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Cover Story
2017 will go down as one of the most significant years in the history of India with Goods and Services Tax becoming a reality from July 1, 2017. The n...
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  Creating a Unified Taxation Regime” by T N Ashok
  GST as a landmark taxation reform and a 2nd major surgical strike on tax evaders as it brings most traders into the tax net, makes movement of commodities freer in the country
  Profiteering- a GST implementation challenge by Shri Gireesh Chandra Prasad
  The government’s biggest concern is to make sure that the consumers get the benefit of reduced tax burden on goods and services that the new indirect tax code offers.
  Creating a strong IT backbone’ by Prakash Kumar
  The article discusses about simplifying the tax compliance by providing a strong Information Technology network.
  Balancing Federal Fiscal Relations by Jayanta Roy Chowdhary
  Article discusses about the balance of power between union and states in the new tax regime of GST.
 
 
  Role of the State in Partnerships
Dr. Manisha Verma
November 01, 2013 | Dr. Manisha Verma  , Dr. Manisha Verma, Partnership, Economy

Introduction

An emerging feature in public policy circles around the world has been the increasing incidence of State agencies entering into various forms of partnerships and coalitions with non-State actors and agencies including the private sector, NGOs, civil society organizations and academicians ostensibly to benefit from their wide and diverse resources in fulfilment of public goals. While some analysts believe that this implies a decline of the State with the State ceding its powers to non-State actors, others are of the view that this in fact indicates a transformation towards a more commanding role of the State while benefitting from a wider knowledge base. Proponents of the New Public Governance hold that meaning of the term governance has also been undergoing several changes in its interpretation and inference in response to the challenges being posed in the present milieu.

Drawing from findings of the new forms of governance where the State agencies are partnering with varied and amorphous non-State actors to forward and achieve its public-directed objectives, this article provides insights into the changing functions and the new roles and responsibilities of the State in what is termed as a differentiated polity (Rhodes, 1997).

Governance with non-State actors

Advocates of New Public Governance are differentiating between the terms governance and government; they define governance to be more than government. According to them, governance signifies a changed meaning of government referring to a new process of governing. While governing is the process of goal oriented interventions presupposing action by the actors, governance is the result of the process of governing and indicates social coordination. Also, government and governance are both means of governing society; while the former relates to forms connected with liberal representative democracies and the State as it is understood traditionally, the latter refers to a broader set of actors-elected representatives, public officials and interest groups. According to Rosenau (1992), government refers to activities backed by formal authority and governance is more encompassing as it embraces both formal and non-governmental mechanisms. This definition counters the image of government as a unitary, hierarchical, directive and all pervasive institution and lays stress on a centreless society in a polycentric State defined by multiple actors. Skelcher (2000: 12) terms such a State as a 'congested State'.

The view of the State as a simple unitary class has been gradually abandoned to accommodate State power depicting complex social relations with non-State actors. This concept of governance explores the relational aspect of the State and its capabilities to project power beyond its own boundaries. The new meaning of governance does not point to State actors as the only entities in policy making and allocation of resources. It however acknowledges the imperatives and dilemmas of modern day governments operating in an environment where amorphous non-State agencies possessing differentiated expertise inform the collective policy process, and where governing is accomplished with and through what are termed policy or governance networks. This has lead to blurring of boundaries dividing roles to address socio-economic issues, and there is distinct power dependence between institutions engaged in collective action coupled with a shift in role of the government from commanding to steering.

The theory of resource dependence states that central to the formation of partnerships and networks are notions of functional specialization arising primarily out of distinctly specialised resources beyond the government agencies. It has been argued that in todays complex socio-economic contexts, no single actor has the resources, knowledge or sufficient action potential to handle complex issues or dominate unilaterally. In such a situation aggregation of resources and knowledge is seen as a functional requirement and reality, and governance is a pattern which emerges in a socio-political context as an effect of interactions of various interdependent actors. Although there is plurality of interest, divergent preferences of actors are translated into policy choices to allocate values.

Scholars of this school point out that governance is not government setting policy and letting other agencies implement it. Instead the government now collaborates with other actors for both formulating and implementation policies. It is argued that conjoining policymakers and implementing agencies tends to increase the acceptability and compliance of policies formulated through a bottom-up approach. Although the government is a significant actor, it is not the controller. In the new mode of governance, the State is vertically and horizontally segregated and its role changes from being an authoritative allocator to that of an activator, while it still remains the custodian of public interest. In this mode, along with a multitude of non-State interest organisations the State is involved in multilateral negotiations to allocate functionally specific values. The State is explored both as an actor and a structure and governance is understood as role of the State to influence and guide public policy. Within this understanding of governance, the unit of analysis for governance is the State understood as a collection of policy arenas incorporating both governmental and private actors. This arguably distances it from anarchy of markets and command and control of hierarchies.

