eotN.301I ni ReformingPublicServices inIndia India Report No. 35041-IN Report No. 35041-IN India Reforming Public Services in India Drawing Lessons from Success Public Disclosure Authorized Authorized Disclosure Disclosure Public Public

February 28, 2006

Poverty Reduction and Economic Management Sector Unit South Asia Public Disclosure Authorized Authorized Disclosure Disclosure Public Public Public Disclosure Authorized Authorized Disclosure Disclosure Public Public

Document of the World Bank Public Disclosure Authorized Authorized Disclosure Disclosure Public Public

HWSSB Hyderabad Water Supply and Sewerage Board VAO Village Accountant Officer IAS Indian Administrative Service VEC Village Education Committee IIM-A Indian Institute of Management, Ahmedabad VPT Village Public Telephones IIM-B Indian Institute of Management, Bangalore VSNL Videsh Sanchar Nigam Limited IS0 International Standards Organization WDP Women’s Development Program ITA Indian Telegraph Act WHO World Health Organization ITC India Tobacco Company WLL Wireless-in-local-loop JP Janpad Panchayat

The World Bank Vice President: Praful C. Patel, SARVP Country Director: Michael F. Carter, SACIN Sector Director: Sadiq Ahmed, SASPR Task Manager: Vikram K. Chand, SASPR

Acknowledgements

This report has been prepared by Vikram K. Chand. It has benefited from several technical papers commissioned directly for the study by Suresh Balakrishan (Making Service Delivery Reforms Work: The Bangalore Experience), Subhash Bhatnagar (E-Seva in Andhra Pradesh), Jonathan Caseley (Registration Services in Maharashtra and Karnataka), Prema Clarke and Jyotsna Jha (Education Reform in Rajasthan), Sangeeta Goyal (Comparing Human Development Outcomes in Tamil Nadu and Karnataka), Sumir La1 (The Politics of Service Delivery Reform), Rahul Mukherjee (Telecom Reform), R. Sadanandan and N. Shiv Kumar (Hospital Autonomy in Madhya Pradesh), E. Sridharan (Electoral Financing), A.K. Venkatsubramanian (The Political Economy of Public Distribution in Tamil Nadu), and N. Vitta1 (Anti-Corruption). In addition, this report has profited from papers commissioned for the Shanghai conference on “Scaling up Poverty Reduction,” SASHD for its work on “Attaining MDGs in India,” and the Water and Sanitation Program (WSP), New Delhi for its Voice and Client Power (VCP) studies initiative.

Pooja Churamani and Arindam Nandi provided research assistance for this report. Vidya Kamath provided administrative support. Helpful comments were provided by Shantayanan Devarajan, Chief Economist of the World Bank’s South Asia Region, as well as Shekhar Shah, Kapil Kapoor, and Stephen Howes of the World Bank. Peer reviewers for this report were M. Helen Sutch and Jose Edgardo Campos, both of the World Bank; Samuel Paul, Chairman, Public Affairs Center (PAC); and N.C. Saxena of the National Advisory Council.

Many individuals from several states, including officials, scholars, and activists spent time with the team sharing their views. Without their generous help, this study would not have been possible. We are particularly grateful to P. I.Suvrathan, Additional Secretary, Department of Administrative Reforms and Public Grievances, Government of India, and R. Gopalakrishnan, Joint Secretary in the Prime Minister’s Office for providing written comments on this report. We are also grateful to B.K. Chaturvedi, Cabinet Secretary, for hosting a seminar to discuss this report. In addition, we would like to thank the Planning Commission for organizing a presentation on this report to its members. The report has also been presented at seminars organized by the La1 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. The final report has benefited greatly from these discussions.

TABLE OF CONTENTS

EXECUTIVE SUMMARY ...... i Chapter One :Introduction ...... 1 Chapter Two : Promoting Competition ...... 7 India’s Telecom Revolution...... 7 Competition in Market Services to Farmers ...... 11

Chapter Three : Simplifying Transactions ...... 15 One-Stop Service Centers ...... 15 Andhra Pradesh’s E-Seva Model ...... 15 Kerala’s Friends Program ...... 18 IT For Farmers...... 20 Computerizationof Land Records in Karnataka ...... 20 Some Challenges in the Implementation of E-Governance...... 23 Gujarat’s Computerized Interstate Check-posts ...... 24 CARD in Andhra Pradesh...... 25

Chapter Four : RestructuringAgency Processes ...... 29 State-Wide Agencies ...... 29 The Registration Department in Maharashtra ...... 29 The Karnataka State Road and Transport Corporation ...... 32 City Agencies ...... 35 The Hyderabad Water Supply and Sewerage Board ...... 36 Bangalore : Making City Agencies Work ? ...... 38 Surat after the Plague. 1994-2005...... 43

Chapter Five : DecentralizingTeacher Management ...... 48 The Madhya Pradesh Experience ...... 48

Chapter Six : Building Political Support for Program Delivery ...... 57 Comparing Human Development Outcomes in Tamil Nadu vs . Karnataka. 197 1-2001.. 57

Chapter Seven : Strengthening Accountability Mechanisms ...... 64 Civil Service Reform : Transfers in Karnataka ...... 64 Unveiling Secrets : Access to Information in Rajasthan. Delhi and Karnataka ...... 67 Anti-Corruptions Institutions ...... 72 The Karnataka Lok Ayukta ...... 73 Strengthening the Central Vigilance Commission ...... 75 Public Interest Litigation ...... 77

Chapter Eight : Lessons for Improving Service Delivery ...... 80 The Enabling Environment...... 80 The Role of Political Leadership., ...... 80 Politicians and the Civil Service ...... 81 Instruments For Improving Service Delivery ...... 82 Promoting Competition...... 82 Simplifying Transactions ...... 82 Restructuring Agency Processes ...... 83 Decentralization ...... 84 Building Political Support for Program Delivery ...... 85 Strengthening Accountability Mechanisms...... 85 Cross-Cutting Issues ...... 87 The Role of Civil Society ...... 87 Corruption in Service Delivery...... 88 Strategy and Tactics of Reformers ...... 89 Sustaining Reforms ...... 91 Transplanting Lessons...... 92 Bibliography ...... 94

Boxes

Box I : Do Indian Voters Reward Performance? The Problem of Anti-Incumbency ...... Box 2 : Instruments and cases studied in this report ...... 6 Box 3 : Gujarat’s Smart-Card Driving License ...... 23 Box 4: Building Capacity for E-Governance: Andhra Pradesh’s Chief Information Officers (CIO) Program...... 27 Box 5: The Role of Ideas in Reform in Madhya Pradesh ...... 50 Box 6: Community Participation in Hospital Management: MPs Rogi Kalyan Samiti (RKS) Model ...... 51 Box 7: Rajasthan’s Experience in Reforming Primary Education in the 1980s and 1990s ...... 55 Box 8: Social Programs in Tamil Nadu ...... 61 Box 9: The Tamil Nadu Medical Supplies Corporation (TNMSC) ...... 62 Box 10: The Battle for Transparency: India’s Freedom of Information (FOI) Act ...... 72 Box 11: Mumbai’s On-line Complaint Monitoring System (OCMS) ...... 75 Box 12 : Reinforcing Accountability in Service Delivery: India and Latin America ...... 87 Box 13 : The Media as a Source of Support for Reform ...... 87

Figures

Figure 1 : Improvements in Overall Satisfaction. Bangalore. 1994. 1999. and 2003 ...... 39 Figure 2: Aggregate Satisfaction across Citizen Report Cards. Bangalore ...... 40 Figure 3: Incidence of Corruption in City Agencies. Bangalore ...... 40 Figure 4 Gross Enrollment Ratio by Gender (Primary Schools in MP) ...... 49 Figure 5: Teacher Absenteeism in India ...... 49 Figure 6: Aggregate Transfer Data, Karnataka, FY 2000/01 to 2004/05 ...... 66

Tables

Table 1 :Average Tenure of MDs: Rural Women’s Development and Empowerment Project...... 2 Table 2 : Average Bribes Paid in CARD and Non-CARD Offices in Rural Districts ...... 26 Table 3 :Changes in MCC Performance (1 999-2002) ...... 37 Table 4 : Population Growth in Surat. 197 1-2001 ...... 43 Table 5 : State-wise Human Development Index: 1981. 1991. 2001 ...... 57 Table 6 : Literacy Rates. Karnataka and Tamil Nadu. 197 1-2001 ...... 58 Table 7 : Selected School Quality Indicators (Primary Schools). 1992-93 ...... 58 Table 8 : Selected Health and Demographic Indicators. 197 1-2001 ...... 59 Table 9 : Appeals under the Delhi Right to Information Act ...... 70 EXECUTIVE SUMMARY

The Focus of the Report: Documenting Successes and Drawing Lessons

This report focuses on successful innovations in service delivery across India. The overarching goal is to identify common factors across cases that explain why these innovations worked. In addition, the report draws lessons from these innovations that might help improve service delivery across sectors and facilitate the transplanting of success stories to other settings. This study examines 25 cases where major reforms in service delivery occurred. The criteria for choosing these cases: All represent some form of institutional reform in service delivery; they range across a variety of sectors, making it possible to discern common threads in reform; there is evidence to indicate a positive impact on service delivery, including surveys, and/or recognition by a credible external organization of significant improvement; and they are stable initiatives in existence for at least two years or longer. In addition, the study examines six cases where innovations were attempted but with less success; these cases are woven into the report to provide some basis for comparison. This study classifies these cases according to six instruments used to improve service delivery: (1 ) Fostering Competition, (2) Simplifying Transactions, (3) Restructuring Agency Processes, (4) Decentralizing Teacher Management, (5) Building Political Support for Program Delivery and (6) Strengthening Accountability Mechanisms.

SOME SYSTEMIC PROBLEMS IN SERVICE DELIVERY

These successes have occurred, despite poor overall outcomes in service delivery and systemic problems that have yet to be resolved.

These successes have occurred in individual services and states, despite an overall context characterized by poor service delivery outcomes. A national survey of major public services (elementary schools, public hospitals, public transport, drinking water facilities, and public food distribution) by the Public Affairs Center (PAC) concludes that India has done well in terms of providing basic access to such services, but far less well in terms of ensuring their quality, reliability, and effectiveness.' A recent study by Transparency International found high levels of corruption in services as diverse as health care, education, power, land administration, and the police.2 Progress towards achieving the millennia1 development goals has been slow.3

There are systemic problems that might explain why service delivery outcomes remain poor on the whole. The civil service is burdening by an expanding salary bill that has crowded out non- salary spending. Short tenures caused by premature transfers of officials responsible for delivering public services have undermined continuity. Capacity gaps exist in some areas - India, for example, has the highest absolute number of maternal deaths in the world, but only three full- time officers at the central level dedicated to the task of supervising maternal health programs.

The weakness of accountability mechanisms is a barrier to improving services across the board. Bureaucratic complexity and procedures make it difficult for the ordinary citizen to navigate the system for his or her benefit. The lack of transparency and secrecy that shrouds government

' Public Affairs Center (PAC), State of India's Public Services: Benchmarks for the New Millennium (Bangalore: PAC, April 2002). * Transparency International, Corruption in South Asia: Insights and Benchmarks from Citizen Feedback Surveys in Five Countries (Berlin: December, 2002). See also, Transparency InternationaKenter for Media Studies, India Corruption Studv, New Delhi: 2005 for more recent data. The World Bank, Attaining the Millennium Development Goals in India (New Delhi: SASHD, 2004).

1 operations and programs provides fertile ground for corruption and exploitation. Nor is civic pressure for change robust: A national survey conducted in 2001/02 revealed that only eight percent of all respondents were members of a civic association, while only two percent could attest to the presence of an NGO in their area working on the provision of public goods.4 This finding is mirrored in another national survey conducted in 1996 by the Center for Developing Societies which found that only four percent of all respondents were involved with a civic ass~ciation.~When the citizenry fails to organize around improving public services, politicians lack the incentives to take the issue seriously.

The lack of accountability in tuin provides oppoi-tunities for corruption. India ranked in ninetieth place in Transparency International’s Corruption Perception Index (CPI) in 2005. Nor is the country well organized to combat corruption: A multiplicity of overlapping anti-corruption agencies, and dilatory legal processes for tackling cases, has made it difficult to bring the corrupt to book. India’s campaign finance regime also has potentially negative effects on service delivery: The unregulated cost of elections - and the lack of legitimate funding sources, including a system of public funding - has created incentives to extract rents from administrative functions, including the delivery of services, to fund campaign expenses or pay back contributors. Despite, these systemic problems, many innovations in service delivery have taken place in different sectors and states with positive results for citizens, as this report shows.

LEARNING FROM SUCCESS: KEY LESSONS

I. The Enabling Environment

(a) The Role of Political Leadershig

The vision of the political leadership influenced the kinds of reforms pursued.

The first lesson that emerges from the cases considered in this report is the centrality of the political leadership in triggering service delivery reforms. In Andhra Pradesh, Madhya Pradesh, and Kainataka, reforms were frequently a product of the vision of leaders.6 In Andhra Pradesh, the fact that the state was led by a politician with fascination for technology played a role in propelling e-governance reform^.^ In Madhya Pradesh, the fact that the leader was committed to vision of governance based on community participation and decentralization clearly influenced the choice of reforms during his tenure in office. In Karnataka, the political leadership sought to transform Bangalore into a leader among cities, using Singapore as a model. At the national- level, telecommunications reform was pushed by the Prime Minister’s Office (PMO) as part of a larger developmentalist vision aimed initially at promoting technological innovation and then at strengthening India’s overall competitiveness in the global economy.

Pradeep Chibber, Federal Arrangements and the Provision of Public Goods in India, Asian Survey, May- June, 2004, p. 347. Ibid., p. 347 For more on this, see Sumir Lal, The Politics of Service Delivery Reform, Paper prepared for India Service Delivery Report, (New Delhi: The World Bank, 2005). ’ Chandrababu Naidu with S. Ninan, Plain Speaking, (New Delhi: Viking, 2000).

.. 11 Bipartisan consensus across party lines facilitated reform; electoral incentives for change.

InTamil Nadu, the Dravidian parties, which came to power in 1967, were deeply influenced by a common ideology, including the importance female emancipation, the eradication of caste distinction, reservations for backward groups, and family planning to promote development. Welfarist ideology emerged as a major ingredient of social policy in Tamil Nadu under both the DMK and the AIDMK 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 AIDMK to create a social safety net through the adoption of a universal system of public food distribution and a noon midday meal programs for schoolchildren and other groups. In fact, the DMK and the AIDMK 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.

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 AIDMK, 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.

(b) 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. The message from these cases is that civil servants when properly empowered by politicians can be transformed into an effective instrument for innovation in service delivery.

Stability of Tenure: Almost all the successful cases studied in this report 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 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.

Managerial Autonomy: Autonomy helped as well: While status as a corporation or a board conferred definite privileges (for example, the right to retain its own revenues rather than send them on to the treasury; 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: 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

111 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 implementing difficult reforms.

11. Instruments for Improving Service Delivery

(a) Promoting Competition

Competition improved service delivery outcomes in India’s Telecom Sector, and weakened the monopoly wielded by traders in MP’s state-controlled Mandi system, thus benefiting farmers.

Promoting competition was a powerful instrument for reforming service delivery. The dismantling of the Department of Telecom’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. Similarly, the opening up of rural marketing services to private players operating outside Mandis has yielded gains for farmers and ITC at the expense of traders, who controlled Mandi operations.

Both initiatives were made possible only by strong action from the highest levels of government. In the telecom case, DOT’Smonopoly was progressively challenged by as powerful an institution as the PMO. On a lesser scale, 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.

(b) SimplijSling Transactions

Simplifying transactions through the greater use of e-governance made it easier for citizens to interact with the state. Successful e-govemance projects took time to develop, often took the form of public-private partnerships, and needed careful nurturing by the project champion. They also involved changes in business procedures, not just automation.

A second instrument used to improve service delivery was to simplify transactions between government and citizens, using e-governance. Successful e-governance projects depended on high-level political support to overcome resistance by departments not accustomed to horizontal integration of services on a single platform (e.g., E-Seva) or vested interests that might have been sidelined by a new business process (e.g., village accountants in Bhoomi). An administrative champion to steer e-governance projects with a stable tenure was essential for the success of virtually all projects in this study. 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 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 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 here. Successful e-governance programs combined the use of information technology with major changes in business processes as well

iv (c) Restructuring Agency Processes

Restructuring agency processes involved change on several dimensions: re-engineering intra- organization processes, empowering senior management through the creation of centralized monitoring systems, improving inter-agency coordination, and developing more effective linkages with civil society. A strong management team was a definite plus.

A Strong Management Team: More than one case pointed to the importance of strong management team to complement the work of the agency head or chief executive of an organization (usually an IAS officer). If the MD lacked the support of strong team, agency turnaround was usually more difficult to achieve.

Reforming Intra-Organization Processes: 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 preceded automation. In the case of the Surat Municipal Corporation, steps, such as breaking down silos, empowering deputy and assistant commissioners, and insisting that officers ‘learn from the field,’ constituted a major restructuring in the way business was done. Other examples abound and are discussed in later chapters.

Centralized Monitoring to Hold Staff More Accountable: Centralized monitoring of customer complaints using IT furnished top management 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. 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 in the case of one water board, for example.

Strengthening Rewards and Penalties: 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 on at least private operators, even if government staff could not be easily disciplined for political reasons. In the case of the Surat Municipal Corporation (SMC), the willingness of successive commissioners to impose penalties on non- performing officials sent a message down the line that such behavior would not be tolerated. Several agency heads reported that the award of prizes for good performance by civil society groups or GoI’s Department of Administrative Reforms and Public Grievances (ARPG) played a positive role in boosting staff morale. Some agencies introduced cash bonuses for rewarding well performing units and individual staff members to good effect.

Greater inter-agencv coordination: 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, and render the flow of critical information more difficult. 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. The Bangalore Agenda Task Force (BATF) acted as coordination mechanism for all civic agencies, resulting in a significant improvement in city services.

More Effective Linkages with Civil Society: Agency reformers in some cases relied heavily on civil society participation. In the case of Bangalore, the 1994 report card by the Public Affairs Center (PAC) 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

V Minister provided an occasion for agency heads to set reform targets and report back six months later at the next summit.

(d) Decentralization

Decentralization improved the functioning of an important municipal corporation, and reinforced teacher accountability in a major central Indian state.

Decentralization remains a controversial subject: Some have expressed the concern that decentralization without ‘proper safeguards’ can increase corruption and mismanagement. Others worry about local-level capacity constraints to handle additional responsibilities and funds.

Yet, these cases underline the importance of decentralization as a tool for reform. In the urban setting of Surat, the decision to vest zonal commissioners with the financial and administrative powers of the municipal commissioner greatly reduced the flow of files to the municipal commissioner’s office, freeing him up to take the lead on policy issues without getting caught up in red-tape; on the other hand, decentralization in the corporation meant that decisions could be taken more quickly in zones.

In the case of primary education in Madhya Pradesh, decentralizing teacher control to Panchayati Raj Institutions (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.

(e) Building Political Supportfor Program Delivery

A consensus across parties facilitated program delivery in Tamil Nadu

Political support is an important pre-requisite 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.

Political support was a key factor in why Tamil Nadu outperformed Karnataka in terms of overall human development outcomes between 1981 and 2001. In Tamil Nadu, this commitment was the product of a perception by the two Dravidian parties that social programs would bring electoral returns as well as a common ideological emphasis on welfarist policies. Political support in the form of a bipartisan consensus provided a crucial impetus for Tamil Nadu’s civil service to design and implement a range of inter-locking programs to improve human development outcomes in the state beyond what could have been expected by economic growth alone.

(f) Strengthening Accountability Mechanisms

Reducing premature transfers, fostering uccess to information, using anti-corruption institutions to generate public pressure against malfeasance, and public interest litigation were some ways used to reinforce accountability.

Reducing Premature Transfers: Short tenures make it virtually impossible to hold officers accountable for their performance and make implementation difficult. Several states have

vi attempted to grapple with the problem: Karnataka’s has capped overall transfers to about five percent of civil service size through a combination of quantitative caps, computerized counseling in education, and the creation of cadre management committees to reduce political interference.

Fostering Access to Information: 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 tool to enforce accountability: The use of public hearings to examine documents relating to public works has discouraged malfeasance in service delivery in both states. Citizens’ charters are another way to improve access to information and empower citizens provided they are based on extensive consultation, spell out minimum service standards and grievance redressal procedures, and are widely disseminated.

Mobilizing Public Opinion against Corruption: 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 their control. The Karnataka Lok Ayukta not only avoided this trap but reframed 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.

111. Cross-Cutting Issues

(a) The Role of Civil Society

In some cases, civil society groups, along with the media, placed pressure for change on providers and/or the state directly. In other cases, civil society organizations worked in a collaborativefashion with agency reformers. There were examples of reformers working hard to generate demand for change when civil society was relatively weak or inactive.

Civil Societv as Pressure: In some cases, civil society groups simply placed pressure on recalcitrant providers and/or the state to compel them to initiate reform. The media also played a major role in generating pressure for reform in several cases documented in this report.

Civil Society as Partner: On the other hand, Bangalore represents a case of collaboration between civil society groups, and city agencies for reform. BATF, for example, provided a convenient monitoring mechanism to track progress on the reform agenda through public summits and technical help for initiatives, such as fund-based accounting and property tax computerization.

Generating Demand for Reform: There were also cases of reformers who actively sought to generate demand for reform as 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 a water board not only went on a public campaign to sensitize citizens to the city’s water problems but created an institutional vehicle for relaying complaints directly to the MD’s office. In Delhi, the creation of an accessible, yet independent, appeals body made it easier for citizens to secure information from the state government. The Delhi example highlights the significance of proper institutional design in creating spaces for civic participation.

vii (b) Corruption in Service Delivery

E-governance worked to check corruption when the leadership was supportive. Greater competition was an important factor in curbing rent-seeking.

E-Governance in particular was one tool used by reformers to promote transparency in service delivery. In case the case of land records computerization, the support of the political leadership made it difficult for rent-seekers to defeat e-governance solutions to curb corruption. In other cases, vested interests were able to scuttle computerization efforts in the absence of political backing. Technology by itself is not sufficient to subvert corruption.

Competition played a major in reducing rent-seeking. At the start of the process of telecom reform, for example, the Indian consumer subsidized an overmanned Department of Telecom (DOT)of some 400,000 employees. The growth of competition resulted in a decline in the number of DOTemployees per direct exchange line from 74 in 1990/91 to only 8 in 2002/03 and a marked improvement in service quality along with lower rates. In MP, the government’s decision to allow farmers to contract directly with private players reduced rents accruing to traders as a result of their former monopoly over purchasing in official marketing centers.

(c) Strategy and Tactics of Reformers

Some politicians sought to anchor reforms in past traditions Reformers were able to overcome resistance through promises of no retrenchment in exchangefor staff cooperation, finding a place for potential ‘spoilers’ who stood to lose from reform, and activating pro-reform constituencies to counter resistance. Some reforms took less time to implement than others, but in no successful case was a ‘big bang’ approach followed.

Backward leaitimacv: Politicians appealed to party traditions to justify change. 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. He also recalled the party’s role in supporting the 73rd and 74‘h amendments to the constitution, which provided a constitutional mandate for strengthening the fabric of local government. Both the DMK and the AIDMK appealed to the ideas of a leading figure in the Dravidian movement to justify their programs.

Dealing with staff. Extensive consultation with staff prior to introducing major changes helped reassure employees. Reformers made it clear upfront that no job losses would occur as a result of reforms: Workers were thus not immediately threatened by prospect of reforms. When substantial business process changes occurred, reformers made an effort to partially accommodate potential spoilers: While Bhoomi displaced village accountants from their core function of issuing land records, village accountants still retained a role in verifying land transactions for the Revenue Department, for example. Reformers also focused on improving working conditions to win employee support; computerization was always cast as an attempt to reduce drudgery and enhance citizen services, and almost never to curb corruption, even if this was its intent.

Activating reform constituencies: Reformers sought to activate potential beneficiaries of their reforms to counter opposition. In the case of rural marketing services in MP, for example, counter-demonstrations by farmers in the wake of a traders’ strike convinced the government not to concede trader demands for a de facto restoration of the old state-controlled monopoly.

viii How Incremental was Reform?: An incremental approach to reform appears to have whittled away resistance over time in some cases: The dismantling of the telecom monopoly built up slowly over two decades before accelerating in the late 1990’s, for example. Most reforms did not unfold as slowly, but in none of the successful cases was a ‘big bang’ approach followed.

Vested Interests Can be Overcome: 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. The Department of Telecom’s opposition to competition gradually eroded under pressure from the Prime Minister’s Office (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.

(d) Sustaining Reforms

Reforms that were popular with citizens survived political transitions; consensus across party lines facilitated reform continuity; sustainability was enhanced when reform was backed up by legal changes and a sound business model.

Even if particular service delivery initiatives were closely identified with a political leader, they could survive the transition from one government to another if they were genuinely popular with citizens. In MP, decentralized teacher management, for example, has continued under new political leadership. In Andhra Pradesh, the popular one-stop service center initiative, E-Seva, remains in place, even after a new party came to power in 2004.

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 at the polls, share 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 has assured the long-term continuance of the mid-day meal program as well as universal access to cheap rice, even if the fiscal cost of these initiatives has been high.

Codifying reforms into law made them harder to reverse and compelled enforcement as a matter of law. Grounding new institutions in law gave them greater standing and staying power than doing so by administrative fiat alone. For example, the creation of a legally independent telecom regulatory authority has helped enforce a level playing field in the industry, improved the fairness of licensing decisions, and reassured private investors.

When governments allowed user fees to be raised in exchange for better services, or implemented initiatives based on sound revenue models, many times in cooperation with private partners, these were more likely to be viable over time. Cities that had a large revenue base stemming from a dynamic local economy were likely to be able to fund infrastructural improvements than cities that depended more on the state or central governments for financial support.

ix (e) Transplanting Examples of Reform

Because reforms often developed in a particular context, they were not always easy to transplant. Promoting dialogue between similar agencies across states; sparking inter-agency competition; and relying on NGO and other networks to spread the good news about successful reforms were the primary ways of transplanting lessons from one setting to another. The Government of India can play a usefil role in transmitting knowledge about good practices across states.

Many of the initiatives studied here were driven by their context. Blind copying of initiatives that worked in one setting is not likely to yield similar results in another. Yet, cross-state learning did occur in several ways. In some cases, dialogue between similar agencies across states sparked a chain of reforms: Andhra Pradesh’ s program to improve registration services led to Maharashtra initiating a similar program with Karnataka following suit shortly thereafter. In other cases, competition led to a virtuous cycle of reforms: The rise of Hyderabad as a major economic center was a call to action for Bangalore. NGO networks played a role in transmitting good practices across states: report cards first tried in Bangalore will now be conducted in Delhi as well. At times, the Government of India (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 too helped push states to adopt good practices by, for example, ordering all states to implement a version of Tamil Nadu’s nutritious mid-day meal program in 2001.

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 program (see Box 4), 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.

Disseminating the lessons of success is a key priority

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 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 after all.

IMPLICATIONS FOR POLICY-MAKERS

CreatinP an Enabling Environment

0 Chief Ministers play a crucial role in creating a positive enabling environment: Intensive dialogue with Chief Ministers is important for improving services in different states.

0 Civil servants managing reforms need to be given high-level access to decision-makers to resolve obstacles in a timely fashion. The political leadership needs to signal support.

X a Go1 and state governments need to tackle the issue of short tenures for civil servants by adopting a statutory law to set minimum tenures, permit exceptions only by approval of a statutory civil services board, and track average tenures rates by post over time.

0 Managerial autonomy needs to be reinforced. Societies can be useful vehicles to shield reformers from political interference and secure the autonomy necessary to effect reforms. Enclaving, however, may create problems of its own by alienating the regular bureaucracy, and is not to be viewed as a permanent solution.

0 Go1 can help create an enabling environment for better service delivery by linking the transfer of funds to states more closely with performance and improving monitoring mechanisms for centrally-sponsored schemes.

Instruments for Improving Service Delivery

Go1 and state governments should promote greater competition in service delivery across sectors. Effective regulation can be a solution to the problem of predatory behavior by either government departments or private players.

Go1 and state governments can encourage the wider use of e-governance to simplify the interaction between government and citizens. Urban municipalities, district collectorates, and other agencies with a large public interface are prime candidates for business process re-engineering through e-governance. The administration of schemes (including the BPL list across states) should be fully computerized to permit accurate expenditure tracking.

Public-private partnerships work well, particularly in projects with an e-governance component, bringing in new skills and management techniques, financial resources, and greater performance accountability. The use of PPP models should be encouraged.

Go1 and state governments could consider conducting functional reviews of service- providing agencies to identify redundant functions, legal and procedural reforms, opportunities for clustering, and ways of strengthening linkages with civil society.

Better coordination mechanisms should be created to foster inter-agency collaboration in cities and districts, allowing for information sharing and more effective implementation.

Agency reformers can use the media as an ally to generate public pressure for reform. Announcing reform plans publicly is a good way to put pressure on staff and managers to implement changes quickly.

Centralized monitoring of public complaints should be made the norm for agencies, thus empowering senior management with the information needed to hold middle management and front-line staff more accountable.

Report cards should be conducted by independent organizations to assess agency performance and widely disseminated.

Access to information legislation needs to be more effectively implemented through better training for officials charged with supplying information, improved records management, and citizen-friendly appeals processes. Civic groups are crucial to the

xi success of RTI legislation and should be viewed as allies by governments interested in widening access to information. Independent audits of departments could be conducted to pinpoint information that can be routinely released via the internet, for example.

Citizens’ charters are a useful way of disseminating information to clients on how to best use a service. Charters should be formulating only after consultation with staff and users.

