GLOBALISATION, GOVERNANCE REFORMS AND DEVELOPMENT

K. Choudhary

1. Introduction In recent years, globalisation has emerged as a very popular term amongst

academics, policymakers, business circles, development practitioners, and in the

common parlance. Yet there is no consensus on its exact meaning and theorisation.

Broadly, it is used to describe the global processes of change taking place in the

world in different spheres of life in around last two decades. The changes cover

economic, technological, political, social, and cultural arenas of life. In this process, a

new paradigm of ‘good governance’ is advocated particularly by the major multilateral

and bilateral development agencies for adoption especially in the developing

countries, and also the former socialist transition economies. There is observed a

close connection between this new governance paradigm and the model of

development in the current era of globalisation.

This note is divided into four parts. First, it briefly discusses the concept of

globalisation. Second, it analyses the current agenda of ‘good governance’ and

development as reflected in the policy of the select multilateral and bilateral

development agencies. Third, it focuses on the current agenda of governance

reforms in India. Finally, it identifies certain important issues for deliberations in the

workshop.

2. Globalisation The concept of globalisation is defined differently by different scholars. Broadly, the

concept refers to the current phase of growing linkages, and integration of varied

types among countries and people in the world in over last two decades.

Globalisation is viewed as a process, as the latest phase in the modern history of

human society, as signifying a new type of society, and as not a reality but an

abstraction/ideology/ prescription. There are advocates of globalisation as well as its

opponents. There are others not siding with either.

Those viewing globalisation as a process differ in their understanding. As a process,

it is regarded as one-dimensional, two-dimensional, and multi-dimensional in nature.

The most common conceptualisation of globalisation is as a (one-dimensional)

process of economic integration that has been occurring on a very rapid pace in the

current times. In this sense, R.G. Harris defines it as “The increasing

internationalisation of the production, distribution and marketing of goods and

services” (cited in Streeten 2001:167). Manuel Castells emphasises the time

dimension of change due to the unprecedented technological breakthrough in the

areas of information and communication. He described it as “The power to act

instantaneously at a distance”. In a fuller way, he defines it as “the process by which

in a given dimension of society, for instance the economy, its core activities acquire

the technological and organisation potential to work as a unit in real time on a

planetary scale”(ibid). The two-dimensionality of the process covers economic

integration being facilitated by the new technology. As an example, for Thomas

Friedman globalisation is “that loose combination of free trade agreements, the

Internet and the integration of financial markets that is erasing borders and uniting

the world into a single, lucrative, but brutally competitive market place” (ibid: 171).

Further, taking it as a multi-dimensional process, Streeten states, “Globalisation is

transforming trade, finance, employment, migration, technology, communications, the

environment, social systems, ways of living, cultures, and patterns of governance”

(2001:8). Holm and Sorensen (1995,cited in ibid) view it as ‘the intensification of

economic, political, social and cultural relations across borders’. R.F.M. Lubbers

views globalisation as a multidimensional process of internationalisation of relations

and dependencies. He states, “Globalisation is a process in which geographic

distance becomes less a factor in the establishment and sustenance of border

crossing, long distance economic, political and socio-cultural relations (cited by

Hudson in Lamberton ed. 2002:101).

A World Bank publication defines it as ‘the growing integration of economies and

societies around the world’. Moreover, this is ‘a complex process that affects many

aspects of our lives’ (World Bank 2002: ix). A recent study by the United Nations

(2002:17), conducted by ECLAC (Economic Commission for Latin America and the

Carribbean) uses the concept to refer to ‘the growing influence exerted at the local,

national and regional levels by financial, economic, environmental, political, social

and cultural processes that are global in scope’. This study specifically highlights the

multidimensional nature of globalisation. It is noted here that the economic

dimension of globalisation is commonly discussed. It is affirmed, however, that the

economic dimension ‘acts concomitantly with non-economic processes, which have

their own momentum and therefore are not determined by economic factors’ (ibid).

One of the non-economic dimensions mentioned, here, include ethical and cultural

dimensions of globalisation which ECLAC terms as the ‘globalisation of values’ and

refers to the gradual spread of shared ethical principles as manifested in declarations

on human rights which has two main concerns: a) civil and political rights, implying

autonomy of individuals from the power of the State and their right to participate in

public decision-making, and b) economic, social and cultural rights, reflecting the

values of economic and social equality, solidarity and non-discrimination. The

‘globalisation of values’ is getting increasingly manifested in the aspirations and

formation of a ‘global civil society’ whose capacity for mobilisation tend the exchange

of information has multiplied by the new information and communications

technologies Another non-economic facet of globalisation is its political dimension as

reflected in a dramatic change in the climate prevailing among sovereign States, in

the international political relations (ibid: 21,23).

Globalisation is also used as a normative concept implying that it is ‘the only possible

road to the full liberalization and integration of world markets, which is seen as the

inevitable and desirable fate of all humankind’ (United Nations 2002:18). Mahbub ul

Haq observes, ‘Globalisation is no longer an option, it is a fact. Developing countries

have either to learn to manage it far more skilfully, or simply drown in the global cross

currents’ (MHDC 2002:1). Moving further in 1998 Daniel Yergin asserted, ‘We are

now beginning a reality beyond globalisation – the World of globality’ which meant a

shift from the description of a process i.e. globalisation, to a state of being. Globality

referred to a condition of community and interconnections that already exists already.

But there are others who greatly differ in the understanding of globalisation . Paul

Hirst and G. Thompson hold that globalisation is a myth, not a reality. They assert,

“Globalisation is a myth suitable for a world without illusions, but is also one that robs

us of hope” (in Streeten 2001:170). It is held that the label of ‘global village’ has been

uncritically adopted like a slogan. One could remember the fact that over one half of

humanity has not made even a phone call. In this sense global village is really not

global. Around two billion people in the world are still below poverty line. In India and

also other developing and poorer countries, still the overwhelming majority of people

have no access to the new information and communication technologies in any

meaningful way. Some scholars deny that globalisation is a process with its own

logic, and hence inevitable. For example, Ian Clark holds that it has often been a

result of state policies, and so it is not irreversible (1997, cited in Hudson: 103). He

argues that economic, technological and cultural changes are different things, with

different logic and timeframes, hence it would be wrong to merge them into a single

term. However, it may be first to posit them and then examine the relationship

among them. In addition, it is denied that globalisation exists in one or more

determinate senses.

