Privatisation and governance

Governance is the art of satisfying the needs of the people and serving their interests. Political parties contest elections with a promise that people would be provided jobs, quality food, shelter, security and a quality environment to live a better life.

Unfortunately, after winning the elections, they work on other agendas and shed off their responsibilities systematically. They promote privatisation, propagate the State has nothing to do with business, creating jobs and providing services like education, health, etc. They say private sector should be entrusted with business, job creation and provision of services.

The ruling elite and their facilitators have implemented this agenda in a careful way. They adopted a two-pronged strategy. For the services sector, they deteriorated the quality of services, which compelled people to look towards the private sector. They privatised services or promoted the role of the private sector, which were guaranteed in the Constitution of Pakistan as fundamental rights of the people.

For example, Article 37-B of the Constitution of Pakistan says, “State shall be responsible for eradicating illiteracy and provision of free and compulsory education up to secondary level, within minimum possible time”. Article 25-A (Right to Education) of the Constitution states, “The State shall provide free and compulsory education to all children of age of five to sixteen years in such manner as may be determined by law”.

Unfortunately, it is not happening, rather public sector is shedding off its responsibility steadily by privatising education. Private education institutes are flourishing due to the privatisation-friendly policies and actions.

According to the Pakistan Education Statistics Report, 44 percent of children (22.70 million) are enrolled in private institutions. It is astonishing to note 38 percent of private institutions accommodate 44 percent of children. It shows common citizens trust the private sector more than the public sector.

It is a blatant violation of the Constitution of Pakistan, as the State had committed to providing education to all its citizens. Regrettably, the ruling elite and the State do not consider it a violation. It played havoc with the education in Pakistan. It resulted in low human capital and low literacy rate. It is a pity to note Pakistan has a literacy rate of 62.3 percent. It is essential to mention here the literacy rate also includes the people, who can read and write their names. It means 86 million are completely uneducated and cannot read or write their names. Out of 86.3 million, 52.7 million fall in the category below age of 35. Moreover, 22.8 million children are out of the education system, and millions attend madrassas without formal education or skills.

The story of the health sector is not much different from that of education. The private sector is booming and the government health services are in decline. It has been estimated about 70 percent of citizens access the private sector. The major factor of higher percentage is the quality of health. It was calculated 59.7 percent of expenditures are being made through private sector and 88.6 percent are out-of-pocket expenditures on the people.

The State of Pakistan is now on a mission to privatise its national productive assets. The proponents have problems with the State business, not with the ruling elite’s business. They are completely silent on the business of ruling elite, who run the government and the State. However, the real problem for Pakistan is the business of powerful people, not the SOEs. The ruling elite tweaks, rather abuses system in their favour to extract maximum benefits. Their business and wealth are growing exceptionally. They do not have any solution for SOEs, except to sell them out.

The deep dive into the facts and data reveals they do not privatise businesses and services for the love of country or the people. They believe privatisation helps them achieve dual objectives: they get rid of potential competitors for their business; they can dictate their terms. Second, they oblige their cronies and get illegal benefits.

Besides, an analysis of SOEs indicates actual problems are political interference and bad governance. Political interference leads to bad management and governance.

The successive governments of political parties abused the SOEs for their political objectives. They stuffed SOEs with their workers and violated the merit. They appointed their cronies to top management seats, and never tried to run the SOEs as business entities.

All these factors contributed to deterioration of SOEs. They are on the verge of collapse. That’s what they wanted. Instead of fixing SOEs, they are planning to sell them out.

It is not a good option. The selling of SOEs will introduce five problems. First, the State will lose productive non-tax revenue sources. It will impact its ability to invest in public goods and services like parks, entertainment facilities, education and health. The proponents of this option ignore the fact no government or State can depend only on tax revenue. It makes the State weak and individual business groups start to dictate it.

Second, privatisation will promote the notion of survival of the fittest, as those who can afford expensive services or goods will survive. Like in the case of education, quality education is so expensive it is out of reach of common citizens. The same is true for the health sector.

Third, to meet its expenses, the government will have to increase taxes or tax rates. Who will pay for these taxes; business community, industrialists, real estate, stock exchange, landlords or the common people? The answer is the common people. The ruling elite -business community, industrialists, real estate, stock exchange, landlords, establishments and bureaucracy - will tweak the system so that they will not have to pay taxes.

The statement of the IMF chief can be quoted to qualify the assumption. It will give birth to a new wave of inflation, which will be beyond the capacity of common citizens. The State will not be able to control or manage it, because it has already sold the productive assets.

Fourth, the government will not be able to provide relief or subsidies to the marginalised sections of society. In the long term, the State will fail to meet its national security commitments due to shortage of resources. Fifth, it will create disturbance among the citizens, which can lead to undesired consequences.

The analysis of history tells us when it becomes impossible for the common people to bear any shock, an undesired situation arises. The State would not be in a position to calm down people, as it had already declared it was not responsible for services management or governance.

In conclusion, we can say privatisation is an open declaration by the State that it cannot satisfy people’s needs and serve their interests.

The State cannot create jobs, secure food or provide security. If this is the case, people may ask if their interests are not served what is the justification of the government.

If you cannot protect our interests, then why do we pay for your luxurious life in the name of people’s interest? The State should rethink its privatisation policy, or prepare itself to face the consequences.