Many analysts point out that this shift towards a fundamental change in the way the government and governance are currently being perceived is primarily caused due to such trends as globalisation, redefinition, and devolution of powers. Globalisation is challenging the traditional roles and powers of governments, with the governments redefining themselves less in terms of power and hierarchy and more through partnership and collaboration. They are opting to work through non-governmental entities to implement public polices, improve their performance and for delivery of services. Over the past decades, this shift from institutional government to networked governance is seen through a gradual addition of new administrative forms, to the existing more traditional structures of administration, that facilitate governance. Public policies and programmes are also being implemented by a network of private entities such as business corporations and non-profit organisations, and the private and public entities are losing their distinct identities. Furthermore, as pointed out in the literature on welfare mix, while welfare delivery is often procured by the State, it is produced by market actors and distributed through voluntary civil society associations.

Public administration experts analyse this new trend chronologically through the decades of a swing between the mix of public and private sectors in accomplishing public goals. Traditionally, the government provided public goods to prevent negative externalities of the market and in order to meet its social and sovereign mandate (although there have been differences among scholars as to what constitutes a pure public good). There has been an ongoing debate in literature regarding State intervention in markets and merits of private versus government provision of goods and services. Subsequent to a period of domination of the government in almost all sectors directly and indirectly in the 1950s and 1960s (which followed the market failure due to negative externalities of the private sector observed during the Great Depression in 1920s and 1930s), there was an era of market preponderance due to State failure.

The bureaucracy was found to be rule-bound, rigid, slow, bloated, wasteful, politicized and ineffective. This was attributed to the bounded rationality of decision makers, predisposition toward rigidity, extreme focus on rules rather than the outcome, and growing rent-seeking behaviour of policy makers. This prevented them from effectively managing the challenges of the complex mutli-sectoral and multi-organisational world of organisations. However, even with the enlarged role of the private sector in various public spheres (during the 1970s and 1980s), it was observed that there was a fundamental flaw in the notion that application of private sector techniques can address all performance and efficiency related problems affecting the public sector. Scholars pointed out that governance and public management cannot be equated with running the government as a private concern. Governance cannot be reduced to the level of economic action with citizens being little more than consumers where their rights as citizens have been diminished. The argument made was that government is concerned with a variety of social and economic activities that cannot always be reduced to figures which can be quantified and which cannot be achieved by following market mechanisms alone; within the market-based approach a strong tendency was observed towards quantifiable components of performance. Market provision of many public services has also been contested on the ground of marginalising the vulnerable communities while its profit motive is found unsuitable for public interest.

These hybrid or horizontal formations with non-State actors emerged in response to this situation as a form of governance which is argued to be midway between a purely State-directed or market-oriented way to provide public goods.

It is claimed that what makes them popular and acceptable is that in addition to providing mix of resources of the different actors, the partnerships are devoid of their dysfunctions. These partnerships, it is pointed out work more through relations, high trust quotient, reciprocity and management by negotiation. They are also postulated to be flexible and agile in responding to emergent issues, capable of developing products and service solutions more cost-effectively and be more responsive towards users needs. These new forms of governance are found to enhance value of intangible assets like tacit knowledge or technological innovation through lateral communication. Moreover, specialisation can lead to welfare gains when links of innovation and information between different contributors in society are created for public good. As forms of governance, they are argued to posit both a plural State with multiple inter-dependent actors contributing to the service delivery as also a pluralist State in which multiple processes inform the policy making.

Issues of governance of networks

Within the broader philosophy of the State partnering with non-State agencies for benefiting from their resources, across the world there has been an increasing incidence of partnerships between the public and private sector, termed as Public-Private Partnerships (PPPs) more so in the infrastructure sectors such as highways, railways, bridges, airports and ports. While these are also seen in the social sector such as health and education, their preponderance in these areas is less primarily due to the non-existent and yet undeveloped revenue models; private sector is observed to invest in areas where there are appreciable returns on their investment emerging from the fundamental philosophy being a profit-oriented domain.