Further, Lubbers, for instance, characterises globalisation as ‘an abstract concept’. In

his opinion. “It does not refer to a concrete object, but to (an interpretation of) a

societal process. Therefore, the concept cannot be defined easily. To make clear

what one means with ‘globalisation’ it is necessary to explain the whole theory in

which one’s use of the concept is embedded” (cited in Hudson: 101). Lubbers

demands a greater ‘logical clarity’ from writers on globalisation about the theoretical

frame deployed and the specific empirical data that would validate their

thesis/hypothesis” (Hudson in Lamberton 2002:104).

Perspectives on globalisation Martinelli (2003:96) places the growing literature on globalisation conceptually along

three main axes –

i) ‘Hyperglobalisers vs. sceptics’

Here, the key distinction between the two positions relates to the degree

of novelty of globalisation and its impact on nation-states.

ii) ‘Neoliberals vs. neo-Marxists and radicals’

Here, the key points of differences are the balance between positive and

negative impacts of globalisation and its truly global or western

hegemonic character.

iii) ‘Homogenization vs. heterogeneity and hybridization’

The focus here is on the cultural dimension of globalisation.

Here, the first axis is considered to be the main, and the other two as specifications.

It is noted that the varied conceptualisations on globalisation differ in terms of the

type and number of aspects analysed – causal dynamics, periodisation and

trajectory, major actors, (differential) social impact on people, and political

implications for state power and world governance. Analyses also differ in terms of

the type of countries, social groups, institutions and cultural phenomena under

investigation (ibid).

It can be observed that hyperglobalisers are the advocates of globalisation with a

neoliberal ideology/ prescription and focus on its homogenising nature. The sceptics

are mainly the neo-Marxists and radicals and they notice also the hybridising cultural

aspect of the process. Neo-Marxists/ Marxists highlight the hegemonic character of

globalisation. Radicals could also be called ‘transformationalists’ who stand

somewhere in between the other two i.e. the hyperglobalisers and neo-Marxists/

Marxists.

Hyperglobalisers conceptualise globalisation mainly with a focus on the economic

aspects. It is affirmed that people are getting increasingly subjected to and integrated

into the global marketplace. Economies are being increasingly denationalised due to

the formation of transnational networks of trade, finance and production. This is

regarded as ‘a novel condition, hardly reversible’. This process limits the range of

choices of nation-states and individuals, and compels them to follow neoliberal

economic policies to be able to compete in the world market. Moreover, the global

economy reshapes the existing division of labour between the centre and periphery

countries and between the ‘North’ and the ‘South’ in the world. It is replacing the

existing relations with ‘more complex patterns of hierarchy of inequality’, which has

winners and losers both among and within countries, and with new tacit transnational

class allegiances. Further, it is held that the benefits of globalisation outweigh the

costs. There is emerging a global civilisation.

The neoliberal advocates view globalisation as the triumph of economic liberalism,

i.e., the application of economic rationalism to ‘nation societies’. It is held that (i)

markets provide the most dependable means of setting values on all goods, and (ii)

economies and markets can deliver better results than states, governments and the

law. But this view of globalisation is interpreted as an ideology, not a reality but a

prescription (see Hudson 2002, in Lamberton :102).

Neo-Marxists and radicals who are sceptics of globalisation, have a contrasting view

of the whole process. They do not take globalisation as beneficial to all and even

being irreversible. They paint a gloomy picture of increasing inequalities and

dominance by the stronger economic actors. It is noted that there is happening the

loss of sovereignty and autonomous power of nation-states (Ohmae1995).

Neoliberals also share this observation. Market forces are getting more powerful

than the states (Strange 1996). The main concern of governments now is to compete

for attracting investments. They are forced to impose cuts on their welfare policies/

programmes to participate in growing global competition. It is becoming increasingly

difficult for them to control transnational flows of money and goods. ‘National

governments are torn between the need to foster economic competitiveness and that

of enhancing social cohesion’ (Martinelli 2003).

The sceptics fault the hyperglobalist thesis of the demise of the nation-state for not

distinguishing among states with quite different power and influence. They strongly

disagree with the view of globalisation as a perfectly integrated economy. They do

not consider it a novel phenomenon. They regard it as another wave of

internationalisation, involving interactions among predominantly national economies.

The process is found to involve regionalisation of the world economy, i.e. the

emergence of regional financial and trading blocks. Trade and foreign investments

are largely concentrated in the advanced capitalist countries. The patterns of

inequality and hierarchy are continuing to prevail and the most ‘third world’ countries

remain marginalized. The governments continue to play a key role, particularly the

powerful western states, in determining economic relations. Free trade is being

promoted by the regulatory power of national governments. Moreover, transnational

corporations are not truly global, because they have their own home state and also

regional base. Some sceptics interpret the current phase of internationalisation as

the byproduct of the US-initiated multilateral economic order after the Second World

War (Gilpin 2000). Callinicos et al (1994) call it a new phase of western imperialism

with governments operating as agents of monopoly capital. It is opined that the

current process of globalisation is ‘incomplete and asymmetric’. The governments of

the developed countries, along with transnational corporations exercise the strongest

influence in this process, but the governments and civil society organisations of the

developing countries hold much less sway.

Further, the current phase of globalisation is labelled by Marxists/neo-Marxists as

neoliberalism. Neoliberalism is affirmed by Paul Krugman. He has highlighted the

doctrinal and normative/prescriptive nature of the views of the advocates of

globalisation, for instance, the ‘Washington consensus’. He affirms that conclusions

with little basis are constantly put forth and provide the doctrinal support for policy

(cited in Chomsky 1999:25). Chomsky mentions two varieties of neoliberal doctrine

which characterise the modern history. “The first is the official doctrine imposed on

the defenceless. The second is what we might call ‘really existing free market

doctrine’: market discipline is good for you, but not for me, except for temporary

advantage” (1991:34,39).

