economic ministries and established consultative bodies incorporating the corporate sector. Thus, at the policy level, the signal was clear. The role of the government had transformed itself; it was no longer to control the private sector to see that it works for the public interest. It was now to work with the private sector in public interest.
Policy Networks: Partnership with Civil Society
In the shift of government to governance, the role of civil society has been very significant. There have been two kinds of strands in this role. One has been that of social movements that have taken the cause of the poor and the marginalized and made the government responsive to their needs through changes in institutions, laws, and procedures. The other has been the rise of what has come to be known as Non-Governmental Organizations that have taken upon themselves multifarious roles that include implementing governmental programmes as laid down in law. Social movements and Non-Governmental Organizations (NGOs) have carved out new spaces in the political processes and in delivering public services.
While social movements have momentum of their own, NGOs have become partners in new policy networks. A National Advisory Council has been established under the chairpersonship of the President of the Congress party. This Council has civil society representatives and acts as a voice to influence government policy. It has specifically directed its attention to the social sector and has been influential in framing several policies in the arena. The Council is not a constitutional body but wields influence because it is headed by the President of the party in power.
The creation of such an institution is in keeping with the exhortation of The Eighth Five-Year Plan (1992-97) of re-examining and re-orienting the role of government by laying considerable stress on strengthening people’s participatory institutions. It made a strong plea for a greater role in the private sector. It must be recalled that this Plan came at a time when economic reforms were being instituted, and a new governance style was being called for. Three Five Year Plans later, the Approach Paper to the Eleventh Five Year Plan has explicitly recognized that ‘many civil society organizations have a proven track record of implementing programmes at the grass-roots level and they have shown impressive results in this area.’
In May 2007, the Planning Commission announced the National Policy for the Voluntary Sector. This Policy is an expression of ‘a commitment to encourage, enable and empower an independent, creative and effective voluntary sector, with diversity in form and function, so that it can contribute to the social, cultural and economic advancement of the people of India.’ This policy further ‘recognizes the important role that the voluntary sector has to play in various areas and affirms the growing need for collaboration with the voluntary sector by the Government, as well as by the private sector, at the local, provincial and national levels.
The Policy emphasizes the partnership of government with voluntary organizations and recognizes three instruments of partnerships: viz., (i) consultation, through a formal process of interaction at the Centre, State and District level; (ii) strategic collaboration to tackle complex interventions where sustained social mobilization is critical over the long term; and (iii) project funding through standard schemes.
A significant achievement of the role of civil society has been the passage of the Right to Information Act in 2005. This has the potential to change the nature of governance in the country.
Public-Private Partnership (PPP) as Implementation Mechanism
Flowing from policy networks, the concept of partnership is also being applied at the level of providing public goods and services, which was the responsibility of public administration alone earlier. PPPs broadly refer to long-term contractual partnerships between the public and private sector agencies, specifically targeted towards financing, designing, implementing and operating infrastructure facilities and services that were traditionally provided by the public sector.
A Concept Note on Public- Private Partnerships prepared by the Planning Commission (2004) also points out that three things generally distinguish PPP from direct provision of services by governments, namely (i) a partnership based on well-articulated ‘contract’, (ii) a long term relationship between the public and private sector (iii) flexibility and responsiveness in decision-making.
PPPs are embedded in the general idea they are the new implementing agencies replacing the ineffective and inefficient state and bureaucracy. The participation is being formalized in governance structures where the government and any of the other two actors in society can participate. These structures are not part of the government hierarchy and are being established as semi-independent institutions, though overseen by the government.
With all the caution about the power of the private sector to mould a PPP to its own interests, ambitious investment in PPP projects is planned in the 11th Plan and projected for the 12th Plan. In the infrastructure sector, the government relies on the partnership strategy for investment and technological resources. The investment in infrastructure is set to rise to Rs. 20,54,205 crores in the 11th Five-Year Plan period. During the 12th Plan, it is expected to be of the order Rs. 40,99,40 crores. (see GOI 2011) 136 projects had been approved by 2009. Several steps have been taken to facilitate the creation of agencies that can support this investment. The Prime Minister himself chairs the committee that looks after the implementation of PPP projects.
