Debating various approaches to remove inefficiencies and foster inclusive growth
Shubhang Arora | October 28, 2012
Service delivery in India is a challenge and is marked with large and glaring inefficiencies. Nearly two decades of rapid economic growth, the uphill task facing policymakers at all levels -- centre as well as states -- is to ensure inclusion so that the gains from increased national income are shared by all every section of the society, since Inclusive growth is the buzzword
There have been numerous studies on service delivery and one noteworthy nationally representative sample of over 3,000 government-run schools and 1,500 primary health centres across India found that on a typical working day, 25 percent of teachers in government schools and 40 percent of medical workers in government health clinics are absent from work. The study has merit and credibility and was conducted by various prestigious institutions and involved teams from Harvard University and the World Bank too. The above statistics and revelations are startling facts and highlight the plight of public service distribution in India.
It is very necessary that basic services such as health and education should be of high standards and be provided to all citizens specially where it is absolutely needed, since these are not only ends goals in themselves, but also play a critical role in enhancing individual capabilities to participate fully in the growth of the economy.
Central and state governments and its bureaucrats have recognized this as a priority area, but have shown a lack of imagination (like all their predecessors) in addressing the problem of service quality by focusing mostly on increasing spending and not enough on the question of increasing efficiency the resources allocated are spent.
The inefficiency and absence are based on direct physical observation as opposed to official records and this is a bare minimum estimate of the problem, because in many cases providers are present but don’t actively work. Also, salaries account for over 90 percent of the non-plan budget in education, nearly half the resources allocated to education are potentially being wasted. Various Research articles have shown that average numbers are bad enough, but the state-level variation are even more troubling because poorer states have significantly higher levels of provider absence in both health and education. For instance, over 70 percent of doctors in Bihar were found to be absent, and over 70 percent of teachers in Bihar and Jharkhand were not engaging in any teaching activity. Thus, the states that have the greatest need for improved health and education are also the ones where increased spending on its own is least likely to make a significant impact on outcomes. Since salaries are the largest component of spending, the rest of this article will focus on ways of improving incentives for the front-line service providers such as teachers and healthcare workers.
Proposed solutions which have been discussed so often and are very effective needs to be undertaken and deemed important for current discussion:
* Bonus Payments linked with performance & contractual structure of employment
There is no incentive for performance and good work. One simple solution to this problem would be to make pay variable and link it to a portion of the salary to objective measures of performance. Misconception in some quarters is that government employees are not paid well enough, while the reality is that the average government teacher is paid three to ten times more than a typical teacher in a rural private school.
Proof of concept have shown results that small monetary bonus payments to teachers on the basis of the average improvement in student performance on independently administered tests led to large gains in student learning outcomes. This program was over 10 times more cost effective in improving learning than simply expanding spending along existing patterns. It was also popular with teachers with over 85 percent of them being in favor of the idea of bonus payments on the basis of performance.
Another promising way of improving effectiveness of service delivery is to modify the contractual structure of employment to make job renewal subject to satisfactory performance as measured by both administrators and the community that is being served. A good example is the use of contract teacher and staff who are hired locally at the community level
* Direct distribution of largesse and empowerment of individuals:
Recent initiatives have changed the focus and demonstrated the effectiveness of these initiatives. Biggest of such initiative is Unique Identity scheme known as Aadhaar, which can facilitate transfer of cash benefits directly to people who are in need and reducing multiple touch points. Pilot projects have shown that it has helped reduce cost drastically by cutting middleman, removing black marketers and corrupt practices of public distribution system, which includes bureaucrats and money-making middleman. However, schemes like above will take time to reach all masses and to disrupt well-established age-old system of corrupt practices.
Regarding empowerment of individuals, one response to the poor quality of public schools and clinics is the increasing prevalence of private schools and clinics even in backward parts of the country. A key feature of private providers is the much higher level of accountability of their employees. For example, our data showed that absent teachers in private schools were 175 times more likely to have action taken against them than absent teachers in government schools, though their salary levels are much lower. This is not surprising since private providers have to compete for their users and can only survive if people choose to use them. Interestingly, our national-level research also showed that 80 percent of public school teachers send their own children to private schools! This statistic alone says more about the state of, and the level of trust in, public education in the country. However, while private providers may be more efficient and respond better to the needs of their users, the problem from the point of view of social justice is that these facilities are only available to those who can afford to pay for them, which puts them out of the reach of the poor.
In conclusion, the public distribution system is very important especially in
a) Improving the quality of health and education for all
b) Subside for fertilizers, seeds availability, storage and distribution of final agriculture product
c) Subsidy on Household items like Sugar, wheat, gas and kerosene oil to targeted families
d) Subsidy on transportation of goods like that on diesel
e) Infrastructure support - which includes roads, bridges and dams.
These subsidies must reach the targeted mass efficiently and directly to reduce cost and leakage. Services to all Indians are critical components of ensuring 'inclusive growth'. While budgetary increases are definitely welcome, their effect will be magnified if accompanied by measures to improve the effectiveness of spending.
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