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Para-statal agencies and task forces in Karnataka

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20 Dec 2008 09:30
20 Dec 2008 17:00

A One day public consultation on their constitutionality, programs, influence and impact on Democracy
Date: 20 December 2008.  Time: 9.30 AM to 5 PM
Place: Legislator's Home, Vidhana Soudha. Bangalore


Karnataka is in the forefront of the reforms process. Most of the reforms adopted by the state are mandatory conditions to loans provided by International Financial Institutions (IFIs). One such condition from early 1990s was to build what the World Bank called 'good' institutions. The logic was simple.  'Good' governance requires 'good' institutions. While people of most developing countries understood this as an attempt to make government departments genuinely oriented and responsive to the needs of its people, what the IFIs actually meant was to create 'new' semi-public institutions different from existing government departments. These new institutions also called para-statal agencies with a large private interest are typically headed by senior IAS officers who have significant project experience with the World Bank or its allied bodies. With an extended logic of keeping bureaucracy away from development work, the primary responsibility of this IAS officer is to handover critical public service related projects of the state to private consultants from around the world. Exorbitant amounts of public money are paid to these private consultants.

The Para-statal agencies also draft public policies on behalf of the people of the state and get a token approval from the cabinet without any public knowledge or debate. So these institutions have the powers of the state but not the public accountability of an elected government. The very design of these para-statal agencies make them vulnerable to external influences by foreign governments, private companies and global banks. Recently there has been an upswing of such unaccountable institutions in Karnataka. The Karnataka Urban Infrastructure Development and Finance Corporation or KUIDFC is one such powerful institution. KUIDFC is responsible for the implementation of many state level projects worth tens of thousands of crore rupees. All these projects are traditionally meant to be implemented by departments of a democratically elected state government. In exchange of loans from Foreign Banks, KUIDFC gets the state government to sign up to associated conditionalities including amendments to state laws and policies that protect corporate interests at the cost of the larger social security of the people of the state. The vulnerability of such para-statal agencies to external influences including foreign governments directly affects sovereignty of our state and the independent rights of our people to decide what is in their good.  The dismaying upturn of such undemocratic Para-statal agencies contradicts the Constitutional mandate for Self Governance in India.

On the other hand, the post '90s loans like the Karnataka Economic Reforms Loan (KERN) and the others have contributed to a process of changing the role of government to a mere regulator.  In the name of decentralization or in spite of it (74th Constitutional Amendment), there has been a growth in the dominating role of para-statal agencies in getting private companies perform the functions of the Local Self Governments.  Elected governments and elected representatives are being sidelined by the reforms process that is highly dominated by this present centralized control.

Another trend in the state is the emergence of task forces. Though they are being set up at the drop of a hat they are neither insignificant nor ineffective in meeting their intended objectives. This is a new way in trying to establish corporate governance in the state. The usual suspects – a few corporate icons are empowered as task force members to encroach upon and co-opt democratic spaces and make decisions on behalf of people at large. With chief ministers to support them, they function with executive powers to promote and execute grandiose plans that over ride local knowledge and contradict people's opinion and aspirations. Like all such initiatives task forces too function under the guise of community participation. It is not surprising that the heightened rhetoric of community participation was to coincide with a set of reform programs that has left the citizens clueless. It is also not surprising that those who get to be the members of these task forces are the same (kind of) people who also lead the reform programs. It is incestuous.

    * All these raise some crucial questions:
    * Are these para-statal agencies and task forces constitutional?
    * Who are they and what do they represent?
    * Who's agenda do they carry?
    * Is the culture of governance they promote appropriate for a democratic and diverse country like India?
    * What inherent rights do they have to bypass democratic procedures and to have a sense of trusteeship to decide on behalf of people?
    * If they are a threat to people's mandate, how can they be challenged?     

It is time we discuss these questions and let the public judge and opine their views and action on the issue. The proposed workshop on the 20th of December will look at the evolution of institutions in the urban development, the direction and the impacts of such processes on the citizens, specifically the poor, the minorities and people from the lower caste.  The workshop also explores ways and means through with the issue of these institutions can be addressed in the state.

