IMPACT OF LPG ON PUBLIC ADMINISTRATION

For almost 30 years LPG have become the buzz words in the politico - economic space of our
country. The LPG regime has made sweeping changes in a way economy functions and hence
has significantly affected the way the government machinery is structured and functions.

It needs to be noted that world over, this LPG is collectively known for the single theme of
Globalization. Wherein Liberalization and Privatization are its necessary options, this is
because

 Whenever there is an international integration on Economies & Society the individual

economy will have to be liberalized so as to make itself amenable to the global integration.
 Further, even when liberalization happens under globalization influences, govt makes
space and creates a de-regulated regime. This space and its freedom paves the way for
privatization.

LIBERALIZATION

The primary objective of Liberalization is claimed to be the re-orientation of economies in the

direction of market principles.

Liberalization, as a term comes from the philosophy of Liberalism, which advocates,

 Greatest freedom for private individuals

 Least intervention by states in private affairs

Further, the momentum towards Liberalization for the strong thrust in late 1980s & early
1990s, the world over, because of the philosophy of Neo-liberalism, which favours,

 Dominant presence of market forces

 Facilitating competition, public choice, efficiency, performance measurement etc. In other
words, it facilitates the roll back of the state & creating space for private dominated
institutional pluralism.

Thus collectively it can be argued that liberalization,

 Creates thrust for liberation from the restrictions, regulations, controls, permits, licenses
etc.
 Roll back of state (i.e) State will bring down size, so that it will allow free and dominant
presence of other players including private players.

Impact and challenges for Public Administration caused by liberalization

1. Importance of re-inventing & re-engineering comes to the forefront and becomes an

important challenge.

NPM has the most significant impact on re-shaping public administration to cope with the
challenges of globalization.

Reinventing is a very important theme connected to liberalization because it requires an honest

introspection of part of government machinery so as to have re-definition of its role and design.

The argument is that in a globalized scenario, the government cannot continue to have an
unviably dominant role and it needs to re-invent a curtailed role & also re-invent a modified,
decentralized and lean structure.
Along with reinventing, the second important requirement of liberalization for administration is
re-engineering. This refers to radical re-designing & streamlining of govt process and
functioning. So that these process became fast, cost effective, user-friendly, less harassing and
more performing.

The concept of re-engineering govt or re-engineering administration is an incorporation of

business process re-engineering model of Business management. It argues that any enterprises
can stand to gain in terms of major performance indicators like cost, quality, service and speed,
if it innovates or re-engineers core business process. Thus collectively through re-inventing and
re-engineering the government administration is required to achieve,

a. Roll back wherever possible (i.e) reform in Role

b. Leaner bureaucracy (i.e) reform in Size

c. Innovative organisational design (i.e) reform in Structure (flattening of structure or

decentralization).

d. Innovate and streamline process (i.e) reform in Processes

In this context, it is also a challenge for govt and administration to actually pass on the
benefits of liberalization to citizens rather than engaging in pseudo liberal reforms wherein
process or govt machinery claimed to have been liberalized but actually the citizen still feel
harassed.

Eg. cutting the size and staff strength in govt department is just symbolic and still the
inefficiency persist. Similarly the simplification of government processes, admissions in schools
and colleges appears to be symbolic.

2. Creating an engaged administration -

The concept of engaged administration is one of the latest development in evolution of PA. It
was given by D. Guithrie in 2003. It stands for an administration which engages with citizens
in a participative dialogue, so as to create need based solution.

The engaged government focuses on a bottom up approach to administration. In this context

Guthrie has noted as under,

“Under the impact of liberalization the administration needs the framework of governance
which would allow public policy. Such a engaged administration provides for bottom up
approach to administrative policy and liberates its citizens from top down approach.”

Thus under the influence of liberalization another important challenge is how to give
meaningful participation to people.
3. Requirement of activating state

The concept of activating state is also a modern day administrative innovation of the past
decade. It was given by Werner Jann in 2002.

The idea behind activating state is the govt administration would be an activator or an
activating catalyst rather than a direct dominant player. This requires a shift from quantity of
government to quality of governance or simply shift from government to governance.

In this context, it has been noted by modern administrative thinkers, that under the impact of
liberalization what we need is not more government but more governance.

Thus under the impact of liberalization, it can be argued that if a 5 fold shift is taking place in
PA.

a. Size

b. Structure/Role

c. Process

d. Participation

e. Regulation

For each of these dimension, the challenge caused by liberalization is how soon, how
comprehensively, how realistically the reforms can be brought out.

