Q: What is the difference between developing and developed countries in terms of the provision of public services?

A: We noted the rationale of governments (in another Q&A session) in providing a variety of services such as school and higher education, healthcare, law and order, social security for those who cannot work, roads, electricity supply, waste collection, traffic control and so on. There are one or more factors regarding each of these services which make private efforts or markets inadequate, and that is why coordinated and collective action (facilitated or directly) by the state is important for these services. 

However, we may note that most of these services are provided adequately only in developed countries. When some people are unable to take up employment due to ill health or other reasons, they get some basic support from the government in these countries. Good quality school education is free of charge in almost all developed countries. There are a set of developed countries that provide free higher education, and governments or philanthropic organisations could provide financial assistantships in other parts of the developed world. Needless to mention there is also more investment in infrastructure (roads, ports, airports, etc.) though there could be problems related to their maintenance. Law enforcement is also a lot stricter in the developed world and this keeps institutions, such as the judiciary, functional. 

On the other hand, one can see severe drawbacks in the provision of public services in developing countries, like India. Most people do not have viable social security and hence, they may have to live in poverty if they cannot work and earn a decent income. Though school education is free, quality is an issue. The number of colleges and universities which provide subsidised education is few compared to the demand, and hence private self-financing colleges/​universities crop up in these countries where students have to meet the full cost of education. Infrastructure in terms of roads, ports, etc. is poor, inadequate and sometimes altogether absent. The enforcement of law and order is poor. In parts of Africa, even basic policing is not adequately provided by the government. There are cities where even middle-class people have to live with private security arrangements. India faces huge problems due to the delays in courts, and this is also due to inadequate investments in the judiciary considering the population size and the number of cases. 

Hence, though governments all over the world have the same rationale for providing public services, the reality is different in developed and developing/​poorer countries. The governments in the latter do not provide many public services adequately and/​or of suitable quality. The level of governmental provision of public services is determined by socioeconomic and human development. When governments do not provide these services adequately, people in developing countries have to manage by themselves or depend on their families or private agents for one or other services which are provided by governments in the developed world. For example, they may have to use up their savings for basic subsistence when they cannot work; or even the poor may have to use private schools and hospitals for education and healthcare. 

Q: Most middle-class people in India use private schools for the education of their children. What is wrong with it? Why cannot private organisations provide services such as education adequately and of quality though these are the responsibility of governments?

A: Yes, nearly one-third of all children in India indeed use private schools. This is true in many other poorer countries, including those in Africa. On the other hand, only 5 – 10 percent of children use private schools in the US and Europe. This is also the case with healthcare. A much higher share of Indians use private hospitals (and private clinics, some with unqualified doctors) whereas that share is near zero in European countries. In remote parts of India, Cambodia, etc. people buy electricity from small private generators at a very high cost per unit of electricity than what is paid in almost all developed countries. People who live in slums in India may have to buy water from private tankers, whereas water supply is provided by governments in almost all developed countries. 

What is wrong with this heavy dependence on privately provided public services in poorer countries? First is the cost. If people have to bear the cost of these services, these will not be affordable for a sizable section of society for they may have to spend a greater part of their meagre income to get these services. This can have implications on their financial conditions and life in general. For example, not only the poor but even middle-class people cannot meet the huge costs of private hospitals in India. Some of them may become poor after going through treatment in such hospitals. Secondly, there can also be a highly unequal availability of privately provided services. For example, one can see many private hospitals in big cities whereas there is a dearth of qualified doctors in rural areas. 

Thirdly, there can be cheating by private providers. This is especially visible in the case of services, such as healthcare in which consumers face challenges due to a higher level of information asymmetry. It is the providers of private healthcare services may prescribe unnecessary medicines and procedures for their own profits. It is noted that the share of caesarean surgeries is higher than that is actually needed in India and this can be due to the profit interest of its private hospitals. 

There can be other issues of quality too. There are private schools where teachers are not qualified in many parts of the developing world. These schools may focus on some visible aspects of education (say, test scores) and may not provide an education that takes into account all societal needs. 