Further, the contemporary process of worldwide change is treated by Marxists/ neo-

Marxists as the latest phase of capitalism, and variously characterised as ‘global

capitalism’ (Kurien 1995) ‘pancapitalism’ (Tehranian, in Lamberton 2002:xv),

‘transnational capitalism’ (Rivero 2001:40), and ‘technocapitalism’ (Kellner

2002:289). It is affirmed that capitalism has a built-in tendency to become ‘global’.

This is reflected in its movement to different parts of the world. It has a propensity to

invade diverse avenues of economic activity. It is able to incorporate more and more

people within its fold as it grows and changes. The basic principle of corporate

capitalism is the ‘incorporation of people into capitalist operations through a diffusion

or sharing of ownership’ (Kurien 1995:7). As financial activities become lucrative,

capital gets more concentrated in financial activities as such. This is frequently

called finance capitalism which has become dominant under globalisation (ibid:21)

Pancapitalism is viewed as a novel phenomenon. It ‘captures the significance of the

transformation of capitalism from its national and regional to global proportions’

(Tehranian, in Lamberton 2002:xvi). On a largely similar line is conceptualised

‘technocapitalism’ which describes ‘the synthesis of capital and technology in the

present organisation of society’. It underlines the increasingly important role played

by technology and the continuing primacy of capitalist relations of production. From

a political economy perspective this is viewed as ‘the emergent postindustrial form of

technocapitalism’ manifested in the growing power of globalised transnational

corporations and governmental bodies and the declining power of the nation-state

and its institutions – which remain, however, extremely important players in the

global economy ((Kellner 2002:290).

‘Transnational capitalism’ is seen as reflected in the current process of nation-states,

including the most powerful and industrialised ones, increasingly losing their control

over their national economies to ‘a globalisation that is driven by the transnational

corporations born out of their own capitalism’ (Rivero 2001:40). It is observed that all

the nation-states are becoming promoters of transnational investment. In the last two

decades, they have changed their economic policies by liberalising, deregulating and

privatising their economies. They are engaged in creating conditions to facilitate the

entry of TNCs in their economies, and thus giving up national capitalism. “The

nation-state is withdrawing from the economic and financial domain and giving way to

transnational globalisation. It is becoming more an administrative than a sovereign

territorial entity, a kind of ‘surrogate for transnational capitalism’. Now its main role is

that of an efficient manager, with a mission to liberalise and deregulate, to supply

good infrastructure, to flexibilise employment and to strengthen public security, in

order to foster a positive investment climate for transnational enterprises’ (ibid)

On the cultural side, one view is that globalisation is manifest in the increasing

homogeneity of world values like rationalisation, market competition, commodification

and democratic/ human rights. There is homogenisation of consumption patterns and

lifestyles as reflected in ‘McDonalization’, CocaColization’, and Disneyfication’ of the

world. Another view emphasise that elements of all cultures are getting mixed

leading to cultural heterogeneity and hybridisation.

Further, there is a ‘transformationalist’ view which differs from the understanding of

both the advocates and opponents of globalisation. Sociologists generally tend to

interpret globalisation as a ‘process at a new level of social reality’. The term ‘global

society’ is sometimes used to describe this ‘new reality’ (Albrow1990). In the opinion

of M. Albrow (1990, cited by Hudson in Lamberton ed. 2002), globalisation refers to

all those processes that involves incorporation of the peoples of the world into a

single society, a society in which ‘humanity’ emerges for the first time as a ‘collective

actor’. The latter aspect of this view is connected with the concept of ‘globalisation’,

defined as ‘those values that take the real world of five billion people as the object of

concern, the whole earth as the physical environment, everyone living as world

citizens, consumers, and producers, with a common interest in collective action to

solve global problems (ibid:101).

Martinelli (2003:96) conceptualises globalisation as a ‘multifaceted process with far-

reaching consequences for the lives of all women and men, imposing constraints and

opening opportunities for individual and collective action’. It reflects deep

transformation in the spatial organisation because of relations becoming more

stretched and more intensively interconnected. There is occurring transcontinental

and transregional flows and networks of activities and exchanges. This generates

power relations which has major implications on decision making processes. ‘New

patterns of hierarchy and inequality of inclusion and exclusion are shaped, that cut

across national borders’.

Kellner also takes a transformationalist view of globalisation. He does not stress on

the aspect of integration. Rather, he focuses on the transformation currently

occurring in different spheres of life and the emergence of webs and networks of

global relations. He observes recasting of the role of state – the state being shaped

as a catalytic/ active/developmental state and not the liberal minimum government.

He sees globalisation as having both negative and positive consequences, and also

both homogenising and hybridising impact plus emergence of identity based

defences.

Thus, ‘transformationalists’ seem to take a middle position on globalisation. They

view it as a multifaceted process with multiple causes like economic, technological,

cultural, political. This perspective does not stress global integration. However, it

focuses on the emergence of webs and networks of relations among individuals,

groups, communities, states, international organisations and transnational actors.

Globalisation is seen as leading to an ‘unbundling of relationships between

sovereignty, territoriality and state power’. It involves a basic restructuring of the

nation-state. In addition, the emerging reactions to globalisation like cultural closures,

aggressive nationalism, religious intolerance and prejudice, further weaken the

authority of the nation-state. ‘According to this view, globalization reinforces old

patterns of inequalities, but also forms new social hierarchies which penetrate all

regions of the world, thus recasting the traditional patterns of inclusion and exclusion.

However, significant opportunities for empowerment of individuals, communities and

social groups also exist’ (Martinelli 2003:98-99). It is accepted that global

corporations have homogenising impact on lifestyles and consumption patterns.

However, there is also observed increasing hybridisation of cultural traits and the

staunch defence of specific identities. Further, there is happening deterritorialisation,

but there are also chances for a greater role of national governments. Nation-states

are not disappearing. But they are undergoing deep transformations. It is affirmed,

“Globalization brings about a variety of adjustment strategies by national policies that

require a rather active state – not the neoliberal minimum government, but the

‘developmental’ or ‘catalytic’ state” (Martinelli 2003). Nation-states are one of the

major actors in the emerging ‘global governance as a polyarchic mixed-actor system’.