4. Public Service Reforms -

The adoption of free market economy in 1980s in UK & other western countries and in 1990s
in India, which is also known by different names viz. New Economic Policy, Structural
Adjustment Programme, privatization, liberalization, De-regulation and Contracting out are the
main reasons for considering Public service reforms under liberalization.

The consequence of free market reforms on government and governmental business are
generally described as the new way of governance, government by the market, reinventing
government new public management, sharing power, slimming of state, hollowing out of state
and so on.

5. Entrepreneurial Government -

Efficiency and Productivity, the hallmark of entrepreneurial government, are two areas where
considerable changes have resulted due to constant pressure of globalization.

Public sector organisations are now under worldwide process to enhance their productivity by
increasing efficiency. Along with cutting down waste and increasing output, the public
bureaucracies are trying to simultaneously facilitate better delivery of service.

6. Good governance -

The key items on the development agenda of the 1990s have reform of PA and issues of
governance among their priorities.

Governance deals with capacity of the government to design, formulate and implement policies
and to discharge their functions. Good governance is associated with efficient and effective
administration in a democratic framework.

Good governance can be considered as citizen friendly, citizen caring and responsive
administration.

7. E-governance -

E-governance is the application of IT to the process of government functioning to bring Simple,

Moral, Accountable, Responsive and Transparent (SMART) governance.
The speed and transparency associated with E-governance have the potential to make public
administration responsive and efficient.

8. Bringing the state back in -

With the advent of globalization, it was considered that, state withdrawing from many areas of
the economy was the precondition for the globalization. But instead a liberalizing state is a one
which focus on the core areas such as defence and foreign affairs leaving other areas open to
private players both domestic and foreign.

The current trend is towards the obvious subjugation of globe by the capitalist, in the garb of
Neo-liberalism. In the third world, the major issue is not State versus Market, instead there is
need for changing the character of the state in order to shift the power to genuine people
democracy.

The market friendly and marginalized state would pave the way for capitalist world
development, whereas the third world needs an altogether different model of development that
will assure general welfare of the mass and egalitarian social life free from exploitation and
deprivation.

The World bank suggested state minimalism and market friendly approach to development in
third world countries, but it led to serious problem, because in such countries, State led
development effort is imperative, to mobilize social efforts to struggle against poverty, ill health,
malnutrition etc. So it is suggested that in such countries state should maintain a visible
presence in social sectors like education, health and it can withdrawal from non-essential
sectors of the economy.

9. Empowering citizens -

globalization from below as witnessed the rise of grassroots, people's active participation at the
local level in many areas. Thus empowering citizens has been a key component of recently
formed wave surrounding public administration.

PRIVATIZATION

Privatization largely refers to induction of private ownership in publicaly owned enterprises.

However on broader connotation, privatization not only includes induction of private ownership,
but also private operational patterns or partnership in publicly owned enterprises/institutions.

Thus from a wider perspective various kinds of institutional arrangements emerge out of
privatization such as,

a. Complete privatization

b. Partial privatization through broad basing of share holding pattern

c. Joint ventures

d. Public private partnership (PPP) - BOOT

e. Leasing - BOL

f. Franchise arrangement - Eg. Company owned petrol pumps

g. Outsourcing or contracting out under business process outsourcing (BPO) model

It can be seen that, privatization is a natural offshoot of liberalization because in liberalization

there is a withdrawal of state regulation, in privatization there is withdrawal of state
enterprises replaced by private players.

In other words, the idea under Liberalization is decontrol, deregulate, de-licence, whereas the
idea under Privatization is to create space for private enterprises wherever,

a. Government has no critical presence

 b. Government has no core competence

c. Private players are willing and capable in terms of technical, managerial and financial
capabilities.

Impacts and challenges for public administration caused by privatization

1. Challenge of networked governance or third party administration :

Privatization necessarily creates third parties or multiple private institutions where the govt
uses private players to provide services to public. In such a scenario third party administration
becomes important.

Whenever the govt gives space to private parties in the form of outsourcing, PPP, joint ventures.
It has to play important role of regulator and coordinatior. In other words because of multiple
institutional arrangements the govt acquires a role of activator rather than prime doer.

In this context Stephen Goldsmith and William Eggers have given the concept of networked
governance in 2004. They have argued that governing by network is a challenging job. It
creates new challenges because now the govt administration requires to handle the inter-
dependencies and inter-relationships between Government organisation and other players and
the public.

