Role of Public Administration Under Liberalisation, Privatisation And Globalisation (LPG)

Since the 1980s a number of countries, have been influenced by the concept of liberalisation, privatisation and globalisation. Under the forces of globalization-liberalization recent decades have seen a shift towards reduced role for the state and government in all countries.

Key Terms:

Globalisation:

Globalisation means progressive integration of Economies throughout the world and treating the whole world as one global market by removing the restrictions on foreign trade.

The process of globalisation not only includes opening up of world trade, development of advanced means of communication, internationalisation of financial markets and services, growing importance of multinational corporations, population movements and, more generally, increased mobility of persons, goods, capital data and ideas, but also of infectious diseases and environmental problems like pollution.

Liberalisation:

A process of freeing the economy, from various Governmental regulations such as industrial licensing, controls on pricing and distribution of products and services, imports and exports and foreign exchange regulations; control of capital issues by companies; credit controls, restriction on investment, etc., so that the development and operation of the economy is increasingly guided by freely operating market forces. Thus liberalisation is essentially a process of withdrawal of all direct controls on the economy.

Thus the private sector is permitted to function freely in respect of investment, production and products.

Privatisation:

It means transfer, from the public to the private sector, of ownership or control over assets or activities. Privatisation fosters efficiency, encourages investment – and thus new growth and employment – and frees public resources for development of infrastructure and social programmes.

In India, 1990s have witnessed a fundamental shift in the orientation and style of functioning of administration.  Liberalization has over taken state regulation and control.  The emphasis has shifted from regulation to deregulation and from state control to privatization.  The licensing foreign currency, foreign capital investment, technical collaboration, imports and exports regulations have been either abolished altogether or reduced considerably.  The role of public sector has been deemphasized and the government is no longer prepared to bear burden of the loss-making public sector undertakings and as a policy, decided to close down or sell out such units.  Thus, the socialist model has been replaced by the free market economy model and the change is taking place at an unprecedented speed.

Ø  One form of LPG has entrusted the management of public sector enterprises partially or fully to private companies.

Ø  Another form of LPG is disinvestment in public sector enterprises, which is followed in India.

As a result of this the public sector enterprises find themselves in a competitive and challenging environment. However, the role of public administration under LPG continues to be quite significant.

It requires dismantling of a regime of regulations, controls, restrictions, licences, secrecy and delay. The bureaucracy has to play an investor friendly, responsive, transparent, open and competitive role. So, this requires necessary administrative reform, which should aim at elimination of redundant practices, procedures, administrative laws and corruption. Thus, the policy of LPG affects the role, values and skills of public bureaucracy. It also decreases the scope of the functions of the state, resulting in minimum of state interference in the lives of the individuals. The state is called upon to oversee the operational side of the enterprises. This gives the state a new role as regulator.

Today, the role of public administration is towards more of governance, then of direct involvement. The public administration has to play enabling, collaborative, cooperative, partnership and regulatory roles.

• Coming to the core areas such as defence, atomic energy, law and order, foreign policy it has a direct role to play.
• In certain other areas such as telecommunications, airlines, insurance, etc., it has to compete with the private sector, for which there should be regulatory commissions to provide for equal level playing fields for both the sectors.
• There are other areas which it can have partnership with the citizens for efficient delivery of services, for example, maintenance of schools, hospitals, irrigation water and civic amenities. An example we can give is the ‘Bhagidari Scheme’ adopted by the Delhi Government.
• In certain areas like electricity, water and transport it can have partnership with the private sector. A number of states have partnership with the private sector in providing these services. Other such areas are protection of forests, empowerment of women, micro credit, health schemes, and awareness programmes, it can have partnership with the Non- Governmental (NGO) and Voluntary Organisations.

Effects of LPG on Public Administration:

• Element of Competition:

·         Bureaucratic model- rule bound, conservative, slow, unresponsive, inefficient, ineffective and high cost- Challenged.

·         Reforms in terms of NPM, E- governance, etc.

·         Process of LPG proved useful.

·         Liberalization encourages competition among the players by ending monopoly of Government owned companies. \

• Modernization and Technological Preparedness:

·         Free flow of technology and management techniques led to modernization and increased use o technology in Pub. Administration.

• Attitudinal changes:

·         Principle of effectiveness added to traditional principles of Pub administration- efficiency and economy..

·         Competition allowed consumers to make choice..

·         Attitudinal change- pub administration became people oriented- improved quality service- attractive products.\

• Increasing importance of specialists:

·         In policy making to achieve efficiency and effectiveness.

·         Bureaucracy became result oriented due to competition with private players.   

• Decentralization:

·         Privatisation and deregulation shift responsibility for functions from the public to private sector and is another type of Decentralisation

• Professional Competence:

·         Reorientation of attitude- new work ethics-acceptance of NPM,

·         Introduction of private management principles in Public Administration,

·         Entry of MNC’s

·         Free play of labour and manpower