Program Schedule:

Introduction to the Issue: Dr. Kshithij. Urs, Action Aid Karnataka

Session I: Origin and Constitutionality

Speakers :

    * Mr. Clifton d'Rozario, Advocate and member of the Alternative Law Forum, Bangalore.
    * Dr Lalitha Kamath, Independent Urban Researcher, Bangalore
    * Mr. Venkatswamy, Samatha Sainika Dala

Session II : Programmes, Government and People's Participation


Mr. Gururaja Budhya, Urban Research Centre, Bangalore

Mr.Vinay Baindur, Independent Urban Researcher, Bangalore

Mr. Narendra Babu, MLA, GoK (to be confirmed)

Session III: Contesting and Challenging Parastatal Governance


Mr. Vinod Vyasulu, Centre for Budget and Policy studies, Bangalore

Mr. Suresh Shetty, Ex- Corporator, Mangalore City Corporation

Mr. Shivsundar, Noted Journalist, Bangalore

Responses from Civil society and Industry

Slum Jagathu – Mr. Issac Arul Selva

Representative of BCIC or CII

Citizen's Action Forum – Mr. Mathew Thomas

Represntative of the Raichur Nagarikara Sangharsha Samithi

Representative of the Bidar Nagarikara Sangharsha Samithi

Summing up of days sessions:  Y J Rajendra, Senior Academic faculty, St. Joseph's college, Bangalore.

Muralidhar Rao


murali772's picture

an alternate approach

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The parastatals were perhaps brought into existence because the municipalities did not have the capacity, both financial as well as technical, required to undertake the services as the demands on them grew larger with the increases in population. Also, those times, perhaps domestic agencies like HUDCO, LIC, etc hadn't grown to their present stature to be in a position to provide adequate funding. Besides, perhaps there were no domestic consultancy agencies either, with the requisite capacity, to provide the necessary technical services. In such a scenario, it all fell into the laps of the foreign consultancy agencies as also the multinational contracting firms, all of whom perhaps had sweetheart deals going with the IFI's, all of them making huge money in the process at the cost of the municipalities, and ultimately, the consumers.

The complaints against the parastatals, in addition, appear to be that they are not answerable to elected municipal bodies. This is invariably because they tend to be headed by politicians, elected mostly at higher (state) levels, providing for a more powerful power centre. Politicians heading the parastatals have also led to their getting corrupted, and becoming inefficient, a lot faster than it happens almost naturally in most government organisations.

Times have changed, and better options are available now. And, the parastatals, that have turned into parasites, can indeed be wound up now.

Let us, for example, look at the power scenario in the city of Mumbai. The supply is largely in the hands of Reliance and Tata's, provided in conformity with city municipal guidelines, and all totally regulated by MERC. The consultancy, to a great extent, is provided by PRAYAS, a Pune based professional NGO. Not surprisingly, the reliability is the highest, and tariffs moderate, with even the poorest of poor getting a very fair deal. There cannot possibly be a more satisfactory arrangement.

And, this can be relicated for almost all services, and for all cities and towns. Instead, if, after getting the parastatals wound up, the municipalities are dumped with these tasks, it will be the perfect recipe for disaster.

So, even as this meet is going to be a parastatal bashing exercise (and deservedly too), I don't see under the programme listing a slot for "alternate approaches/ solutions", or anything of the sort, though the last para of the background note has stated that "the workshop also explores ways and means through with the issue of these institutions can be addressed in the state". 

Muralidhar Rao

Muralidhar Rao
psaram42's picture

Missing two meets at a time

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There is a public meeting called by our MLA Raghu which is clashing with this Para Statal meeting. Looks like I am missing both of these meets as I will be away on a week end trip to coorge.

Hope we will get a feed back from Murali sir on the PS Meeting.

murali772's picture

Public sector vs Private sector - customer impact

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Additional burden a consumer has to bear when the distribution is with a government agency (like BESCOM in Bangalore), as compared to when it is with a private agency (like Reliance in Mumbai):

1) Speed money at the time of installation.
2) Careless installation practices, leading to repeat breakdowns, and costs thereof for repairs (apart from opportunity costs over time and effort involved in restoration)
3) Poor quality of transformers and other equipment, leading to repeat failures due to overload, and costs thereof.
4) Poor quality of supply, leading to the need for investment in and operation of stand-by power equipment.
5) Energy theft, in connivance with meter readers and engineers, camouflaged as T&D losses, necessitating frequent tariff increases, or financial instability of the service provider.

When privatisation happens, many mafias will go out of business, and the consumer is generally rid of most of the above problems. But, mafias' loss can become lobbyists' gain. This happens if the terms of engagement of the private agencies get 'fixed' to the detriment of the consumer, like it happened in the case of the notorious ENRON, and is happening even today, like in the case of Rs 1 lakh crore '3G spectrum allocation' scam centred around the DMK minister, Raja  ( ).

The answer to that is transparency, the mother of all requirements. But, this is required even when entrusting a job to the public sector agency. The problem with government agencies is that, sooner or later, the mafias will take over. So, why not engage private agencies in a transparent manner and get rid of all the problems, once for all?

Muralidhar Rao

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