Opinion - Editorials

Public-private partnership

THE TERM PUBLIC-PRIVATE partnership is being increasingly used in the context of the paradigm shift away from the public sector that is taking place across the globe. In India it is more than being just another addition to the lexicon on public sector disinvestment, where of course it is most relevant today. Public-private partnership accurately captures a scenario in which there will neither be an ideological bias in favour nor prejudice against either of the two sectors. That is a far cry from the mixed economy model we are used to, what with the public sector occupying commanding heights of the economy. An inevitable consequence of the latter has been the creation of state-owned monopolies in strategic areas of the economy, most noticeably in the key infrastructure areas and also the indiscriminate expansion of the public sector into areas such as tourism and hotels.

Disinvestment of public sector enterprises, an integral part of the economic reform process that began in the early 1990s , aims to usher in competition in economic activities which were hitherto dominated by one or two state-owned enterprises. Not surprising at all — the experience of most other countries who embarked on that course earlier bears this out — there has been a concerted opposition to the programme in India. While in the face of much stronger political will such opposition is getting whittled down, the time has come to conceptualise and articulate the emerging scenario in which both government ownership and private initiatives will complement each other. Viewed that way the term public-private partnership is definitely far less contentious than either privatisation that has very recently been used or the term disinvestment, in vogue from the beginning.

However, it is in highlighting the positive aspects of the public-private partnership that distinct gains accrue to public policy and economic decision-making. A partnership of that nature is collaborative and, contrary to widespread but facile assumptions, is not anti-public sector but is pro-competition. The growing literature on the subject recognises the tangible benefits from such an arrangement the world over. At the most basic level, as is now evolving in India, public-private partnership implies a co-existence of the public and private sectors in producing goods and services. At the next stage, it is possible to discern the benefits of the partnership in complex, multipartner infrastructure projects. In India a beginning has been made by the railways to invite greater private participation. Certain capital-intensive roadways built by government agencies have had substantial private sector presence as sub contractors. A third way in which the partnership has evolved in the developed world is to engage corporations in their non-traditional areas such as primary education, garbage clearance and in providing civic amenities. While there are a few examples in India of this type of arrangement as well, it is only in the first category that a few topical examples are to be found.

Recent developments in the telecom and petroleum sectors show an unmistakable trend towards a healthy public-private partnership. The acquisition of the state-owned long-distance telephone provider ,VSNL, by the Tatas will be quickly followed by the opening up of the sector. New players are sure to advent bringing in unprecedented competition that will surely drive down the rates. Both the government-owned domestic telephone companies have already had a taste of private sector competition. Every segment of the telecom industry is in a flux. While the previously dominant companies are losing their monopoly status, they have reacted by competing aggressively in new areas. The petroleum sector in for major restructuring is another testing ground for public-private partnership. IOC might have extended its marketing reach by acquiring IBP but has been precluded from bidding for HPCL and BPCL. Consumers in India are already reaping the benefits of the partnership.

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