Anti-corruption agencies are hobbled by weak investigative powers and overlapping jurisdictions: Go1 and state government might consider removing the ‘single directive’ that requires agencies to seek permission to investigate senior officials on corruption allegations. Anti-corruption institutions can play an important in generating public awareness about the problem of malfeasance in government.

Tactics of Reform

0 Big bang approaches rarely work in the Indian context, but nor do ad hoc reforms. A carefully sequenced, if incremental, approach is likely to work best.

0 Whenever possible, reforms should be justified by turning to an established source of prior legitimacy (e.g. party traditions). This makes it harder to scuttle them.

0 The benefits of reform should be widely disseminated to create allies and stir up the beneficiaries of the reform process against vested interests.

0 E-Governance initiatives are best framed as attempts to improve convenience and cut drudgery, not reduce corruption. Staff should be told upfront that no jobs will be lost.

Sustaining Reform

0 The best guarantee of sustainability is popularity: independent surveys should be conducted on a regular basis to gauge the effects of reforms on citizens.

0 Reformers should seek to maximize political support across parties for their initiatives. This not only helps increase the resources available for a program, but facilitates their long-run sustainability as well. This will involve regular dialogue with opposition parties when formulating and implementing reform initiatives.

0 Legal changes should be effected to underpin reform, thereby enhancing sustainability.

0 Reforms should be based on a sound business model (e.g., charging user fees from those able to afford them, professional procurement arrangements etc).

Transplanting Reforms

0 Strengthening institutional mechanisms to disseminate information about good practices is a key priority. Go1 can play a vital role in disseminating information about good practices in service delivery. The electronic repository of good governance practices housed in the Department of Administrative Reforms and Public Grievances (ARPG) should be updated regularly and widely publicized. Similar agencies across states should

xii periodically share information about common problems and reform processes. Donors and NGO networks can also play a crucial role in this area.

Building greater technical capacity through more innovative methods of training is important in facilitating replication of good practices across states. Andhra Pradesh’s Chief Information Officers program is a good example for other states on how to go about improving capacity in e-governance, for example.

... Xlll

Chapter One Introduction

1.1 Service delivery outcomes in India remain poor on the whole. A national survey of major public services (elementary schools, public hospitals, public transport, drinking water facilities, and public food distribution) by the Public Affairs Center (PAC) concludes that India has done well in terms of providing basic access to such services but far less well in terms of ensuring their quality, reliability, and effectiveness.* A recent study by Transparency International found a high perception of corruption in services as diverse as health care, education, power, land administration, and the police.' Within South Asia, the perception of corruption was highest in Pakistan followed by Bangladesh, India, and Nepal; corruption was significantly lower in Sri Lanka than in other South Asian nations." Several studies also show a strong association between higher levels of corruption and lower levels of human development, reflecting leakages in government programs, poor delivery of health and educational services, and rent extraction from the economically vulnerable. Progress towards achieving the millennium development goals (MDGs) has been slow." Despite an impressive decline in infant mortality from 130-140 infant deaths to 1000 live births in the early 1970s to 68 in 2000, the absolute levels of infant and child mortality are still too high (about 68 infant and 95 child deaths per 1,000 live births in 1998- 99). Child malnutrition rates are still high, with nearly one-half of children aged 0-35 months underweight or stunted in 1998-99. In primary education, official gross enrollment ratios touched 100% in 1990-91; however, household surveys yielded a much smaller gross enrollment ratio of only 61 %. The primary completion rate remained stubbornly low for the country as a whole at only 61.4% in 1999-2000.

Some Systemic Problems in Service Delivery

The civil service faces a crushing salary burden, weak capacity in key management positions, and suffers from frequent transfers of civil servants.

1.2 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% in some states to over 90% in others. In West Bengal, Karnataka, and Andhra Pradesh, 90% 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.'' 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 to private sector wage is now 233% compared to 192% a decade ago: This generalization applies with full force to teachers who constitute 40% 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

Public Affairs Center (PAC), State of India's Public Services: Benchmarks for the New Millennium (Bangalore: PAC, April 2002). Transparency International, Corruption in South Asia: Insights and Benchmarks from Citizen Feedback Surveys in Five Countries (Berlin: December, 2002). loOn a scale of -2.50 to 2.50 (higher being better), Pakistan scored -0.79, Bangladesh -0.64, India -0.39, Nepal -0.3 I, and Sri Lanka 0.0. m.p. 5. 'I The World Bank, Attaining the Millennium Development Goals in India (New Delhi: SASHD, 2004). I*For more on this, see The World Bank, State Fiscal Reforms in India (Macmillan, 2004), Chapter 2.

1 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.

1.3 The frequent transfer of civil servants remains a major problem, threatening continuity and accountability. In some states that average tenure of a collector or a district magistrate has shrunk to less than one year, throwing district administration into chaos.13 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 (Table 1).

Table 1 :Average Tenure of Managing Directors of the Rural Women's

State Number of MDs Average Tenure (in Months) Bihar 3 8 Gujarat 7 3.1 Karnataka 4 6 Madhya Pradesh 4 6 Uttar Pradesh 5 48 Source: Rao-Seshadri, Shreelata, 2003, p. 22

1.4 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. India, for example, suffers from the highest absolute number of maternal deaths in the world, about 100,000 per year. Yet, Go1 has only three full-time officers dedicated to supervising maternal health programs in the Department of Family Welfare (DFW), who are overloaded with routine administrative tasks.14 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 and translates into weak policy-making capacity at the highest levels of the system.

The Problem of Weak Accountability Mechanisms

1.5 The fact that Go1 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 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 the ordinary citizen to navigate the system for his or her benefit. The lack of transparency and secrecy that shrouds government operations and programs provides fertile ground for corruption and exploitation. 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

I3Government of India, Committee on Civil Service Reform, Final Report (New Delhi: GoI, 2004). l4Dileep Mavlankar, Study of Technical Tor, Management Capacity for Safe Motherhood Program in India, Paper for Study on MDGs in India, (New Delhi: The World Bank, SASHD, 2003)

2 volunteering time to a civic association, while more educated citizens tend to participate more actively in public or community affairs.I5 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 eight percent of all respondents were members of a civic association, while only two percent could attest to the presence of an NGO in their area working on the provision of public goods.I6 This finding is mirrored in another national survey conducted in 1996 by the Center for Developing Societies which found that only four percent of all respondents were involved with a civic ass~ciation.'~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 an attempt 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.

1.6 The lack of accountability in turn provides opportunities for corruption. India ranked in ninetieth place in Transparency International's Corruption Perception Index (CPI) in 2005. 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. 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 3 11 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 servant for non-performance. The Hota Committee on Administrative Reforms has recommended that Article 3 11 be amended to allow for the expedited removal of civil servants involved in corruption cases.

1.7 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. Judges are often spectators in their own courtrooms in the face of collusion between lawyers, court staff, and litigants to ensure 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.

l5 On the link between participation and socio-economic development, see Robert Dahl, Polvarchv (New Haven: Yale University Press, 1971), pp. 62-80; Samuel Huntington, The Third Wave (Norman: University of Okhlahoma Press, 1989), pp. 59-72; and Seymour Martin Lipset, Political Man: The Social Bases of Politics (New York: Doubleday, 1960), pp. 45-76. '' Pradeep Chibber, Federal Arrangements and the Provision of Public Goods in India, Asian Survey, May- June, 2004, p. 347. " Ibid., p. 347 N.Vittal, Anti-Corruption Enforcement in India: The Framework and Possible Reforms, Paper prepared for India Service Delivery Report (New Delhi: The World Bank, 2005).

3 A non-transparent campaign and political party funding regime leads to rent-seeking in key functions of public administration and service delivery.

1.8 Reforming India's campaign finance regime is an important factor in improving the overall climate for service overall climate for service deli~ery.'~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.25 lakhs, the average winner spent approximately Rs.83 lakhs in the 1999 Parliamentary elections.'' 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; nor does India have a system of public funding for elections.

1.9 In 2003, the government made company donations tax-deductible in order to encourage payments by cheque; 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. In 2003, political parties were granted additional free time on private electronic media, but this decision has not yet been implemented so far. The Supreme Court in 2003 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.

1.10 The government could consider clubbing party and candidate expenses on a campaign under a single, realistic ceiling (currently party expenses are uncapped) or create 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 anti-corruption 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.

The rise of multi-party systems can complicate service delivery challenges

1.1 1 As several Indian states move towards multi-party systems, the challenge will be to ensure that service delivery does not suffer. In two-party systems, the winning threshold is significantly higher than in multi-party systems: As a result, two party systems put a premium on interest aggregation cutting across segmented identities of race, caste, or class. In multi-party systems, however, winning thresholds are much lower and smaller parties have to cling more faithfully to their traditional bases: this, in turn, exacerbates the role of narrow groupings, Multi- party systems are thus more likely to deliver 'club' goods to their followers in the form of patronage involving jobs, contracts, or schemes targeted at particular groups; two-party systems, on the other hand, are more likely to focus on providing genuine public goods to a large cross

l9 E. Sridharan, Political Partv Finance: Tackling Upstream Incentives for Corruption in Service Deliverv, Paper prepared for India Service Delivery Report (New Delhi: The World Bank, PREM Team, 2005). *' Figures from the National Election Audit '99 (NEA '99) conducted by the Centre for the Study of Developing Societies (CSDS). Ambiguities in the law have made campaign ceilings largely meaningless: Explanation One, Section 77 (I)of the Representation of the 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.

4 section of groups.” Statistical evidence backs up this argument: Multiparty states were more likely to spend more on salaries and less on development than two-party systems. A comparison of four major north Indian states (Madhya Pradesh, Rajasthan, Uttar Pradesh and Bihar) reveals a similar picture. While MP and Rajasthan can be classified as two-party systems, Bihar and UP are clearly multi-party states: Since 1971, Bihar and UP have spent more on personnel expenditures, experienced lower increases in the delivery of public goods, such as the number of villages with electricity, as well as literacy rates compared to the two-party states of Rajasthan and MP. When multi-party systems produce fragile coalitions, coalition pai-tners may jostle for the spoils of office, the longevity of the government may be in doubt creating uncertainty, and politicians may be more concerned with survival rather than long-term improvements. On the other hand, multi-party systems may disrupt collusive tendencies among dominant parties and provide more space for citizen voice. More research is needed to understand the effects of two- party and multi-party systems on public service delivery.

Box 1 : Do Indian Voters Reward Performance? The Problem of Anti-Incumbency Indian elections have been characterized by rapid changes in government dubbed in Indian political parlance as “anti-incumbency.’’ The probability that a member of Parliament will get re-elected is less than half; more astonishingly, four out of five incumbent state governments are voted out of power at each election. Electoral volatility became more pronounced during the 1980s with the erosion of the traditional dominance of the Congress Party. The lowering of the voting age to 18 contributed to anti-incumbency as younger voters have fewer loyalties and switch parties more often in virtually all countries. It is difficult to relate government performance to election results: other factors, such as the pattern of party alliances, the impact of drought, and voter fatigue with the existing government play an important role. Incumbent governments or candidates who received high satisfaction ratings have found themselves voted out of office at the polls. Mehta (2003) points out that one reason for anti-incumbency may be the fact that for most Indian voters the underlying costs of switching governments or representatives may not be perceived as significant given the remarkable degree of consensus on most issues cutting across party lines. Governments that reform service delivery may not necessarily be rewarded for doing so at the polls. Making service delivery a potent political issue is thus a priority that could be facilitated through the provision of information about service delivery outcomes to voters; bringing more public pressure to bear on politicians to focus on service delivery through NGOs, for instance; empowering local communities; and tying disbursements of centrally-sponsored schemes to the fulfillment of performance benchmarks. This process may encourage politicians to focus more on the provision of public goods instead of ‘club’ goods.

Successes in Service Delivery

Yet, despite systemic challenges, there are a large number of successes in improving services in all sectors in different states and at the national level.

1.12 This report focuses on successful innovations in service delivery across India. The overarching goal is to identify common factors across cases that explain why these innovations worked. In addition, the report draws lessons from these innovations that might help improve service delivery across sectors and facilitate the transplanting of success stories to other settings. These studies examine 25 cases where major reforms in service delivery occurred. The criteria for choosing these cases: All represent some form of institutional reform in service delivery; they range across a variety of sectors, making it possible to discern common threads in reform; there is evidence to indicate a positive impact on service delivery, including surveys, and/or recognition

~ ~~~~ *’ On this, see Pradeep Chhibber, Do Party Svstems Count? The Number of Parties and Government Performance in the Indian States, Unpublished Paper (Berkeley: University of California, Berkeley, 200 1). See also, Philip Keefer and Stuti Khemani, Why has democracv in India failed to deliver basic services to the poor? (The World Bank: Development Research Group, December, 2003)

5 by a credible external organization of significant improvement; and they are stable initiatives in existence for at least two years or longer. In addition, the study examines six cases where innovations were attempted but with less success; these cases are woven into the report to provide some basis for comparison.

1.13 This study classifies these cases according to six instruments to improve service delivery: (i)Promoting Competition, (ii)Simplifying Transactions, (iii)Restructuring Agency Processes, (iv) Decentralizing Teacher Management, (v) Building Political Support for Program Delivery, and (vi) Strengthening Accountability Mechanisms. The final chapter discusses the key lessons of these cases for improving services, including sustainability and scaling-up, and probes the implications for policy-makers. Most of these cases were commissioned for this report; we have also benefited from some papers commissioned by the World Bank’s South Asia Human Development Unit for its work on attaining the MDGs in India, the World Bank Institute for the Shanghai conference on “Scaling-up Poverty Reduction” (2004), and the Water and Sanitation Program, New Delhi for its Voice and Client Power studies initiative.

Box 2 : Instruments and cases studied in this report Promoting Competition (a) India’s Telecom Revolution. (b) Delivering Marketing Services to Farmers: ITC’s e-Choupal kiosks and Sagar hubs in Madhya Pradesh.

Simplifying Transactions (a) One Stop-Service Centers: (i)E-Seva in Andhra Pradesh and (ii) Friends in Kerala. (b) The Computerizationof Land Records (Bhoomi) in Kamataka.

Restructuring Agency Processes (a) The Transformation of the Stamps and Registration Department in Maharashtra. (b) The Hyderabad Water Supply and Sewerage Board (HWSSBj. (c) The Kamataka State Road and Transport Corporation (KSRTC). (d) Bangalore: Making City Services Work? (e) Surat after the Plague: The Reform of the Municipal Corporation

Decentralizing Teacher Management (a) Institutional Reforms in Primary Education in Madhya Pradesh. (b) Rajasthan’s Experience in reforming Primary Education in the 1980s and 1990s.

Building Political Support for Program Delivery (a) Human Development Outcomes in Tamil Nadu and Karnataka, 1971-2001

Strengthening Cross-CuttingAccountability Mechanisms (a) Civil Service Reforms: Transfers in Kamataka. (b) Unveiling Secrets: Access to Information in Rajasthan, Delhi, and Kamataka. (c) Anti-Corruption Institutions and Service Delivery: (i) the Kamataka Ombudsman and (iij the Central Vigilance Commissioner (CVC). (dj Public Interest Litigation, the Supreme Court, and Service Delivery; Solid Waste Management, Compressed Natural Gas (CNG) in Delhi, and Election Candidate Disclosure cases.

In addition, the report addresses several other cases in these chapters that provide a contrasting story to our main cases or contain useful comparative lessons. (a) Gujarat’s Computerized Interstate Check-posts (CCIPj. (bj Andhra Pradesh’s Computer-AidedAdministration of the Registration Department. (c) Gujarat’s Smart-Card Driving License. (d) Tamil Nadu’s Medical Supplies Corporation (TNMSC). (e) Mumbai’s On-line Complaint Monitoring System (OCMS) (f) Hospital Financing and Autonomy: MP’s Rogi Kalyaiz Samiti (RKS) Model. (g) India’s Freedom of Information Act. (i) Land Records Computerization in Bihar.

6 Chapter Two Promoting Competition

2. I Traditionally, the burden of providing most public services in India was viewed as an exclusive preserve of the government. This model of monopolistic service provision has failed to deliver acceptable outcomes: Government cannot run vast delivery systems by itself without provoking serious problems, ranging from politicization, bureaucratization, an entrenched culture of corruption, and, of course, high prices for poor quality goods. Here we examine two cases where competition was used effectively to improve the quality of service delivery and curb rent- seeking; (a) the gradual de-monopolization of India’s telecom sector and (b) the growing role of private players, particularly the India Tobacco Company (ITC), in providing direct marketing services to farmers outside state-controlled marketing centers (Mandis) in Madhya Pradesh. The Telecom case is one of India’s most successful examples of improved service delivery through competition, resulting in improved teledensity, especially in urban areas, falling prices, and greater efficiency of service. Similarly, the opening up of rural marketing services to private players operating outside Mandis has yielded gains for farmers and ITC at the expense of traders, who controlled Mandi operations.

I. India’s Telecom Revolution

Rent-seeking behavior by Department of Telecom (DOT)

2.2 India’s telecom sector until recently was entirely under the control of the Department of Telecom (DOT). DOTfunctioned as a monopolist, a situation that was highly inimical to innovation as well as the provision of efficient and low cost services. It took twenty years to dismantle this monopoly, a process that was resisted by DOTat every turn. DoT’s enduring monopoly reflected several realities: First, DOTprovided a channel for rent-seeking behavior particularly by its staff The Indian consumer subsidized an overmanned Telecom Department of over 400,000 employees appointed often through political patronage. Second, DoT’s monopoly was protected by law: The Indian Telegraph Act (1 885) ensured that the Telecom Department was allowed to operate as policy-maker, service provider, and licensor at the same time and made no provision the existence of a regulator who could level the playing field. Third, DOTowned the entire telecommunications network in India in the early 1990s when liberalization began in earnest, allowing it to levy prohibitive charges for interconnection agreements on potential competitors. It continued to enjoy a monopoly over long distance calling in India, much after competition was introduced, allowing it to subsidize local calls in the process much to the dismay of the country’s burgeoning private telecom providers.22

The early stages of telecom reform, 1970-89

2.3 Both Prime Ministers, Indira Gandhi and Rajiv Gandhi understood the need to modernize the creaky telecom sector. As early as 1973, the Department of Electronics (DOE)was established under the direct control of the Prime Minister’s Office (PMO) to prod the Ministry of Posts and Telegraphs into paying more attention to modernizing telecommunications. These moves were successfully resisted by the telecom bureaucracy and it was only when Rajiv Gandhi became the Prime Minister that telecom reform again resurfaced as a priority. He was concerned

For a detailed discussion of telecom de-monopolization, see Rahul Mukherji, “Competition and the Transformation of Telecom Service Delivery in India,” Paper for India Service Delivery Report (New Delhi: Poverty Reduction and Economic Management Unit, The World Bank, 2005).

7 that India’s telecom sector was being bypassed by global technological developments, and established the autonomous (from DOT)Center for the Development of Telematics (C-DOT) to attract local scientific talent to develop new equipment that could be licensed to the private sector for production; C-DOT was brilliantly successful with its Rural Automatic Exchange Switches (RAX) serving over 60% of rural India by 2004. By 1989,70% of India’s manufacturers of telecom equipment had licensing agreements with C-DOTto produce its Private Automatic Branch Exchange (EPABX). In addition to allowing private sector licensees to commercially produce and provide C-DOT innovations on a large-scale, the government created a publicly- owned corporation, Mahanagar Telephone Nigam Limited (MTNL), out of the DOTto serve metropolitan Delhi and Bombay in 1986. In parallel fashion, the government created another publicly-owned corporation, Videsh Sanchar Nigam Limited (VSNL), to handle India’s long- distance traffic. The establishment of MTNL and VSNL was India’s first attempt to separate policy-making and service provision in telecom; strong opposition from DOTand its unions ensured that the original goal of creating six other corporatized entities to serve other urban areas would be shelved.

Opening up the cellular phone market to private players during the 1990s.

2.4 Telecom reform continued fitfully thereafter: In 1991, the Telecommunications Restructuring Committee (TRC) established by Prime Minister Chandrashekar came out openly in favor of creating an independent regulator, allowing private capital in areas where DOT resistance was likely to be low (e.g., the cellular phone market perceived as elitist and thus inconsequential), and further separation of policy-making and service provision. The PMO took the lead in creating the TRC, despite DOTconcerns, but little further movement occurred until the new Congress government took over in 1991 under Prime Minister Narasimha Rao, who appointed a pro-reform bureaucrat as Secretary of DOTwith the responsibility of drafting a National Telecommunications Policy (NTP). The NTP of 1994 allowed private investment in basic telephone services for the first time in India. The bidding process for cellular licenses that began soon after was, however, seriously flawed. Bidders complained of an excessively high license fee based on the size of bids, rather than expected revenue; irregularities including apparent favoritism; and a lack of investor interest because DOTand MTNL continued to subsidize their local calls thanks to VSNL’s monopoly over the long distance market.

2.5 As accusations of improprieties in the tendering process rocked Parliament, the need for the creation of an independent regulator became apparent. Cabinet had agreed to create one in 1995, but this decision had not been implemented because of opposition within the Congress Party. Meanwhile, two public interest litigation suits filed before the Supreme Court, challenging privatization without regulation, were dismissed after the Supreme Court was given an assurance that the government would establish a regulator shortly. Initially, a very weak regulating body was created by a presidential ordinance awaiting legislative approval. In 1997, Parliament finally passed the Telecom Regulatory Authority of India (TRAI) bill. TRAI was hobbled from the beginning: While it could resolve disputes between service providers, it could not intervene in conflicts between the licensor (DOT)and service providers. Nor could TRAI, unlike its counterparts in the UK or USA, award licenses: This - and the allotment of the radio spectrum -- remained the exclusive prerogative of DOTunder the Indian Telegraph Act (1 SEI), which remained in force. All TRAI could do was ‘advise’ DOTon licensing issues. With DOTstill controlling licensing, a crisis was inevitable. It soon came in the form of a decision to allow the state-owned MTNL, a fixed line operator, to enter the cellular market without paying a license fee, badly upsetting the revenue projections of private cellular providers. The PMO at this stage did nothing. TRAI condemned DOT’Saction but the Delhi High Court in Union oflndia vs. TRAZ upheld the legality of DOT decision.

8 The Reform Process Deepens, 1999-2003

2. I By 1999, it was clear that predatory behavior by DOThad made private investment in telecom unprofitable. The sector was increasingly starved of capital to finance growth. This itself was a source of worry to the new Prime Minister Atal Bihari Vajpayee. The PMO was also concerned that India’s information technology (IT) exports depended directly on an efficient telecommunications network. The Bharatiya Janata Party’s (BJP) election manifesto had a chapter on the need to develop India’s IT potential, an essential component of the party’s vision of an internationally respected and competitive India. The PMO quickly created a National Task Force on IT (NTFIT) chaired by the deputy chairman of the planning commission, with several prominent members. NTFIT provided a convenient vehicle for the IT industry and its supporters to push for further telecom reform at the highest levels of the government. Finally, all private telecom operators came together to face the crisis, particularly the Cellular Operators Association of India (COAI) and the Association of Basic Operators (ABTO).

2.2 All these factors led to a dramatic deepening of telecom reform in India. Under a New Telecom Policy (March 1999), cell-phone operators were bailed out through migration to much lower one-time license fee along with a revenue-sharing regime based on actual earnings. The TRAI Act was amended to make its recommendatory role in licensing mandatory: DOTnow could not act in licensing decisions without the consent of TRAI. Meanwhile, the Department of Telecom Services (DOTS), which provided all calling services outside Delhi and Mumbai, was turned into a corporation, the Bharat Sanchar Nigam Limited (BSNL): The unions agreed because they were assured that no retrenchment would occur; in return, they accepted a moratorium on further recruitment. In addition, domestic long distance services were liberalized with the entry of new private players in 2000 and VSNL was sold ahead of schedule to Tatas in 2004.

India’s Telecom Revolution: How Complete?

2.3 By the end of 2003, a telecom revolution had occurred in India, with the emergence of TRAI as a potentially powerful regulator, the entry of private players in the international and national long distance markets, along with the recovery of private cellular services, and the deepening separation of policy-making and service provision functions in the industry. Numbers also tell the story of this transformation: The ratio of staff per direct exchange line (DEL) for both MTNL and DoTSBSNL fell sharply from 74 in 1990/91 to just 8 in 2002/03. Urban teledensity (phones per 100 people) rose form 3.95 in 1995-96 to 20.79 in 2003/04. Foreign private investment increased from just Rs.20 million in 1993 to Rs.98.72 billion in early 2004, with the sharpest increase occurring between 2000 and 2002 when it more than doubled from Rs.42.21 billion to Rs.95.62 billion. Between 2003 and 2004 itself, cell phone connections shot up from 13 million to 35 million subscriptions. India’s overall teledensity jumped from 5.1 1 in 2002/03 to 7.02 in 2003/04. Finally, India’s international calling rates fell dramatically as a result of sale of BSNL to Tatas, along with the entry of major private players, like Reliance and Bharti.

2.4 All this does not mean that there are no major issues left to resolve in the telecom saga. Even after the strengthening of TRAI, questions remained about its independence from DOT. One of the most controversial licensing decisions of TRAI under pressure from DOTwas to allow private fixed line operators to use wireless-in-local-loop (WLL) technology to offer roaming services within a short distance charging area (SDCA) in January, 2001. This decision blurred the distinction between cellular and fixed-line operators and undermined the competitiveness of cellular operations because fixed-line operators continued to pay a much lower license fee. In going along with DOT,TRAI argued that allowing WLL technology in fixed-line operations

9 would help broaden access to rural areas where the cost of laying lines was presumably prohibitive and force cellular operators to lower their prices and expand subscription levels. . Eventually, after several protests from COAI, TRAI moved towards a universal licensing system that allowed operation in both fixed and cellular services.

2.5 Another burning issue was the lack of teledensity in rural areas. Rural teledensity stood at just 1.5 telephones per hundred people in 2003/04 far below the 20.79 telephones per hundred in urban areas. Go1 to remedy the problem funneled five percent of the revenue of telecom companies into a Universal Service Obligation (USO) fund designed to subsidize companies to extend the rural telephone network. This system, however, does not seem to have worked: Tata Teleservices, for example, had by late 2003 provided only 1,314 of the 9,635 Village Public Telephones (VPTs) that it had promised, while Reliance had installed only 502 of 8,635 expected VPTs. Government has also levied an access deficit charge (ADC) on all international distance calls to subsidize below-cost BSNL operations in rural areas. A sharp cut in the ADC recently ordered by TRAI, however, may negatively affect the possibilities for extending rural telephony in the future. So clearly, India’s Telecom Revolution remains largely an urban story: Unless more effective means are found to extend rural telephony, such as introducing revenue-sharing mechanisms for calls received in backward regions from more advanced ones, hiking the ADC back to its prior level and fining companies that renege on their agreements to provide VPTs, the growth of rural teledensity in India will remain slow.

Patterns in Telecom Reform

2.6 When one looks at back at the story of telecom reform in India, one is struck by the following patterns. First, the process of reform was gradual: It began in the mid 1980’s with the creation of C-DOT and continued fitfully into 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 twenty-year affair, spanning several governments from several parties, including Congress, the United Front, and the BJP. Second, the power of vested interests ensconced in the DOTwas whittled away primarily by the Prime Minister’s Office (PMO): The PMO pushed reform at critical moments when DOTwas clearly opposed, first by creating C-DOT and corporatizing DOT’Sservices in Delhi and Bombay, then by constituting a Telecom Restructuring Committee in the early 1990’s and framing the first New Telecom Policy in 1994. PMO activism in the late 1990’s 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 1992 in the tendering process for cellular licenses led to the creation of TRAI; a further crisis of private investment in the sector in the late 1990’s 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.

2.7 What does the telecom story imply for the restructuring of another major service, involving basic infrastructure -- the power sector? Not as much as one might expect. First, the

10 central government’s constitutionally-mandated control over telecom issues made it easier to push for change at the highest-levels (e.g., the PMO) and simplified the reform process considerably. The power sector, on the other hand, is subject to complex and varying dynamics across states that muddy the waters. Second, telecom reform in urban India is much less politically-sensitive than power sector reform with its attendant issues of theft, tariff-setting for rural consumers, and financial losses. Yet, the telecom story does show how the central government can intervene to reform a service where it has primary control and is an instructive case for central government services that need further reform, such as national highways, ports, railways, and postal services.

11. Competition in Marketing Services to Farmers: ITC’s e-Choupal kiosks and Choupal Sagar Hubs

The role of the Government: reforming the regulatory environment

2.8 The Government of MP actively encouraged the private sector to link up directly with farmers to acquire their produce to undermine the stranglehold exercised by traders over farmers through the state’s official marketing centers (Mandis). The Chief Minister saw this strategy of direct contracting between buyers and sellers of rural produce - bypassing official Mandis - as a way of raising returns to farmers on their crops.23 The bye-laws of the Mandi Board in Bhopal were altered in 2000 to allow for direct contracts, Souda Patraks, between buyers and sellers of notified rural produce outside the premises of the local Mandi, but within a defined ‘market area’. As long as a private center for acquiring produce was located within a defined market area, sales could occur outside the physical confines of a Mandi. In 2003, the government went further by amending the Agricultural Produce Marketing (APM) Act of 1972 to permit the issuance of a single license on payment of a fee of Rs. 2 lakh rupees to transact business with farmers directly anywhere in Madhya Prade~h.~~

ITC’s Strategy: Using information technology to link up directly withfarmers and cut costs

2.9 These regulatory changes in turn laid the foundations for ITC to engage in direct transactions with farmers. ITC is one of India’s largest private companies with a presence in tobacco, hotels, packaged foods, and agri-business; its annual revenues totaled about two billion US dollars in 2003.25 The opening up of the oilseed market in the late 1990’s in India, underlined the need for ITC to restructure its business processes to stay competitive in terms of quality and price. The strategy was to purchase soya and other crops directly from farmers and change the roles of traditional intermediaries, particularly traders, ensconced in the Mandi system.