This perspective suggests the need for democratic global governance based on the

principles of universal rights and responsibilities (ibid).

3. Governance and Development Despite differences in the different perspectives elaborated above, it is observed that

they share a basic point that the nature of nation-state is getting transformed in one

way or the other in the era of globalisation. There is noticed a trend of ‘globalisation’

of national policies and policy-making mechanisms (Khor 2001:10). National policies

relating to different spheres of life, which were under until lately under the domain of

States and their people, are being increasingly influenced by international agencies

and processes or by big private corporations. Even in the developed countries the

large corporations have acquired large part of decision making at the cost of the

power of the State or political and social leaders. It is getting increasingly difficult for

the state to control the TNCs and financial institutions, big players and speculators

regarding the level of their currency and flows of money in and out of the country.

Western national governments have to compete with each other in terms of tax

concessions, deregulation and wage-restraint to retain or attract investments by

MNCs. ‘In fact,…we are in an era where the old-fashioned autonomy of the nation

state is being eroded by the multinational corporation everywhere, both in the First

World and in the Third World, but at different speeds’ (Bhaduri and Nayyar 1996:70).

The nation state in the developing countries are at a double disadvantage because

they have to compete not only with the developed countries but also among

themselves in enticing the MNCs. They have to lower much more domestic wages,

tax holidays, social welfare and so on in this fierce competitive bid.

Besides the MNCs, the global institutions like the World Bank, IMF, WTO, and UN

bodies have emerged as major makers of an increasingly wide range of policies that

were previously under the national governments. As a result of their deepening debt

crisis and fiscal deficit, most of the developing countries had to approach these

multilateral bodies for assistance in the recent past. These countries have been

helped out on the condition of introducing the popularly known SAP (Structural

Adjustment Programme) which has impacted their sovereignty in terms of decision

making relating to social, economic, and even cultural life of the people. The new

development model being advocated and implemented by these multilateral

institutions is that of liberalisation, privatisation and globalisation (LPG). In this

process a new paradigm of governance and development has emerged which has

serious implications particularly for the developing countries – their nation state and

the people. Both the multilateral and international institutions/ agencies have played

an important role in this connection. Moreover, it is noted that ‘in recent years, the

UN has lost a lot of its policy and operational influence in economic matters, and

correspondingly the powers and authority of the World Bank, IMF and GATT/WTO

have expanded’ (Khor 2001:12).

There has occurred a shift from government-speak to governance-speak in the world.

But the imperative for this shift is very different in the North and the South. In the

North, the policies of deregulation and cutbacks in social spending were made by the

state due to a fiscal crisis. It forced them to introduce new strategies of public

management to change the inefficient and huge welfare-state bureaucracies, even if

it involved reorganising the state itself along the lines of private sector. Here,

privatisation and liberalisation did not mean reduction in the role of the state, but

rather a shift in the means of intervention from decommodifying bureaucracies to

marketizing ones. ‘Reinventing government’, for example, means the replacement of

bureaucracies which directly produce public services by ones which closely monitor

and supervise contracted-out and privatised services, according to complex financial

criteria and performance indicators (Cerny 2000:129).

In this manner, there is a tendency of a truncation of the state’s role as the regulator

of economic activity, and also as a provider of social services, but not as the

‘orchestrator of social consensus’ (Hirst 2000, cited in Jayal and Pai 2001:14).

But in the South, governance discourse entered in a different context. It was pushed

in by the Bretton Wood institutions to improve the development performance. In 1989

the World Bank affirmed in its document on sub-Saharan Africa that it was due to a

‘crisis of governance’ there that the Bank’s programmes of adjustment and

investment were not proving effective. There came up a push for Good Governance

as ‘sound development management’ which was defined as ‘the manner in which

power is exercised in the management of a country’s economic and social resources

for development’.

In its 1992 report ‘Governance and Development’, the World Bank stated,

‘Governance, in general, has three distinct aspects: (a) the form of a political

regime (parliamentary or presidential, military or civilian, and authoritarian or

democratic); (b) the processes by which authority is exercised in the

management of a country’s economic and social resources; and (c) the

capacity of governments to design, formulate, and implement policies, and in

general, to discharge governmental functions (cited in LaPorte 2002).

It is noted here that the first aspect clearly falls outside the Bank’s mandate. The

Bank’s focus is, therefore, on the second and the third aspects’. Moreover, in the

1992 document, President of the Bank L.T. Preston stated,

‘Good governance is an essential complement to sound economic policies.

Efficient and accountable management by the public sector and a predictable

and transparent policy framework are critical to the efficiency of markets and

governments, and hence to economic development. The World Bank’s

increasing attention to issues of governance is an important part of our efforts

to promote equitable and sustainable development (emphasis added, ibid).

In the 1994 report, the World Bank (1994) clearly identified four major components of

governance reforms. These cover:

(i) Public sector management – This include civil service reform (e.g.

downsizing, professionalisation), prudent financial management, and state

enterprise sector (viz. corporatisation, disinvestments/ privatisation);

(ii) Accountability of Government – This implies macrolevel accountability

(political, administrative), and also its reinforcement by microlevel accountability

through decentralisation, participation, and competition; decentralisation of

government; financial accountability (e.g. improved budgeting, accounting and

information systems); and anti-corruption measures;

(iii) Legal Framework for Development – This include formulation of clear laws

and efficient legal institutions; a set of rules securing property rights, governing

civil and commercial behaviour, and limiting the power of the state – all this

aimed clearly for private sector development;

(iv) Transparency and Information – This require access to information essential

for competitive market economy; Govt. to value transparency i.e. to rely more

on market mechanisms for economic management; transparency in

privatisation; beneficiary participation in programme design and

implementation; freedom of the media; and making public processes more open

(e.g. public procurement tenders).