It needs to be noted that although inviting private ownership and operation reduces the
workload of government, it does not reduce the responsibilities. The government role of
networking or governing through network as new challenges which require,

a. Tact - specially negotiation skills, consensus-based decision making and role sharing

b. Firmness - because from time to time, these other players or private players will need
to be dealt with firmness. So that they do not prejudice public interest for private
interest (i.e overcharging, poor quality of service).

c. Coordination - i.e various plural institutions will need to be systematically coordinated,

so that their actions and decisions are harmonious.

In this context Goldsmith and Eggers has noted as under,

“Involving private partners to to produce public goods and services put more rather less
responsibility on public administration officials.”

It means the responsibility of PA thereby increases because now they focus on quality of
regulation rather than quantity of regulation.

2. Challenge of ensuring Public interest :

It has been observed by various critics of privatization and market forces that, too much of
space creation for market can hamper the genuine public interest because of following
possibilities,

a. Elitist bias (refer criticism under public choice theory)

b. Usurptive relationship makes the approach exclusive (to effluent class) rather inclusive.
 c. Private players having their own priorities & motivation and thus do not come and
operate in such sections which are not profitable to them.

Thus, all in all, privatization is no guarantee for public interest or improvement of quality of
service delivery on a mass scale. In this context Faraz Mand as noted as under,

“Increasing dominance by corporate sector creates a possibility of dominant control of

globalizing corporate elites and as a result, government's role is overruled by these
corporate elites”.

The concerns raised here is, that the government may get marginalized as its role becomes
negligible. A similar concern has also been raised by NPS perspective given by Denhardt and
Denhardt, where they have argued that government cannot be marginal player and even if
institutional pluralism is created public service must be the focus.

In other words, people's trust on government cannot be allowed to erode on the argument that
government is minor player and that's why NPS argues for serving rather than steering.

Thus the challenges is to create a balance wherein,

a. Private capacities are made use of; but

b. Government role is not marginalized; and

c. Public interest is still guarded.

GLOBALIZATION

Globalization can be understood in terms of two distinct phenomena: ‘scope’ (or stretching) and
‘intensity’ (or deepening). On the one hand, it defines a set of processes, which embrace most
of the globe or which operate worldwide hinting at a spatial connection. On the other hand, it
also implies an intensification of the levels of interaction, interconnectedness or
interdependence between the States and societies, which constitute the world community.

The Organisation for Economic Cooperation and Development (OECD) (1995) has defined
globalization as a shift from a world of distinct national economies to a global economy in
which production is internationalized and financial capital flows freely and instantly among
countries.

Globalization is giving rise to new societal expectations, changing value systems, altering the
nature of State and governing systems. This is putting pressures on public administration to
respond to the widely fluctuating shifts.

globalization has affected public administration due to the impact of pressures generated on it
by global institutions, information technology and increasing concern for efficiency and
productivity.

The aid conditionalities imposed by global institutions, have wider repercussions as they
increase the developing country’s financial, military, and political dependencies on the West.

It is a process by which an inward looking economy convert itself into an outward looking
economy, so as to,

a. Integrate better with international markets

b. Learn from international experiences

c. Compete internationally so as to give advantages of global integration

In this context the comparative features of an inward and outward looking economy are
tabulated below,
Inward looking economy Outward looking economy

Self sufficiency Interdependence

Seeks protection to domestic industries and It favours global competition

put barriers for outside world

Production for own market only Looks for global presence

Impact of Globalization on Public Administration

1. Pre-requisite for international competition

It creates pre-requisite for international competition by the very nature globalization leads to
integration and competition of economics and the feature of international competition
necessitates the focus on certain pre-requisite which public administration of any country is
required to adopt. These are

a. cost control

b. productivity consciousness

c. technological upgradation

d. adoption of international best practices

In other words, the global economy and the operation of interconnected government not only
facilitates international comparison but also brings PA in a country under public scrutiny.

In the light of international comparisons people compare and demand an administration which
is conscious of cost, quality, speed, user-friendly and other best practices

2. Impact of information technology -

One of the major offshoot of globalization has been the realisation of future potential of IT and
specifically the internet. It has been opened up enormous opportunities for administrative
improvements through,

a. Information dissemination.

b. Transparency.

c. Convenience & Accessibility.

d. Speed of service delivery across territorial distance and hardships.

e. Citizens participation in administrative process through various kinds of interface like

G to C , C to G.

f. Administrative agencies and govt departments are increasingly adopting e-governance

theme in a big way to improve on various parameters like accountability, people's
participation, accessibility, speed and transparency.

Challenges caused by globalization for public administration

1. Challenge of context sensitivity :

The biggest challenge for public administration caused by globalization is threat created by
possibility of global administrative and monoculture (i.e) the possibility that a single model or a
limited set of theories may start getting propagated as universally applicable models or theories.