2.10 Information technology was a useful tool for linking the company to a disparate and large group of farmers: ITC’s e-Choupal program creates a direct link to farmers for the procurement of soya and wheat, beginning with the placing of orders at a village e-Choupal internet kiosk to its actual purchase by ITC at one of its Sagar procurement hubs. ITC created a network of 1,700 rural internet kiosks servicing some 10,000 villages in Madhya Pradesh between 2000 and 2003

23 Bank staff interview with Digvijay Singh, former Chief Minister of Madhya Pradesh, December 12, 2004, New Delhi. 24 Bank staff interview with Commissioner, Mczndis, Government of Madhya Pradesh, February 5,2005, Bhopal 25 Kuttayan Annamalai and Sachin Rao, What Works: ITC’s e-Choupal and Profitable Rural Transformation (Ann Arbor: University of Michigan, 2003), p, 5.

11 to establish direct contact with farmers. 26 These kiosks performed several functions. They disseminated information on Mandi prices for soya and wheat across the state, allowing farmers to compare prices before setting off a particular Mundi to deliver their crops. The closing price at the nearest Mandi was also designated as the benchmark mark for purchases made at 43 Sagar hubs. Orders to procure crops for hubs were first placed at e-Choupal kiosks.

2.1 1 E-Choupal provided useful information on the application of good practices in cultivation through films, for example. ITC also persuaded the Meteorological Department to provide district-level weather forecasts for the first time through the e-Choupal website (www.echouDal.com) that can be accessed through all e-Choupal centers. The kiosks were staffed by Sanchalaks, a farmer selected from within the village, who had a front room to spare where a computer and printer were installed, along with a VSAT on the rooftop. ITC agents at local Mandis, in their new role as Samyojaks (Coordinators), provided vital information to the kiosks, such as the closing prices for soya and wheat, on a daily basis. Sanchalaks are authorized to assess the quality of produce brought by the farmers and indicate the price at which ITC would buy should the farmer wish to sell to ITC.

Picture 1: Farmers at an E-Choupal Center in Madhya Pradesh

Source: Photo Courtesy ITC

Benefits to fanners and ITC from the new marketing arrangement

2.12 What advantages did local farmers gain from this new arrangement? Under the old system, farmers had to transport their crops to the local Mandi without knowledge of prevailing market prices. Once at the Mandi, crops were auctioned off in a large shed and then weighed and bagged by Mundi staff. If the farmer was dissatisfied with auction prices, he could hardly carry his produce back with him, because of the sunk cost of transport and no guarantee that the prices would be any better next time around. Deliberate spillage of produce at manual weighing stations resulted in significant losses to farmers, who had to pay the costs of loading and unloading as

26 Bank staff interview with Mr. Ramkumar, Head of Operations, International Business Division, ITC, Madhya Pradesh, February 5,2005.

12 well as bagging. Agents at Mundis rarely paid farmers for their produce on the spot. The result was an exploitative, opaque system manipulated by vested interests, particularly traders. At a Sagar hub center, conditions could not have been more different. Electronic weighing eliminated any chance of error, let alone spillage. The hubs absorbed the costs of loading and unloading as well as bagging and threading. Crop payments were made on-the-spot rather than in installments later. The brightly painted Sagar hub with a spotless cafeteria and toilets, and a well-stocked department store for farmers with cash to spend was in sharp contrast to the dingy and rudimentary Mandi that for so long served as the only channel to market farm produce in MP.27

2.13 What did ITC gain from the new system? Direct links to farmers made it easier to trace the source of particular consignments, improving quality control; Mandi agents aggregated consignments, rendering ‘traceability’ difficult. Long-term supply relations with farmers now became possible, thus reducing risk. ITC also paid fewer commissions to its agents known as Samyojuks. Intermediation costs through Mandis fluctuated between 2.5% and 3% of total procurement costs. This was now drastically reduced: Sumyojaks were now paid only for providing price information to e-Choupal kiosks, not procurement itself, and for managing the Choupal Sagar hubs.

ITC’s strategy to overcome resistance.

2.14 How was ITC able to trump the vested interests in Mundis? First it helped that ITC had the deep pockets necessary to acquire the hardware for its 1,700 kiosks estimated at some Rupees 200,000 per kiosk because of the necessity of installing a VSAT in each village to overcome connectivity problems, and a Solar Panel for back-up Power supply. Acquiring land for 43 Sagar hubs - and constructing them -- was an expensive financial proposition that only a major private sector company with long term orientation could have borne. Second, ITC’s change management strategy was incremental. The company continued to pay taxes to the local Mandi for produce acquired at Sagar hubs. Mandi committees did not lose revenue from the creation of an alternative marketing channel, softening them in the process. Members of the Mandi union were employed for most operations at Sagar centers. All Sagar transactions were certified by a Mandi inspector. Former ITC agents lost income but not as much as they might have since they continued to act as channels of information between local Mundis and e-Choupal centers as well as management of Choupal Sagars. Third, without the changes in regulatory structure, ITC could not have succeeded.

Thefiture of E-Choupal

2.15 The change in government in Madhya Pradesh in 2003 does not seem to have imperiled e-ChoupaUSagar. A two-week strike by Mandi traders in December, 2003 produced a counter- reaction among farm organizations, who organized large protests in Bhopal and elsewhere in favor of a competitive marketing system. This message has been heeded by the new BJP government, which has done nothing to roll-back e-ChoupaUSagar. The new government has in fact, since issued a Single License to ITC to operate across the State as per the new APM Act.

2.16 E-ChoupaVSagar is an excellent example of what the private sector can do to improve service delivery, in this case, for farmers in a relatively poor north Indian state. This was possible because the Mundi system no longer served the interests of farmers but a tightly knit cartel of traders. This situation created an opportunity for ITC to step in with its financial reserves and

*’Bank staff visit to a local Mail& in Sehore district, as well as an e-Choupal kiosk and Sagar procurement hub on February 5,2005.

13 knowledge of agricultural practices to challenge the trader monopoly. The use of information technology created an effective network of ties between farmers and ITC that made doing business directly a feasible proposition in India’s largest state. Effective change management by ITC and a supportive policy environment because of the obvious gains to be had from improving marketing services for farmers ensured the success of the model. Its revenue model was sound: Both ITC and farmers gained economically from the arrangement. Given that Mundis function in much the same way across the country, it is not surprising that ITC has had little trouble in extending the e-Choupal/Sagar model to several other states in rapid succession, including Uttar Pradesh (with some 1,700 kiosks), Rajasthan and Maharashtra (800 kiosks each) and Kamataka (1 00 kiosks). ITC is now planning to extend the e-Choupal concept to medical services: kiosks will deliver medical information to villagers on-line and set up appointments to visit a dispensary at the Sagar Hub for proper attention and drugs.

Conclusion

2.17 In both of these cases, competition clearly helped clients: In the telecom case, DoT’s capacity for rent-seeking dropped dramatically while consumers, especially in urban areas, gained through vast improvements in connectivity and lower prices for calling services. In the case of marketing services for farmers in MP, farmers and ITC gained at the expense of traders. Farmers found an alternative channel for selling their produce where they could be paid on time without being exploited; ITC improved its competitiveness by developing long-term supply relations with farmers; and both shared the benefits of paying lower commissions to traders in Mundis.

2.1 8 Both initiatives were made possible only by strong action from the highest levels of government. In the telecom case, DoT’s monopoly was progressively challenged by as powerful an institution as the PMO. On a lesser scale, the political leadership in MP was willing to take on vested interests by amending the bye-laws of the Mandi Board and later the APM Act to allow for private participation in delivering marketing services to farmers. Both of these initiatives were popular: farmers liked having an alternative to the local Mandi to sell their crops, while most Indians applauded easy access to cheaper telecom services, especially in urban areas. Both of these cases offer models for other sectors: The telecom case has implications for other central government services, such as ports, posts, and railways, while ITC has extended the reach of its e- Choupal kiosks and Sagar procurement hubs to several states, particularly Uttar Pradesh, Rajasthan, Maharashtra, and Karnataka. Several agri-business companies are keen to imitate ITC; rural marketing services are thus likely to become even more competitive over time.

14 Chapter Three Simplifying Transactions

3.1 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, 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 on-line. Efforts to streamline transactions have not, however, been uniformly successful. There are examples where e-governance solutions have been warded off by vested interests as we shall see from our examination of two cases: Gujarat’s program to computerize its inter-state check-posts and Andhra Pradesh’s effort to computerize property registration in rural areas.

I. One-Stop Service Centers

(a) Andhra Pradesh ’s E-Seva Model: Political Support and Technological Sophistication

How does E-Seva work?

3.2 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.

3.3 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 ten counters per center, at least, in the Hyderabad area.

3.4 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 some 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. Transactions 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.

15 The benefits of E-Seva

3.5 E-Seva is expected to offer the following benefits to its users:

Faster processing, shorter queues, and better reception areas. Fewer trips to government offices, saving transport costs, and wage losses. 0 More accurate and legible documents; easy correction of errors. Improved access to centers (nearer home, open seven days a week, extended timings). Improved complaint handling.

3.6 A user survey conducted by the Administrative Staff College of India (ASCI) indicates that many of the expected benefits are being realized.28 84% of respondents indicated that E-Seva counters provided faster service than traditional departmental counters. An overwhelming majority of the users (97%) 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 five percent) experienced problems when they paid their bills at E-Seva (e.g., payments not properly recorded). Most (80%) transact at E-Seva counters on their own behalf, which implies a drastic decline in the use of intermediaries and touts. The most popular service is electricity bill payments (75%).

3.7 The growth of in the volume of transactions is also indicative of success. Transactions in the Hyderabad-Secunderabad area have skyrocketed from an average of 57,817 per month during the last five months of 2001 to close to 1.7 million in July, 2004. This growth has been achieved by the addition of new centers and new services. There has been a continuous shift of customers from departmental counters to E-Seva counters.*’ In Ap’s districts, transaction volumes have grown from an average of 36,608 per month in 2003 to about 1.5 million per month in July, 2004. Total monthly transactions for E-Seva in July 2004 thus stood at 3.2 million, translating into annual flow of 38.4 million transactions with a turnover of some Rs. 50.53 billion. These numbers clearly indicate a high degree of acceptance by customers.

3.8 Another sign of success is the increasing number of service providers participating in E- Seva. Several public and private sector banks have linked up with E-Seva to facilitate access to banking services. The popularity of E-Seva is evident from the requests by legislators and citizen associations to open centers in their districts. E-Seva has received several awards, including one from the Commonwealth Association of Public Administration (CAPAM).

Why was E-Seva successful?

High-level Political Suuport

3.9 Strong support from the Chief Minister (CM), Chandrababu Naidu, played a major role in its adoption. The CMsaw in technology a short-cut to overcoming the ills of service delivery in India.30E-Seva was an idea that came to him during a trip to Singapore where he became familiar

’*Administrative Staff College of India (ASCI), Hyderabad, Studv on the E-Sew scheme in Twin Cities, December 2002. 29 The electricity department indicated that nearly 80 out of 120 (60%) collection counters were closed in Hyderabad during the first four years of E-Seva operations. u. 30 Bank staff interview with Chandrababu Naidu, former Chief Minister of Andhra Pradesh, Hyderabad, December 6,2004.

16 with the role of the city state’s portal in delivering services on-line. Funds for the pilot were released at one go. The CMreviewed progress once a week during the first year of the project. He also persuaded departments to agree to participate in E-Seva and, in the case of the electricity utility, to pay five rupees per transaction, thus guaranteeing the financial viability of E-Seva. Without pressure from the CM, it is highly unlikely that departments would have risked sacrificing their independence by participating in E-Seva, along with reimbursing the cost of bill collection. It also helped that the CM, in his second term in office, had an absolute majority of 192 of 294 seats in the state assembly when E-Seva was initiated in 1999.

An Experienced Management Team in a Flexible Organization

3.10 A team of dedicated professionals implemented the project. A civil servant with expertise 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 longer 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.

A Public-Private Partnership Model

3.1 1 The fact that E-Seva is a public-private partnership has given the project additional financial leverage, management skills, and technical capacity. This in turn has made it easier to expand E-Seva over a period of five years. 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. As E- Seva become more far-flung, it will be important to strengthen the Department’s capacity to monitor such agreements. Areas where E-Seva could be improved include sequencing billing to prevent the bunching of business around particular days, with the risk of overcrowding; acceptance of non-cash payments above a certain amount; and charging departments for transaction time, rather than a flat fee, to encourage them to make their processes more efficient.

Change Management Strategy

3.12 Tactically, neither the Chief Minister nor his civil servants cast E-Seva as an attempt to curb corruption; it was uniformly treated as a program to enhance citizen convenience and reduce drudgery for departmental officials. It is conceivable that E-Seva may have reduced the payment of speed-money, but the ASCI survey did not ask this question and there is thus no evidence to support this claim, likely as it is.

17 The Future of E-Seva

3.13 The election of a new government in the 2004 assembly elections raised questions about the future of E-Seva in Andhra Pradesh, partly because this was so closely associated with the previous regime leadership. Yet, the new government has made no attempt to thwart the functioning of E-Seva; in fact, it has promised to expand E-Seva to rural areas. Clearly, E-Seva is a popular initiative that has won broad support, thus insulating it from changes in political direction. There are worries that departments will try to assert their independence and derail E- Seva but so far this has not happened. More real is the concern that transaction volumes may be too low for private partners to invest in E-Seva centers in rural areas. E-Seva may therefore have to be redesigned in rural areas to function more as multi-purpose internet kiosks, providing a mix of government services, opportunities for surfing the net or computer education, and even the sale of products. The current design of an E-Seva center is more suited to an urban municipality and is unlikely to be viable in most rural settings.

(b) Kerala’s Friends Program: Innovation under Political Constraints

Contrasting E-Seva and Friends

3.14 If Andhra Pradesh represents a sophisticated variant of the one-stop center complete with full networking and a reasonable level of backend computerization, Kerala’s Fast, Reliable, Instant, Effective Network for Disbursement of Services (Friends for short) represents a creative adaptation to local conditions. While the original inspiration for Friends came from E-Seva, Friends represents an attempt to promote single-point front-end service delivery without any real backend computerization. Nor does Friends charge departments for effecting transactions on their behalf with the exception of the publicly-owned telecom company, BSNL. Unlike E-Seva, whose counters are staffed by employees hired by private partners, Friends counters are staffed by employees appointed by parent departments; women from local self-help groups, organized by the state’s Kudumbashree movement to assist poorer women, provide cleaning and other services, including hand-delivering scrolls of transactions to departments every day.

3.15 Like E-Seva, Friends allows citizens to pay utility and other bills as well as property and other taxes at any counter in a Friends Center. Friends - unlike E-Seva at least in the Hyderabad area - lacks the capacity to deliver more complex outputs on-line that might entail significant process re-engineering, including a variety of government-issued certificates. The first center was opened in Trivandrum in June, 2000; a year later all 14 districts had one center each. Centers, however, are not networked to each other or to individual departments. Unlike E-Seva, Friends has not allowed its centers to be used for delivery of private services; nor has Friends turned to advertising to generate revenue. Inspite of the fact that Friends is clearly more “basic” than E-Seva, an opinion survey commissioned by the World Bank in 2001 indicates that Friends has struck a positive chord with Kerala’s citizen^.^'

How satisfied are customers with Friends?

3.16 The survey was targeted at potential customers in two wards of each district across the state. Almost 8 1% said that they did not have to wait at all to make a payment at a Friends counter compared to 61% who stated that they always had to wait at a departmental counter. 62% found the Friends center readily accessible. Respondents consistently rated Friends significantly

3’ Shirin Madon and G.R. Kiran, Information Technology for Citizen-Government Interface: A Study of the FRIENDS project in Kerala (Washington DC: The World Bank, 2002).

18 higher than departmental counters on friendliness of staff, willingness to clarify questions, and personal attention to customers. 97.4% preferred Friends overall to departmental counters. Women, in particular, preferred to pay their bills in a Friends center because of a proper queue system, absence of delays, friendly treatment, and the ability to effect several transactions at a single counter at a single time.

Motivating Government employees to perform

3.17 Friends has successfully motivated government employees to deliver front-line services in a professional and enthusiastic fashion. The absence of visible hierarchy among Friends employees, an excellent office environment, and the fact that most employees are volunteers with an interest in learning about computers helped motivate Service Officers. Officers sent on deputation to Friends rarely sought to return to their home departments and were usually allowed to stay on indefinitely by Friends management unless recalled.

3.1 8 All employees at Friends are given a common designation, ‘Service Officer’, regardless of previous seniority differences. The average age of a ‘Service Officer’ isjust 36, with many officers in government for less than five years. Most joined Friends voluntarily with a better working environment being a major attraction. Service Officers are well educated, with 43% possessing a bachelor’s degree and another 16% further graduate training. They were highly motivated: 76% praised the common designation system and some 32% felt that environment was friendlier than their home departments. Almost 88% wanted Friends to be extended to the sub- district level. The majority of Service Officers prefer to transact their own business with government at a Friends center rather than a departmental counter. Women employees recruited from the Kudumbashree poverty eradication program also thought highly of Friends: 65% felt that their standard of living had improved after joining Friends. This latter finding reflects the fact that most women were unemployed prior to joining a Friends center.

The role of the political context

3.19 Friends clearly grew out of the political context of Kerala characterized by multi-party coalitions, popular ideologies, and consensus decision-making. In fact, Friends was conceived at a time when the Left Democratic Front (LDF) consisting of the Communist Party (Marxist) and Communist Party were in power. Using government employees was essential in a state where the hostility to privatization or outsourcing was particularly strong. This also reassured Kerala’s powerful staff associations that e-governance would not furnish a pretext for job cuts by reducing workloads. The decision to involve women from the Kudumbashree movement generated a great deal of support for Friends among political parties, NGOs, and the public. There was no question in Kerala of using the Chief Minister’s limited power to compel departments to network themselves directly to Friends or pay service charges. Kerala’ s Information Technology Secretary, was compelled to begin with front-end computerization without worrying about back- end changes, work with existing government staff, and tap the services of local self-help groups rather than the private sector. This was no mean feat: It helped that the IT Secretary enjoyed an uninterrupted tenure of six years over two political regimes, allowing her to patiently nudge Friends along to its current transaction level of approximately 2.8 million for 2004/05 compared to one million in 2001/02. This is still only a fraction of Ap’s 38.4 million transactions annually, even after adjusting for Kerala’s smaller population size.

19 The limits of Friends

3.20 Friends will face clear limitations over time, Departments are reluctant to spare staff to man Friends counters, inhibiting the expansion of centers: There is only one center for the whole of Trivandrum, for example, compared to 43 E-Seva centers in Hyderabad. Nor are departments willing to pay any service charges to Friends and Friends continues to rely on an on-budget subsidy from government for operating costs. Departments argue, correctly, that they are already subsidizing Friends by paying employee salaries. The failure to diversify into private sector services - because this might entail charging users a fee unpalatable to Kerala’s political elites and customers - has also limited the revenue base of Friends. The absence of significant back- end computerization or business process re-engineering in departments has made it difficult to expand the menu of government-offered services from bill and fee payments to more sophisticated transactions, such as certificates. There are concerns that the use of manual back- end processes leads to room for errors, with departments not inputting data from transaction scrolls on time or making mistakes in data entry.

3.2 1 In order to address some of these issues, the IT Department is considering turning Friends itself into a public-private partnership. In addition, Kerala intends to develop a network of rural IT kiosks to be operated commercially that will deliver services from Friends but also provide a platform for other activities to improve viability. Some 650 rural kiosks are now operational under the Akshaya pilot program in Malappuram district. The fact that the United Democratic Front government in power since 2001 has agreed to commercial operations with user fees in Akshaya is an important step towards improving the prospects for e-governance programs in Kerala, including strengthening Friends.

3.22 Friends represent a highly creative program that builds on local conditions: this very adaptability, however, qualifies its relevance as a model for other states. On the other hand, Friends is a useful example of how to improve front-end service delivery without back-end computerization because of departmental recalcitrance and relatively low-levels of cross-party political support for e-governance. It is worth noting that front-end computerization did not furnish much incentive for departments to computerize their back offices in response, as advocates of the project initially claimed would happen.

11. IT FOR FARMERS

(a) Computerized Land Records in Karnataka (Bhoomi)

The Deteriorating State of Land Records

3.23 Land administration in India has deteriorated during the post-independence period partly because the declining shares of land revenue in the own-tax revenues of state governments. Staffs assigned to the Revenue Department in rural areas are, more often than not, reassigned to tasks other than land administration, including election duty, the issue of certificates, and so on. Land surveys that were once conducted at regular intervals no longer happen as much partly because of lack of qualified staff but also because farmers fear that land surveys will be used to manipulate patterns of ownership. In some states, such as those in the north-east, land records simply do not exist, while in other states they suffer from serious inaccuracies.32 Reliable land

32 See N.C. Saxena, “Updating Land Records: Is Computerization Sufficient?” Economic and Political Weekly, January 22,2005.

20 records are important to secure credit from Banks, establish a presumptive claim to ownership, and for any legal proceeding involving disputed property.

The Process of Computerizing Land Records in Kamataka

3.24 Given the importance of land records for ordinary farmers, Karnataka embarked on a huge effort to computerize some 20 million records for 6.7 million farmers, using funds provided by the Government of India (GoI) for land records computerization across states.33 Farmers no longer have to approach village accountants for a copy of their land record but can directly receive a signed computer-generated record at Taluq-level kiosks. Village accountants were often inaccessible, asked for bribes, and could easily manipulate records. The first task was data entry: Once completed in a Taluq, printed records were handed over to village accountants and others for authentication against existing paper records. Farmers were provided with free copies to encourage further verification of accuracy. The mutation process was altered to permit farmers to submit such requests on-line, receive a status-tracking number, and verify pendency. Village accountants were still responsible for verifying changes of ownership in the field, but were required to deal with applications on a first-in, first-out principle only to discourage payments for queue-jumping. Revenue Inspectors are also now required to take action on a file within 50 days after which the case is automatically transferred to a higher official. In order to staff the 177 Taluq-level kiosks, the Revenue Department hired young offspring of village accountants as government servants on “compassionate grounds” (permissible under civil service rules) and trained them in computers. A facilities manager from the private sector was appointed to maintain hardware and resolve system glitches at Taluq centers. The computerized land record was signed by a revenue official posted to the center. In order to prevent tampering, biometric identification was introduced for the first time in India to ensure that only authorized personnel had access to the data. A central server is now ready in Bangalore to permit access to the land records database from any Taluq center or rural IT kiosk (when these become operational) in Karnataka. The entire project took some seven years to complete. A service charge of Rs. 15 per land record is currently levied on all transactions.

Did Computerization Make a DifSerence?

3.25 So far the results are encouraging. An independent user survey -- based on a comparison of six districts, some computerized and others not - and conducted by the Public Affairs Center (PAC) revealed the following results.34

66% of all users were able to use Bhoomi kiosks without any help compared to 25% in the case of the manual system. 0 79% transacted their business under the computerized system without seeking access to a revenue official (other than counter staff); in contrast, 61 9% of all users in the manual system had to meet two to four officials to get their work done.

33 For an analysis of this process, see Rajeev Chawla and Subhash Bhatnagar, “On-line Delivery of Land Titles to Rural Farmers in Karnataka,” Paper prepared for Shanghai Conference on “Scaling-up Poverty Reduction” (The World Bank: World Development Institute, 2004). Available on-line at http://n ww.wrldbank.orrr/wbi/reducinLrpovertv/case-India-BHOOMI.htni1

34 Albert Lobo and Suresh Balakrishnan, Report Card on Service of Bhoomi Kiosks (Bangalore: Public Affairs Center, November 2002). An earlier qualitative analysis of Blzoorni presents a more critical view; although thoughtful, this study is based on a field-visit to a single Taluq only. See Tim Hanstad and S.B. Lokesh, Computerization of Land Records in Karnataka: Observations from a Simple Field Study, 2002.

21 0 Computer-generated records had fewer errors than those provided manually. 74% of all computer-records were accurate compared to only 63% in the manual system. Major errors in land details were reported by 3 1 % of users of the manual system compared to just four percent of those using the computerized alternative. 0 85% of those using the computerized system characterized staff behavior as ‘good’; the corresponding figure for users of the manual system were zero. ..42% reported a waiting time of less than 10 minutes in the case of Bhoomi kiosks compared to 27% for users of the manual system. 0 57% of Bhoomi users reported timely action in response to complaints compared to a paltry 3.6% for users of the manual system. 0 66% of users in the manual system reported paying a bribe compared to just three percent for Bhoomi users. 0 The weighted average of bribes paid under the manual system was Rs. 152.46 per person compared to Rs.3.09 for Bhoomi.

Political support, administrative leadership, process re-engineering, and effective change management together explain why Bhoomi worked so well

3.26 The project was overseen by a single person from the very beginning: An Indian Institute of Technology (IIT) graduate, who later joined the IAS, shepherded the project for seven long years as Additional Secretary, Revenue. The Chief Minister, made his support of the project amply clear on several public occasions, thus sending a powerful signal to the state’s 9,000 village accountants to go along with it. The Chief Minister saw Bhoomi as a vital part of his program to “sharpen” service delivery and that he felt secure in taking bold actions to do so because of his large majority in the state assembly.35 As a result of this support, it was possible to push through key measures essential to the success of Bhoomi, including charging transaction fees, banning use of manual records after a Taluq had switched over to the computerized system, and amending the Karnataka Land Revenue Act to allow for the use of electronic records. Bhoomi also implemented an effective change management system to blunt opposition to the project: Children of village accountants were hired as operators under Karnataka’s compassionate employment program. While business processes were significantly altered, village accountants retained an important role in verifying mutation transactions and were thus not shut out of the system altogether. New procedures, such as the ‘first-in, first out’ rule and time limits for mutation transactions were taken only after the computerized system was working across the state, and not before. The care taken to verify electronic records with revenue officials and farmers also reduced the error rate and improved the credibility of the new system.

Land records have not been properly computerized in several states

3.27 Tamil Nadu is one of the few states in India, other than Karnataka, where land records have been put on-line in all districts. In most other states, computerization has been incomplete or resulted in putting inaccurate data on-line. Bihar, for example, received some Rs.30 million from Go1 in 1998-99 to begin the process of putting its land records on line. Over the next six years, Bihar spent only half of this amount, precluding further funding from Go1 for the project. The Director, Survey, who was charged with implementing land records computerization in Bihar, had an average tenure of about three months during this on-going project. The office also lacked the clout to push through such a complex program. Because the error rate in paper records is so great in Bihar, collectors, not irrationally, saw little point in computerizing them. Long

35 Bank Staff interview with S.M. Krishna, former Chief Minister of Karnataka, Mumbai, January 5,2005.

22 delays in appointing private companies for data entry also delayed the project, while a fear of vigilance inquiries seems to have discouraged project managers from acquiring hardware.36

More still needs to be done in Kamatuku to improve land administration

3.28 While Karnataka is clearly ahead of other Indian states in land records computerization, there is still more to be done. The presence of multiple agencies in land administration can lead to confusion: There is a need to merge the functions of generating land records and registering them for purposes of stamp duty. Networking registration and land records offices is a crucial step in the right direction (both are technically part of the revenue department in Karnataka). The accuracy of a land transaction needs to be verified to allow certificates of registration to function increasingly as legal titles in a smoothly functioning property market. It is worth noting that Bhoomi adds to the travel time of a farmer who now has to travel to a Taluq office to secure his land record rather than the village accountant. Clearly this is a small price to pay given the other benefits of the system, including faster service, more accurate records, and fewer opportunities for corruption. Karnataka’s plan to decentralize the issuance of computerized land records to privately-run rural internet kiosks spread across villages in the state is thus a helpful step to making access to land records still more convenient for state’s farmers.

Box 3 : Gujarat’s Smart-Card Driving License3’ Gujarat was the first state in India to introduce a smart-card driving license. The chip on the card stores personal data, including fingerprints and a record of prior traffic violations. New infractions can be written onto the chip instantly through hand-held terminals. The smart-card license has driven touts out of business: Now all applicants have to visit a Transport Office to be photographed and fingerprinted personally. The new system thus allows more effective control over the issuing of drivers’ licenses, as well as proper tracking of offenses, making Gujarat’s roads safer. It is virtually impossible to forge these licenses. Gujarat has issued some four million smart-card licenses since 1999 out of eight million licenses. The system is operated by a private company under the supervision of the Transport Department. The system was the brainchild of a Transport Commissioner who viewed e-governance as a useful tool to improve his department’s services. Madhya Pradesh and Sikkim have introduced smart-card licenses similar to Guiarat’s, while several other states are Dlanning to do so in the near future.

-- I I Note: Pictures courtesy of Transport Department, Government of Gujarat

111. SOME CHALLENGES IN THE IMPLEMENTATION OF E-GOVERNANCE

Not all e-governance projects were as siiccessful as E-Seva or Bhoomi

3.29 Two ambitious projects, one that sought to computerize inter-state check-posts in Gujarat and the other to computerize the Registration Department in rural Andhra Pradesh, both ran into

36 N.C. Saxena, “Updating Land Records: Is Computerization Sufficient?” 37 See Pannervel, E-Governance: A Change Management Tool, Chapter. 2.

23 trouble for the same reason: resistance by those who stood to lose most from the project, which, in turn, caused state politicians to waver in their initial support of these two bold initiatives.

(a) Gujarat ’s Computerized Interstate Check-posts (CZCP)

Collecting Taxes More Efficiently to Reduce Leakages

3.30 All states have the right to collect entry taxes from vehicles entering their states under the law. These taxes are collected by inter-state check-posts controlled by the Transport Department. Officials in Gujarat were deeply concerned about the loss of revenue to the exchequer caused by corrupt inspectors through the imposition of ‘unofficial’ taxes on vehicles which never made it into the treasury system. Manual checking led to long lines and delays that harmed the flow of inter-state commerce. Given the shortage of inspectors and the lack of technology, only a small fraction of vehicles were actually checked for overloading, which resulted in a further loss of revenue to the government through foregone penalties. Inspectors ruled the roost at these check- posts and there was little monitoring by the Transport Department.