Here the main features of governance reforms include public sector management

(capacity and efficiency), accountability, the legal framework of development, and

information and transparency. Jayal and Pai note that this view of governance reform

has gradually been transcended and alternative conceptualisations have emerged

which are not driven by donor interests or tied to aid conditionalities (2001:15). The

newer views recognise the plurality of actors engaged in the process of governance,

and also concern with the substance of governance. In this way, governance is not

simply equated with civil service reform, or with applying management strategies

devised in the private sector to public organisations. Now, greater focus is given on

participation, decentralisation, accountability, governmental responsiveness, and

even broader concerns of social equality and justice. This new emphasis is viewed

as the result of a parallel process: the discrediting of the traditional concept of

development as economic growth, and the adoption by international agencies of the

‘human development perspective’ which recently also got linked with the agenda of

human rights. Moreover, this redefinition of development has at least partly occurred

as a result of social and political struggles the world over, particularly in the South,

against unsustainable and inequitable forms of development (ibid).

However, a closer scrutiny would show that there is no basic change in the

governance agenda of the World Bank. The Bank document of 1994 (‘Governance –

The World Bank Experience’) includes both civil service reforms and the concerns of

decentralisation, people’s participation and human rights as a part of the same

package of governance reforms (1994). In fact, civil service reforms are to be

effected by the latter. Moreover, the Bank’s governance package gives emphasis on

state enterprise sector in which it advocated, in the beginning, corporatisation of state

enterprises, but later moved on to privatisation and divestiture to promote competition

and efficiency and the liquidation of nonviable firms to reduce the budget deficit and

the crowding out of the private sector (World Bank 1994:5).

The World Bank is a part of the UN system. But it is autonomous and hence tends to

act on its own, which is different from other organisations in the system.

Further, it is found that the term ‘good governance’ was used at the Second UN

Conference on least Developed countries held in 1990. It was concluded at the

Conference that ‘Good governance is basic to the economic and social progress of

all countries’ (ibid). The UNDP started examining government efficiency and

effectiveness to explore good governance-type projects. Its annual Human

Development Reports also started linking human development and human rights to

good governance. In fact, it sponsored studies on the efficiency and effectiveness of

government provided services in many countries in the late 1980s and 1990s. It

examined the public administrative sectors in developing countries. In this

connection, it suggested reforms in areas such as civil service (including training),

budgeting and finance, organisation and management, government structure, public

decision making and women in development.

In the recent decade, bilateral development agencies also began to emphasise ‘good

governance’ in their programmes. For instance, USAID gave focus on the areas like

civil service reform, local government decentralisation and development, public

auditing reform, government restructuring and reorganisation, legislative

development, legal reform, judicial system reform, as well as traditional areas of

government streamlining, efficiency, and effectiveness (ibid).

In the whole conceptualisation about good governance in the recent years, LaPorte

has identified certain terms which have been commonly used. This includes:

efficiency, effectiveness, transparency, participation, accountability, rule of law, civil

society, pluralism, human rights, fair elections, accessibility, decentralisation, and

devolution (ibid). Moreover, he adds, “What’s good for the governors is not always

‘good’ for the governed”. Here, he cautions that ‘good’ is a subjective, value-laden

term.

The new definitions of governance that have emerged in recent years include not

merely institutions of national government, but also those of local and global

governance. They suggest that governance is a more broad-based process which

encompasses state-society interactions and partnerships, and are therefore

heterarchical (Jessop 1998, cited in Jayal and Pai 2001:13-14).

This is considered a process-based, rather than structure-based, framework of

governance. It includes a range of organisations, public and private, and the complex

relationships between them. In this new governance there is plurality of participating

actors like institutions of local governance (panchayats), civil society organisations

(NGOs, social movements, cooperatives, civic organisations), private corporations

and other market institutions.

Now, it can be affirmed that the multilateral and bilateral development agencies view

governance as closely linked with development – economic/ political/ social. They

share the view that better quality of governance would promote development, which,

in their opinion, is not happening in the desired way particularly in the third world,

also transition economies in the world. So, there is an urgent need to introduce

governance reforms. But their agenda of governance reforms is not confined to the

traditional view of governance as mere administrative reforms. Rather, it emerges as

a model of development. The agenda, in fact, propounds a model of development

that places the private sector in the centre and other sectors as agencies to promote

its growth – i.e. a private sector/market-centred model of development, though it

stipulates partnership/collaboration between state, market and civil society/ NGOs.

The agenda broadly covers three areas of reforms – economic, political, and

administrative. The reforms in economic governance relate to promotion of market/

private sector agency. Reforms in political governance include partnership/ plurality

of actors/ agencies wherever needed, and decentralisation, participation.

Administrative reforms concern with ensuring accountability, efficiency, effectiveness,

transparency, tackling corruption, etc. In the context of reforms, the broad

development concerns, stated by major multilateral and bilateral development

agencies, are to ensure human rights, human development, and equitable and

sustainable development.

4. Governance Reforms in India In the current discussions, it is held that the nature and quality of governance has a

strong bearing on the course and impact of development endeavours made by the

state and other agents. There is noticed currently a growing governance crisis,

particularly in the developing countries. This is reflected in the weakening and

erosion of major modern institutions of governance such as legislature, state

executive/(development) bureaucracy, judiciary, etc. Corruption is rampant in the

political system and the bureaucracy. In addition, social tension and conflicts based

on primordial identities are on the rise. Rule of law is diluted. Law and order

situation is deteriorating. Modern democratic institutions are under great strain. The

basic needs of the most needy sections of society are not met to the desired extent.

The inability of the state to deliver the desired/ promised gains of development to a

vast section of the people poses a serious challenge to the legitimacy of and the

ruling regimes the state.

It is observed that multi-lateral institutions as well as several bilateral development

agencies have come forward with the new governance package and are

forcing/helping introduce it in the developing countries, including India. Currently the

concepts/expressions used by these agencies include good governance, governance

for human development, democratic governance, and democratic governance for

human development. These agencies have their own policies and programmes. But

they share certain commonalities, though they have certain differences in their

emphasis in this connection. They are engaged in supporting different programmes

for establishing/reorienting/reframing the governance systems in many developing

countries, including India.

Further, the Government of India has paid special attention to governance reforms in

the recent decade. The reforms in economic governance started in the country under

the structural adjustment programme (SAP) over a decade ago with the World Bank/

IMF loans, as in several other countries at different point of time. The measures for

administrative reforms also followed as part of the loan conditionalities to improve the

balance of payments and fiscal discipline. The country could overcome the problems,

but has continued apace on its own will with governance reforms in a comprehensive

manner. The government agenda of reforms has been clearly stated in the recent

official documents and reports.