Thus there is a tendency of proliferation of ready made solutions in the nature of one size fits
all where is requirement is shop specific or tailor-made solutions.
Further there are been tendencies of possible imposition of western or us centric ideas.

Blind mindless import of these models by local economic planners and experts in the borrowing
country.

Moreover, it has already been debated that bilateral/multilateral agencies of UN propagate

global monoculture in the form of eight conditionalities either to propagate their ideology or two
for their commercial interest. In this context Christopher Hood as observed as under,

“Even the global Village is culturally plural and not homogeneous”.

Meaning thereby, let the world under the impact of globalization may have become compact as
a village but still culturally it is heterogeneous. Thus one of the strongest issue faced by the
public administration in various countries is to revise their own models and strategies of
administrative reforms by embracing global learning and remaining careful at the same time
about the adaptation and fine tuning. In other words the challenges for the administration is
how to think global and yet act local.

2. Challenge of cultural globalization :

Globalization has brought a focus on specialized task for administration which earlier were
never seen as core part of public administration the special administrative task of global world
are,

a. Global security and war against terrorism.

b. Sustainable development and environmental concerns eg. Global warming.

c. Gender sensitization

d. Global pandemics health issues

This issue is bring for front the requirement of greater global networking and competition
among different Government and administration. Further administration of any country needs
to develop greater negotiations and collaborative skills to achieve the twin objective by guarding
National interest while contributing to International interest.

3. Challenge of global accountability

It is now being increasingly argued that, in a globalized world, justice and accountability in
functioning of international agencies is an important concern.

It has been noted that there has been a tendency of global Elitism, were by few powerful
countries or blocks of countries tends to dominate the world order and World forum.

It is agreed that every nation has a right to have a say in what is good and what is bad for it.
However, it has been seen that quite often international decisions are taken in such a manner
that it gives no voice to third world countries.

As a result, their economy and developmental interest are often neglected or compromised. In
this context Joseph Stiglitz has noted as under,

“Globalization can promote development but can create poverty global justice and
accountability became major issues because there exist a possibility of global governance
without global government”.

It also needs to be seen that the inbuilt within the challenges of globalization are the challenges
of liberalization and privatization. As a result, public administration in any nation has to be
accordingly reinvented, re-engineered, pluralised, networked and fine-tuned.

4. Public administration is facing new challenges due to the impact of globalization. These are :

a. A growing need for negotiation skills among sovereign States.

b. Changed role of bureaucracy from managing to facilitating economic activities.

 c. An organisational, managerial culture which stresses performance and result oriented
management (There is a demand for managerial skills of adaptability, cooperation and
creativity).

d. Focus on managerial leadership and expertise which has been necessitated by the
demands of negotiations, mediation, and sensitivity to human rights and diversity.

e. Emergence of e-government, where all countries have been executing major initiatives to
tap the vast potential of the Internet for improving and perfecting the governing process.

f. Need for a comparative perspective wherein, in response to the new global reality, public
administration must effectively utilize a comparative outlook that incorporates non-
western as well as more developed systems.

5. Changing role of State -

Traditionally, many countries embarked on the concept of Welfare State, but with the onset of
globalization, there is significant changes in this traditional role of the State. The market-based
approach to public administration is leading to the emergence of a ‘Competition State', which
encourages public choice initiatives, deregulation, and privatization, irrespective of the local,
political and administrative cultures.

This ‘roll back’ of the State propagated during the 1980s and 1990s, especially in the USA and
UK, due to the influence of Neo-liberalism has resulted in deregulation, privatization and the
introduction of market-oriented reforms in public services. The new political economy of
development is based on ‘market’ and not the State as the central actor.

globalization impacts heavily on the State, its policies, institutions, and personnel. The ‘public
sphere’ and the space for citizens’ involvement have been shrinking and the Corporate State is
making its presence felt. The biggest challenge for administration is to recast the role of the
State. There is a need for evolving a new regulatory State with an expanded agenda.

Osborne and Gaebler (1992) in their work Reinventing Government have made a case for
government having a key role in restructuring of markets through:

 Setting rules in market place.

 Facilitating the provision of information.

 Augmenting demand.

 Catalyzing private sector supplies and new market sectors.

 Creating market institutions.

 Risk sharing.

 Regulating through application of market-oriented incentives.

Effective economic governance demands the State to make efforts to provide a conducive
atmosphere for market institutions to function and at the same time strives to make them
socially responsive.