When these two entities with distinct agenda, motivation, priorities, values, ethics and ideologies (based on the normative and conventional division of roles) come together for achievement of State-directed goals, available evidence suggests that there are several public policy and governance issues. Analysts identify the paradigmatic conflict between public welfare and philosophy of competition. Whereas equity of the market philosophy dominates the private sector, equity of need is argued to guide State activities. The partnerships, due to their multi-actor and multi-form structures, are observed in many cases to lead to indeterminate outcomes, exclude vulnerable and unrepresented sections, result in agency capture and tend to steer policies towards own selves. This implies a radial argument for privatisation while forwarding argument of private interest government, where policy making favours a certain few.

There have been grave concerns of accountability due to their non-transparent structures of administration. Moreover, with many actors in the fray, crowding may lead to a sense of fragmentation in policymaking which may require more resources for coordination thereby increasing transaction costs. Available evidence from the Indian PPPs in the infrastructure sector indicate that instead of reducing the time and cost over-runs, which PPPs are argued to do, there have been huge delays and resultant escalation of the project cost forcing private developers to quit some very large multi-crore projects, mainly due to poor coordination among the partners. Also, while partnerships are based on the premise of reciprocity between the partners, it is observed that reciprocity does not insulate actors from considerations of power, and networks are frequently criticised for aspects of dependency, particularism and subtly creating barriers for newcomers.

Role of the State in governance of partnerships

The above analysis opens the discussion and underscores the case for a redefined role of the State in governance of these governance networks and partnerships to distribute resources for the larger interest, and ensure that these lead to the results for which they are created. Emerging evidence strongly suggests that engaging with non-State agencies places more responsibility, although of a different nature, on the government. The role of the State does not diminish when non-State actors gets involved in service provision; it just becomes different. Rather than abdicating its responsibilities the State assumes new ones in order to bring parity between the different intrinsic needs of the partners.

When functioning with non-State actors, governance adorns a complex character of confronting and managing complex institutional arrangements; in such a situation, new techniques of strategic management are required and governance does not mean no government but is carried out with more than government. The State is required to look beyond the narrow commercial formulations of a problem (in order to steer clear of opportunistic ignorance), and to take a wider view within a multidisciplinary framework by bringing in the social, economic and political dimensions of the issue into the discussion as reality is layered.

What is needed is an effective State that can play the role of facilitator, catalyst and partner, and not a minimalist State. A meta-governance role for the State is suggested indicting a broader process of formulating policies and a range of mechanisms for allocating and coordinating recourses, structuring of economic space through macroeconomic policies, juridical regulation and shaping conditions for self regulation. This is a pre-requisite of the State as a network partner while still ensuring that it does not succumb to the pressures of demands of concentrated interests. A strong State is more likely to ensure that partnerships of any form secure public interest while providing facilities, improve existing efficiencies, and supplement limited resources of government at reasonable cost. In this view, bureaucratic coherence is not perceived to be contradictory with networks, but one that represents effectiveness of the State.

The prime role of the State within partnerships is based on the premise that among all actors, only the government has constitutional legitimacy, authority, autonomy, mandate and legal authority to seek and protect larger public good. More than an agency to execute policies, enforce laws, reach targets, and do what they are told, the public administrative machinery is a social asset at the core of democratic governance (Goodsell, 2006: 633). Such a State facilitates provision and growth of physical, economic, social and other infrastructures without which social and economic development are not possible. Moreover, governance structures are also found to be necessary for providing a secure predictable political basis for markets to function. Scholars point out that the confidence and trust generated in the public by an effective State gives rise to trust capital, which is argued to have stronger force than financial and human capitals.

There are frequent demands, mostly from the neo-liberal quarters, to reduce the scope of State intervention. It is important to make a distinction between intervention and involvement. The private sector needs to realise that it can be more productive and derive greater benefit when it is complemented with an active and effective State and that there is a significant difference between a controlled market and a governed market. What is perhaps not realised is that when the market fails to self-regulate, intervention by the State is found necessary to protect peoples interests. According to Bourdieu (2005) the economic world, more than any other, is inhabited by the State which structures the forces that characterise it, and plays a crucial part in ensuring its stability and predictability. Involvement by the State is therefore likely to continue by virtue of the mandate of the State. However, the nature of role of the State may vary during different phases of economic growth. The State, on its part, needs to ensure that it does not stifle the markets but stimulates them with progressive policies, selective intervention and prudent regulation.

 

 

 


 
 
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