The Tenth Five Year Plan (2002-07) of the government has a full chapter (Chapter

6, vol. II) on ‘Governance and Implementation’. Here, it categorically states that

governance issue is at the forefront of the development agenda. It says, good

governance is one of most crucial factors for development. Its notion of governance

is broad and comprehensive, and not confined to mere administrative sphere. The

Plan document says,

‘Governance relates to the management of all such processes that, in any

society, define the environment which permits and enables individuals to

raise their capability levels, provide opportunities to realise their potential and

enlarge the set of available choices. These processes, covering the political, social and economic aspects of life impact every level of human enterprise, be it the individual, the household, the village, the region or the

national level…It covers the State, civil society and the market, each of which is critical for sustaining human development. (GOI 2002a).

Here, the State is regarded as responsible for ‘creating a conducive political, legal

and economic environment’ for building individual capabilities and encouraging

private initiative. The Market is expected to create opportunities for people. And the

role of Civil Society is to facilitate the mobilisation of public opinion and people’s

participation in economic, social and political activities (ibid:177). This is done for

sustaining an ‘efficient and productive social order’ (GOI 2002b)

National Human Development Report (NHDR) 2001 brought out by the Government

of India has a full chapter (Chapter 7) on Governance for Human development’. It

notes that the issue of governance has emerged at the forefront of the agenda of

‘sustainable human development’. It implies ‘A development that, while being

sustainable in terms of resources over generations and across space recognises, the

legitimate claim of each person in a society to be an active and a productive

participant in the development process’(GOI 2002b:114).

NHDR recognises quality of governance as one of the primary factors in the most

remarkable development successes of human history. Good governance is

responded as helpful in achieving human well-being and sustained development.

Moreover, ‘it is equally important to recognise that poor governance could well erode

the individual capabilities, as well as institutional and community capacities to meet

even the basic needs of sustenance for large segments of the population’ (2002b:

115) . This is found to be true especially for the poor, disadvantaged and

marginalized sections of society, more so, in the developing countries. The report

notes, “There is a general acceptance now that human deprivation and inequalities

are not merely for economic reasons; rather they go hand-in hand with social and

political factors rooted in poor governance” (ibid).

Further, NHDR notes that there exists wide gaps in development outcomes, social

indicators across regions, states, and districts within a state in the country. And

these do not match with the available resources and human potential of the people.

Moreover, certain states in the country, have taken the governance initiatives and

made important gains in human development. But there are that have not done so,

and lag behind despite their natural advantage and initial conditions after the

independence. There is, in fact, observed decline in governance standards in some

regions and states. Taking stock of the conditions after independence, it is, affirmed,

‘There are attainments in all aspects of governance that one could legitimately be

proud of and yet there are as many challenges (GoI 2002 b:116). Even in the

relatively better performing states, there are found instances of loose or even poor

governance. This has created gaps between inherent potentialities of the people and

the actual achievements. This is found to be reflected in (ibid) :

• Poor management of economies, persisting fiscal imbalances, disparities in

the pace and level of development across regions and across districts;

• Denial of basic needs of food, water and shelter to substantial proportion of

the population;

• Threat to life and personal security in the face of inadequate state control on

law and order;

• Marginalisation, exclusion or even persecution of people on account of social,

religious, castes or even gender affiliations;

• Lack of sensitivity, transparency and accountability in many facets of the

working of State machinery, particularly those that have an interface with the

public;

• Lack of credibility – the gap between the intent and the actions – of some

institutions in the society;

• Perverse system of incentives/disincentives for people (particularly for a civil

servant), subversion of rules, evasion of taxes and failure in getting timely

justice;

• Despite a visible movement towards decentralisation through the Panchayati

Raj institutions, a significant number of voiceless poor with little opportunities

for participating even in institutions of local self-governance; and

• Deterioration of physical environment, particularly in urban areas.

NHRD 2001 provides a recent score card of India’s governance in terms of

achievements and concerns/challenges. This is done with reference to three areas

of governance – economic, political and civil (see chart below).

India’s Governance – Recent Score Card

Achievements

Concerns and Challenges

Economic Governance • India is among the ten fastest growing

economies of 1990s; • Growth disparities across States have

increased in 1990s as compared to 1980s; • Substantial forward movement in industrial,

trade and aspects of fiscal policy reforms; • Implementation problems remain in many

areas and parallel action is needed in most States;

• Tax reforms – rationalisation of tax rates, exemptions and simplification of tax administration;

• Less than 0.5 per cent of population pays income tax, under reporting of income widespread;

• Reasonable price stability; • Stagnation tax – GDP ratio; • Comfortable balance of payments, growing

foreign exchange reserves; • Central and State Governments running

unsustainable Fiscal Deficits; • Significant decline in incidence of poverty; • Self-sufficiency in food grains with

unprecedented public food stocks;

• About 260 million persons or about 26 per cent of population still below the normative poverty line;

• Steady improvement in most social indicators;

• Pockets of hunger and acute deprivation still an unfortunate reality;

• Impressive gains in demographic transition for many States;

• Critical gaps remain, a little less than half of women still illiterate, high infant mortality rates;

• Population growth still high, unsustainable and persisting adverse sex-ratios in some States.

