[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...

MORE MARKETS, LESS GOVERNMENT
like immunisation, social forestry, reforestation
of hill sides or de-silting of waterways
etc. have a direct impact on the
livelihood and quality of life of the poor.
By generating pressure from the demand
side on the political system, marketisation
can help to produce more of
them and make a difference. We also
gain from the supply side. Since producers
are to make a profit at the end of the
day, every rupee of taxpayer drawn into
the work has to work efficiently. It may
appear puzzling that there should be
any scope for profit in these services. If
the government were to do the job it is
not expected to make a profit out of it.
Taxpayers would then just pay for the
cost. However that cost contains, as experience
tells, not only the technically
required cost but that of inappropriate
technical and political choices, of bureaucratic
delays, of coalition politics
and above all of general inefficiency. For
the same amount of money budgeted for
a project, the suggested system promises
to meet the stipulated quality and
complete it in time with a profit to spare
for the producers. In a sense the profit
is hidden in the present system. It is enjoyed
by bureaucrats and government
workers not in cash but in kind. It takes
the form of the luxury of slack work environment
and unaccountability. It is
this hidden profit that motivates private
firms as much as it motivates some government
workers to prefer jobs in these
areas. The latter take it in kind while
private business would convert it to cash
profit. But the winner would be the public
who would get more services, done in
time at lower cost. To get this going we
need to initiate a market-like environment
by announcing that these services
will be bought on the market. This will
spawn an industry producing these services
that will not only efficiently produce
better quality service but also generate
a demand side awareness to sustain the
industry. United States, North Europe
and Pacific countries like Japan, Australia
and New Zealand have made big
strides in the technology of environment
protection and nurturing in the last decade.
The business model generates ample
incentive for cost-cutting, improvement
of technology and research. A
switch to this model could help us to
make significant difference to the lives
of lower income people and also reduce
resource costs in the long run.