Q: Aren’t privately provided services such as education and healthcare better in terms of quality? Many parents want to use private schools since they see these as providing better education. Won’t the learning achievements in private schools be better than those of government schools? Don’t people use private hospitals due to the better facilities available there? 

A: We should note that the learning achievements of children depend not only on the school but also on the situation at home. There are studies which indicate that around 70 – 80 percent of learning achievements of school children can be attributed to family and socioeconomic conditions which include adequate support at home to attend schools regularly; the interest of parents in the learning of their children; additional academic support at home; the education levels of parents; the ability of parents to get additional academic support from others (say through paid tuition), etc. In many developing countries, most parents who use private schools for their children have these enabling conditions, whereas those who use government schools do not have these, and hence there is no surprise that the learning achievements in private schools are better. This is evident from the systematic studies carried out on the impact of private versus government schools after controlling the impact of family and socioeconomic conditions. (Some of these are mentioned in this article https://azimpremjiuniversity.edu.in/notes-on-strategy-series/the-need-to-strengthen-government-schools-in-india)

Healthcare also has what can be called ​‘market failure’ which may create losses to society if it depends mainly on private providers. Poorer people may not be able to afford quality healthcare if they have to depend only on private providers (often unqualified medical practitioners). In many countries in Europe, healthcare is almost completely a public provision. But in countries like India, when such public provision fails, people have to use private hospitals which when they provide quality care are mostly extremely expensive. 

In the case of electricity, water supply, etc., private providers may not be able to operate at the scale required and this increases the cost. If one private provider monopolises the service, it may reduce the supply (compared to efficient levels) and it can create a social loss. For all these reasons, there is a need for government intervention in the case of these services. 

Q: How is the heavy dependence on private provision of services such as education, healthcare, water supply, etc. a reflection of economic underdevelopment? 

A: Public provision of services, such as education and health care, requires governments to have enough public resources. Governments in poorer countries may not be able to mobilise enough public resources through taxes and other means. On the other hand, developed countries are able to spend more public resources on such services.

When it comes to the quality of publicly provided resources, this depends on the accountability of governments which in turn depends on the ability of people to assert their rights. The institutional framework that may help to enhance the accountability of governments is weaker in developing countries. People in many poorer countries are either not aware of the importance of publicly provided services or are not in a position to assert their rights. 

There is a need for collective action to improve public services. However, there may be challenges in collective action in poorer and developing countries. This could be due to social divides among people based on economic class or social identity. Hence, only those who can afford may opt for private services. For example, there is a perception that most government schools are not enabling students to learn adequately. So, middle-class people move out of such schools. Only poorer parents use government schools. They may not be able to influence the government to improve these schools. This becomes a vicious cycle. When people cannot come together to exercise collective action to improve public services, the better-off sections move out and that further aggravates the problem of collective action. There is a similar pattern in the case of public hospitals in India. 

By comparing this situation with that of the developed world, the dependence of people in poorer countries on private organisations for services such as education and healthcare can be seen as a reflection of underdevelopment.

Q: What may be preventing collective action for improving the provision of public services in India?

A: Let us consider a few possible factors. 