Political Governance

• A resilient democracy supporting the emergence of a multi-party at various tiers of government;

• Recourse to competitive populism, the use of money-power, particularly during elections, compromising decisive political action;

• Politics of coalition and consensus is beginning to find its feet;

• Absence of institutional framework for sustaining (coalition) governments for their term, once elected to office;

• Broad political consensus on nature and direction of economic reforms and national foreign policy;

• Disruptions in parliamentary proceedings dealing timely and informed legislative work;

• Movement on decentralisation of power from the Centre to States, districts and villages;

• Excessive compartmentalisation of the executive, into ministries resulting in a narrow development perspective, vested interests and preventing the rightsizing of a bloated bureaucracy;

• Positive discrimination, reservation in political bodies at grass-root level, social mobilisation of the marginalized and competitive elections have created opportunities for popular participation in decision making;

• Criminalisation of public life, politics of vote bank, communal violence, and corruption are major challenges for improving governance in the country;

• Independent and a proactive judiciary on issues of larger public interest;

• Too much state presence in some areas, too little in others;

Civil Governance

• Primacy of basic human and civic rights; • In practice, some like women and deprived are less equal than others, particularly, in their social and economic rights;

• Rule of law; • Persisting law and order problems in some areas;

• Freedom of expression, free press and electronic media;

• Mobilisation of people for better work ethics, civic responsibilities and environmental protection;

• Considerable non-governmental and civil society initiatives in various spheres of social and public life;

• Poor conviction rates, delayed justice, backlog of cases, particularly in subordinate judiciary;

• Institutional framework/agencies for checking corruption in high public offices;

• Distorted, perverse incentive structures in civil services encouraging mediocrity and corruption;.

Source : Government of India (2002b: 117).

Further, NHDR aims at going beyond the stage prognosis to the actual treatment. It

outlines the area of emphasis and certain relevant instruments that has to be

pursued to improve governance in the country. It offers ‘an alternative framework’ in

conceptualising governance. In its view, the issue of governance can be restricted to

political, economic or civic governance or look at the system in its totality. But a

useful approach to analyse governance ‘is to view the process of intermediation as

involving a continuous, each representing a specific set of deliberate arrangements’.

These elements include (GoI 2002b:118) –

• Institutions – adapted or created arrangements, both formal and informal, to

bring about predictability, stability and efficiency in managing the social,

economic or political transactions in any society;

• The delivery mechanism – including the executive apparatus adopted or

evolved by the institutions for implementing the agenda and the objectives for

which the said institutions have been created; and

• The supportive and subordinate framework of rules, procedures and legislation – formulated for delivering and meeting the stated responsibilities

of the concerned institutions.

It is held that efficient governance needs efficient institutions. But the efficiency and

effectiveness of institutions relies on its adopted delivery mechanism and the

supportive framework of rules and procedures. So, each of these three is required to

work in ‘harmony’ with the other to carry out the functions and roles for which the

institutions are created. This makes possible for the institutions to attain their stated

goals and meet their assigned responsibilities in ‘managing the affairs of society’.

Moreover, ‘there has to be a capacity for evolution, a continuous adaptation in each

of these elements’ with changes in the context – domestic as well as global –

changes in the profile and needs of the society, and with development. In this

context it is observed that rigid ideological positions and political divide in society

would pose hurdle in developing such capacities.

In society, there are certain changes that occur naturally like population growth.

Also, there are planned development changes initiated by the government, and may

be even other agencies. These have to be factored in while creating institutions and

their framework. In addition, there are certain changes made in the state machinery

that are deliberate but adhoc in nature, such as changes in civil service rules,

promotional policies and job responsibilities. These have negative effects on morale,

incentive structures and the overall work ethics, leading to mediocrity and corruption

in the state machinery. Different government ministries/departments initiate plans

initiative in an ad hoc manner alongwith the spillover from the earlier Plans. There

are observed unanticipated changes in society. ‘The failure to take a holistic

perspective results in institutional inadequacies, which get compounded over time’

(ibid : 118-119).

The issue of governance is regarded as context specific to time and the stage of

development in any society. In case of India, it is noted with appreciation that there

is currently adaptation in governance practices. This is seen as reflected in the

changing role and scope of the State, the market and the civil society vis-à-vis each

other. There is acceptance of market liberalism and globalisation. The state is

yielding to the market and the civil society in several areas where it is said to have ‘a

direct but distortionary and inefficient presence’, as in production of goods and

services that are also produced in the private sector. Even in its role as a

‘development catalyst’, the state is considered inferior as ‘perhaps the civil society

presently has better institutional capacity’. On the whole, ‘It means extension of the

market and the civil society domain at the expense of the State in some areas. It

also implies an increase in the area of their respective overlaps’ (ibid:123).

Figure 1 : Changing Face of Governance

ey

Reduction

Source : GOI 20

Stat

02b

Civil Societ

Market

Expansion

Unanticipated Changes Changes in Global Economic and Political Order

Delivery Mechanism

Deliberate but Adhoc Changes in Institutions

Planned/Anticipated Changes

Institutions

Supportive Framework of Rules and Procedures

Figure 2 :Governance – An Alternative Model

Source : GOI 2002b.

Further, the governance issues and strategies identified for the Tenth Plan (chapter

6) include: people’s participation, decentralisation, right to information, civil society

involvement, civil service reforms (rightsizing, transparency, accountability,

professionalism), procedural reforms (single window clearance, investor assistance

cell), judicial reforms (speedy delivery justice), using information technology,

empowerment of the marginalized, etc. These issues largely relate to administrative

reforms (including judicial), and partial political reforms (decentralisation plus

people’s/ civil society participation). But at the core are the reforms in economic

governance in terms of increasing privatisation/disinvestments/ corporatisation,

liberalisation/ deregulation, and social sector reforms (growing entry of private sector

and NGOs) as evident from other sections of the plan document and the actual policy

changes in the recent years.

There is found increasing assistance to the government by the multilateral and

bilateral development agencies to introduce the package of governance reforms

through projects (in different areas of the country), training of personnel from India

and also policy advice.

Further, in the recent years, it is observed that the sphere of market and the NGO

sector have grown ‘ the state contemplates its own shrinkage, or at least

ineffectuality’ (Jayal and Pai 2001:13). It cannot be a coincidence that these two

domains have been identified as critical ingredients in the alternative

conceptualisations of governance in the international development discourse in the

1990s.

Further, in the current era of globalisation, the dominant pattern of development is

that of retreat of the welfare state, and increasing role of the private sector and the

civil society organisations and NGOs. The state is expected to play more the role of

facilitator for the growth and strengthening of the other two major sectors. The

creation of a conducive environment for them is regarded as a vital task of the state.