Designing a ‘Fool-Proof’ IT Solution

3.3 1 In 1999, the Transport Commissioner persuaded both the Chief Minister and the Finance Department to support his plans to computerize the state’s ten check-posts by promising a major increase in revenue.38 A highly sophisticated system was then put in place within ten months: New lanes were built with electronic weighing machines. A video-camera was installed in each lane to transmit images of license plates to a control room in Ahmedabad for scanning against a database to determine whether taxes had been paid on the vehicle and its permissible weight load. This information was then transmitted to the terminal in the lane’s cabin, which automatically calculated any taxes due; the difference between the vehicles permissible and actual load based on electronic weighing; and the penalty due for overloading. In the system, as ideally designed, an electronic display board (EDB) flashed all this information to the driver, who was also given an automated receipt that tallied with the data on the EDB. Random checking was thus halted: All commercial vehicles were checked for overloading using the new technology. A private company was selected through competitive bidding to operate and maintain the system, as well as staff the cabins at each lane. The video-cameras provided an independent way of verifying the number and kinds of vehicles that had passed through each lane, making it hard for inspectors to fudge such information. The average time under the new system to clear a vehicle was pegged at two minutes infinitely superior to the old manual system.

The Solution Unravels

3.32 A review by the Indian Institute of Management, Ahmedadad (IIM-A) in June, 2002, however, found that the system has unraveled ~ompletely.~~The Transport Commissioner after installing the system in a lightening ten months was transferred to another post in 2000. A new leadership proved less involved in the project than in the past: In the following 18 months, some four Transport Commissioners came and went. Meanwhile, a dispute broke out between the government and the private sector provider over payment terms, resulting in the departure of the

38 P. Pannervel, E-Governance: A Change Management Tool (New Delhi: Rawat Publications, 2005), chapter 3 “Automatic of Inter-state Border Transport Check-posts.’’ 39 Center for Electronic Governance, Computerized Inter-state Check-posts of Guiarat State, India, (Ahmedabad: Indian Institute of Management, November 2002).

24 company. In the wake of this, the computer system at the check-posts collapsed: The IIM review found that inspectors had switched off the electronic display boards, receipts were manually issued without critical information, such as the actual weight of the vehicle (as recorded by the electronic weighing machines), and the control room at Ahmedabad ceased to function because the video-cameras at check-posts were turned off by inspectors. Drivers continued to complain of ‘unofficial’ payments being demanded by inspectors: A full 61 % of all drivers’ surveyed stated that ‘additional’ money continued to be paid routinely and 33% of all vehicles of all overloaded vehicles were not charged an official penalty, implying a significant leakage of revenue that should have gone to the g~vernment.~’

3.33 By 2005, there was evidence of some improvement. A new Transport Commissioner had been in place €or nearly two years and had managed to pull the project back from the brink. A new private sector provider had been selected to operate and maintain the computer systems. The control room in Ahmedabad was working again, although the absence of a reliable database makes it impossible to check license plate details, as originally en~isaged.~’Still, it was possible for staff at the control room to check revenue figures from check-posts with vehicle image data stored in the central server. But a follow-up review of the system is necessary whether these improvements are real, particularly at the check-posts.

But revenue did increase.

3.34 In one sense, though, the project has been a success: Revenue did increase significantly from Rs.560 million in 1998-99 before computerization to Rs. 2.91 billion in 2003/04: Electronic weighing made it possible to check all vehicles for over-loading unlike in the past when inspectors could manually check only a few vehicles selected at random. Retaining this revenue is the principal reason why the leadership of the Transport Department had an incentive to rescue the project, despite serious opposition from politically influential inspectors.

(b) AP’s Computer-Aided Administration of Registration Department Program (CARD)

Computerization fails to reduce corruption according to survey evidence

3.35 AP was the first state to computerize its Registration Department. While the initiative appears to have done well in urban areas, there are indications that corruption in rural areas has continued, despite reforms. One study (Caseley, 2004) comparing two computerized and non- computerized Sub-Registrar offices (SROs) in each of three rural districts revealed that the incidence of bribes remained significant even in the computerized SROs (Table 2).42

401bid.,p. 14-15. 4’ Bank staff visited the Control Center in Ahmedabad on February 23,2005. 42 Jonathan Caseley, “Public Sector Reform and Corruption: CARb Facade in Andhra Pradesh”, Economic and Political Weekly, March 13, 2004.

25 District Total Fees Actual Fees: Total % of Actual Cost of Total Paid by What Customers Bribes Fees Paid As Bribes Paid in Customers Should have (A-B=C) Bribes Labor Days

Mahboobnagar 7347 3279 4068 124 136 2 Card SROs 2 Non-Card SROs 4540 2020 2520 125 84

West Godavari 8 148 6320 1828 29 61 2 Card SROs 2 Non-Card 8 164 6035 2129 35 71 SROs

Chittor 4397 2994 1403 47 47 Card SROs Non-Card SROs 5290 3152 2138 68 71

Note: Calculated through oflcial government fees for stamps and registration. Source: Caseley (2004).

3.36 Clearly, CARD failed to arrest corruption in rural SRO’s: In Mahboobnagar, there was no difference in corruption levels between computerized and non-computerizedSROs. In West Godavari and Chittor, corruption in CARD offices remained substantial, although not as high as in non-CARD SROs in the same districts. How did this unexpected outcome occur? CARD was implemented quite rapidly across the state of Andhra Pradesh. By November, 1998, fifteen months later, CARD had been extended to 21 2 SROs in Andhra Pradesh under the careful supervision of the Department’s IT savvy Inspector-General (IG). The Registration Department’s staff association consisting of some four thousand employees went along on the assurance that no employee would be retrenched and that computerization would eliminate the drudgery of manual operations.

Traditional players in the registration process retained control despite computerization.

3.37 Deed writers have always played an important role in mediating the relationship between citizens and SRO staff They wrote out documents on stamp paper, ensured that requirements for submitting a document had been fulfilled, and paid any bribes to the Sub-Registrar. In this, they were often accompanied by Village Accountants responsible for the maintenance of land records. It is now clear that this way of doing business continued after computerization - in fact, 36% of CARD SRO customers in the three districts studied stated that they never met any SRO staff, 87% were not given an official receipt for fees paid generated by the computer system, 42% said they had paid bribes, and 57% agreed that the Department was corrupt. Connivance between Sub-Registrars, deed writers and village accountants meant that the computer system was bypassed for the most part and not much changed as a result in these rural districts.

3.38 The IG was transferred in 1999 and the project lost a valuable champion as a result. Not enough effort was made to inform citizens about the new processes especially in rural areas, so they could demand that Sub-Registrars implement the system more effectively.

26 Comparing CICP and CARD

3.39 CICP and Card have much in common. Powerful interests that stood to lose from reform regrouped to undermine it in both cases. The two projects were implemented very rapidly, ten months in the case of CICP and 15 for the roll-out of CARD, compared to the seven years it took to implement Bhoomi. Both CICP and CARD deteriorated after the transfer of their original champions. The withdrawal of CICP’s private sector partner in the wake of tensions with the Government led to the disabling of the project’s computer systems. It is no doubt true that some of the problems in CARD were traceable to low levels of awareness among rural users, but the Department could have made more effort than it did to anticipate and address this issue.

Box 4 : Building Capacity for E-Governance: Andhra Pradesh’s Chief Information Officers (CIO) Program. In 2000, The State Government of Andhra Pradesh in India launched a unique program to train key Government officials in the process of developing Government ICT applications, so that they would be in a position to harness better outputs from IT-related investments in their respective departments. The program was designed and delivered by the Indian Institute of Management, Ahmedabad. The CIO program is a fully residential training program consisting of eight weeks of in-class modules and a four week project. The main objective of the program is to prepare participants to play a leadership role in the planning and implementation of information systems projects in the governance of the state. The program serves the following specific objectives:

1. To help participants acquire a holistic view of an IT application, for example, by enabling them to consider an information system from the point of view of all stakeholders.

2. To enable participants to understand their role in the analysis, design and implementation of an information system, lead IT project implementation teams, and effectively monitor projects during different phases of their life cycle.

3. To develop an appreciation among participants for information technology and its role in operational and strategic decision making, as well as expose them to current trends in hardware, software, communications and networks, so that they can assess the implications of the new technologies for offering improved services, choose cost-effective technology in planning and upgrading their systems, and acquire a variety of skills for handling techno-commercial decisions.

4. To help the participants appreciate the fact that the success of an IT application is determined not merely by its technical excellence, but also on how well the resulting socio-cultural, administrative, and other organizational changes are managed.

Five programs have been conducted over the last four years, training 120 middle and senior-level officers drawn from IAS, IPS and State Civil Service cadre of AP. Many of those trained have played a leadership role in developing and implementing E- Governance projects in AP.

Conclusion

3.40 E-Governance is a popular tool for simplifying transactions. E-Seva is probably the most sophisticated one-stop center model in technological terms: It depended heavily for its success on high-level political support, administrative competence, particularly at the mid-management level, careful change management, and a well structured public-private partnership arrangement. Friends are more the product of diligent leveraging by the state’s long-time IT Secretary rather than high-level political support. Bhoomi depended on support from the state’s Chief Minister at critical junctures; the Chief Minister supported the project because of the expectation that this

27 would shore up his party’s rural base. In addition, Bhoomi could not have happened without the presence of a highly skilled - technically and administratively -- civil servant at the helm of the project for seven years, significant process re-engineering, and the use of effective change management strategies.

3.4 1 Without these supporting conditions, neither Bhoomi nor E-Seva can be easily replicable. Both Bhoomi and E-Seva involved significant business process changes, unlike Friends. Because Friends set the bar lower than E-Seva, with only the front-end being re-engineered, it may be easier to replicate. Bhoomi in particular involved formidable challenges, including the task of verifying and digitizing 20 million land records and ensuring connectivity for 177 on-line kiosks: Very few states have the capacity to undertake such a massive enterprise on their own. All three initiatives have survived political transitions from one party to another because of their popularity with users.

3.42 Neither Bhoomi, E-Seva, nor Friends were successfully resisted by those who might have lost from these initiatives. In all three cases, the governments cast the objective in terms of improving citizen convenience and eliminating drudgery, not curbing corruption. Village accountants in the Bhoomi case were a disparate group spread out over the state with a weak capacity for collective action. Nor were they rendered totally irrelevant by computerization; all land transactions continued to be verified by them. Friends was too limited a program to threaten departments in Kerala, while E-Seva had visible political support from the Chief Minister, making it expedient for departments to cooperate. These conditions did not apply in the cases of CICP in Gujarat and CARD in rural AP. In the CICP case, Inspectors were a powerful and cohesive lobby whose interests were directly threatened by the introduction of new technology. Inspectors were able to reclaim the system, with a series of Transport Commissioners being transferred in quick succession and the initial private provider abandoning the project after its position became untenable. In the Registration case, deed-writers, village accountants, and Sub- Registrars came together to exploit the low level of rural awareness to bypass the computerized system.

28 Chapter Four Restructuring Agency Processes

4.1 Simplifying transactions is a more superficial process than restructuring agency processes. It only involves re-engineering the relationship between citizens and agencies at the point where they interact. Neither E-Sew nor Friends transformed the fundamental operations of participating agencies, while Bhoomi did not change the nature of the Revenue Department in Kamataka, with the exception of the issuing of land records. Restructuring agency processes involves a much wider attempt at reform, across 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.

4.2 Here we examine five agency reform processes at the state and city level respectively. Our state-level examples include the transformation of the Stamps and Registration (S&R) Department in Maharashtra; and reforms taken to bolster the performance of the Karnataka State Roads and Transport Corporation (KSRTC). At the city-level, we examine the cases of the Hyderabad Water and Sewerage Supply Board (HWSSB), agency reform in Bangalore, and changes in the working of the Surat Municipal Corporation sparked by the outbreak of an episode of plague in the city in 1994. All of these cases involve agencies with a great deal of interface with the public. S&R Departments around the country handle property transactions, registering deeds that testify to ownership and collecting stamp duty, an importance source of revenue. Road Transport Corporations are charged with providing efficient, comfortable, and safe intra and inter-state bus services to citizens. City agencies, including municipal corporations, play a vital role in delivering many urban services. The state of these agencies in most states is poor, but these cases of reform do offer considerable evidence that meaningful change is indeed possible.

I. STATE-WIDE AGENCIES

(a) Transforming the Stamps and Registration Department in Maharashtra: Staff consultation and Business Process Re-engineering precede computerization.

Stumps and Registrution’s reputation as u department prone to corruption.

4.3 Stamps and Registration Departments have a reputation of being vulnerable to corruption, partly because of temptation - they register high-value land transactions; opacity in rules and procedures, registration services in India are still regulated by the antiquated Indian Stamp (1 899) and Registration Acts (1908); 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. The recent Telgi scam involving the printing and use of fake stamp paper to validate transactions in banking, the legal system, and property markets has added to the image of corruption that haunts S&R Departments, although the Telgi scam was more the result of a breach in the security system of the Government’s printing press in the city of Nasik and collusion among a complicated nexus of criminal gangs, stamp vendors, the police, and some politicians.

The process of reform in Muharushtra.

4.4 Reform in the S&R Department in Maharashtra began with the appointment of a reforming IAS officer as Inspector-General (IG) in mid- 1998; The new IG came to the post with

29 both an MD and MBA degree and a reputation as an administrator committed to change. His appointment was the direct result of the decision of the state’s Chief Secretary, the senior-most office in the state bureaucracy, to focus on the Registration partly because of its reputation as a hotbed of nefarious activities and partly to catch up with Andhra Pradesh, which had already implemented a major program to computerize registration services. The Chief Secretary wanted to show that Maharashtra too could become a leader in delivering citizen-friendly services through e-governance.

4.5 The new IG immediately began a series of intensive staff consultations, meeting and speaking with more than 70% of the department’s 2,657 employees. He also visited several Sub- Registrar offices (SROs) incognito; extensive discussions were held with stakeholders including real estate brokers, lawyers, and citizen groups. 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 lay-out of registration offices, compelling sub-registrars to move their desks to the front of the office among staff to improve team-work. 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 a 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-Registrar’s (SRs) to meet them.

4.6 Once this initial foundation had been laid and employees appeared to accept the inevitability of change, computerization began in earnest. An advisory board consisting of SRs was created to vet the software prepared by C-DAC, strengthening ownership. One key issue was how to introduce computerization in a department that lacked the necessary skills to operate and maintain hundreds of computers, scanners, and CD writers in 360 offices across the state. The only way out was to ask a private operator to sign a contract with the registration department to install, staff, operate, and maintain the system; in order to pay for this arrangement, the state Cabinet allowed the department to charge a user fee of Rs.20 per page for every document and open a bank account for the department to retain such revenues directly. The state’s SRO’s were divided into eight divisions and thrown open to a competitive bidding process; tender documents were careful to clearly specify roles and responsibilities. Dividing up the state into eight divisions allowed local companies to compete effectively for contracts. By October, 2001, tenders had been awarded and by February 1,2002, computerized registration services were launched simultaneously in all 360 SRO in Maharashtra at a ceremony attended by the Chief Minister (the pilot phase had been limited to one SRO in Pune).

A more effective performance management system.

4.7 Both private contractors and SRO 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.

4.8 The installation of a help-line in Mumbai provided a useful feedback mechanism to S&R leadership, while a telephone-based appointments system cut lines at SROs in the city. 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

30 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.

4.9 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 Standards Organization (ISO) certification in November, 2004. This certification was based on a series of internal and external (by IS0 staff) audits to assess quality management systems in 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 impact of Maharashtra’s reforms on Kamataka.

4.10 Karnataka was directly influenced by Maharashtra. A visit by Karnataka’s IG to Maharashtra to study S&R reforms there, triggered a series of changes in Karnataka, including the adoption of C-DAC’s software package for calculating stamp duty; a public-private partnership model; the right to retain user fees rather than plough them back into the state’s consolidated fund, and a new citizens’ charter. Karnataka also banned the use of stamp paper. The Chief Minister and the Finance Department interested in improving revenue collection readily agreed to these proposals, which sailed through the Karnataka cabinet.

User perceptions of reform in Maharashtra and Karnataka

4.1 1 A survey carried out in August, 2004, however, shows that users in Maharashtra have a higher opinion of registration services than those in Karnataka on, at least, some parameter^.^^

0 The number of people who used “help” (e.g., touts) to register their document in Maharashtra was significantly lower than in Karnataka. Only 40.5% in Maharashtra got help compared to 94% in Karnataka. 0 74.5% of all respondents in Maharashtra classified the behavior of S&R staff as polite compared to 3 1% in Karnataka. 0 93.5% of all those surveyed in Maharashtra stated that they had not paid “any extra fees to successfully register their document compared to only 14.5% in Karnataka. 0 77.5% of all respondents in Karnataka stated that it was true that “people still had to pay bribes to register their documents” compared to only 8% in Maharashtra. 0 Respondents in both states noted an improvement in the time taken to register a document: All respondents in Maharashtra (1 00%) stated that it took under 30 minutes, excluding preparing documents for submission; in Karnataka, some 50% said that it took between 30 minutes to an hour to do so.

43 The survey was based on visits to one urban and one rural SRO in four districts in each state, representing different socio-economic regions. At each SRO the team interviewed the SR, observed service provision, and conducted exit interviews with at least 25 customers: N=200. Results reported in Jonathan Caseley, Reinventing Service Delivery in an Indian State: Reform n the Stamps and Registration Departments in Maharashtra and Karnataka, Final Draft Paper for India Service Delivery Report, (New Delhi: Poverty Reduction and Economic Management Unit, The World Bank, 2005).

31 Sizeable proportions in both states expressed a positive view of the S&R services: 56.5% of users in Maharashtra said these services were ‘good’ compared to 3 1.5% in Karnataka. Only five percent in Karnataka said these services were ‘poor’ compared to three percent in Maharashtra. Approximately, 65.5% in Karnataka felt services were average compared to 38.5% in Maharashtra. Interestingly, some 42% of all respondents in Karnataka rated S&R services “better” than those of other agencies, compared to 65% in Maharashtra. The rest mostly said the quality of services was similar: 52% in Karnataka and 22% in Maharashtra.

4.12 Clearly, Maharashtra’s S&R Department has been turned around: The perception of corruption is low, staffs are mostly polite, and most deeds registered within an hour. In Karnataka, users still perceive corruption as a problem, with intermediaries thriving, although registration takes far less time than in the past. In fairness to Karnataka, it is necessary to point out that Karnataka’s reforms began only in 2002, a full three years after Maharashtra, so it may take more time for reform to stabilize and percolate to the point where it can influence public opinion.

Reform in Maharashtra worked because of staff buy-in through consultation; business process changes before computerization; an effective public-private partnership and tight performance management, a stable tenure of three years for the IG; and support from the Chief Secretary.

4.13 The transformation of Maharashtra’s S&R Department is a remarkable phenomenon; In a chain reaction, A€’, Maharashtra, and Karnataka, with varying degrees of success, took important steps to reform their registration services. Inter-state 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 IS0certification 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.

(b) The Karnataka State Road and Transport Corporation (KSRTC): The bene$ts of a prior history of reform and a mix of autonomy combined with state support.

The history of KSRTC

4.14 KSRTC had a prior trajectory of reform before major changes were introduced beginning with the appointment of a new MD in 2000. The Transport Minister from 1996 to 1999, had presided over its re-organization, tamed the unions, introduced autonomy for fare revisions, and supported transparent recruitment processes. KSRTC was broken up into smaller units to facilitate change. Initially, a monolithic public sector enterprise created in 1961 to provide bus services for the state of Karnataka, KSRTC was divided into four Corporations, starting with the creation of the Bangalore Municipal Transport Corporation (BMTC) in 1997, the North-West Kamataka Road Transport Corporation (NWKRTC), also in 1997, and the North-East Karnataka Road Transport Corporation in 2000. KSRTC in 2000 was thus left with control over 14 of Karnataka’s 27 districts, located mostly in the southern part of the state: In some these districts, KSRTC enjoyed a monopoly but in others it shared routes with private operators as a result of

32 policy changes designed to deregulate the transport sector. KSRTC continued to be responsible for procurement decisions for all four corporations, as well executive staffing decisions.

Reforming the remnant KSRTC, 2000-2004

4.15 These changes laid the foundation for rapid reform in the remnant KSRTC triggered by the appointment of an experienced administrator with a talent for turning around failing public sector enterprises as the new MD in 2000. Three working groups were set up, each headed by a functional director, to focus on technical improvements, revenue maximization, and staff motivation. These groups galvanized senior management behind the MD and helped steer reform forward. Higher-quality ‘branded’ buses, including Volvo buses for the first time in the history of any state-owned public bus company, were introduced on certain frequently traveled routes, such as the Mysore Mallige between Bangalore and Mysore. Branding allowed for the operation of a differential fare system, as well as greater comfort for paying passengers. KSRTC raised its fares four times in three years between 2000 and 2003 to recover costs at a time when diesel prices were decontrolled. There were substantial gains in efficiency: Between 2001 /02 and 2004105, KSRTC’s staffhehide ratio fell from 5.84 to 5.17, a comparatively low ratio for public bus companies in India. Karnataka did better than public bus companies in AP, Maharashtra, Gujarat, and UP in terms of its daily vehicle utilization rate (367 kms per bus in 2003/04) and the daily kilometer yield per staff member (54 kms). Fuel efficiency grew from about 4.67 kms/litre in 2000/01 to 5.25 kms/litre in 2003/04 for a fleet of some 4,466 buses as a result of changing fuel mixes, de-rating engines, and better driving4 KSRTC became a profit-making enterprise for the first time in decades, starting in 2000/0 1.

Picture 2: KSRTC Modernizes its Fleet with the Airavat Bus

Photo courtesy KSRTC

4.16 Major reforms were introduced to improve customer relations. A computerized reservation network was expanded to include some I15 private agents on better revenue-sharing terms, while remote reservation counters were established at nine locations, as well as in all districts headquarters. An accident relief fund, akin to a life insurance plan with payments of Rs.1 lakh for fatal cases, was created for the first time in India based on the principle of collecting

44 Data provided by KSRTC.

33 one rupee for every ticket valued at Rs.20 or more. KSRTC was also the first Indian public bus company to introduce a service guarantee, offering discount coupons to customers who experienced significant delays or breakdowns. Safety was improved through a variety of means, including video-graphing tests for new drivers. Drunk driving and other infractions by staff led to well publicized suspensions, which deterred further trouble. A citizens’ charter was introduced in 2002: The charter was “drilled” into staff through training and communication programs at the depot-level. Late arrivals and departures - the bane of the transport system - was tackled by daily monitoring at bus-stands and prompt corrective action.

Customer perceptions of the egectiveness of reform

4.17 A survey of some 2000 commuters by the Indian Institute of Management, Bangalore (2004) showed that KSRTC buses out-perform private buses on a number of counts.45

55% felt that KSRTC services offered faster travel times than public buses compared to 32% who said private buses were faster. 57% felt that KSRTC buses were more “likely to follow arrival and departure timings” than private ones; only 32% felt private buses would do so. 64% felt that “the attitude of the crew was better” in the case of KSRTC buses compared to 15% who expressed a preference for private bus crews. 63% felt that KSRTC buses were better maintained than private buses; only 23% of those surveyed held the opposite view. 75% felt that private buses were more prone to accidents and 77% felt that private bus drivers were more likely to engage in rash and negligent driving. 52% felt that seating arrangement in KSRTC buses were better compared to 24% who felt that private buses offered better seating. 61% felt that KSRTC buses offered easy boarding and alighting compared to 18% who felt that private buses were better on this count. 86.7% favored a state monopoly over buses (47.7%) or a mix of state and private participation (39%). Only a small minority wanted privatization (13%). 81 % stated that they were willing to pay a higher fare for a more comfortable journey.

What explains KSRTC’s turnaround?

Autonomy

4.18 KSRTC, as a corporation, enjoyed a high degree of autonomy. Crucially, KSRTC could alter bus fares based on an already existing formula with the permission of its Board of Directors instead of approaching the state government for permission to do so. More idiosyncratically, the Transport Minister, who acted as the Chairman of KSRTC, rarely intervened in decisions having to so with staff or purchases. Karnataka’s Transparency in Tenders and Procurement Act was strictly implemented in KSRTC, resulting in substantial savings to the organization, which runs up purchases of some Rs.7 billion annually. It was also possible to standardize recruitment and transfer processes within the organization as a result.

45 T.V. Ramanayya et..Studv on Transport Facilities in the Nationalized and Non-Nationalized Sector (Bangalore: Indian Institute of Management, September, 2004).

34 Staff-Management Relations

4.19 The story of the transformation of management-staff relations is complex. KSRTC had a history of conflict between its communist-dominated union and management, leading to frequent strikes, lock-outs, and even some bloodshed. The division of KSRTC in 1997 was marked by union protests, but the government held firm. The balance of power thus shifted decisively toward management. A state-wide strike called to protest new transfer and recruitment policies fizzled when the Transport Minister backed up the MD. Staff were won over through a combination of welfare measures, such as the creation of a fund for the children of employees to finance higher education; improvements in work conditions and fulfillment through the introduction of branded buses, ticket counter computerization, and a better public image for KSRTC employees; and the uniform implementation of personnel policies relating to transfers, duty rotation, and leave.

State Support

4.20 The Government of Kainataka (GoK) deserves a substantial share of the credit for the improvement in KSRTC finances. GoK reduced motor vehicle taxes substantially on the ground that KSRTC had to pay taxes on a gross revenue basis while private operators were taxed by seat occupancy levels, resulting in lower tax obligations for the latter. GoK also agreed to cover losses that KSRTC had been forced to absorb to provide concessional travel for various groups ranging from students to senior citizens as state policy. The support of the Transport Minister and top bureaucrats in the government of Kamataka, such as the Home Secretary, enabled KSRTC to wring these vital concessions out of GoK.

Stable Tenure for the MD, a Strong Management Team, and Recognition

4.21 KSRTC was fortunate in that it had an excellent group of technical managers who could maintain the momentum of reform after its reforming MD was transferred after completing a three year term. The reform process was aided by a string of national awards garnered by KSRTC for its performance and safety record, which raised staff morale and reassured commuters.

11. CITY AGENCIES

The context: Rapid urbanization and poor service delivery

4.22 Approximately 28% of India’s population currently lives in urban areas, roughly 285 million people. The share of India’s urban population is likely to grow to 50% by 2030. Six of the world’s largest 20 metropolises in 2001 were located in India, while the number of Indian cities with a population of one million or more inhabitants grew from 23 in 1991 to 40 in 2001, and is expected to rise to 70 by 2021. The contribution of cities to Gross Domestic Product (GDP) increased from 29% in 1951 to 55% in 1991 to approximately 60% in 2001, fueling migration to large urban centers and the concomitant growth of slum population^.^^ Indian cities face huge challenges: Delivering services, improving infrastructure, expanding civic participation, and taming urban poverty. While there are no easy formulas on how to fix these

46 For some figures on India’s urban situation, see Asian Development Bank, Technical Assistance for Reducing Poverty in Urban India (Manila: ADB, 2000); see also, Alka Bharat and Chandan Chawla, Urban Governance for Sustainable Development (Unpublished paper).

35 problems, HWSSB is one agency that has succeeded in becoming more responsive, while Bangalore and Surat are two major cities that sought to reshape urban governance and service delivery, despite the strain of rapid population growth and economic expansion.

(a) The Hyderabad Water Supply and Sewerage Board (Metro Water): Senior managers stoke public pressure for greater accountability.

The history of Metro Water

4.23 Metro Water was established by the Ap government towards the end of the 1980’s to address a growing crisis in water and sanitation services fueled by a prolonged drought. Shortly after its creation, Metro Water received a U.S. $89 million loan from the World Bank to increase bulk water supply, rehabilitate and strengthen existing water and sewerage systems, and resettle people displaced by the construction of the Singur Dam and Reservoir. At the urging of the World Bank, Metro Water was carved out of the mammoth Public Health and Engineering Department and given semi-autonomous status vested in a Board of Directors. This allowed it to bypass the traditional bureaucracy and provided insulation from political interference.

Metro Water reaches out to citizens.

4.24 Metro Water implemented bold reforms designed to improve service delivery and empower citizens from the late 1990’s onwards. The new MD kicked off his term with a ‘Customer Meets Campaign’, compelling senior managers to leave the comfort and authority of their offices to interact directly with citizens in neighborhoods throughout the The campaign not only provided valuable customer feedback to Metro Water management, but sparked pressure from citizens for further reform by raising expectations. The campaign was covered extensively in the media, thereby magnifying its impact. The campaign was followed by the establishment of a Metro Customer Care (MCC) center located at head office. MCC was open 24 hours with the exclusive mandate to receive and coordinate the response to complaints filed by citizens through a specially designated telephone number. A software package, dubbed the Complaints Redressal Efficiency (CRE) system, provided senior managers with a regular stream of performance-related data that could be used to hold front-line and middle-level managers accountable for service quality and compliance with the norms in Metro Water’s new citizens’ charter launched in January, 2000 by the Chief Minister. Finally, a single-window cell (SWC) was established at Head Office to receive, process, and coordinate all new water and sewerage connection applications (the old system involved a dilatory process beginning with the submission of an application at a section office and additional approvals at the sub-division and division levels). A dedicated Green Brigade, consisting of some 26 Metro Water staff and private contract laborers, was tasked with physically connecting lines after approval by the SWC.