6. Responsiveness of State Institutions

The globalizing State that is said to threaten the lives of common people, through promotion of
elitist policies, can be counteracted by reasserting the role of the State institutions in becoming
responsive to the needs of people.

The key challenge, to counteract the negative consequences of globalization, is to strengthen

and revitalize the public institutions in a manner to ensure their legitimacy and effectiveness in
protection of public interests. The developing countries need to take concrete measures in this
direction.
7. Management Orientation in Public Administration

Public administration, traditionally speaking, had the major obligation of promoting public
interest. The managerial orientation in PA is not a recent development, as it was prevalent
earlier too but in varied form and content.

The new reform model in public administration, which emerged in the 1980s as New Public
Management (NPM) approach are targeted at the multiple performance failure of the
government and the need to build public confidence.

The new reforms model that is the NPM model is based on certain postulates, which include :

a. Focusing on achieving results rather than primarily conforming with processes.

b. Introducing market principles such as competition, and contracting out in the

provision of goods and services.

c. Making public administration customer-driven to enhance service ethic and efficiency.

d. Assigning the role of steering activities to the government rather than rowing.

e. Relying on third parties such as non-profit organisations, and other levels of

government in implementation of policies.

f. Deregulating the government activities to make them result-oriented.

g. Empowering the employees to serve the customers as it promotes teamwork.

h. Changing the overall public administrative culture towards flexibility, innovation,

entrepreneurialism, as ‘opposed to’ rule-bound, process orientation (Rosenbloom, 2002,
Paraphrased).

NPM has emerged clearly as a major manifestation of the Competition State.

8. State-Market Co-operation :

A consensus is gradually building up to create cooperation between the State and the market.
Three kinds of interventions have been identified which are functional, institutional and
strategic.

Functional interventions seek to remedy market failures in so far as prices give the wrong
signals.

Institutional interventions seek to govern the market by setting the rules of the game for
players in the market.

Strategic interventions seek to guide the market, as these are interlinked across activities or
sectors in an attempt to attain broader, long-term objectives of development.

The State in order to facilitate market functioning needs to develop the physical infrastructure
as well as create indispensable social infrastructure.

9. Civil Society as a Supplementary Democratic Model :

Civil society comprises the collective of those social organisations that enjoy autonomy from the
State, and have as one important goal, among others, to influence the State on behalf of their
members.

As the markets are being driven by profits, and the State organisations are being mired in
inefficiency and unresponsiveness, the civil society organisations, have gained prominence due
to their participatory, flexible, less bureaucratic, cost- effective, accessible, and people-friendly
characteristics.

By delegating more of its functions to partly or semi-autonomous local agencies, communities

and cooperatives, the State is promoting democratic de-centralisation.
globalization is said to affect communities, and their participation in managing their affairs.
The biggest challenge to administration lies in not simply strengthening the processes and
institutions of government, but also looking at the governed, making them partners in the
process of development, strengthening their capacities and empowering them.

Peter Evans (1998) in his analysis of East Asian economies has given a new orientation to the
theory of ‘Embedded Autonomy’, whereby he emphasizes that a significant factor responsible
for their economic growth, is the presence of concrete set of social ties that bind these States
to their surrounding societies.

Impact of Globalization in developing countries

The privatization of public enterprises, especially the loss making units are unable to get
suitable buyers and are hence being sold at low prices.

The contracting out process is also open to corruption and mismanagement. The process
becomes immensely complex and difficult to manage as the need for constant monitoring and
supervision adds to the already heavy load of work and cost of the public agencies.

The introduction of user fees goes against the principles of equity and ability to pay. In
developing countries, this approach is likely to lead to higher cost of essential services that a
larger section of the impoverished population may be unable to afford.

The developing countries are yet to arrive at a stage of development where the provision of
public service can be handed over to private providers without the risk of major disruption or
threat to the interest of the consumer plans.

The methods and mechanisms for establishing a system of democratic governance,

characterized by accountability and transparency are yet to be materialized in developing
countries.

It is being felt that globalization has benefited only a few, and the majority, especially in
developing countries, continues to live in deteriorating levels of poverty. This is mainly due to
the increasing powers being exercised by multilateral financial institutions in these countries,
which is reflected in their economic and social policies.

Joseph Stiglitz comments

“If globalization continues to be conducted in the way that it has been in the past, if we
continue to fail to learn from our mistakes, globalization will not only succeed in promoting
development, but will create poverty and instability”.

Globalization process has taught some lessons (positive as well as negative), especially to the
developing countries. It has brought to the fore the need to appreciate the significance of
indigenous local systems of administration and governance, as well as adapt them in
accordance to the new trends in globalization.