1. Sections of poor people may not recognise the need for quality public services such as education and healthcare. They may not use (secondary) education for their children because they do not see the value of education for their children, who drop out and start working. Even those sections who send their children to schools may not recognise the importance of quality (so schools also do not care for quality). Similarly, poor people in India who use unqualified doctors for medical services do so because of their lack of awareness of quality medical services. 
2. When sections of the poor recognise the importance of public services, they should be in a position to influence elected representatives to provide them with these services. Such awareness and capacity are missing, and this is the most important reason for the non-availability of water supply or other services to the urban poor in Indian cities. Urban poor, especially migrants, do not have political clout in many parts of India. 
3. If poorer people are to be in a position to influence the government (through their elected representatives), they should be politically empowered. There are two aspects to this political empowerment. They should vote in elections based on their awareness and understanding of the affairs of government and not on other interests. The practice of politicians to buy the votes of poorer people is not uncommon in India. When their votes can be bought, there is no compulsion on the elected representatives to meet their requirements for public services. 
4. Another aspect of empowerment is the political mobilisation of the poor. Not all sections of the poor in different parts of the country are politically mobilised. Even when they are, it may not be based on their interest in governance (say the provision of public services). Instead, it is based on social identity (like caste or religion). The opposition to people belonging to a caste or religion is the main consideration for voting and the need for public services is neglected in this process. 
5. When poor sections are not interested in the quality of public services, lower-middle-class people who can benefit from these (because they find it difficult to pay for private schools and hospitals) find it difficult to demand quality. This is part of the collective action problem. This may lead to a situation where even lower middle-class people may be forced to use private services. 
6. The tax resources available to the governments in India (as a share of the Gross Domestic Product) are significantly lesser than those in developed countries. There is not enough political support to enhance the tax rate and provide better quality services. This can be a vicious equilibrium. People do not see quality public services and hence, oppose an increase in tax rate; people oppose an increase in tax rate, and hence, the government’s ability to provide quality public services is limited.
7. When middle-class people move out of public systems and use private services in education and healthcare, the constituency which can demand accountability from the government weakens. Poorer people may not demand better quality due to their lack of awareness of the importance of better quality or their lack of interest or capability. Rich people’s dependence on publicly provided private services is anyway less. Hence, the accountability of public services is grounded in the inclusion of middle-class customers. But the size of this section is small in poorer countries. 
8. The religious and caste divide or political mobilisation based on these social identities can also work against the collective action to improve public services. 

In summary, when people belonging to different social classes and identities do not come together to express their voice, public services may not improve, and that may encourage people to opt for privately provided services. 

Q: You have mentioned the importance of collective action to improve the quality of public services. Is there evidence from India or elsewhere in this regard? 

A: Relatively speaking, the public education and healthcare in Kerala and Tamil Nadu are better. There are other states — Himachal Pradesh, Goa, Mizoram — where school education is better than other Indian states. Kerala’s health system could ensure that healthcare is available to all timely and at affordable rates. Kerala spends a higher share of public resources on services such as education and healthcare. These are the outcomes of collective action that I have mentioned. 

Even poorer people in these states want education for their children. Hence, they have an interest in government schools and the quality of education provided in them. There are political mobilisations of poorer sections of society in these states. This encourages the poor not only to vote but also to pressurise political leaders to provide (and improve the quality of) public services to them. When sections of the poor get educated and become part of the middle class (as they get salaried jobs), the middle class may share some of the concerns of the poor, and this may facilitate collective action. Media is likely to focus on the issues of the middle-class but given the context in these states, the media gives sufficient importance to the inadequate provision and poorer quality of public services. These media stories increase the pressure on the government. Also, sections of people will be influenced by these stories, and this can influence their voting decisions during elections. This too puts pressure on the governments. 

Public services, such as education and healthcare, would become part of the give-and-take relationship between voters and elected representatives in a politically active society. The issues related to these services may be communicated by citizens to their elected representatives, and the latter may take action as a way of ensuring votes during elections. 

How political transformation helps the improvement of public services in a country is an important theme. We will take this up in another Q&A session. 

Q: What can public officials do in terms of public services? 

A: To begin with, they have to make public services accessible to those who do not receive these. Officials who get exposure to such sections of the population can inform higher authorities. In places where such services are available, these officials can ensure that these are provided to meet the needs of people to the extent possible. It is noted that the quality of public services does not depend only on the money that is made available for that purpose. The interest of government officials plays a very important role. There are several examples of how government school teachers or doctors have made an immense difference in the lives of people who benefit from their services, even though these facilities (like schools or hospitals) are underfunded and lack adequate infrastructure. The needs of different people can be different and hence, a higher sensitivity on the part of government officials regarding the specific requirements of people who use their services is important. 

Santhakumar V is Professor, Azim Premji University, Bengaluru