47 For more on reforms in Metro Water, see the excellent paper by Jonathan Caseley, Blocked Drains and Open Minds: Multiple Accountabilitv Relationships and Improved Service Deliverv Performance in an Indian City, IDS Working Paper 21 1 (Brighton, Sussex: Institute for Development Studies, 2003). The discussion of this case is based almost entirely on this paper, as well as interviews conducted by Bank staff with the MD, Metro Water in Hyderabad in 2001 and 2002 during official missions for preparation of the Andhra Pradesh Structural Adjustment Loan (APSAL).

36 The impact on customers: easier complaint registration, faster redressal, and a simpler process for connections.

4.25 A survey (Caseley, 2003) shows that these changes had a positive effect on customers:

0 Some 96% of MCC customers found its procedures easy to follow compared to 21 % of those who registered complaints at their section office (direct users). 0 The average time taken to address a complaint (7-8 days prior to the creation of MCC) was now 4.8 days for MCC users compared to 6.8 for direct users. 0 79% of all SWC users surveyed found its procedures easy to follow, 74% filled in the application themselves, and 8 1 % delivered their applications personally. 0 62% of SWC users stated that staff were more polite than in the past; 65% found them more respectful. 0 69% of SWC users stated that they were satisfied with the new service.

4.26 Table 3 reveals two new trends: A major increase in complaint numbers fueled by the fact that MCC not only makes its easier to file a complaint, but offers a credible channel of timely redressal for customers. Table 3 also shows that the efficiency of complaint redressal improved across categories, despite the healthy surge in complaints.

Registered at MCC Efficiency (%) May- August- May- August - August, November, August, November,

Sewerage Overflow on Road 1,110 12,616 41 66 Sewerage Blockage at 1,188 9,824 17 33 Customer Premises

Source: MCC Database, 2002 reported in Caseley (2003).

Metro Water is an example of how to put the citizen at the center of reform, first by consulting and mobilizing public opinion and then creating institutional mechanisms to allow citizens to be heard by top managers, who used this information to hold lower-level managers and front-line staff more accountable.

4.27 Clearly, enhanced autonomy gave the MD of Metro Water more room to make decisions independently of political pressures. The media also facilitated the transformation of Metro Water: Critical articles on Metro Water in the media strengthened the hand of senior management in pushing for change. Participation in the interactive television program, ‘Face to Face’, transformed the MD into the public face of Metro Water, making him ultimately accountable for any mistakes in his organization. This was in sharp contrast to many Indian public sector organizations characterized by complex structures and all too frequent changes at the level of top management, making it impossible sometimes to pinpoint accountability.

48 This table is from Caseley, Blocked Drains and ODen Minds, p. 8.

37 4.28 Even more important, both MCC and SWC fundamentally changed the way Metro Water worked by allowing senior managers in headquarters (where MCC and SWC were located) to secure performance-related data to hold section managers and front-line staff accountable. Information that would have been jealously guarded at the section-level and never shared with senior managers now reached them immediately. MCC and SWC thus provided a vehicle for citizens to communicate directly with senior management, including the MD, who then used this information to enforce standards down the line. Centralized monitoring thus gave both citizens and top management a powerful tool to compel accountability in Metro Water.

4.29 Finally, the Metro Water case underlines the importance of not working in silos: Reform in Metro Water was facilitated by intense engagement with the outside world ranging from other Water Boards, and training programs with academic institutions in India and abroad. Over an 11- year period (1 989-91), 5 1 senior staff traveled abroad to attend professional conferences, training courses, or for study tours. Metro Water was clearly on organization open to new thinking, fresh ideas, and policy innovation. Stable tenures for its MDs allowed reform to take hold firmly.

But water scarcity remains acute, even if Metro Water has become more responsive.

4.30 But it must be said however, that these reforms did not help resolve the basic issue of water scarcity in the city: Hyderabad still continues to receive water for just two hours per day every other day. Hyderabad, like all major Indian cities, remains unable to provide 24x7 water supply in contrast to cities in the OECD and Latin America, and some cities in Africa. To move to 24x7 supply in India would mean instituting managerial reforms aimed at pricing water appropriately, metering consumption, reducing leakages, and ensuring adequate maintenance of water supply networks.

(b) Bangalore: Making City Agencies Work?

4.3 1 Bangalore is the center of India’s booming IT industry and the capital of the southern state of Karnataka. Bangalore’s population grew rapidly in the 1990’s - fueled in large measure by economic growth - from 4.1 million in 1991 to 6 million in 2001.49 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.

Report Cards on Service Delivery in Bangalore, 1994, 1999, and 2003

4.32 Three citizen report cards (CRC) on city services conducted by the Public Affairs Center (PAC), in 1994, 1999, and 2003 show a significant improvement in the quality of services provided by city agencies.” Figure 1 presents the satisfaction ratings across the three report cards by agency.” The three utilities -- the Bangalore Electric Supply Company (BESCOM), the

49 An excellent study of Bangalore’s history is Janaki Nair, The Promise of the Metropolis: Bangalore’s Twentieth Century (New Delhi: Oxford University Press, 2005). Suresh Balakrishnan, “Making Service Delivery Reforms Work: The Bangalore Experience,” Paper prepared for India Service Delivery Report (New Delhi: The World Bank, PREM Team, 2005). ’’ 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 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

38 telecom company (BSNL), and the Bangalore Water Supply and Sewerage Board (BWSSB) -- showed major improvements across all three report cards; while the Bangalore City Corporation (BMP), 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.

Figure 1 : Improvements in Overall Satisfaction, 1994,1999, and 2003 by Agency

Satisfaction with Public Services Across CRCs

I 801 71 73 - 65 70 i 60 - 54 Q, 50 - 45 43 r 40- n 30- 25 nf 20 1

lo0-I r BWSSB BESCOM BSNL BMP Govt BDA RTO Hospital Agency

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.

39 4.33 Aggregate satisfaction levels (all agencies combined) rose from nine percent in 1994 to 34% in 1999 to 49% in 2003 (Figure 2).

Figure 2: Aggregate Satisfaction (1994-2003) across Citizen Report Cards

I Satisfaction with Public Services Across CRCs

I

49

I

4.34 The incidence of problems reported also declined significantly between 1999 and 2003 from 24% in 1999 to only 11 % 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 (Figure 3).53 These improvements in service delivery were corroborated by other surveys commissioned by the Bangalore Agenda Task Force (BATF) between July, 2000 and February, 2003.

Figure 3 : Incidence of Corruption in City Agencies I Incidence of Corruption

E 25 2 20 - 3

9 4.8 55 g 0 __ - - __ -~__ al n 1994 1999 2003

Revitalizing the Compact between the State and Providers, 1999-2003

4.35 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. A Memorandum of Understanding (MoU) signed with the BCC made state government financial support conditional on improvements in BCC performance. More broadly, the Chief Minister was willing to appoint competent civil servants to key posts in city

52 For more analysis of these results, see Suresh Balakrishnan, “Making Service Delivery Reforms Work: The Bangalore Experience,” OD. cit.. j3Public Affairs Center, The Third Report Card on Bangalore Public Services (Bangalore: PAC, 2004).

40 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 time-frame.

The Role of the Bangalore Agenda Task Force (BATF)

4.36 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.54 BATF held public ‘summits’ 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 @BAS) in the BCC, allowing the corporation to track revenues and expenses down to the smallest detail instantly. 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 NGO’S.~~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.

Reforms by City Agencies

4.37 Given the Chief Minister’s endorsement of reform and his willingness to allow agency heads autonomy, 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 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

54 Proceedings of the Government of Karnataka, Constitution of a Task Force on MetroDolitan Bangalore (Bangalore: Government of Karnataka, 1999). 55Theseincluded Janaagmha, Voices, PAC, and the Center for Budget and Policy Studies (CBPS). For more on Janaagmha, see Seema Dargar, Citv Government, Budget Analvsis. and People’s Participation in India (Bangalore: CBPS, 2003).

41 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 land removed, both of these changes benefited a large numbers of citizens.“ 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.57 BWSSB introduced a sophisticated grievance redressal system monitored by Janaagraha 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

4.38 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 pro-active Lok Ayukta (Ombudsman) made combating corruption in service delivery his main priority.58 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- 1999 Period

4.39 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-1990’s. By 1999, improvements in service delivery were palpable, although satisfaction ratings remained under 50% for all city agencies. PAC’s work in the 1990’s clearly helped lay the foundations of what followed later under far more favorable political circurn~tances.~~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.

Yet, there are questions about the sustainability of Bangalore’s refonns.

4.40 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

Bangalore Development Authority, A Saga Unfolds (Bangalore: BDA, 2004). ’’ On reforms in the BWSSB, see Genevieve Connors, Pro-Poor Water Governance in Bangalore, Unpublished paper submitted to the International Institute for Environment and Development, 2004. On this, see Anuradha Rao, Karnataka Lok Avukta (Bangalore: Public Affairs Center, 2003). 59 Samuel Paul, Holding the State to Account (Bangalore: Books for Change, 2002)

42 criticized for being too identified with urban interests, particularly Bangalore. The BATF lost its relevance in a 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 doing much 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

How relevalit is the Bangalore experience for other cities?

4.41 Bangalore’s reforms were the product of several inter-related 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 studied the BCC’s self-assessment program for property taxes closely. Delhi has invited PAC to conduct a version of its report card in the city. Go1 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.

(c) Surat after the Plague, 1994-2005

4.42 Surat is a bustling industrial center located on the River Tapi close to the Arabian Sea. It is also Gujarat’s most important economic center and is well known for its synthetic textile and diamond polishing industries, which have experienced rapid growth since the 1970’s. The Hazira industrial area located just outside the city limits has drawn large investments from major companies, such as Reliance Industries, ONGC, and Tatas. Surat’s population grew explosively from 3 17,5 19 in 1971 to 2.43 million in 2001 (Table 4) propelled by massive migration from other states, particularly Orissa, UP, and Bihar.

Table 4 : Population Growth in Surat, 1971-2001

Year Population Decadal Growth Rate % 1971 493,001 1981 913,806 85.35 1991 1,490,000 66.01 200 1 2,430,000 63.08

Source: Census Data

The Plague: A Catalyst for Refonn

4.43 The outbreak of the plague in Surat in September, 1994 was the first recurrence of the disease in India since 1967. The immediate cause was persistently heavy rainfall that resulted in widespread flooding and the wiping out of cattle and other animals (including rodents presumably). The failure (or incapacity) of the Surat Municipal Corporation (SMC) to dispose of their carcasses in time created a public health danger that led to the plague. The detection of the

43 first cases of plague triggered a mass exodus, with 300,000 people fleeing the city. Surat’s business community racked up economic losses to the tune of Rs.30 billion, and the city’s image took a beating. It was in this disastrous situation that reform began in the SMC, which at the time of the outbreak did not even have a functioning elected council as a result of political infighting6’

Management Reforms in the SMC

4.44 A new municipal commissioner was appointed in May, 1995 by the state government. He set about transforming SMC with the support of local Suratis humiliated by the negative publicity occasioned by the plague. The first task was to take on the problem of departmental compartmentalization within the corporation. This was done by appointing six zonal chiefs with supervisory authority over all functions within their zones ranging from roads to public health to water and sanitation. Departments could thus no longer function in isolation and had to share information and coordinate their activities. In order to sweeten the bitter pill, the Chief Engineers of SMC’s main departments were appointed zonal commissioners.6’ All the financial and administrative powers of the municipal commissioner were decentralized to zonal chiefs. This empowered them to take rapid action to improve conditions in the city and took pressure off the lone municipal commissioner by reducing the number of files crossing his desk. It also made it impossible for zonal chiefs to avoid blame for non-performance by resorting to the standard plea that they lacked the necessary authority to act. All senior officers (the commissioner included) were required to spend their mornings in the field; they could return to the corporation only in the afternoons for routine business. This gave officers a feel for what was happening on the ground, allowed them to monitor corporation workers better, and connected senior and junior staff in ways that had not happened before in the history of the SMC. As part of an attempt to win the corporation’s sanitation workers over to the reform program, the corporation vastly improved services in the colonies where they resided; this had the salutary effect of demonstrating the difference between sanitary and unsanitary conditions to those charged with the task of keeping Surat clean. Several grievances that had alienated sanitation workers in the past, including the failure to release salary increments, were also resolved The senior-level management team around the commissioner was restructured by easing out those who might have become stumbling blocks to reform had they been allowed to stay.

4.45 These management changes turned the SMC into an instrument for change. The first priority was simply to enforce the law: Restaurants that violated hygiene norms were immediately booked. A system of ‘administrative charges’ was introduced to penalize industries that polluted the environment, while illegal buildings were simply demolished without much fanfare to prevent, for example, the blocking of roads or pavements. Rigorous enforcement in turn produced a more orderly city. In order to address the problem of Surat’s slums, the SMC focused on installing community taps, widening and paving streets, providing community toilets, and constructing open drains to the city’s sewer system.

6o Published sources on the Surat story: Archana Ghosh, Management of Urban Environment: A Studv on Post-Plague Initiatives of the Surat Municipal Corporation, UMP-Asia Occasional Paper No.39 (United Nations: Urban Management Program, 1998); Ghanshyam Shah, “Bureaucracy and Urban Improvement: Can it be made to last? Post-plague Scenario in Surat,” Economic and Political Weeklv, Vol 32, No. 12, March 22-28, 1997; S.R. Rao, Surat’s Experience: Making a Difference (Unpublished paper, no date); Lecture by S.R. Rao, on Surat, Series on “Ideas that Have Worked” (Department of Administrative Reforms and Public Grievances, GoI, 2001); and Sharadini Rath, After the Plague: Surat, Paper prepared for Electronic Repository on Good Governance Practices (Department of Administrative Reforms, 2004). “Bank staff interview with S.R. Rao, Surat Municipal Commissioner, 1995-97, Ahmedabad, Feb. 24,2005.

44 4.46 The heart of SMC’s efforts, however, focused on the unglamorous, but crucially important, solid waste management system: Surat’s six zones were further subdivided into 52 sanitary wards with six officers each to supervise garbage collection. This improved the ratio of supervisors to sweepers significantly, making it easier to monitor the latter. A new formula was applied to ensure that resources would flow to each of these wards on the basis of objective needs rather than political pressures. Surat became the first municipality in the country to allow private contractors to collect a portion of the garbage generated in the city and transport it to landfills. SMC also allowed the private sector to take responsibility for cleaning major road arteries at night when there was less traffic, while corporation employees swept other streets in the mornings. A daily activity report monitored by senior corporation staff tracked staff attendance, garbage collected, complaints received, vehicles deployed, and road cleaning across sanitary wards. A disease surveillance system developed in cooperation with the city’s hospitals, public and private, helped the corporation anticipate potential epidemics, while the quality of water was monitored on a daily basis at different points in the city’s water distribution network.

4.47 E-Governance in the corporation has also become a reality: 13 civic centers allow citizens to transact most of their business with the corporation without ever having to visit an SMC office.62 Surat was the first city in India to develop a computerized double-entry accounting system and won an award for its on-line grievance redressal system, which prioritizes response times to different kinds of complaints (24 hours in some cases, longer in others).

Surat’s Transformation between 1995 and 2003

In short, Surat today is a different place than it was in 1995.63

0 In 1995, only 60% of its population had access to protected water compared to 95% in 2003. 0 In 1995, only 30% of Suratis had access to sewerage facilities compared to 95% in 2003. 0 In 1995, only 40% of all garbage generated was actually collected; in 2003 all garbage generated was collected. 0 In 1995, only a fraction of Surat’s sewerage was actually treated; in 2003 all sewerage was treated before being released into the sea or river.

The sustainability of Surat’s reforms reflects several factors, including the decision of the state government to post a series of competent ofleers as municipal commissioner, each with a stable tenure; a senior management team that remained mostly the same for most of the decade after the plague; and a booming local economy, which made it possible to fund new infrastructure.

4.48 All these new management practices introduced between 1995 and 1997 were very much in evidence ten years later. In addition, Octroi and property tax collections rose continuously from 1995 to 2004 facilitated by Surat’s rapid economic growth; as a result Surat became financially independent of the state government. An on-line property tax system improved collections greatly.64 Wealth in turn translated into bold infrastructural initiatives including the construction of a weir to bring additional river water to the city, an expansion of the city’s water and sewerage network, new sewerage treatment plants (STPs), and the city’s first biomedical waste disposal facility. Institutional memory was retained by considerable continuity in the

62 Bank staff visit to Civic Center, Surat, Feb. 25 2005. 63 Data from the Surat Municipal Corporation (SMC). 64 Bank staff interview with G.R. Alloria, Surat Municipal Commissioner, 2002-05, Ahmedabad, Feb. 23, 2005.

45 senior management team reporting directly to the municipal commissioner. The state government ‘compacted’ with the corporation to post a series of competent officers as municipal commissioner with a mandate to continue the reform process and the stability of tenure necessary to do so. The elected wing of the corporation was also, by and large, supportive of the reform process: It was also less fractious than in the past because one party was clearly dominant in the council. It is possible that the memory of the plague - and its consequences for the image of the city - may have had a sobering effect on city leaders, encouraging them to support the continuity of the reform process.

Surat’s transformation was largely an in-house affair that depended on strong administrative leadership by the commissioner and his senior management team, the support of the elected municipal council which was less divided than in the past, and pressure from the media.

4.49 Reform in Surat was triggered by an extraordinary situation, the onset of plague for the first time since 1967. Bureaucratic leadership played a vital part: A new commissioner appointed after the plague struck transformed the way in which the corporation did business. He was succeeded by a series of commissioners who built on what he had already achieved. All four of Surat’s commissioners after 1994 were assisted by a senior management team that had been restructured and empowered. The average tenure of each of these four commissioners was 2.33 years, while the senior management team, recruited locally, remained almost the same during the decade after the plague. The political environment also improved: local elections in 1995 resolved the political impasse with the emergence of a single party in command of the municipal corporation controlling 98 of its 99 seats. The commissioners were fully supported by the elected council and its mayor elected from among the council for a 30 month term. Subsequent elections in 2000 also returned a single party to power, with an absolute majority. Commissioners were careful to consult closely with the corporation’s elected wing, but opposition to their plans was muted largely because of the shocking experience of the plague and the tacit support of Suratis for the measures being put in place to improve the city. It is worth noting that commissioners in Gujarat under the law have considerable power: If the elected council modifies or rejects a particular proposal, the municipal commissioner can simply delay action by referring the matter to the state government for consideration. While Surat’s vibrant media and television channel kept the pressure up for improvement, Surat’s large business community was uninvolved in the reform process. The major corporations in Hazira lay outside the boundaries of the municipal corporation, did not pay local taxes, and were indifferent. Even the leaders of the local diamond polishing and synthetic textiles industries, who did pay local taxes, remained mostly apathetic.

Conclusion

4.50 Restructuring agency processes is a powerful instrument for improving services. Clearly, a mixture of historical legacies (relatively weak unions, the breakup of the old KSRTC monolith, and autonomy in tariff setting and personnel matters); state government support for reform; and innovative leadership backed up by a strong team around the MD all contributed to the emergence of KSRTC as one of the country’s best public bus corporations capable of competing with the private sector.

4.5 1 In the case of registration in Maharashtra, state government support, particularly from the Chief Secretary, was also needed for reform (e.g., the appointment of a reform-minded IGfor a full term of three years, the approval of a public-private partnership model, and the charging of user fees retained by the department); in addition, the strategy of extensive consultation and business process re-engineering prior to computerization worked, building employee acceptance of the reforms. The introduction of a penalty and reward system created a robust regime of

46 incentives in the registration department for the first time. This system worked because clear service norms were set early on and monitored through the Department’s new software package. Private partners proved easier to penalize for non-performance than regular staff.

4.52 Service delivery reforms in Metro Water were grounded in a relatively low level of political interference, extensive consultation and media coverage to build public pressure for reform (a commonality with the registration case in Maharashtra) and business process changes, including the creation of Metro Complaint Center in Head Office, designed to allow citizens to complain directly to top management, who could use this constant flow of information to sanction lower-level management and front-line staff. Metro Water is an excellent example of how centralized monitoring based on citizen complaints can become a powerful tool for public accountability.

4.53 In the case of our two city reform cases, Surat’s process was fundamentally different from that of Bangalore. In Bangalore, the IT industry and other professionals were deeply involved in effecting change through the BATF. In Bangalore, reforms were driven by the Chief Minister directly, not the commissioner. Civic pressure through report cards played an important part in the changes. Surat, on the other hand, was a reform process driven primarily by the SMC itself - the commissioner, senior managers, and the elected wing of the corporation. The only contribution of the state government was to post competent officers to the SMC as commissioner and allow them to remain in their posts for a sufficient length of time to achieve results. Gujarat Chief Ministers had very little to do with the changes in Surat, which, unlike Bangalore, was not the capital of the state and depended on state funding for only a miniscule portion of the city’s budget. Surat’s plentiful resources helped the reform process by making it possible to finance new infrastructure. While the media played a positive role in both cities in drawing attention to the need for reform, the SMC did not depend on civil society in the same way that Bangalore’s agencies did: There were no citizen report cards in Surat, no public hearings to discuss the corporation’s budget, and little engagement with any NGOs. Of course, Surat as a manufacturing center dependent on migrant labor may have lacked the vibrant middle class that is associated with the mushrooming of NGOs in larger cities like Bangalore. Yet, in its own way, Surat is as much of a success as Bangalore and its achievements are much less vulnerable to reversal because they are not associated with any one Chief Minister. Surat’s low-key and in-house strategy of reform may thus be the key to its remarkable record of sustainability.

4.54 Given the fact that KSRTC and Metro Water affect the well-being of large numbers of voters, politicians are unlikely to tinker with reforms in these two agencies. Registration in Maharashtra is a slightly different case: Here the impulse for reform came not from the public but from the highest levels of the state government eager to show that Maharashtra - and not just AP -- could show-case a major e-governance reform program. But the fact that these reforms took place in the form of a public-private partnership and the wide publicity that the reforms received, including several prizes and IS0 certification, will make them more difficult to reverse.

47 Chapter Five Decentralizing Teacher Management

5.1 Decentralization remains a controversial subject: Some have expressed the concern that decentralization without ‘proper safeguards’ can increase corruption and mismanagement. Others worry about capacity constraints in the country’s Panchayati Raj Institutions (PRIs) that might impede an effective transfer of functions to them. PRIs still receive only a miniscule portion of funds from the central and state governments, with the exception of Kerala and West Bengal. Decentralization, although constitutionally mandated by the 73rdand 74thamendments, has been resisted in most states by line departments and state-level politicians who fear an erosion in their prerogatives and authority as power is transferred to local institutions.

5.2 This chapter makes no effort to address these larger issues. Instead it examines the efficacy of decentralization in a single sector (primary education) in one state (Madhya Pradesh). Efforts to expand school access and reinforce teacher accountability by empowering local communities and Panchayati Raj institutions (PRIs) yielded significant benefits at least in MP. This does not mean that there are no other ways to improve school performance, but it does show that decentralization can be a useful instrument for bringing children into primary school, raising literacy levels, and strengthening teacher accountability in a low-income and very large central Indian state.

The Madhya Pradesh Experience

Advances in Primary Education in Madhya Pradesh in the 1990’s

5.3 Striking advances in primary education occurred during the 1990’s in Madhya Pradesh, particularly in terms of literacy growth, improved access, and teacher responsiveness.

0 Male literacy rose from 58.54% in 1991 to 76.80% in 2001, ajump of 18.3%. MP’s male literary rate now compares favorably with two major southern states, including Karnataka (76.29% male literacy) and Andhra Pradesh (70.85%).65 0 Female literacy rose from 29.35% in 1991 to 50.28% in 2001, an increase of almost 21%. This was significantly higher than the national increase in female literacy (14.9%) during the I990’s, and, in fact, equaled the increase in literacy achieved in MP over the preceding three decades from 1961 - 199 1 (20.47%). e Literacy as a whole surged by 20.93% between 1991and 2001 (the third highest increase in overall literacy in any Indian state for the decade). 0 The percentage of children in the 6-1 1 age bracket attending school rose from 61 % for boys and 47.3% for girls in 1992-93 to 80.1 % and 73.9% respectively in 1998-99.66 0 The total Gross Enrollment Ratio (GER) for primary schools in MP jumped from 76.5% in 1996 to 101.7% in 2002-03; for girls, the GER rose even faster from 70.7% in 1996 to 100.3% in 2002-03.67

65 Literacy figures from GoMP, Madhva Pradesh, Human Development Report (20021, pp. 34-37. 66 Vimala Ramachandran, Education Guarantee Scheme: A Communitv-Government Partnership that Gets Millions into Schools in Madhva Pradesh, Shanghai Conference on “Scaling up for Poverty Reduction” (The World Bank: The World Development Institute, 2004), p. IO. The paper is available on-line at http://www.worldbank.org/wbi/reducingpoverty/case-India-Community.html 67 Ibid. Gross Enrollment Ratio (GER) is the unadjusted number of children in the 6 to I1 age-bracket enzed in primary school over the total number of children in this age-group.

48 Figure 4 : Gross Enrollment Ratio by Gender (Primary Schools in MP)

120.0% 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% Boys G irk Total

Source: RGSM, Bhopal, 2003

MP’s low rate of teacher absenteeism

5.4 According to a survey conducted by the World Bank in 2003, Madhya Pradesh -- along with Gujarat -- had the second lowest rate of teacher absenteeism in India for primary schools, only 17%, just behind Maharashtra’s 15%.68 This is all the more impressive given the mounting evidence that high-income states tend to experience low levels of absenteeism in primary schooling. MP is a low-income state that contained teacher absenteeism to levels very similar to two of India’s most prosperous states.69 It did so by adopting major institutional changes, especially shifting teacher control to PRIs, as we shall see in a subsequent section.

Figure 5 : Teacher Absenteeism in India

80

70

60

50

40

30

20

10

0 MH ! MP I GJ KL KN HP HY TN OR RJ WB AP UP CH LT AM PJ BH JH L-..‘,&.P

Source: Provider Absence Project Research Team, the World Bank (2004).

68 See data available from the Provider Absence Project Research Team, World Bank 2004 69 On the causes of absenteeism in primary education, see Michael Kremer, Nazmul Chaudhry, F. Halsey Rogers, Karthik Muralidharan, and Jeffrey Hammer, “Teacher Absence in India; A Snapshot,” Journal of the European Economic Association, forthcoming. The authors through detailed survey analysis show that higher income states have lower rates of absenteeism (Punjab is an outlier); in addition, states that have better teacher supervision and monitoring mechanisms and school infrastructure also have lower rates.

49 Reforming the System, 1993-2003

5.5 In 1993, a newly elected government began major reforms in the primary education system. The I991 census revealed very high rates of illiteracy in MP: 56% for the population as a whole and 70% for females. Only 35% of the state’s scheduled caste population was literate and 21.5% of its large tribal population; 30,000 of the sprawling state’s 110,000 habitations lacked convenient access to a school.

In Madhya Pradesh, Digvijay Singh as Chief Minister from 1993 to 2003 focused on decentralizing service delivery to local communities. The defining moment in the development of his political philosophy occurred in 1978 when he was a young Congress legislator. On a round of his constituency, he chanced upon a village that had no school. He found that the villagers had themselves appointed a teacher for their children whom they were paying a salary of Rs. 150 per month out of a community fund. This was not how the system should work, thought Singh, and lobbied hard and successfully to get a government school sanctioned for the village. As a legislator, he had done his duty satisfactorily, and the story should have , ended “happily ever after” at that point. But when Singh visited the village again some time later, he found that while the old teacher had gone away being no longer needed, the government teacher was always i absent. So the DeoDle were worse off than before.70

School-Mapping

5.6 The first step the new government took was to engaged in a participatory school-mapping exercise that involved a door-to-door campaign conducted at the panchayat level to secure house- hold level data on the numbers of primary-school age children, whether enrolled or not enrolled; understand the reasons for non-enrollment; develop a village education register to track the educational progress of school-children under the panchayat; and develop a village plan to address challenges in schooling. The Lok Sampark Abhiyan (LSA), the formal name for this survey exercise, revealed that some 32% of the state’s villages lacked adequate primary schools, as well as a 20% lower GER for the 6-1 1 primary school age-bracket compared to official statistics.” LSA Iand I1(a follow-up survey conducted in 1999) not only yielded more reliable information on the state of primary education, but mobilized communities around the issue.

The Education Guarantee Scheme (EGS)

5.7 The next step was to address the crucial problem of access. In 1997, MP launched EGS: The heart of EGS was a guarantee that if a Panchayat forwarded a list of at least 40 children without access to a school within walking distance, the state would ensure a functioning school within 90 days. Under the program, communities were expected to contribute physical space for a school, choose a teacher, and supplement resources. The government bore the costs of teacher salaries, provided teaching and learning materials as well as seed-money for infrastructure, and took responsibility for teacher training. Parent-Teacher Associations (PTAs) were charged with monitoring the functioning of EGS schools and reported to Village Education Committees (VECs). In a short period of three years from July, 1997 to July, 2000, the number of EGS schools rose to 26,571 (42% of them in tribal areas), catering to some 1.2 million children of

70 Bank staff interview with Digvijay Singh, former Chief Minister of Madhya Pradesh, New Delhi, December 15,2004. ” Prema Clarke, Education Reform in the Education Guarantee Scheme in Madhya Pradesh, India and the Fundescola Proaam in Brazil, Background Paper for World Development Report 2004- (The World Bank, March 2003), p. 9 at http://econ.worldbank.org/wdr/wdr2004/library/

50 which 91 % were drawn from disadvantaged c~mrnunities.~~In June, 2003, the EGS program had some 3 1,8 15 teachers, Gurujis, on its rolls, all identified by the community.

Box 6 : Community Participation in Hospital Management: MPs Rogi Kalyan Samiti (RKS) Model MPs Rogi Kulyan Sumiti (RKS) represents a creative adaptation to the problem of excessive spending on salaries: Under RKS, district hospitals are turned over the 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 important players locally 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 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 at 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. The central government’s National Health Mission has recently identified the RKS model for replication across the country.