While most projects have not been evaluated, some infrastructure projects have come in for public scrutiny. The Joint House committee of Karnataka probing the construction of the Bengaluru International Airport has indicted several public functionaries and officials for faulty design and construction of the airport. The Committee on Public Undertakings of the Parliament has ‘flayed’ the National Highways Authority of India for irregularities in executing the traffic-intensive Delhi-Gurgaon highway, claiming that it made certain exceptions to the usual approach to projects to benefit the private concessionaire. (Indian Express, 17 December, 2009) For the first time, the Committee raised the question of how much should be the reasonable profit for the private investors which operate and collect tolls for periods extending to 20 years in such stretches. The private partner saw profit in light of the balance of risk and award and saw considerable risk in this case, thus pitching in a higher rate of profit. (Times of India, 9 October, 2009)
While the challenge that the policymakers face in the infrastructure sector is that of creating a more favourable ‘enabling state’ to attract greater private sector investment, the story of PPP projects in the social sector has an additional challenge. This is concerned with not only creating the physical infrastructure that can provide health and education services but also providing them equitably.
Public-private partnerships in the health and education sector appear to face problems that transport, roads or energy sectors in some ways do not face. These are in terms of reaching the poor and those who are deprived of these health and education services.
However, in health or education, some innovations are taking place. Among the 16 case studies of public-private partnerships undertaken by Venkatraman and Bjorkman (2007), eight are those of the public sector and NGOs. Their analysis suggests that the most successful partnerships have been with NGOs despite the fact many terms and conditions have not been as favourable to them as to the ‘for profit’ sector. Poor patients seem to have benefited from the partnership arrangements. The NGOs have also succeeded in taking over the management of hospitals in partnership with the government.
Another success story comes from Madhya Pradesh, where the government has encouraged the formation of Lok Kalyan Samitis, with representatives of civil society and hospital staff on board. They have been registered under the Madhya Pradesh 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 a contract basis and carry out other activities to improve hospital services.
Typically, the General Body consists of elected representatives, government officials, medical professionals, social workers and citizens. This kind of arrangement has had considerable influence on health reform. Institutions such as the Hospital Development Society in Kerala, the Medical Relief Society in Rajasthan, the Chikitsa Prabhandan Committee in Uttaranchal and Aspatal Kalyan Samiti appear to have roots in the experiment tried in Indore.
Similarly, in the field of education in rural areas, the government has recognized the role of voluntary agencies in provisioning school education and enriching its quality.
Conclusion
Network governance is assumed to contribute to the production of public purpose within a certain area. This public purpose expresses the social vision and the direction the policies should take to achieve this vision. But network governance is embedded in political and social processes at work in society, and they may not necessarily be conducive to producing public purpose on all occasions. Even the Prime Minister, speaking at a public function, has doubted the way we are going and has alerted the country to the growing symptoms of ‘crony capitalism’. The reason is that in the Indian context, it is possible for big businesses to influence decisions in their favour and get away with it. The data on the Indian economy is a testimony to this view.
This brings up the issue of the capacity of the state to negotiate and bargain in these networks. There is ample evidence to show that both political and bureaucratic leadership have not been too uncomfortable taking the personal advantages and benefits that liberalization policies have offered. Consequently, their capacity to negotiate is weakened. In addition, with the blurring of the boundaries of public and private interests, public servants may not feel the urge to pursue public interest alone. Thus, the partnerships are unequal and can allow certain private interests to dominate.
While it is accepted that governance seeks to dilute the monopoly of political institutions in resolving societal problems and actively seeks other actors to play this role jointly or independently, the need to coordinate many players’ roles remains. This coordination and coherence among a wide, disparate array of actors with different objectives and interests can only be brought about by the state and its institutions.
In this emerging web of institutions, it should not be believed that the state has been rolled back and become ineffective. It remains a pivotal institution. Without the state playing its role and having the capacity to do so, the network of institutions cannot perform the functions they have been set up for. The state is the source of laws, and democracy legitimizes them. Laws are meant to resolve conflicts and maintain harmony in society. Together with making laws, the state is the only agency that can enforce them, for it has the monopoly on the use of coercive power.
Thus, a democratic state is based on the rule of law, and the critical question is its capacity to do so. This capacity does not stem from coercion alone but from legitimacy. With its extensive participative institutions, governance will presumably be better positioned to provide legitimacy than state-centric governance. Participative institutions help the state enforce laws cleanly and transparently; this is what the move towards governance does.