Combating Corruption: The Causes and Consequences of Public Service Reform in the Indian States

1. Combating Corruption:The Causes and Consequences of Public Service Reform in the Indian States Jennifer L. Bussell Ph.D., University of California, Berkeley Visiting Fellow, Center for Asian Democracy, University of Louisville

2. Delivering Public Services • Public service provision is a fundamental, but flawed, activity of government. • “Too often services fail poor people…They are often inaccessible or prohibitively expensive. But even when accessible, they are often dysfunctional, extremely low in technical quality, and unresponsive to the needs of diverse clientele” (World Bank, 2004).

3. Reforming Public Services • Significant efforts to increase the quality of public services • Two important trends: • Privatization and public-private partnerships • Increased use of information and communication technologies (computers, Internet, mobile phones) • Goals: • Improve accuracy, speed, and cost of services • Limit bureaucrat-citizen interaction - Reduce corruption, especially “speed money”

4. A Global One-Stop Services Model • Singapore • eCitizen Centre • Germany • Buergerbuero (Citizen’s Bureau) • Finland • Citizen Services ‘One Stop Shop’ • Brazil • City and state centers, e.g. SAC Salvador • South Africa • Multipurpose Community Centres • India • State initiatives and Common Service Centres

5. Two Important Questions • Why do (or don’t) governments reform public services? • Do public service reforms improve citizen services?

6. The Indian Puzzle • Standalone, one-stop citizen service centers • Computerized • Frequent private sector participation • Fundamental government services • E.g. driving licenses, birth certificates, land titles, welfare benefits, tax payments • Considerable variation across Indian states

7. State-level Variation • Timing of Policy Adoption • Sixteen states implemented during 1999-2006 • Quantity of Services • From 2 to more than 40 services • Type of Services • Socio-economic groups targeted - business licenses vs. welfare benefits • Potential for corrupt rents - electricity bills vs. land records • Degree of Automation • Front-end computerization vs. full automation

8. A Corruption-Based Approach • Indian citizens frequently pay bribes for service delivery • $5 billion in bribes for services per year (TI 2005) • $22 million by below poverty line households (TI 2007) • Early evidence that eServices can reduce corruption (IIMA, 2007) • Clear potential benefit for the average citizen • Secondary benefit to ruling politicians

9. Bribes and Politics in India • Bureaucratic discretion enables bribes for service delivery • Politicians use “transfer authority” over bureaucrats to access bribes (Wade, 1985; de Zwart, 1996). • Politicians use rents to fund future election campaigns (Ibid.; Sarin, 1999) • Extent of corruption affects the opportunity costs of implementing technology policies

10. Constraints of the Party System • Single-party government Chief Ministers can claim credit for reforms • Party members have limited power to resist • Coalition government partners may resist reforms • Threats to rents imply threats to stability of the ruling coalition • Greater constraints on reform in coalition states

11. Predictions • Reform will require expected net benefits to ruling politicians and the power to act • Higher corruption states and states led by coalition governments should implement policies later and in a less robust manner than less corrupt and single-party led states.

12. Testing the Argument • Controlled comparison of states • Theory development - fieldwork in 7 states • Andhra Pradesh, Gujarat, Karnataka, Kerala, Madhya Pradesh, Rajasthan, Tamil Nadu • “Out of Sample” testing on 10 additional states • Chhattisgarh, Delhi, Haryana, Himachal Pradesh, Maharashtra, Orissa, Punjab, Uttarakhand, Uttar Pradesh, West Bengal • Interviews with government, NGOs, academics, and private sector • Analysis of data from 20 states overall • Bihar, Goa, Jharkhand • Wide range of policy characteristics

13. Policy Timing Technology-Enabled Service Centers in India Cumulative State Policy Adoption

14. An Event History Model of Policy Timing

15. Quantity of Services

16. Corruption and Quantity of Services • Entries are unstandardized regression coefficients with t-ratios in parentheses. *p < .05 **p <.01

17. The Consequences of Reform:Does it have any effects? • Nemmadi initiative in Karnataka • 800 privately-run centers • Associated computerization of government offices • Phased implementation • Allows real-time comparison of traditional and reformed offices • Stated goal: • “Provide transparent, speedy, and efficient services to rural citizens” (Government of Karnataka, 2006)

18. Evaluating Reforms • Citizen survey • 20 taluks, 1000 respondents, 3 types of centers • Field experiment • 18 taluks, 27 subjects, 3 types of services, computerized centers • First comprehensive and independent evaluation • Major goals: • Unbundle the effects of computerization and privatization on service quality • Maximize validity of causal inference while maintaining external validity

19. Service Characteristics

20. Speed Money and Middlemen *All Yes/No questions are scored 0-1, with Yes=1

21. Recommendations • Consider the institutional incentives underlying the established model • Top politicians and street level officers • Design policies to establish strong, if narrow, initial model • Growing citizen demand affects electoral benefits • Depend on design of policy, not partners, for success • Evidence of corruption even in private centers

22. Conclusions • Corruption has clear implications for policy design and implementation • The benefits of computerization require further attention • Implications for other countries • Cross-national findings • The cases of Brazil and South Africa

23. Thank You!