Decentralizing Teacher Management

Teacher management was decentralized to panchavats along with the creation of new teacher categories based on contract employment and less remuneration than regular teachers.

5.8 MP also introduced a more decentralized system of teacher management to improve ac~ountability.~~The state’s unionized regular teachers were declared a ‘dying’ cadre and no further recruitment permitted to the cadre: Regular teachers were recruited by the state government and could be transferred across districts. Panchayats had no role in hiring them and could not remove them in the event of non-performance or poor attendance.

5.9 In order to make teachers more responsive to panchayats, the government introduced a new category of teachers, Shiksha Karmis (SKs), in 1996. Shiksha Karmis at the primary school- level were to be recruited by block or Janpad Panchayats (JPs) for a probationary period of three years. If after three years, the GP was not satisfied with teacher performance, it could simply decline to confirm the teacher in hidher post; alternatively, the GP had the power to put off confirmation by extending probation for another two years and revisit the decision later.74 During probation, SKs could be removed by GPs for dereliction of duty with one months’ notice. Panchayats, according to a government order issued in 1999, were also given the power to withhold salary payments for non-attendance for all primary school teachers, including SKs and regular teachers. SKs were generally, but not always, local employees and were transferable only within the block.

5.10 EGS teachers, known as Gurujis, did not constitute a cadre at all; they were recruited to fill a particular post in a particular school and could not be transferred. They were purely contract

72 Ramachandran, op. cit., p. 3. 73 For an excellent discussion of these institutional reforms, see Amita Sharma, Improving Primarv Teacher Provision through Better Management: A Studv of Madhva Pradesh (Unpublished manuscript, 2000?). 74 Government of Madhya Pradesh, Rules (Shiksha Karmis), January I, 1998

51 employees, who could be removed at any time subject to a decision by the PTA in conjunction with the VEC. The government later introduced a new category of slightly better paid contract teachers in 2001, known as Sanvida Shah Shikshaks (SSSs). Unlike Shiksha Kamzis, who could become permanent Panchaynt employees after three years, SSSs were recruited for renewable terms of three years each to fill particular posts in particular schools. They were thus not transferable, could be removed at any time by the Janpad Panchayat, and had no hope at all of becoming regular JP employees. Gurujis and SSSs were always local employees. 75 All these new kinds of teachers, including Shiksha Karinis, were paid far less than regular teachers.

5.1 1 The appointment of SKs, Gurujis, and Sanvida Shah Shikshaks helped the government fill vacant teaching posts in more backward communities. Because these teachers were mostly local residents, they were willing to be posted to such communities, unlike many regular teachers. Local teachers possessed a greater bond with the community, thus improving motivation. The very limited transferability of SKs - within a Janpad Paizchayat only - and the non-transferability of Gurujis and contract teachers also stemmed the flight of teachers from rural to urban areas, reducing absenteeism. Finally, the fact that Gurujis and contract teachers were removable, while SKs could not be confirmed for at least three years, made it easier for JPs to enforce discipline, including regular attendance and accountability for learning outcomes. It is worth noting that SKs, Gurujis, and contract teachers could not be employed for duties other than teaching, unlike regular teachers, increasing time spent in the classroom.

Improving Suuervision through Cluster Resource Centers (CRCs).

5.12 MP also beefed up the supervision process in another way: Traditionally, supervision over schools was exercised by Assistant District School Inspectors (ADSIs) at the block-level. ADSIs were in short supply and poorly trained: Each AS1 was responsible for approximately 80- 100 schools. As part of the District Primary Education Program (DPEP), MP introduced CRCs covering schools within a radius of eight kilometers within a block. Each CRC was headed by a coordinator, usually the senior-most headmaster in the cluster; coordinators were responsible for facilitating more cross-teacher interaction within the cluster, supervising training, and monitoring school quality and performance. Each coordinator was responsible for monitoring some 10-12 schools, a vast improvement over the previous system. CRCs provided a forum of peers to discuss problems and find solutions. Clearly, these wide-ranging institutional reforms played a key role in containing primary teacher absenteeism, despite MP’s status as one of the poorest states in the country.

MP’s Education Act, 2002

5.13 In order to institutionalize these reforms, GoMP passed a landmark Education Act in 2002. The Act formalized the role of PTAs, VECs, and CRCs. VECs were given the legal power to order the withholding of salaries from any kind of teacher for willful neglect. Headmasters were legally required to prepare individual reports on their students and PTA’s given the right to raise donations for their schools. For the time in India, the Act mandated the collection of data on learning outcomes at the school-level for presentation to the PTA and VEC. In addition, district authorities were charged with preparing an annual report by electoral constituency on learning

75 For their service conditions, see Government of Madhya Pradesh, Rules (Sanvida Shala Shikshaks), July 11,2001.

52 outcomes in schools to be presented to the state assembly. The purpose was to spark greater interest among politicians in improving learning outcomes in their constit~encies.’~

What About Quality?

5.14 No other state has gone as far as MP in reaching out to deprived communities in so short a time, reshaping teacher service conditions, or creating a legal framework for primary education. While this is clearly a singular achievement in the Indian context, there are concerns about the quality of learning outcomes in both government primary schools and EGS schools in Madhya Prade~h.~~On student outcomes, LeClercq reports that while students taught by contract teachers performed similarly on tests to students taught by regular teachers, both groups of students performed poorly as a whole. In addition, he found that the quality of teaching was poor across the board, whether in EGS, regular government primary, or private rural schools. Official statistics on pass rates for board examinations also suggest that there is no difference in performance between EGS and government schools. Given that students taught by contract teachers come from socially disadvantaged groups, this would imply that educational quality in EGS schools is no lower, and possibly higher, than in regular schools. EGS thus allowed the government to provide at least the same quality of instruction compared to regular primary schools at a fraction of the cost of employing a regular teacher.

Lessons from MP ’s Reforms in Primary Education

MPs reforms in primary education succeeded because of several factors: The Chief Minister’s vision of decentralized and participatory forms of governance; the continuity of tenure for the state’s civil servants involved in education reform; the creation of a separate institutional vehicle to push reform; program design that emphasized ‘demand-driven ’ support from parents; sequencing starting with school mapping and ending with an Education law; and the most far- reaching changes in teacher service conditions anywhere in India.

5.15 MP’s impressive educational achievements in the last ten years contain several lessons for other states. First, the fact that the Chief Minister believed in decentralized and participatory programs, such as EGS, and remained in power for two successive terms with a large majority in the state assembly, helped empower civil servants associated with the RGSM to implement reforms that would otherwise have been difficult. Second, there was extraordinary continuity of tenure for those most closely associated with educational reform in MP. The Director of the Rajiv Gandhi Prathmic Shiksha Mission (RGSM), who spearheaded the campaign for improving primary education, was in her post for nearly ten years. Another civil servant, who played a major role in EGS, was a powerful player in the Chief Minister’s office for almost a decade. Third, educational reform in MP implemented outside the confines of the government system through RGSM, a registered society, allowed for more flexibility, faster decision-making, and insulation from pressures against reform; in fact, RGSM emerged as laboratory for new thinking

76 Government of Madhya Pradesh, Madhva Pradesh Jan Shiksha Adhinivam, 2002 and Madhya Pradesh Jan Shiksha Nivam, 2003 (Bhopal: Government Printing Press, 2003). 77 On this issue, see Francois Leclerq, “Education Guarantee Scheme and Primary Schooling in Madhya Pradesh,” Economic and Political Weekly (May, 10, 2003). See also, the reply to Leclerq by Amita Sharma and R. Gopalakrishnan, Qpinion or Facts? EGS in Madhva Pradesh, Occasional Papers, Document 12, RGSM, 2003. See also the discussion on para-teacher quality in Stephen Howes and Rinku Murgai, Subsidies and Salaries: Issues in the Restructuring of Government Expenditures in India (Unpublished Paper, 2003), p. 15. See also Clarke, u,p. 9.

53 on education generally and a spur to innovation throughout the system.78 The fact that RGSM pushed policies that empowered panchayats, at least in primary education, shows that there was no necessary contradiction between using a society as a vehicle for implementing reform, going around a department that may be less capable of promoting change, and decentralization to PRIs. Fourth, EGS was a well designed program: the fact that communities not only initiated the demand for a school, but contributed actively to its realization, made it possible to hold the state accountable for its end of the bargain. Fifth, educational reform in MP was accompanied by major changes in teacher service conditions. Without this, reform might not have worked: Regular teachers would have been reluctant to accept postings to remote communities, which constituted the main focus of EGS; the fiscally-burdened government would not have had the resources to provide teachers for an additional 26,000 plus EGS schools on regular pay-scales; and panchayats would not have had the powers to hold them sufficiently accountable to the local community. Finally, reform in MP took place in carefully sequenced phases: It began with the first-hand collection of household data on primary education; LSA Iwas followed by the introduction of the EGS program, along with major changes in teacher service conditions and improvements in training and inspection; the entire process culminated in the passage of a path- breaking Education Act designed to provide a legal basis for what had already happened.

The Future of Education Reform in MP

5.16 Today almost all EGS schools have been upgraded to primary schools, staffed by two non-regular teachers. Upgrading EGS schools, once the initial problem of access had been addressed, was part of a natural evolution towards higher quality schools in the view of program advocates. But the pre-reform management structure has not returned: the Gurujis and contract teachers staffing these schools remain removable for non-performance and cannot be transferred across schools.

5.17 More worrying was the recent three-week strike by Shiksha Karmis seeking to pressure the new government to allow them to be transferred outside the block as well as higher scales of pay. The strike was called off after the government constituted a committee to examine these demands. So far no real changes have been introduced in the primary education system: Pressures to agree to centralized procurement for school uniforms, which might have bred corruption, were fended off on the ground that the Education Act required PTA’s to take responsibility for procuring them.

78 Bank staff interview with Amita Sharma, former Mission Director of the Rajiv Gandhi Prathmic Shiksha Mission (RGSM), February 4,2005, Bhopal.

54 Box 7 : Rajasthan’s Experience in Reforming Primary Education in the 1980s and 1990s ’’ Overall literacy grew in Rajasthan by 35.9% in the 1980’s and 58.3% in the 1990’s; female literacy grew even faster by 55.1% in the 1980’s and 117% in the 199O’s, 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 the concept of para-teachers in 1987 chosen from the community. These Shikshn Knrrnis were hired by the Shikshn Kurrni Board, a registered society, to teach in schools in remote areas. By the mid- 199Os, the Shikshn Knnni program covered some 202,000 students spread out over 32 districts in the far- flung desert state. The Shiksha Kurrni program was complemented by the Lok Jurnbish program introduced in 1992 to promote community mobilization for better educational services in regular government schools and reach out to out-of-school children particularly from disadvantaged social groups. Among Lok Jurnbish’s many achievements: 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 Jiimbish functionaries, and an expansion of flexible educational programs. Rajasthan’ s success during the 1980’s and 1990’s 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 Shikshn Kurnzi Program. The Mnzdoor Kisnrz Slzukti Surzguthun (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% of State Domestic Product (SDP) on education during the 1980s and 199Os, higher than the all-India average of 3.3%. While political leaders strongly supported educational reform in the state during this period, the Lok Jiimbish program was largely abandoned by the late 1990s by a 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 Kurrni 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 Jiimbish and Shiksha Kurmi 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 199Os, while drop-out rates, which had slowly decreased in the 1980s and 199Os, began to inch back up again. Rajasthan now has the highest drop-out rate for girls in primary school in the country (74%) and the second highest drop-out rate for boys (55%).

Conclusion

In Madhya Pradesh, the political leadership’s commitment to decentralization and participatory processes in service delivery played a major role in shaping the reform of primary education; in addition, fiscal constraints pushed MF in the direction of staffing new EGS schools with contract teachers, who were far cheaper than the state’s regular teachers. In Rajasthan, however, educational reforms were initiated by civil society actors, such as the Social Welfare Research Center (SWRC) and the Women’s Development Program (WDP), which developed workable models for educational reform that evolved into programs like Shiksha Kumi and Lok Jumbish. Administrative leadership was important for educational reform programs, which were furthered in both states through societies rather than the Education Department. Political commitment mattered in both states: The withdrawal of political support after 1998 in Rajasthan seriously

79 Prema Clarke, Raiasthan’s Experience in Improving Service Delivery in Education, Draft Paper for India Service Delivery Report (New Delhi: The World Bank, 2005); Vimala Ramachandra and Harsh Sethi, Raiasthan Shiksha Karmi Project: An Overall Appraisal (New Delhi: SIDA, 2000); and V. Ramachandran, Lok Jumbish - Ra-iasthan PeoDle’s Movement for Education for All (New Delhi: SASHD, 2003).

55 undermined Shiksha Kunni and Lok Jumbish. MP, however, went much further in promoting community participation through the PRI system, albeit not exclusively.

Clearly, decentralizing teacher control to PRIs and the local community in M€' made a major difference by strengthening teacher accountability. The appointment of para-teachers under PRI control allowed for the extension of a more accountable system of primary education across the state, with local teachers subject to tight monitoring by local communities. Regular unionized teachers would in all likelihood have resisted these changes fiercely, so bypassing them by creating a less expensive class of para-teachers was a politically adept strategy in this case.

56 Chapter Six Building Political Support for Program Delivery

6. I Political support is an important pre-requisite for effective program delivery. When politicians care about a particular program, they are more likely to insist on effective implementation by the civil service. Civil servants responsible for managing such programs are likely to be given more autonomy, as well as administrative and financial resources. Programs that enjoy political support are better positioned to ward off rent-seeking behavior by influential groups. Building political support can thus be an important instrument for ensuring the success of a program.

6.2 This chapter examines the puzzle of why Tamil Nadu outperformed neighboring Karnataka in terms of overall human development outcomes between 1 98 1 and 200 1. We argue that political support was a key factor in explaining Tamil Nadu's superior performance. In Tamil Nadu, political support took the form a bipartisan consensus between the state's two major Dravidian political parties to promote policies and programs designed to improve human development. Both parties engaged in an active game of one-upmanship to extend the reach of these programs over some three decades for common ideological and electoral reasons.

Comparing Human Development Outcomes in Tamil Nadu vs. Karnataka, 1971-2001

Overall Human Development

6.3 Tamil Nadu and Karnataka are two more advanced states in the southern region that have experienced similar levels of economic growth; yet, from the 1980's onwards, Tamil Nadu has done significantly better than Karnataka in terms of human development outcomes (Table 5).*O

Value Rank Value Rank Value Rank

Tamil Nadu 0.343 7 0.466 3 0.53 1 3 Punjab 0.41 1 2 0.475 2 0.537 2 Kerala 0.500 1 0.591 1 0.638 1

Source: Goyal, 2005

6.4 Indeed, in 198 1, Karnataka and Tamil Nadu ranked sixth and seventh in the Human Development Index (HDI)", but by 1991, Tamil Nadu had pulled ahead to occupy the third position after Kerala, while Karnataka remained in seventh place. Karnataka and Tamil Nadu maintained their relative rankings in 2001.

For an extended discussion in historical context of the differences between Karnataka and India, see Sangeeta Goyal, Human Development in Karnataka and Tamil Nadu: A Comparison, Paper prepared for India Service Delivery Report (New Delhi: The World Bank, 2005). 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,

57 Primary Educution

6.5 Tamil Nadu has outperformed Karnataka in the spread of literacy (Table 6). Until, 198 1, Karnataka’s performance was close to the all-India average, while Tamil Nadu’s was significantly better compared to both Karnataka and India as a whole. Since 1 98 1, both states have outperformed the all-India average, with Tamil Nadu maintaining a diminishing lead over Karnataka. The current educational gap between the two states is driven largely by differences in literacy rates between rural and urban areas, particularly for females. Tamil Nadu also did better than both Karnataka and India as a whole in terms of school attendance, particularly in rural areas: In 1995-96, the gross attendance ratio of rural females attending primary school stood at 92 in Tamil Nadu compared to 72 in Karnataka and 7 1 compared to 40 for upper primary.

Ta 001 1971 1981 1991 2001 Karnataka All 36.83 43.92 56.04 67.04 Male 48.51 55.67 67.26 76.29 Fernale 24.55 31.68 44.34 57.45 Tamil Nadu All 45.4 52.63 62.66 73.47 Male 59.55 65.58 73.75 82.33 Female 30.92 39.37 51.33 64.55 All India All 34 44 52 65 Male 46 57 64 76 Female 22 30 39 54 Source: Goyal, 2005

6.6 There is clear evidence that parents are willing to spend more on education if local school quality is better. Indeed, in Tamil Nadu, rural households were willing to spend twice as much as in Karnataka on a child attending primary school; in urban areas, parents in Tamil Nadu spent roughly 15% more per child than their counterparts in Karnataka. Data from the Sixth All India Education Survey (1 992-93) indicates that school infrastructure in Tamil Nadu was significantly better compared to Karnataka (Table 7). The presence of a much higher percentage of female teachers in Tamil Nadu may also explain its higher rate of school participation, particularly among rural females.

Percentage of Primary Schools with Drinking Urinals Lavatory Separate Pupil- Percentage Percentage Water Urinals for Teacher of Trained of Female Girls Ratio Teachers Teachers Tamil 62.34 19.97 12.57 24.24 37.19 99.8 48.9 Nadu

Kamataka 23.94 4.57 3.3 1 3.76 39.2 93.8 3 1.20

All India 44.23 18.93 10.86 17.33 40.00 85.3 31.6 ~~ Source: Shtli All India Educnrional Survey, 1992-93

58 Tamil Nadu 's Health Breakthrough

6.7 In the twenty years between 197 1 and 199 I, Tamil Nadu achieved a health breakthrough (Table 8). The infant mortality rate declined by nearly 50 percentage points, from 113 per 1000 live births to 57 per 1000 live births. Under-five child mortality fell by two thirds - from 40.7 to 12.6 per 1000 live births in 1997, 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 197 1 compared to Tamil Nadu, but made slower progress in the following two decades. The infant mortality rate in Kamataka fell by only 19% - from 95 to 77 per 1000 live births between 197 1 and 1991. Under- five child mortality fell from 37.5 to 16.6 per 1000 live births in 1997. Life expectancy at birth increased from 55.2 in 197 1 to 62.9 to 1997, a gain of 7.7 years, and only half of Tamil Nadu's increase in the same time period. In the post-I991 period, however, Karnataka's progress in health accelerated, while Tamil Nadu's showed only modest gains having already reached a high level of performance. Demographic change complemented Tamil Nadu's health transition. Between 1981 and 1991, the crude birth rate in Tamil Nadu declined from 28 to 20.8, whereas in Karnataka it fell less sharply from 28.3 to 26.9. The total fertility rate for Tamil Nadu fell from 3.4 in 198 1 to 2.2 in 1991 (with a below replacement fertility rate of only 2 in urban areas). In Kamataka the total fertility rate declined much less from 3.6 in 1981 to 3.1 in 1991.

1971 1981 1991 1997 2001 Karnataka Crude Birth Rate 31.7 28.3 26.9 22.7 22.2 Crude Death Rate 12.1 9.1 9 7.6 7.6 Irtfant Mortality Rate 95 69 77 53 58 Under 5 Mortality Rate 37.5 24.2 23.6 16.6* Life Expectancy at Birth** 55.2 60.7 62.5 62.9 61.7165.4" Total Fertility Rate 4.4 3.6 3.1 2.5 2.4* Tamil Nadu Crude Birth Rate 31.4 28 20.8 19 19.1 Crude Death Rate 14.4 11.8 8.8 8 7.7 Infant Mortality Rate 113 91 57 53 49 Under 5 Mortality Rate 40.7 35. I 16.1 12.6' Life Expectancy at Birth** 49.6 56.9 63.3 63.7 65.2167.6" Total Fertility Rate 3.9 3.4 2.2 2.0 1.85 * 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 birtldfemale life expectancy at birth. *Estimated for 1994-2001 (Guilnioto and Rajan, 2002).

Source: Compendium of India's Fertility and Mortality Indicators, 197 1- 1997, Registrar General of India, New Delhi (1999); Health Information of India 2002, Central Bureau of Health Intelligence, Ministry of Health and Family Welfare, Government of India.

6.8 Another striking contrast between TN and Karnataka is the superior utilization of child and maternal services in the former. Even as late as 1998-99, only 5 1.1 % of mothers in Kamataka gave birth in a health care facility compared to 79.3% in Tamil Nadu and only 60% of all children between the age of one and two had received all vaccinations compared to 88% in Tamil Nadu.

59 Why was Tamil Nadu a Superior Pe$ormer?

6.9 There are signs that the gap between the two states is narrowing, but Tamil Nadu remains a better performer 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 1970’s, but the per capita spending difference on health in the 1980’s was too small to account for the vastly different health outcomes in the two states. Instead, we argue that the reason for Tamil Nadu’s superior performance is the role of 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.

Welfarist Ideolonv

6.10 Tamil Nadu’s superior performance was basically the product of sustained state action on a variety of programmatic fronts starting in the late 1960’s. In 1967, the Congress Party was defeated in the state assembly elections and a regional party, the Dravida Munnetra Kazagham (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 1920’s. 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. The DMK was inspired by Ramaswamy’s ideology: Although the DMK later split into Karunanidhi’s DMK and M.G. Ramachandran’ s All-India Anna Dravida Munnetra Kazagham (AIDMK), both parties drew their inspiration from Ramaswamy’s Dravidian thought. The DMK and the AIDMK were permeated with ideas that emphasized social welfarism and empowerment.

Good Politics

6.1 1 These ideas also made good political sense: A major food crisis in 1967 was one the primary reasons why the Congress was voted out of power in Tamil Nadu after holding power continuously since independenceeg2As a result both DMK and AIDMK leaders shared a commitment to universalizing access to cheap rice: In addition, the government introduced a vast Nutritious Mid-day Meal (NMM) program across the state in 1982. Other important programs focused on family planning and improving child and maternal nutrition in villages (see Box 4).

A.K. Venkatsubramanian, The Political Economy of Tamil Nadu’s Public Distribution System (PDS): A Case Study, Paper prepared for India Service Delivery Report (New Delhi: The World Bank, 2005).

60 Social programs were mutually reinforcing.

6.12 Tamil Nadu’s experience was marked by a number of inter-locking initiatives across a range of areas that generated positive synergies. 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 mid-day meal scheme had an impact on both 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.

Box 8 : Social Programs in Tamil Nadu 1. Universal Access to Cheap Food through the Public Distribution System (PDS): When the AIDMK’s M.G. Ramachandran (MGR) became Chief Minister in 1977, he promised to provide a fair price shop for food in every village. The number such shops doubled from 9,300 in 1977 to 17,536 in 1982. Over time, the public food 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 such system in the country in terms of access, reliability, and quality. This came at heavy fiscal cost though: by 2004, Tamil Nadu’s food subsidy amounted to a staggering Rs.15.4 billion.

2. The Nutritious Mid-day meal (NMM) Program: The Nutritious Mid-day Meal (NMM) program was introduced in 1982, covering pre-school and primary school children alike; this was soon expanded to include upper primary and secondary school students as well as old-age pensioner^.^^ The program employed some 200,000 people, mostly women, as organizers and cooks. At first, the government was mocked for the huge cost of the program (estimated at Rs.6.59 billion in 2002/03), but it clearly helped boost school enrollments, reduce drop-out rates, and improve nutrition. Teachers and parents were appreciative of the scheme and its salutary effects on educational improvements. Its importance in the political agenda has kept it relatively insulated from becoming another vehicle for patronage and rent-seeking. The NMM program was so successful in Tamil Nadu that the Supreme Court in 2001 ordered that all states adopt it.

3. The Family Planning Program: Fertility decline in the state, which accelerated in the late 1970s and 1980s, was enabled by the presence of a strong family planning program. While such programs were introduced in all the states in India, with varying results, the Tamil Nadu model was effective.84 The program enjoyed the enthusiastic support of the state’s political elite. The success of a pilot program implemented in Thanjavur district in the early 1970s motivated other district collectors to follow suit. The family planning program was combined with the provision of maternal and child health care services.x5 Nurses working in the sub-centers provided family planning services as well as antenatal and post-natal care and immunization to pregnant mothers, infants and children. Partly as a result of this dovetailing, Tamil Nadu has a high coverage rate for women with respect to antenatal care and immunizations.

4. Child and Maternal Nutrition: Interventions, such as the Tamil Nadu Integrated Nutrition Project (TNIP) and the Integrated Child Development Scheme (ICDS) were effectively implemented with good results.

83 P. Subramaniyam, Case Study on Mid-day Meal Schemes of Tamil Nadu and Guiarat States, Paper for Study on MDGs in India (New Delhi: South Asia Human Development Sector, 2003). 84 T.V. Anthony “The Family Planning Programme - Lessons from Tamil Nadu’s Experience,” Paper presented at the Symposium OIZ India’s Developnzent iti the 1990’s at the Nehru Memorial Museum and Library (New Delhi: Center for Policy Research, 1992); see also, T.V. Anthony, Tamil Nadu -A Case w,Paper presented at the Second Regional Workshop on the Management of Population Programs, Nanjing, China, 1994.

85 This is in contrast with Kerala where the ANM’s did not promote or provide family planning services.

61 Tamil Nadu ’s civil service was an efective vehicle for irnplementirig social programs.

6.13 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 office; nor does Tamil Nadu 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 on 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, 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 frontline 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.

Box 9 : The Tamil Nadu Medical Supplies Corporation (TNMSC)S6 The Tamil Nadu Medical Services Corporation is an excellent example of how to reduce corruption in drug procurement and ensure the provision of high quality drugs to the state’s public hospitals, improving their image and encouraging usage. Under the old system, drugs were procured by the health department and individual district hospitals. No list of essential drugs existed to guide their decisions. This haphazard system not only raised the cost of drugs, but encouraged favoritism and rent-seeking. In 1994, the government established TNMSC to streamline procurement. The first step was to create a list of some 240 essential drugs based on WHO guidelines. Next TNMSC became the exclusive agent for procuring these drugs from suppliers, allowing it to negotiate cheaper bulk contracts. Only established suppliers are allowed to participate in the tender process; surprise visits to the factories of suppliers help verify claims of expertise. Drugs stamped with a TNMSC logo to prevent diversion are delivered to its 24 warehouses around the state with a penalty applied for late shipments. Samples are sent to laboratories around the country for quality control. Once quality is certified, shipments are then released to hospitals and PHCs using a passbook system. Allotments to hospitals and PHCs are based on objective criteria, such as patient volume and local morbidity patterns. The entire process is fully computerized, allowing TNMSC to monitor the stock of different drugs across districts and hospitals on a daily basis. The price of drugs had fallen dramatically: for example, a Ciproflaxin packet of 100 tablets that cost Rs. 525 in 1992-94 was available for Rs. 88 in 2002/03. The idea of TNMSC came from a few technocrats in the state government, but was quickly adopted by state’s politicians as a way of demonstrating their commitment to the poor.

Both the AIDMK 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.

6.14 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. One should also note that both the DMK and AIDMK have a tradition of powerful Chief Ministers and disciplined party cadres: 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-

*‘For more on this, see N. Lalitha, Access to Medicines: Initiatives in Policv Making and Deliverv of Drugs in Tamil Nadu, Paper prepared for study on MDGs in India (New Delhi, SASHD, 2003)

62 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 AIDMK, although bitter rivals, shared the same world view and ideological bent made for continuity, not disruption.

Patterns in Karnataka.

6.15 Karnataka’s political parties have not generally sought to mobilize political support by pursuing welfarist policies.*7 It is telling that Karnataka did not introduce a state-wide mid-day meal program until 2002, twenty 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 TNMSC, and improving regulatory capacity.

The unfinished agenda for human development in Tamil Nadu.

6.16 Tamil Nadu has made significant progress human development over the last 35 years. But more could clearly be done. While severe malnutrition has declined in Tamil Nadu, the incidence of malnutrition in absolute terms remains high. Since the 1990’s progress in overall literacy has slowed in Tamil Nadu, with Karnataka fast catching up. Literacy rates for scheduled castes continue to lag behind the general population in both states. The decline of infant mortality in Tamil Nadu has tapered off, hovering at 53 per 1000 live births throughout most of the 1990’s. Yet, Tamil Nadu remains an instructive case of how state interventions spurred by both political and ideological considerations can speed up the pace of realizing key human development objectives in a relatively short span of time.

Conclusion

6.17 Political support was a key factor in why Tamil Nadu outperformed Karnataka in terms of overall human development outcomes between 198 1 and 2001. In Tamil Nadu, this commitment was the product of a perception by the two Dravidian parties that social programs would bring electoral returns as well as a common ideological emphasis on welfarist policies. Political support in the form of a bipartisan consensus provided a crucial impetus for Tamil Nadu’s civil service to design and implement a range of inter-locking programs to improve human development outcomes in the state beyond what could have been expected by economic growth alone. Tamil Nadu’s success illustrates the importance of political incentives for effective program delivery.

87 R.C. Crook and J. Manor, Democracv and Decentralizationin South Asia and West Africa, (Cambridge, Cambridge University Press, 1998).

63 Chapter Seven Strengthening Accountability Mechanisms

7.1 While previous chapters have focused on particular services, this one examines cross- cutting processes that have a bearing on accountability in service delivery. We focus on some important governance reforms designed to reinforce accountability in service delivery in a variety of settings, including Karnataka’s attempts to curb politically-motivated transfers of civil servants; Rajasthan and Delhi’s efforts to improve access to information to citizens; the emergence of more vigorous anti-corruption institutions in Karnataka and nationally through the transformation of the Central Vigilance Commission (CVC); and the role of the Supreme Court in intervening directly to improve services. In some cases, it is possible to link these reforms to concrete improvements in particular services: Public Interest Litigation (PIL) triggered Supreme Court interventions that had a positive impact on solid waste management and improving air quality. In other cases, the impact is harder to gauge especially in the short-run: While NGOs did use access to information legislation in Delhi to hold service providers more accountable, we do not have evidence to show that this actually resulted in an improvement in the quality of services themselves, although one could probably infer that was the case.