At the same time, it has to ensure that the basic needs of the poor and marginalised

sections of the society are adequately met. In this, the civil society, mainly NGOs are

to play a vital role. It is stated:

‘The roles of civil society in guarding the poor against the disproportionate burden

placed on them, and the private sector in playing a supportive and

compassionate role in humanising globalisation are essential. Governments

alone cannot monitor everything and deliver all the services. But globalisation

process requires an activist government to protect the vast majority of South

Asians, with the help and active support of the civil society and private sector’

(MHHDC 2002:7).

Jayal has identified the multiple visions of the state contained in the models of

governance that have emerged in the political discourses in India in the 1990s.

These models are : 1. Rolling back the state; 2. Franchising the state; 3. Partnering

the state; 4. Decentralising the state; 5. Challenging the state; and 6. Controlling the

state. Here the first model is clearly mandated by the agenda of economic reform and

globalisation. The second model is reflected in the NGOs seeking to take on the

developmental functions of the state or working as implementer of the state policies

and programmes as a franchisee or public service contractor. The third model is

expressed in the state and community working in partnership (as in JFM) with

differing emphasis on one or the other. The fourth model is manifested in

decentralising the state, for instance, the recent Constitutional amendment made by

the government with regard to the PRIs. The fifth model is reflected in the

contestation of state projects, practices, and discourses contained in the practices of

social movements (NBA for example) advocating a radical participatory democratic

politics. The last model considers the state as the locus of power, and hence the

main goal of its political programme (the lower caste political parties like BSP) is

control of the state (Jayal and Pai eds. 2001:132-34). All these models, except the

last one, seem to be in tune with globalisation which involves weakening of the

centralised state and changing its role in the direction of promoting liberalisation and

privatisation.

The existing system of governance for promoting development in India lack

transparency, public accountability, responsiveness, people’s participation and

effectiveness. The ever increasing scourge of corruption is devouring the whole body

politic. There is an urgent need to transform the system of governance to respond to

the new developmental tasks and challenges associated with globalisation, lest the

system would collapse and lead to further instability and strife all over.

The Indian state has adopted a largely favourable stance towards the process of

globalisation, liberalisation and privatisation. It has also embarked in recent years on

the path of reorienting and restructuring its governance system with the assistance of

several multi-lateral and bilateral agencies. The endeavour covers different aspects

such as political governance, economic governance and civil governance. This is

being attempted at different levels – central level, state level, and local level. But the

nature of pace of governance restructuring/reforms does not seem to be uniform at

all levels, and in all domains in different states. There are numerous problems

encountered from different quarters in effecting the changes. There seem to be vital

points of convergence and divergences at different levels and in different areas.

So, governance reforms are already underway in economic, administrative and also

a bit in political spheres in the country for over a decade. By now the reform package

is well formulated and has a clear direction in terms of promoting private sector/

market-centred development in the country. The reforms are being implemented at

different levels – centre, state and local levels. But the pace of reforms does not

appear to be the same at all levels and in all sectors/departments of the government.

Moreover, there seem to be contrasting experiences in this connection across states

and departments. There could be various reasons for this. The macro process of

globalisation and governance reforms also has differing consequences in the country

for different social classes, castes and communities in economic, political, social and

cultural terms. There are both winners and loosers (and maybe even unaffected

ones?) in the process. There are both opportunities and threats, as commonly

opined. There are certain classes/ castes/ social strata and their spokespersons and

representatives who are fully supportive or partly supportive of the reform package

and there are others who are/maybe fully or partly opposed, and some others may

not be much aware or concerned. Moreover, the very nation-state of India, like many

others, is getting affected by the globalising forces.

5. Issues for Discussion

There have been numerous seminars and conferences to deliberate upon the issues

of governance at the local level. This is also reflected in the publications on the issue.

But no systematic attention seem to have been paid to closely understand and draw

lessons relating to the governance issues at the Central and State levels in India.

There is not much effort made to systematically analyse the agenda of governance

reforms advocated by the multilateral and bilateral development agencies. It is also

essential to understand the agenda of governance reforms in the broader context of

globalisation that has become very important with the SAP in India and process

seems to continue apace in the near future. Moreover, there is found substantial

discussions on the economic aspects of globalisation and governance reforms. But

the deliberation on the social, cultural and political dimensions has not received as

much attention particularly with a focus on India and also in general.

Against this backdrop, the major issues that need critical thinking, analysis and

discussion in this workshop under the broad theme of “Globalisation, Governance

Reforms and Development” would include –

1. ‘Good governance’ paradigm – in the theoretical and philosophical thinking

on governance, particularly in the context of globalisation; and the political

economy of governance reforms especially with a focus on India;

2. The package of governance reforms of major Multi-lateral (viz. the World

Bank/IMF and UNDP) and Bilateral development agencies (particularly

USAID and DFID) - relating to governance model, policy, programmes and

projects with a focus on India (reforms in economic, political and

administrative spheres);

3. Governance reforms introduced in recent years in India at the Central level

and at the State level with a focus on selected states viz., Kerala, Gujarat

and Bihar (high, medium, and low performing states regarding governance

reforms) - (reforms in economic, political and administrative/ including civil

service and ICT spheres) ;

4. Social aspects of globalisation and governance reforms (in economic,

political and administrative spheres) with particular reference to farmers,

labour (especially rural), SC, ST, middle and upper classes in India – their

participation (support/ opposition to reforms), consequences (benefits/ losses,

opportunities/ threats), and their responses to reforms (mobilisation and

movements); - include changes in government policy/ programmes in the

analysis;

5. Cultural aspects of globalisation and governance reforms in India with

reference to the electronic media (particularly TV, information and

communication technologies-ICT/Internet), and print media (especially the

press) – concerning growth of consumerism, commodification, individualism,

and changes in values (like human rights, universal values) in terms of

cultural imperialism, hybridisation, adaptation; - include changes in

government policy/ programmes in the analysis;

6. Political aspects of globalisation and governance reforms in India with a

focus on the participation of/ impact on the nation-state in terms of its

sovereignty, autonomy and approach to policy making in economic, political,

social and cultural spheres, including the implications for the welfare state;

and reform of political institutions (relating to elections and the functioning of

the party system) and problem of political corruption;

7. Appropriate governance framework for promoting development in India in

the era of globalisation with a focus on addressing the social, economic,

cultural and political challenges, etc.

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