I. Civil Service Reform: Transfers in Karnataka

Frequent Civil Servant Transfers: A Problem for Service Delivery

7.2 One of the most important governance problems facing India is the frequent transfer of civil servants. This 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. Low tenure rates reflect the problem of corruption with posts being bought and sold in some departments with rich pickings. The phenomenon of buying and selling posts was first noted by Robert Wade in his study of the Irrigation Department in a major south Indian state written some two decades ago.” Wade noted that irrigation engineers were able to extract large amounts from the sale of posts as well as the award of contracts and water to lobby groups. After a share for the engineers, the bulk of this money found its way in the coffers of politicians seeking to raise money for elections and other purposes. The buyers of posts in turn had to work hard to recoup their investment by extracting as much revenue as they could before being transferred themselves unless they could avert this potential threat by paying to retain the post for a longer period. Clearly, the more downstream problem of chaos in administration caused by high turnover rates is linked the upstream imperative facing politicians to extract revenue from routine government functions (e.g., the assignation of posts, the supply of scarce resources such as water and power, and the award of lucrative contracts to bidders) to finance the quest for office.

** Robert Wade, “The System of Administrative and Political Corruption: Canal Irrigation in South India” Journal of Development Studies , Vol. 18, No. 3, 1982, especially pp. 302-317. See also, Robert Wade, “The Market for Public Office: Why the Indian State Is Not Better at Development” World Development, Vol. 13, No. 4, 1985, pp. 467-497 for a revealing discussion of the problem of frequent transfers.

64 Measures to Curb Transfers in Kamataka

7.3 Karnataka is the state that has moved fastest towards addressing the problem of frequent transfer^.'^ During the first year of a new government in 2000/01, transfers reached a level of approximately 54,000 (Figure 4), the highest number since 1992-93 when transfers came close to 58,000. At first, the government did what several other govemment before it had done to contain transfers after the first year spike: It announced a blanket ban on general transfers for 2001-02, with a few narrow exceptions authorized only by the Chief Minister himself. The number of aggregate transfers for 2001/02 registered a steep fall to approximately 16,798, a drop of more than 69% relative the previous year. Despite some opposition, the general ban on transfers was continued into 2002/03 as an economy measure. More important than the ban, however, was the path-breaking decision by the govemment to create a committee system to screen requests for transfers at all levels of the system; so far no other state has such a structure. Effecting transfers by committees, staffed primarily by senior bureaucrats without an interest in the cases at hand, provides some insulation from political interference.

7.4 Critical institutional changes to regulate transfers thus included:

0 The Creation of Cadre Management Authorities (CMA’s) for all regular civil service posts to screen transfers. The Minister was designated chairperson of the committee for Group A posts, along with the Principal Secretary and Head of the Department (HOD)concerned as well as a Secretary to government from another department. Ministers now had to effect such transfers in consultation with senior bureaucrats, not alone. A separate committee, reporting directly to the Chief Minister, was to consider requests for the transfer of members of the Karnataka Administrative Service chaired by the Chief Secretary. Other transfers for Group B, C, and D posts were effected by committees chaired by the Heads of field departments.

0 Raising minimum tenure across Groups: The government raised minimum tenures for Group A posts to three years, B posts to four years, C posts to five years, and D posts to seven years respectively. Premature transfers were disallowed except under certain strictly defined and narrow circumstances.

0 Notifying cadres exempted from transfers: The new transfer rules also contained a useful provision that allowed government to exempt certain cadres from transfers altogether.

0 Imposing a Quantitative Ceiling on Transfers: The Government imposed a ceiling of five percent on aggregate transfers of total sanctioned cadre strength, translating into roughly 30,000 transfers a year.

0 Creating a Transfer Data-base: Karnataka also developed a comprehensive database to track transfers over time. No other state has such a data-base.

89 For a more detailed discussion , see Vikram K. Chand, “Contemporary Governance in India: Islands of Success and Beyond in Stephen Howes et..,State-level Reforms in India (New Delhi: Macmillan, 2003).

65 The Problem of Teacher Transfers 7.5 Despite these measures, there was some concern that the discipline in controlling transfers set in 2001102 was unraveling in 2002/03 when transfers for the year shot up to 29,802 for the April through September period, far higher than the 16,798 recorded in the whole of the previous year and 4.6% of sanctioned civil service strength in just six months. A closer look revealed that the problem was concentrated in Education, which registered a total of 19,374 transfers alone (8% of its sanctioned strength). Transfers of teachers continued well beyond the transfer season with teachers accounting for 8,350 out of 9,700 transfers (roughly 86%) in August and September, and outside the framework of the newly-established cadre management authority. Other departments were in line with the five percent annual norm for transfers.

Figure 6 : Aggregate Transfer Data, Karnataka, FY 2000101 to 2004105 - ~~~ ~ ~ -~ Total Group A, B, C and DTransfers - Government of Karnataka (200&2005) 60000 54333

50000 In U 40000 r 0 c I- .-C 30000 In 1:6 20000 E i loooo i \821 1 0 00-01 01 -02 02-03 03-04 04-05 (April- SePt) Year I Source: Department of Personnel and Administrative Reforms, Government of Karnataka; Interim Report, Karnataka Administrative Reforms Commission, Jan 200 1.

7.6 In order to stem the deteriorating situation the government put the brakes on transfers during the latter half of 2002103. Between October 1, 2002 and March 3 I,2003, transfers fell to only 4,2 16 across government, including 2,622 teachers. The Government experimented with a computerized system in the Education Department to process transfers in an attempt to take matters out of the hands of the politician. With the Department receiving far more requests for transfers, particularly from rural teachers wanting to move to urban areas, than vacancies, the entire process was prone to corruption. Rules for prioritizing requests were made explicit and coded by a software program: Employees seeking transfers were called in order of priority for a counseling session where such matching was done on-line. Electronic transfer orders were then generated and the vacancy database updated. The system worked only partially in 2003/04: Not all vacancies were reported in the database, allowing some posts to be filled through patronage. In 2004/05, the system was not implemented at all, but aggregate transfers still remained rather low because of delays in forming the new government (Figure 5).

66 Karnataka ’s made progress in reducing politically-motivated transfers through a combination of high-level support from the political leadership and senior civil servants.

7.7 Aggregate transfers remained at low levels in 2003/04 totaling 30,257 and only 8,21 I in the first half of 2004/05. Karnataka has thus succeeded in containing transfers to close to five percent of the civil service’s sanctioned strength for four transfer seasons in a row. Several factors explain this outcome. Senior bureaucrats were concerned about the problem of political interference in government and supported the strategy of limiting transfers. The Karnataka Administrative Reforms Commission (KARC) chaired by a senior politician drew attention to the problem of frequent transfers in its report, which was widely read by the state’s political elite. The Chief Minister’s own approach to his civil servants was to grant them autonomy and hold them accountable for results: Reducing transfers was thus acceptable to the Chief Minister, who was willing to resist pressures from his own party on the issue. The Education Department, with competent leadership, viewed transfers as a menace that interfered with rational planning, leaving rural schools without teachers and disrupting the school-year especially when transfers occurred outside the regular season: top officials in the Department strongly supported the policy of limiting transfers over substantial political opposition.

Transfers can be controlled through public tracking and reporting, quantitative caps, and computerizing transfer processes in large departments, such as Education; non-statutory cadre management committees are not powerjiul enough to resist external pressures.

7.8 Karnataka’s attempts to reduce transfers offer useful lessons to other states. First, it is better to create statutory committees to authorize transfers than to do so administratively: statutory committees have authority independent of the executive and are legally enforceable. Kamataka’s cadre management committees were relatively weak in nature and most of the decline in transfers was more the result of strict adherence to the five percent norm (quantitative caps in effect) combined with artificially-imposed bans on transfers. Second, computerized counseling in staff-intensive departments, particularly education, health, and the police, can help reduce political interference in the process. Third, a public database to track transfers is essential for monitoring. Finally, while reducing ‘mass’ transfers will help reduce corruption and politicization, it is essential to curb senior-level IAS transfers. In the case of IAS officers, Kamataka is still a long way away from any concept of a minimum tenure - even though it is at the leadership level that this is most needed. Indeed IAS transfers during 2002/03 totaled 163 out of a sanctioned cadre strength of 239; in others words, 68% of the IAS in Karnataka was transferred during 2002103, far higher than the 15% recorded for Group A as a whole during the same period. In 2003104, over 90% of the IAS cadre turned over compared to 8.8% of Group A as a whole.

11. Unveiling Secrets: Access to information in Rajasthan, Delhi, and Karnataka

7.9 Rajasthan and Delhi present two contrasting, but effective, paths to opening up government to public scrutiny. In Rajasthan, a bottom-up and extended struggle by the Mazdoor Kisan Shakti Sangathan (MKSS), a well known NGO, resulted first in a series of amendments to the state’s Panchayati Raj Act (PRA) to widen popular access to information relating to local- level public works in 2000 and the adoption of a state Right to Information (RTI) law in 2001. The Delhi Right to Information Act (DRTI) was primarily an initiative of the Chief Minister as part of her overall program to improve administration rather than the product of civic pressures. Once the Act was adopted, however, the response from civic groups and citizens alike was overwhelming. Delhi’s NGO’s adopted some of the same strategies as the MKSS to ensure its enforcement by government agencies, such as public hearings. Both the Rajasthan and Delhi

67 laws have made it much simpler for citizens to pursue (and get) accountability in service delivery, particularly government works and programs. In Karnataka, on the other hand, a strong law has encountered difficulties in implementation because of an ebbing of political ownership.

Raiasthan:

The MKSS mobilizes public pressure for transparency through public hearings.

7.10 The MKSS was constituted in 1990 as an NGO seeking to improve the rural poor’s access to entitlements, including enforcement of minimum wages.” Its strategy was to uncover corruption in local public works by first securing employment rolls, vouchers, beneficiary lists, and completion and utilization certificates and then turning these over to villagers for scrutiny at open public hearings, Jan Sunwais, in the presence of the media and a panel of eminent persons. Key irregularities that emerged in public hearings: Hiring ghost-workers and pocketing the proceeds at the expense of real workers, paying for work not completed or not done at all, false bills and vouchers, the use of inferior materials for constructing local roads or public buildings, and manipulating beneficiary lists for social programs. Understandably, local officials, particularly Sarpanches and Panchayat Secretaries, were reluctant to part with such information, but the MKSS was usually able to use its influence to get these documents in advance of a Jan Sunwai through the intervention of higher-level officials.

7.11 After the first few Jan Suwais in 1994 and 1995, the MKSS began pressuring the state government to institute reforms that would allow the public to gain legal access to key documents for local-level accountability, including the budget and quarterly spending report for government schemes in a district; the list of people considered below-the-poverty line and thus able to benefit from social programs; and copies of employment rolls, along with bills and vouchers for a small fee. While the Chief Minister at the time announced that he would so in a speech to the state assembly, nothing changed. It took two sit-ins (dhamas) in Beawar in 1996 and Jaipur in 1997, which drew national attention, for the state government to go public with a series of changes in the rules of the PRA that conceded some of the MKSS’s demands.

Pressure from below leads to legislative changes.

7.12 In 1998, the opposition party won the state elections: As part of its strategy to woo rural voters disenchanted with corruption, it had promised to implement access to information in Rajasthan if victorious. The new Chief Minister then proceeded to amend the PRA itself (not just the rules) in 2000 to introduce serious reforms, including the creation of a Ward Sabha, a smaller unit of the Gram Sabha, to foster greater civic participation in rural local governance. Ward Sabhas were given the power to conduct social audits of any government program, approve proposals for public works in the ward, and certify the proper execution of works. Ward Sabhas were vested the right to secure access to any documents that might be necessary to hold social audits (under the new law, social audits had to be held twice a year). The new law thus institutionalized the Jan Sunwai as a way of ensuring accountability through periodic meetings of ward residents at which government officials were required to be present, answer questions, and correct problems. Simultaneously, the government passed a state RTI law that allowed citizens to gain access to documents and records held by public bodies (subject to certain exceptions, such as

90 Neelabh Mishra, People’s Right to Information in Raiasthan, Discussion Paper Series, No. 4 (New Delhi: UNDP, 2003). See also, Anjali Bhardwaj, Moving towards an Effective Right to Information Regime in India (New Delhi: The World Bank, 2004) and Mark Tully, India in Slow Motion (Delhi: OW, 2002).

68 Cabinet papers); inspect records and public works; and receive samples of materials used in government projects for testing purposes.

7.13 Clearly, pressure worked in Rajasthan. The MKSS was led by figures who were well networked among civil society groups in Rajasthan and nationally and within the government (including one former member of the IAS). The presence of the media, as well as observers, made it difficult for the government to ignore the Jan Sunwais. Indeed, corruption at the expense of the poor by government officials became a major political issue in the 1998 state elections, as we saw.

Delhi:

Delhi ’s political leadership sponsors a Right to IiEformation Law.

7.14 Delhi’s citizens did not have to struggle for their Right to Information law. The Chief Minister believed in the importance of such a law and pushed for its enactment, despite the fact that some of her own departments were reluctant (or not ready) to open their files to public scrutiny. The Delhi law allows citizens to inspect public records, documents, and works (and take samples of these as well). Exceptions are allowed for documents relating to national security; cabinet papers are also off bounds as are documents the release of which might constitute an invasion of privacy. The law allows one appeal to the Public Grievances Commission (PGC) in the event that a request for information is turned down by a department. Departments have 30 days to consider a request and must give reasons for rejecting a request. Penalties can be imposed on officers who fail to deliver information within 30 days and/or furnish false information. A state council for information is expected to monitor the working of the law including its implementation by departments. The council is chaired by the Chief Minister and consists of twenty members in all of which ten must be chosen from civil society.

NGOs use RTI to push for accountability in service delivery.

7.15 The response to this law in Delhi has been striking: NGOs in particular have been quick to use it in creative ways. The organization, Parivartan, used the DRTI law to expose corruption in the state’s public distribution (PDS) system by insisting on access to stock registers maintained at privately-run fair price shops (FPS) to compare official entries relating to food stocks received from government warehouses with field surveys to verify what households actually received. The result: 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 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 ground that doing so violated the privacy rights of FPS owners. Parivartan also conducted an audit of all public works executed in a poorer colony, Sundernagri, by comparing completion certificates issued by the Municipal Corporation of Delhi (MCD) with the situation on the ground. A Jan Sunwai conducted by Parivartan in Sundernagri revealed serious malfeasance, including roads and streets that existed only on paper; hand-pumps that were said to have been installed but were not; and the use of poor quality materiak9* Parivartan joined with the Indian Express newspaper to conduct a series of camps with Delhi citizens interested in filing applications under the DRTI law.

9’ Parivartan, Report of Jansunwai on Public Distribution System (July 31,2004) 92 Parivartan, Report of Jansunwai in Sundernagri (December 14,2002).

69 Delhi ’s Public Grievances Commission (PGC)

7.16 The PGC is another reason why the law worked well in Delhi. As the only appellate authority under the DRTI Act, the PGC plays a pivotal role in overcoming bureaucratic resistance to releasing information. The PGC has the power to summon any official (or files) to its hearings; its proceedings are relatively quick with most cases being resolved in two sittings; and the body is completely autonomous of the government in its functioning. It is headed by a Chairperson (usually a senior former civil servant) assisted by three members -two of whom are drawn from civil society. The PGC is also charged with tracking departmental compliance with the suo-motu provisions of the law, which requires departments to routinely release information on their functions, powers, and rules; publicize the process for obtaining information; and provide “all relevant facts” while announcing policies and/or decisions to people who might be affected by them, along with the reasons for such decisions.

7.17 More than 4,700 people have used the DRTI Act to secure information from government offices in the first three years of its operation.93 During the same period, some 1,126 appeals have been filed with the PGC. Approximately one out of every four requests made in the state of Delhi for information is thus likely to result in an appeal. It usually takes about two months (and two hearings) to resolve an appeal (more than the norm of 30 days set by the DRTI Act for hearing an appeal) but still rapid.94 In fact, the PGC is probably the most citizen-friendly appeals body for right to information cases in the country. About three-quarters of appeals (75%) are resolved in favor of the appellants. This has raised the credibility of the PGC and produced an upward trend in the number of appeals filed (see Table 9). Pending cases are few in number: Only 32 of 248 appeals (13%) filed in 2002-03 were carried over into 2003-04; in 2003-04, only 52 of 428 appeals (1 2%) were carried over into 2004-05.

2002-03 248 216 32 2003-04 428 376 52 2004-05 450 385 NA Source: Government of Delki, Public Grievances Cornmission, 2005.

7.18 Because the PGC is both a statutory appellate authority under the DRTI Act and non- statutory channel of grievance redressal for citizens, the current chairperson of the PGC has sought to combine the two functions by using appeals that raise systemic questions to foster reform. One appeal involving a request for information on why the Registration department continued to use antiquated rules to register land transaction led to the PGC commissioning an independent report on the working of the Registration Department with recommendations for its reform.95

Strong support from the Chief Minister, the active use of the law by NGOs, and a credible and easy-to-use appeals process explain why the Delhi RTI Act worked.

7.19 The DRTI law was successful for a variety of reasons: The law itself provided enough legal latitude to secure ample information from the government. The visible support of the Chief

93 Government of Delhi, Public Grievances Commission (New Delhi, 2005), p. 14 94 Bank staff interview with Shailaja Chandra, Chairperson, PGC, New Delhi (March 16, 2005) 95 Center for Civil Society, Registration of Documents in the Office of the Sub-registrar (New Delhi, dd).

70 Minister for the new law made it harder for Departments to undermine its implementation. The response of civil society, including the media, meant that there was constant pressure on departments from below to release information. The importance of the existence of an independent appeals process to a highly responsive body like the PGC cannot be underestimated either. The DRTI law is thus likely to work well over the long-term given the high involvement of civil society and the availability of a credible appeals process, even if a new political leadership were to take office in Delhi.

Kamataka

Karnataka adopts a strong right to information law, but goes slow on implementation.

7.20 The Karnataka Right to Information Act (KRIA) was adopted in December, 2000 as part of the new government’s wider program of administrative reform. The Act was one of the more progressive pieces of legislation on the subject in the country. The Act had strong suo- mot^ disclosure provisions similar to Delhi’s and limited exceptions, including one for Cabinet papers. Departments had 15 days to respond to a request for information. It provided for a regime of penalties in case information officers dragged their feet in responding to legitimate requests as well as two appeals - the first to the Secretary of the Department (in the case of the Secretariat) and the second to the Karnataka Administrative Tribunal (KAT).96

7.21 After the adoption of the Act though, the government delayed issuing the necessary rules - in effect, keeping the Act in suspended animation for over 18 months. It is a puzzle why the government after announcing its intention to pass a Right to Information and then doing so with much fanfare, would delay implementation for so long. There certainly were bureaucratic apprehensions about the new law, particularly that information that could compromise the working of government might end up in the public domain. But the real opposition to the law came from the political establishment, which had at first ignored the passage of the new law.

A public audit by an NGO of KRIA reveals poor implementation

7.22 The Act was a powerful instrument for curbing corruption. The government approved the rules in July, 2002 partly in response to pressure from donors, the media, and civil society groups. An Implementation Audit of KRIA subsequently conducted by PAC and the Commonwealth Human Rights Initiative (CHRI) revealed that it was being poorly implemented. In order to test the system, individuals forming part of the Audit team filed requests for information across agencies between November, 2002 and April, 2003 97.

7.23 The results of the Audit:

0 Government officials were generally ignorant of the new law. 0 Most agencies had not appointed information officers by November, 2002; by April, 2003, more had been appointed. 0 Except for one agency, the suo-motu disclosure requirements of the new law were not being implemented. 0 Information was provided after considerable delays and several calls to offices. 0 11 of 20 public agencies approached for information did not respond.

96 Government of Karnataka, Karnataka Right to Information Act, 2000 and Rules (Bangalore: GoK, 2002). 97 Public Affairs Center and Commonwealth Human Rights Initiative, Imdementation Audit of Karnataka Right to Information Act, 2000, November 2002-April 2003, (Bangalore: PAC, 2003).

71 0 Appeals against delays did not elicit a response from higher-level officials, while approaching the KAT proved to be a daunting task requiring legal counsel.

Weak implementation of KRIA reflects a lack of political ownership, but Karnataka ’s large NGO community may yet succeed in making the law work.

7.24 The implementation audit was given wide publicity: Government has since put in place information officers in almost all departments and named appellate authorities. Yet, there is still a sense of frustration that KRIA has not been implemented as well as it could have. First, the government has not created a dedicated unit to implement the new law: Technically, the Department of Personnel and Administrative Reforms (DPAR-AR) was charged with its implementation; this was changed in 2004 and responsibility for KRIA transferred to the Department’s Public Grievances Cell. Second, unlike in Delhi, there is no independent state council to push for implementation of the new law; international experience has shown that such councils can and do make a difference to the quality of implementation. Third, KRIA’s appeals process has been unwieldy: Senior Secretaries have proven reluctant to overrule the judgment of their subordinates. The KAT, while independent, is too formal and distant an institution to serve as an effective channel of appeals, unlike the Public Grievances Commission in Delhi which is easily approachable and makes quick decisions. Finally, KRIA lacked, after the initial passage of the law in 2000, high-level political and administrative ownership, although civil society groups have embraced the law enthusiastically and may yet make it work.

Box 10 : The Battle for Transparency: India’s Freedom of Information (FOI) ActY8 The central government’s freedom of information law has been the subject of intense discussion. Parliament first passed a freedom of information law in 2002 but the NDA-led coalition delayed the framing of rules, resulting in its non-implementation. The new Congress-led government, which came to power in 2004, was committed to strengthening the FOI Act as part of its Common Minimum Program. A new draft bill framed the National Advisory Council (NAC) went beyond the 2002 law by:

I. Expanding the range of information to be released on a suo-motu basis to include an index of all records held by a department and critical data on its budget and subsidy programs. 2. Requiring Departments to computerize their records in a time-bound fashion. 3. Allowing applications to inspect records and works, as well as take samples. 4. Creating an independent Central Information Commission (CIC) to hear appeals. 5. Prescribing strict penalties for officers who willfully disregard the law. 6. Releasing sensitive information held by government after 25 years including Cabinet papers.

The NAC draft has recently been passed by Parliament in much the same form; the challenge now will be to ensure its effective implementation, especially wide publicity to encourage citizens to use the Act.

111. Anti-Corruption Institutions

7.25 The fight against corruption in India has been crippled by several factors, including multiple agencies with overlapping jurisdictions, the need to secure permission from the executive to prosecute senior public servants under the Prevention of Corruption Act (1988), and a slow court system (25 million cases pending at last count). Yet, even in this area, there are examples of reform, particularly the working of the office of the Ombudsman, Lok Ayukta, in

98 Commonwealth Human Rights Initiative (CHRI), Document Comparing Changes between Freedom of Information Act (2002), NAC Draft, 2004, Proposed RTI Bill bv Ministrv of Personnel, 2004, and RTI Bill Tabled in Parliament, 2004 (New Delhi: CHRI, 2005).

72 Karnataka since 2001, and the strengthening of the Central Vigilance Commission (CVC) during the late 1990’s at the national level.

The Karnataka Lok Ayukta: Generating Public Pressure to Check Corruption

7.26 The idea of creating an Ombudsman to address high-level political corruption was recommended by the Administrative Reforms Commission (ARC) as early in 1966. Karnataka created a Lok Ayukta in 1984 in a bid to raise moral standards in politics. While 17 states have established Lok Ayukta offices, attempts to create a similar institution at the national level failed (bills to do so were introduced in Parliament eight times between 1966 and 2004 but never enacted).

Kamataka ’s Lok Ayukta: Authority and Structure

7.27 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 prosecution 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-motu 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” on a 2/3rds vote of the assembly.

7.28 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 anti-corruption 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.

A New Focus on Service Delivery

7.29 Yet, despite its powers and resources, the LokAyukta was quiescent for the most part until the appointment of an activist Justice as its helm in July, 2001. The first action of the new Lok Ayukta, Justice Venkatachala, was to reorganize the institution to focus more directly on service delivery. The Health and Family Welfare Task Force, created in 1999 to reform the state’s health had identified corruption as the single most serious problem facing the health system in Karnataka. Its chairperson was appointed Vigilance Director for Health and Education; the new Director viewed the Lok Ayukta as a powerful instrument to enforce the key recommendations of Health Task Force. This appointment was followed by high profile raids in the presence of the media on city and district public hospitals. During these raids, the Lok Ayukta not only uncovered serious irregularities but issued on-the-spot corrective orders, for example, requiring hospital staff to return bribes extracted from hapless and desperately poor patients, clean up filthy toilets, display the list of drugs in stock at the hospital pharmacy, and discontinue private practice during office hours. Next the Lok Ayukta unearthed a major scandal in the Drug Controller’s office, which had failed to revoke licenses for drug manufacturers after tests revealed that their drugs were adulterated andor spurious. Serious irregularities were found in the General Medical Store, which procured large quantities of drugs not on Karnataka’s Essential Drugs List,

73 including one banned in the U.S. and U.K. In addition, raids on several sub-registries and regional transport offices (responsible for collecting motor vehicle taxes and issuing drivers’ licenses) revealed widespread bribery in progress. Other scandals that came to light included irregularities in the sale of advertising space in the Bangalore City Corporation (BCC), as well as in procurement in several municipal corporations around Bangalore amounting, in the latter case, to a loss of Rs 2.7 billion.99

7.30 The vigor of the Lok Ayukta and the constant press coverage of the many irregularities unearthed by him raised the credibility of the institution. The number of complaints shot up from 20 per day to more than 100 now. The Lok Ayukta’s aim was not so much to prosecute offenders, which he felt was difficult under Indian conditions, but to use the power of his office to intimidate corrupt officials and bring public pressure to bear on them through extensive media coverage. He also wanted to raise awareness about the role of the Lok Ayukta in combating corruption and maladministration among ordinary citizens, Indeed, the rapid rise in the number of complaints has compelled the Lok Ayukta ’s office to fully computerize its complaints registration process: each complainant receives a unique tracking number and the Lok Ayukta is able to monitor the progress of important cases personally. Finally, government reformers viewed the Lok Ayukta as an important ally: Both the Inspector-General of Stamps and Registration as well as the Commissioner, Transport viewed these raids as a critical part of their efforts to reform their agencies.

The wide statutory and institutional authority of the Lok Ayukta was used to make corruption a potent public issue, particularly through the media.

7.3 1 Clearly the transformation of the Lok Ayukta in Karnataka had much to do with the occupant of the office, who viewed his work as a crusade; it is also unlikely that the Chief Minister would have proposed an activist judge for the post had he not been serious about reducing corruption. The LokAyukta thus had implicit political support at the highest levels. The fact that the Lok Ayukta was a realist, who understood that a conviction was not easy to achieve under Indian conditions, set the stage for a shift of strategy towards high-profile raids and investigations that mobilized public opinion and forced the government to take action, if not to prosecute those guilty of violating the law, then to reform the system. Most state anti-corruption agencies in India are still trapped in a numbers game - gauging their performance by the number of people successfully prosecuted - in which they always look ineffectual for reasons beyond their control. The Kamataka Lok Ayukta not only avoided this trap but reframed 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 thus deployed not to prosecute people, but to make corruption a potent public issue and compel politicians to take the matter more seriously.

” On this, see Government of Karnataka, Establishment of Lok Pal and Lok Avukta Institutions [Bangalore; Lok Ayukta’s Office, 20041, pp. 33-42; Anuradha Rao, Karnataka Lok Ayukta: Initiatives in the Public Health Sector (Bangalore: Public Affairs Center, 2003); and Prnknsh Rno v. R Aizatidnrajasheknr, Drugs Coritroller of Kartintnka, et. al. (Bangalore: Lok Ayukta’s office, Sept. 16,2003)

74 Box 11 : Mumbai’s On-line Complaint Monitoring System (OCMS) loo The On-line Complaint Monitoring System of the Greater Mumbai Municipal Corporation (BMC) has several interesting features. The system was designed by the NGO, Pmja, to cover complaints across all wards in Mumbai. Complaints can be filed through Pruju’s website, by telephoning a dedicated number, or by filing a complaint in person or by telephone at a ward office. A complaint has to be redressed within a certain time-frame by the officer responsible; otherwise, the system escalates the complaint to a higher- level official until it reaches the Municipal Commissioner. All complaints, however, are stored on a server controlled by Pruju: While corporation officials have access to the server to provide status reports on complaints, they cannot delete complaints. Praju tracks the process of escalation and follows up with officials if the response is dilatory. OCMS provides a powerful tool for obtaining performance data by function and ward, allowing the corporation to identify structural problems and fashion a plan to resolve them. The availability of performance data also makes it theoretically feasible for the BMC to develop an incentive system for it employees and wards, but this is yet to happen. A user survey commissioned by Praja in December, 2003 (and conducted by A.C. Nielsen) revealed that only 49% of all citizens surveyed felt that their complaint had been resolved compared to the official figure of 88%. Pruju is worried that several complaints, particularly those filed at wards, are not actually being logged into the system by front- line staff. Pruju’s approach has been gradualistic: It began working the BMC in 1999 to design a citizens’ charter and monitor its implementation through surveys and only then proceeded to work on OCMS. Praja’s Board consists of a former Cabinet Secretary and a retired Bombay Municipal Commissioner, among others, and has been able to build up high-level support in the BMC. A challenge will now be to broaden that support to include front-line staff in wards. Several agencies in Bangalore have adopted the principle of involving NGOs in grievance redressal: The BWSSB has launched an on-line system with Janaagruha to monitor complaints and the BDA is readying to do so as well.

Strengthening the Central Vigilance Commission CCVC)

7.32 The CVC was created by administrative order in 1964 to tackle corruption among senior civil servants in the central government and public sector undertakings (PSUS).’~’The 1964 order gave the CVC authority to investigate complaints of corruption, provide advice on disciplinary inquiries conducted by Chief Vigilance Officers (CVOs) within departments, and supervise vigilance and anti-corruption work in Ministries and PSUs. For the first three decades of its existence, the CVC did not make much of a dent on the problem of corruption partly because it was purely an advisory body at the mercy of the government of the day. The CVC was transformed because of an exogenous shock administered by Supreme Court in response to public interest litigation (PIL). A PIL case filed by an investigative journalist asked the Supreme Court to take action to strengthen the country’s anti-corruption agencies which the petitioner alleged had gone slow in prosecuting political and other figures involved in a money-laundering scandal that became public in the early 1990s.

The Supreme Court Intervenes

7.33 In a landmark judgment delivered on December 18. 1997, the Supreme Court struck down the ‘single directive’ issued to the Central Bureau of Investigation (CBI) by the Government requiring prior permission to investigate civil servants above the rank of Joint Secretary in corruption cases. The Court also ordered that the CVC be transformed into a statutory body with the power supervise the functioning of India’s two key investigating agencies,

looOn Praja, see Vikram Chand, “Contemporary Governance in India” in Stephen Howes, State-level Reforms in India op.cit; Badal Mallick, Institutionalizing Partnerships Around a Tool: The Case of the Online Complaint Monitoring Svstem, Draft Paper, (New Delhi: WSP, 2005); and Praja, Complaint Audit (December 2003). Bank staff interview with Praja’s Nitai Mehta, Mumbai (Jan. 4, 2005). Government of India, Resolution No. 24/7/64 - AVD (New Delhi: Ministry of Home Affairs, 1964).

75 the CBI and the Enforcement Directorate (ED). In order to ensure political neutrality in the selection of the CVC, the Court stated that henceforth the CVC would be appointed by the President on the advice of a committee consisting of the Prime Minister, Home Minister, and the Leader of the Opposition in the lower house. The CVC’s term was to be a fixed four year one and non-renewable; CVCs were also prohibited from accepting remunerative employment with the central or state governments after leaving office.

The CVC Takes on Corruption

7.34 The central government issued an ordinance to implement these orders, which was followed later by the enactment of a CVC law in 2003. Between 1998 and 2003, a stronger CVC put in place new measures to check corruption. Public sector banks were encouraged to computerize most of their operations under the CVC’s authority to recommend changes in procedures that “afford scope for corruption or misconduct.” The CVC sought to improve the procurement process in the central government by issuing an order banning post-tender negotiations with any party other than the lowest price bidder. The practice in the past had been to allow other bidders to match the lowest price, resulting in negotiations with several bidders in a single tender, a process fraught with possibilities for corruption; in addition, the process encouraged bidding high initially in the expectation that bid values would be slashed at the end to match the lowest bid. A list of corrupt public servants, including those who had been found guilty under disciplinary proceedings launched by the CVC and those facing prosecution under the Prevention of Corruption Act, was posted on the CVC’s public website.’’* The credibility of the CVC as an effective institution has been enhanced by the fact that the central government has chosen to accept 95% of its recommendations in the last few years. This clearly had made disciplinary processes in central government ministries and PSUs more efficient that they would otherwise have been. In 2004, the CVC was given the authority to protect whistle-blowers in the wake of the murder of a young engineer who informed the PMO of possible corruption in a highway project in Bihar.

The Limits of the CVC

7.35 The CVC suffers from shortcomings as well: It relies on a network of CVOs in departments who devote only a part of their time to vigilance cases and the rest to normal tasks. In addition, CVOs are not top-rung officers and sometimes find it difficult to conduct an inquiry against a more senior official While the CVC has become a statutory body independent of the government, its role remains basically advisory, although its ‘advice’ is now taken more seriously than before.

7.36 The emergence of a statutory CVC was entirely the result of a Supreme Court decision, not political ownership. The government in fact added a section to the CVC Act bringing back the ‘single directive’ that had earlier been only an administrative order. This in turn has given the government the capacity to hobble CVC investigations if necessary; worse, state governments have now begun issuing their own ‘single directives’ to check their anti-corruption agencies. This time the Supreme Court has not so far intervened to strike down the section. Clearly the absence of political ownership does not augur well for the restructuring of anti-cotruption agencies, even with the intervention of a powerful institution, such as the Supreme Court

lo*N. Vittal, Anti-CorruptionEnforcement in India: The Framework and Possible Reforms, Paper Prepared for India Service Delivery Report (New Delhi: The World Bank, 2005).

76 IV. Public Interest Litigation

The Evolution of Public Interest Litigation

7.37 Public interest litigation (PIL) has emerged as one of the more effective ways of prodding governments to reform themselves. Traditional justice allows only an aggrieved person to seek legal redress: In the early 1980's, however, an increasingly activist Supreme Court altered the rules of locus standi. It first allowed members of the public to approach the Court for enforcement of the constitutional and legal rights of disadvantaged groups not in a position to seek redressal themselves. The Court then went further stating that it could treat letters from citizens relating to matters of public interest as writ petitions - in effect making it easier to litigate in the public interest. Finally, in S.P. Gupta v. The Union of India, the Court declared that citizens and organizations could ask the Court to step in to redress public injury, enforce public duty, and defend public interest. If a complaint involved a violation of legal rights, litigants could take their case to the High Courts; if it involved a violation fundamental constitutional rights (including the constitution's directive principles), they could approach the Supreme Court dire~tly."~

7.38 These changes to the rules of locus standi unleashed a flood of PILs. PIL cases work differently from normal cases. Plaintiffs can be broad coalitions, procedures are flexible, expert committees can be formed to advise the Court, the focus is on addressing problems rather than establishing liability, and the Court's involvement can extend over several years (and many interim orders) before winding down. In recent years, the Court has taken strong stands in favor of improving solid waste management, improving air quality in the national capital, and combating the presence of criminals in Indian politics, among many other issues (including improving the working of the CVC).

Case One: Solid Waste Management

7.39 In Almitru Patel & Another vs. Union of India, the petitioner claimed widespread neglect of municipal solid waste (MSW) management, including a failure to collect and dispose of garbage adequately, resulting in pollution and public health hazards. The Supreme Court responded by establishing an expert committee to produce a report on the issue. The Barman committee recommended major changes including house-to-house collection, segregation of waste matter, recycling, and restricting land filling to non-biodegradable matter. Discussions between members of the Barman committee and the Central Pollution Control Board (CPCB) led to a new set of MSW management rules. These rules were sent to the Ministry of Environment and Forests (MOEF), which sat on them until the Court publicly expressed the hope that they would be notified before the next hearing. The new MSW rules were notified on October 3, 2000. The Court was clearly able to facilitate a dialogue between civil society groups, the CPCB, and the MOEF to ensure the adoption of these new rules. Slumbering agencies were forced to take action. On the other hand, four years later, compliance with the new MSW rules remained at low levels. More broadly, the Court's intervention made garbage disposal a high- visibility issue and reframed the terms of the debate from one about garbage to one about

IO3 For a discussion of PILs in India, particularly the Almitra Patel and CNG cases, see Lavanya Rajamani, Judical Activism and Public Interest Litigation in India, Draft Paper, (New Delhi: WSP, 2005).

77 environment. It is worth recalling that the Court’s role in the MSW case spanned eight years and 40 orders from 1996 to 20O4.lo4

Case Two: Air Quality in Delhi

7.40 In M.C. Mehta v. Union oflndia, a case that began in 1985, the petitioner drew the Supreme Court’s attention to the impact of air pollution levels in Delhi on the health of its residents, particularly ~hi1dren.l’~The Court initially asked the Delhi government to explain what steps it had taken to control vehicle emissions. The Court also asked MoEF to establish a committee to examine the feasibility of “low cost alternatives for operating vehicles at reduced pollution levels.” The Sakia committee in turn recommended the use of low leaded and unleaded fuel, catalytic converters, and Compressed Natural Gas (CNG). In response, the Court ordered the central government to supply low-lead petrol to all four major metropolitan cities by December, 1994 and the entire country by December, 1996. The second phase of the case was sparked by a report by the Center for Science and Environment (CSE) entitled “Slow Murder: The Deadly Story of Vehicular Pollution in India” which drew widespread national attention on its release in November, 1996. The Court, roused again to action, issued a suo-motu notice to the Delhi government to submit an action plan to control vehicular pollution. At the same time, the Court constituted an expert committee to provide the bench with technical and policy guidance. On the basis of input from the Bhure La1 committee, the Court issued a judgment in July 1998 ordering the conversion of the city’s bus fleet to CNG by March 31,2001, the phasing out of all commercial vehicles older than 15 years, including taxis, by October, 1998 and the expansion of CNG outlets from nine to 80 by March 3 1, 2000,

7.41 Although the Court had to extend these deadlines several times because of protests by transporters, strenuous objections from the Delhi government, and a shortage of CNG outlets, all these goals were met in short order. All older vehicles were off the road by December, 1998. Converting the bus fleet to CNG was more difficult, but this too was achieved by the end of 2002 by which time some 7,400 private and 2,100 public buses, 15,000 taxis, and 45,000 auto- rickshaws were on CNG. While this was an achievement that came about mostly because of the Court, the fact that it had ventured into technology choice questions made some uncomfortable. Pollution levels in the capital did in fact fall significantly after the adoption of CNG.lo6

Case Three: Electoral Transparency.

7.42 The Supreme Court has emerged as the leading champion of electoral reform in recent years. In December 1999, the Association for Democratic Reforms (ADR) filed a public interest lawsuit in the Delhi High Court asking that the Election Commission (EC) be directed to gather information on the criminal antecedents (if any) of candidates running for elective office, and publicize this information to allow voters to make a more informed choice. In November 2000, the High Court directed to the EC not only to collect and publicize information relating to the prior criminal backgrounds of candidates, but their assets (including those of their spouses and dependent children) and educational qualifications. The central government appealed against the decision to the Supreme Court, but the Supreme Court upheld the High Court ruling in a judgment issued on May 2, 2002 with only small changes: Candidates for state and national elections were ordered to file an affidavit, along with their nomination, detailing past all criminal

Ibid, p. 70. Ibid, p. 43. IO6 A few skeptics argued that the decline in pollution levels was more the result of tightening emission standards and improving the quality of petrol and diesel rather than the introduction of CNG.

78 cases in which they were involved and their disposition, as well as any pending ones, and now they were to declare both family assets liabilities.

7.43 When the EC tried to implement this ruling, however, politicians from all parties came together to oppose it. The Union Cabinet then passed an Ordinance to prevent implementation of the Supreme Court’s ruling at which point some 26 civil society organizations urged the President not the sign the Ordinance. After returning the Ordinance once for clarification and getting it back again without changes from the government, the President assented. A subsequent PIL gave the Supreme Court a chance to intervene again: In 2003, the Court struck down the new law on the ground that it violated the basic structure of the constitution.

7.44 Beginning with the 2004 national and state elections, all candidates have thus been compelled to disclose this information, making it possible for the media, NGOs, and rival candidates to scrutinize their backgrounds. This should make it easier for voters to make a more informed choice at the ballot box by voting out dishonest politicians from office or preventing them from winning in the first place, thus making corruption in ‘downstream’ service delivery less likely.

How effective is Supreme Court intervention?

7.45 There are concerns that the Court by intervening too extensively in public administration is in effect usurping executive power. Some feel that the Court’s micro-management can lead to technically questionable decisions and stifle administrative initiative. The Court’s interventions in the solid waste management, the Delhi air quality, and electoral reform cases had positive results. Public interest litigation can be a powerful tool of accountability, but its repeated use points to an underlying weakness in the administrative system that is cause for serious concern.

Conclusion

7.46 Political and administrative ownership, as well as some donor pressure, played an important in reducing transfers. Citizen pressures, on the other hand, were instrumental in the adoption of legislative changes to improve access to information in Rajasthan. Delhi is a more complex case - political ownership clearly led to the initial passage of a well designed law - but citizen pressures on the lines of Rajasthan and excellent oversight by an independent and citizen- friendly appeals body ensured that the law was implemented effectively. In Karnataka, political ownership faded after the initial adoption of the Act in 2000: Without strong ownership, the government soft-pedaled implementation of the Act. Yet, KRIA has opened up space for civic groups to push for more access to information using the new law. In the case of anti-corruption institutions, Karnataka’s Lok Ayukta was transformed by a new focus on mobilizing public pressure for greater accountability in service delivery. But a lack of political ownership led to attempts to stymie the CVC, despite the Supreme Court’s intervention to bolster it. The Supreme Court was successful in promoting better service delivery outcomes, particularly in the areas of solid waste management and improving air quality in Delhi, and compelling more open disclosure by candidates in elections.

79 Chapter Eight Lessons for Improving Service Delivery

I. THE ENABLING ENVIRONMENT

(a) The Role of Political Leadership

The vision of the political leadership influenced the kinds of reforins pursued.

8.1 The first lesson that emerges from the cases considered in this report is the centrality of the political leadership in triggering service delivery reforms. In Andhra Pradesh, Madhya Pradesh, and Karnataka, reforms were frequently a product of the vision of leaders.lo7 In Andhra Pradesh, the fact that the state was led by a politician with fascination for technology played a role in propelling e-governance reforms."' In Madhya Pradesh, the fact that the leader was committed to vision of governance based on community participation and decentralization clearly influenced the choice of reforms during his tenure in office. In Karnataka, the political leadership sought to transform Bangalore into a leader among cities, using Singapore as a model. At the national-level, telecommunications reform was pushed by the Prime Minister's Office (PMO) as part of a larger developmentalist vision aimed initially at promoting technological innovation and then at strengthening India's overall competitiveness in the global economy. Without the support of the PMO, overcoming entrenched opposition to reform especially in the Department of Telecom (DOT)would have been extremely difficult.

Bipartisan consensus across party lines facilitated reform; electoral incentives for change.

8.2 In Tamil Nadu, the Dravidian parties, which came to power in 1967, were deeply influenced by a common ideology, including the importance female emancipation, the eradication of caste distinction, reservations for backward groups, and family planning to promote development. Welfarist ideology emerged as a major ingredient of social policy in Tamil Nadu under both the DMK and the AIDMK 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 AIDMK to create a social safety net through the adoption of a universal system of public food distribution and a noon midday meal programs for schoolchildren and other groups. In fact, the DMK and the AIDMK 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 & & and Bhoomi, were also supported partly with an eye to their popularity with voters.

Stable governments with a clear majority in the state assembly were better positioned to implement refonns.

8.3 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

lo' For more on this, see Sumir Lal, The Politics of Service Delivery Reform, Paper prepared for India Service Delivery Report, (New Delhi: The World Bank, 2005). 'Os Chandrababu Naidu with S. Ninan, Plain Speaking, (New Delhi: Viking, 2000).

80 reforms. In Tamil Nadu, the tradition of a strong Chief Minister in both the DMK and the AIDMK, 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 certain altruism at play not always reconcilable with rational political calculations.

(b) Politicians and the Civil Service: Patterns of Znteraction

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.

8.4 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 study 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 the IAS when properly empowered by politicians can be transformed into an effective instrument for innovation in service delivery

8.5 Stability of Tenure: An essential ingredient of such empowerment is a guarantee of stable tenure: Almost all the successful cases studied in this report 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 the Gujarat’s attempt to computerized 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.

8.6 Manaperial Autonomv: 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 fast-track the reform of elementary education in the state with the backing of the Chief Minister: Its Director enjoyed an uninterruptedtenure of 10 years. The fact that RGSM promoted changes that empowered panchayats in primary education showed that there is no necessary contradiction in implementing reform through a society, rather than a department, and effective decentralization. The Karnataka State 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 freedom to manage staff. While status as a corporation or a board conferred definite privileges (for example, the right to retain its own revenues rather than send them on to the treasury; 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.

8.7 Political Access and Signaling: 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

81 of services. Public signaling of support by political leaders helped protect civil servants seeking to implement difficult reforms.

11. INSTRUMENTS FOR IMPROVING SERVICE DELIVERY

(a) Promoting Competition

Competition improved service delivery outcomes in India’s Telecom Sector, and weakened the monopoly wielded by traders in MP ’s state-controlled Mandi system, thus benefiting farmers.

8.8 Promoting competition was an important instrument for reforming service delivery. The Telecom case is one of India’s most successful examples of improved service delivery through competition. The slow, but irreversible, dismantling of the Department of Telecom’s monopoly has resulted in cheaper and more efficient calling services, including an explosion in the cell phone market; a marked improvement in teledensity, especially in urban areas; and a dramatic increase in the flow of private investment. Similarly, the opening up of rural marketing services to private players operating outside Mandis has yielded gains for farmers and ITC at the expense of 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 direct supply links with farmers.

8.9 Both initiatives were made possible only by strong action from the highest levels of government. In the telecom case, DOT’Smonopoly was progressively challenged by as powerful an institution as the PMO. On a lesser scale, 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.

8.10 The creation of an independent regulatory body was a pre-requisite for dismantling the telecom monopoly to assure private investors that they would face a level playing field vis-&vis the Department of Telecom (DOT),particularly in the area of licensing decisions. Without this, the bid to open up the telecom sector to private participation would probably not have succeeded.

(b) Simplifying Transactions

Simplifying transactions through the greater use of e-governance made it easier for citizens to interact with the state. Successfiil e-governance projects took time to develop, often took the form of public-private partnerships, and needed careful nurturing by the project champion. They also involved changes in business procedures, not just automation. Political support was necessary to counter resistance to the greater transparency brought about by e-governance.

8.1 1 A second instrument used to improve service delivery was to simplify transactions between government and citizens, using e-governance. Successful e-governance projects depended on high-level political support to overcome resistance by departments not accustomed to horizontal integration of services on a single platform (e.g., E-Seva) or vested interests that might have been sidelined by a new business process (e.g., village accountants in Bhoomi). An administrative champion to steer e-governance projects with a stable tenure was essential for the success of virtually all projects in this study. 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 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

82 for E-Seva in Andhra Pradesh, and seven years for Bhooini partly because of the digitization challenges in the latter. All e-governance reformers 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 here. Successful e-governance programs combined the use of information technology with changes in business processes as well: Mere automation of existing processes could not have yielded the results documented in many of these case studies. In fact, automation without business process re-engineering adds an extra step to the manual procedure and another opportunity for corruption.

(c) Restructuring Agency Processes

Restructuring agency processes involved change on several dimensions: re-engineering intra- organization processes, empowering senior management through the creation of centralized monitoring systems, improving inter-agency coordination, and developing more effective linkages with civil society. A strong management team was a definite plus.

8.12 Simplifying transactions 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. 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.

8.1 3 A Strong Management Team: More than one case pointed to the importance of 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 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 in team, as did KSRTC.

8.14 Reforming Intra-OrganizationProcesses: 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 guidelines values in an accessible form, setting new service standards, reducing discretion in defining a document ready for registration) all 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.

8.15 Centralized Monitoring.to Hold Staff More Accountable: Centralized monitoring of customer complaints using ITappears to have furnished top management in the Hyderabad Water and Sewerage Supply Board (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 Center (MCC) 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

83 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.

8.16 Strengthening Rewards and Penalties: 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 on at least private operators, even if government staff could not be easily disciplined for political reasons. In the case of the Surat Municipal Corporation (SMC), the willingness of successive commissioners to impose penalties on non- performing officials, including suspending them, sent a message down the line that such behavior would not be tolerated: It, of course, helped that elected councilors were willing to allow commissioners this latitude in the wake of the trauma inflicted on the city by the plague episode. 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 well performing depots and individual staff members to good effect. In at least one case, IS0certification constituted a significant reward for past efforts at reform and an incentive to continue with the process.

8.17 Greater inter-agency coordination: 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 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 Rajiv Gandhi Shiksha Mission (RGSM) handled all functions relating to elementary education under one roof and emerged as a focal point for incubating new ideas.

8.18 More Effective Linkages with Civil Society: 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 out-do each other.

(d) Decentralization

Decentralization improved the functioning of an important municipal corporation, and reinforced teacher accountability iiz a major central Indian state.

8.19 Decentralization remains a controversial subject: Some have expressed the concern that decentralization without ‘proper safeguards’ can increase corruption and mismanagement. Others worry about capacity constraints in the country’s Panchayati Raj Institutions (PRIs) that might impede an effective transfer of functions to them. PRIs still receive only a miniscule portion of funds from the central and state governments, with the exception of Kerala and West Bengal. Decentralization, although constitutionally mandated by the 73rd and 74‘h amendments, has been

84 resisted in most states by line departments and state-level politicians who fear an erosion in their prerogatives and authority as power is transferred to local institutions.

8.20 Yet, these cases underline the importance of decentralization as a tool for reform. In the urban setting of Surat, the decision to vest zonal commissioners with the financial and administrative powers of the municipal commissioner greatly reduced the flow of files to the municipal commissioner’s office, freeing him up to take the lead on policy issues without getting caught up in red-tape; on the other hand, decentralization in the corporation meant that decisions could be taken more quickly in zones.

8.21 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. This would not have been possible without hiring large numbers of contract teachers and placing them under PRIs. The appointment of less expensive para-teachers under PRI control allowed for the extension of a more accountable system of primary education across the state, with local teachers subject to tight monitoring by local communities.

(e) Building Political Support for Program Delivery

A consensus across parties facilitated program delivery in Tamil Nadu

8.22 Political support is an important pre-requisite for effective program delivery. When politicians care about a particular program, they are more likely to insist on effective implementation by the civil service. Civil servants responsible for managing such programs are likely to be given more autonomy, as well as administrative and financial resources. Programs that enjoy political support are better positioned to ward off rent-seeking behavior by influential groups. Building political support can thus be an important instrument for ensuring the success of a program.

8.23 Political support was a key factor in why Tamil Nadu outperformed Karnataka in terms of overall human development outcomes between 1981 and 2001. In Tamil Nadu, this commitment was the product of a perception by the two Dravidian parties that social programs would bring electoral returns as well as a common ideological emphasis on welfarist policies. Political support in the form of a bipartisan consensus provided a crucial impetus for Tamil Nadu’s civil service to design and implement a range of inter-locking programs to improve human development outcomes in the state beyond what could have been expected by economic growth alone.

(f) Strengthening Accountability Mechanisms

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 accountubility.

8.24 Strengthening cross-cutting accountability mechanisms can play an important role in improving service delivery outcomes.

8.25 Reducing Premature Transfers: 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

85 impossible to hold officers accountable for their performance. Several states have attempted to grapple with the problem: Karnataka’s has capped overall transfers to about five percent of civil service size through a combination of quantitative caps, computerized counseling in education, and the creation of cadre management committees to reduce political interference.

8.26 Fostering Access to Information: 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.

8.27 The cases of Delhi and Rajasthan clearly point to the importance of information as 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.

8.28 Citizens’ charters are also 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 Hyderabad Water Supply and Sewerage Board (HWSSB) and urban ‘core’ charter, both of which provide for penalties if the provider fails to meet charter standards.

8.29 The Changing Role of Anti-Corruption Institutions: 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 their control. The Karnataka Lok Ayuktu not only avoided this trap but reframed 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.

8.30 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.

8.3 1 Judicial Oversight in Service Deliverv: 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. The Supreme Court in recent years 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 stifling administrative initiative. India presents a sharp

86 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.”’

Box 12 : Reinforcing Accountability in Service Delivery: India and Latin America Both Latin American and India have functioning democratic systems in place (India for almost all of the post-war period and Latin America since the democratization wave that swept the region during the 1980s and 1990s). Yet, in both regions, the electoral route to accountability has not always translated into better service delivery outcomes on the ground. Undemocratic political party structures, the role of patronage and clientelism, and social heterogeneity are all reasons why electoral democracy has not meant the more efficient provision of public goods, particularly for the poor. While there are cases of successful efforts to enhance client power by promoting competition among providers in India, such as telecommunications, Latin America has gone further in doing so in the social sectors. Both Columbia and Chile have, for example, introduced school voucher programs that effectively obliged schools to compete on the basis of quality to attract students vested with the power of choice. Latin America has also experimented with cash transfers to poorer households conditional on children’s school or clinic attendance, for example,. Mexico’s Progresa program. Report cards, first used to benchmark public services in Bangalore in 1994, have now spread to Latin America as well: Peru was the first country to use report cards to assess its national health, education, nutrition, and employment programs, and Bogota became the first city in the region to introduce report cards under its ‘Como Vanzos?’ initiative.

111. CROSS-CUTTING ISSUES

(a) The Role of Civil Society

In some cases, civil society groups placed pressure for change on providers and/or the state directly. In other cases, civil society organizations worked in a collaborative fashion with agency reformers. There were examples of reformers working hard to generate demand for change when civil society was relatively weak or inactive.

8.32 Civil Societv Pressure: 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 by no means essential to prod reformers into initiating change, however. 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.

Box 13 : The Media as a Source of Support for Reform 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 have 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, Prabkat 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.

IO9 For more on this, see Ariel Fiszbein (ed.), Citizens, Politicians, ad Providers: The Latin American Experience with Service Delivery Reform (Washington DC: The World Bank, 2005), pp. 40-41.

87 8.33 Civil Societv as a Partner: 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 to provide technical help and funding for initiatives, such as fund-based accounting and property tax computerization.

8.34 Generatine Demand for Reform: There were also cases of reformers who actively sought to generate demand for reform as 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 sensitive citizens to the city’s water problems but 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 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. These initiatives activated civic participation and the capacity to make demands on the system as a pre-requisite for meaningful reform.

(b) Corruption in Service Delivery

E-governance worked to check corruption when the leadership was supportive. Greater competition was an important factor in curbing rent-seeking.

8.35 E-Governance in particular was one tool used by reformers to promote transparency in service delivery: Certainly the computerization of land records in Karnataka as well as the Registration Department in Maharashtra did contribute 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 by itself will not reduce corruption unless there is high-level 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.

8.36 In the Telecom case, 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’Srent-seeking proclivities were curbed over a twenty-year period by several factors: Telecom was simply too important for India’s overall development to be left alone. Prime Minister’s Rajiv Gandhi (1984-89) and Atal Bihari Vajapayee (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 Prime Minister’s

88 Office (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 to major changes in the late 1990’s 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 Telecom Regulatory Authority of India (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 ratio, which fell from 74 per DEL in 1990/91 to 8 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 de-monopolization of the Telecom sector, despite stiff resistance. In the E-Choupal case, the fact that farmers could contract directly with ITC to sell their produce reduced rents captured by traders at the expense of farmers by undercutting their monopoly exercised through the state-controlled Mundi system.

(c) 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 stuff 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.”’

8.37 Politicians appealed to party traditions to justify change (“backward legitimacy”).”’ 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 73‘d and 74‘h amendments to the constitution, which provided a constitutional mandate for strengthening the fabric of local government. In Tamil Nadu, both the DMK and the AIDMK appealed to the ideas of ‘Periyar’ E.V. Ramaswamy, a founding figure of Dravidian thought, to promote their social policies and programs.

8.38 Reformers made it clear upfront that no job losses would occur as a result of reforms: Workers- were thus not immediately threatened by 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 life-time employment, with only new teachers being hired on a contractual basis: This, in turn, helped mollify teacher unions. Even when substantial business process changes occurred, as they did in Bhoomi, village accountants continued to play an important role

~

‘loI 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. ‘‘I 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 Samuel P. Huntington, The Third Wave: Democratizationin the Late Twentieth Century (Norman: University of Oklahoma Press: 1989). Clearly, this was a case of backward legitimacy in action.

89 in verifying the veracity of land transactions and were thus not rendered irrelevant by land record computerization. In the E-Choupal case, ITC managed change by employing Mundi workers at Sugar 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 Mundi employees as well as traders. ITC also used the fact that the new system benefited an even larger group - farmers - to persuade GoMP to agree to changes in Mundi rules that allowed for direct transactions outside Mundis.

8.39 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 Sub-Registrar offices, 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.

8.40 An incremental approach to reform appears to have whittled away resistance over time: The dismantling of the telecom monopoly built up slowly over two decades before accelerating in the late 1990’s. 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 EGS was launched in 1997: But between 1997 and 2000, a staggering 2637 1 schools were established in some of 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 lens, but still far from a ‘big bang’ approach.

8.41 On the other hand, the ‘big bang’ strategy of reform in the rare cases where it was tried in the highly centrist Indian political system does not appear to have worked well at all: The attempt to implemented a highly sophisticated technical solution to the problem of corruption in Gujarat’s interstate check-posts within ten months was probably too ambitious to succeed in the first place.

8.42 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 Kamataka’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. The Department of Telecom’s opposition to competition gradually eroded under pressure from the Prime Minister’s Office (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.

90 (d) Sustaining Reforms

Reforms that were popular with citizens survived political transitions; consensus across party lines facilitated reform continuity; sustainability was enhanced when reform was backed up by legal changes and a sound business model.

8.43 This study also points 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 to 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: NGOs underpinned the implementation of right to information statutes in Rajasthan and Delhi.

8.44 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 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 has assured the long-term continuance of initiatives like the noon mid-day 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 inter- related public initiatives to further human development at around the same time improved sustainability by generating synergies across them.

8.45 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, Court 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.

91 8.46 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 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, which 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 government.

(e) 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.

8.47 These cases provide useful lessons about processes of replication and scaling-up. Of course, many of the initiatives studied here are context-bound: The political ownership that led to E-Seva in Andhra 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.

8.48 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 Government of India (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. So did the Supreme Court: The decision to order states to adopt a cooked mid-day program is a case in point. When the same political party that had introduced innovations in a particular state went on the win national power, the chances that these initiatives would be implemented on a larger scale increased: The central government, for example, has recently introduced a national variant of MP’s hospital autonomy program.

8.49 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 program (see Box 4), designed in collaboration with the Indian Institute of Management, Ahmedabad, has made it easier to train officials in the

92 implementation of e-governance projects; M’SCIO program could easily be adopted by other states as well.

Conclusion: Learning From Success

8.50 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 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 after all.

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