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Anjula Gurtoo · Colin Williams Editors

Perspectives on
Public Service
Developing Country Perspectives on Public
Service Delivery

Anjula Gurtoo • Colin Williams

Developing Country Perspectives on Public

Service Delivery

Anjula Gurtoo Colin Williams
Department of Management Studies Management School
Indian Institute of Science University of Sheffield
Bangalore, Karnataka, India Sheffield, UK

ISBN 978-81-322-2159-3 ISBN 978-81-322-2160-9 (eBook)

DOI 10.1007/978-81-322-2160-9

Library of Congress Control Number: 2015940407

Springer New Delhi Heidelberg New York Dordrecht London

© Springer India 2015
This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of
the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation,
broadcasting, reproduction on microfilms or in any other physical way, and transmission or information
storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology
now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication
does not imply, even in the absence of a specific statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information in this book
are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the
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Printed on acid-free paper

Springer (India) Pvt. Ltd. is part of Springer Science+Business Media (www.springer.com)


This book is an attempt to better understand government service delivery in a devel-

oping country context. In this volume, public services refer to services where some
type of government delivery of an activity is perceived to be necessary, desirable
and inevitable. Although such services might in theory be feasibly delivered by
either the market or even the community (such as by voluntary action), there is often
a widespread belief that it is necessary and desirable for such services to be deliv-
ered by the public sector. For example, the delivery of police services to maintain
law and order is a service that few believe should be delivered in any sphere other
than the public sector. Similarly, social housing and primary education are also
widely delivered as public services. Taxes are the price for services provided by the
government. Whether one is considering the police, education or health care, all are
funded primarily through taxes, and these services are essential for the smooth func-
tioning of a society. The main rationale for government involvement in these ser-
vices which, in principle, could be provided by the private sector is that the
government will not withdraw or escape responsibility in cases where a profit is not
These services often require decisions by the providers that are inherently imper-
fectly organized, or incomplete, or unevenly distributed, thus rendering them more
suitable for public delivery. Some of the elements of such service delivery that thus
need to be managed effectively include the following:
1. Use of resources: Resources here refer to the material, staff, funds and other
assets which are utilized to provide these public services. The effective use of
these resources could be pursued either to directly deliver services, to issue and
monitor contracts for other providers or to enter into partnerships with private or
voluntary sector providers to deliver the service. These resources also need to be
effectively used to maintain an enabling financial and secure environment and
provide a guarantee for proper judicial procedures under the rule of law.
2. Information and awareness: Asymmetry of information leads to a disconnection
in the effective utilization of any public service. Public education through proac-
tive engagement with key audiences; public relations through stakeholder

vi Preface

support to adapt, learn and understand the services; and other outreach efforts
are required to ensure the smooth and effective flow of services to the target
3. Efficiency of delivery mechanisms: Integration mechanisms, such as technology,
process innovations and human integration, impact on system performance. Indi-
cators of efficiency in public service delivery mechanisms include departmental
consistency in programme definition; fixing tangible measureable outputs across
the process; support for informed decision-making through timely data analysis,
especially of outcomes; and selecting the right mechanisms from various func-
tions across the departments.
4. Accountability and responsibility: Accountability measures typically focus on
how well policies, plans, programmes and people are performing. Policy plan-
ning, strategic planning, and operational planning and budgeting processes all
incorporate accountability and responsibility. Accountability and responsibility
are seen as basic drivers for the success of public service delivery.
Throughout the developing world, the oft-told story is one of the failures of pub-
lic services to deliver the services people need and want. The problem is often of
these service delivery efforts being ad hoc, small scale and often fragmented. For
example, the widespread failure to deliver social protection for citizens in the form
of social insurance schemes has often resulted in governments deciding to turn a
blind eye to the informal economy as an alternative social protection mechanism
that can act as a substitute for the failures of public service delivery. The resultant
vicious cycle is that fewer taxes are collected, meaning that public welfare services
cannot be delivered, resulting in yet further reliance on the informal economy as a
survival practice for populations marginalized from the formal sector and formal
welfare services. How to break such vicious cycles is an ongoing issue in many
developing economies. Indeed, it is not just social protection that is partial and ad
hoc in the developing world. Few developing countries have anything like a com-
prehensive level of provision of public services in many other realms, including the
provision of health and education, and there is little investment in workplace well-
being, such as health and safety provision or training and skills development.
Indeed, there is widespread recognition of these circumstances by national and
international bodies who sometimes advocate that private firms and the non-profit
sector should be able to compete with the government for the provision of such
public services. The common argument is that this will decrease the unit costs for
producing goods and services and therefore improve efficiency. Community partici-
pation approaches or decentralization, therefore, is increasingly becoming part of
the public service management and delivery, as direct service delivery by the public
sector is replaced with private and third sector provision. Two debates dominate this
discourse about the roles of local organizations in public service delivery. The first
issue concerns how to make local organizations perform effectively, and the second
concerns the relative functions and balance of government organizations, NGOs,
community groups and private organizations in service delivery.

Preface vii

This book seeks to provide case studies of a heterogeneous array of efforts in

urban and rural areas to deliver public services which may have some promise of
wider applicability and transferability. The outcome will be to propose an analytical
framework in the form of a typology and categories of administrative need (collabo-
ration, accountability, etc.) in the concluding chapter. The assumption throughout is
that the role of the government in developing countries must be modified to accom-
modate new actors, including non-profit, non-governmental organizations and other
forms of voluntary activity, as important development catalysts if encouraged.
Analytically, their service delivery roles can be separated from advocacy and devel-
opmental roles without distorting their overall contribution. During the past decade,
participatory approaches under the auspices of private and community partnership
structures have emerged in several spheres of service delivery, such as resource
management, local infrastructure development and resource distribution.
Governments are also developing strategies for economic growth by making local
organizations the central actors. The three main pillars of public delivery evaluation,
namely efficiency, flexibility and reach, are being strategized for maximum effec-
tiveness. These changes in service delivery include different ways to make savings
in public expenditure, improve quality by including civil society groups, make the
operations more transparent with the hope to increase the chances of policy effec-
tiveness and make use of diverse processes including privatization and externaliza-
tion. A review of the history of public service delivery highlights three clear time
periods. The initial “Weberian” approach towards the problem of inadequate ser-
vices in infrastructure, education, health, enforcement and regulations was based on
developing a centralized bureaucracy to supply a top-down and uniform public ser-
vice. This was not successful. In this approach, the social and political processes
which necessitate interactions between citizens and the state were overlooked. The
second time period, in the not-so-recent past, sought solutions in technology and
technological systems for a coherent approach to service delivery, implemented by
an impersonal, rules-driven provider. We do see some clear successes, but the fail-
ures caused most practitioners to doubt its universal applicability. Consequently, the
concepts of public participation, accountability, transparency and good governance
have emerged in more recent times. In the current scenario, technology, state, citi-
zens and social systems interact simultaneously through formal organizational
structures. While this does create institutional heterogeneity, the consequent emer-
gence of solutions is practical, applicable and acceptable to the citizens.
As the role of the state gets redefined in developing countries, the corresponding
increase in the role of the market and non-profit sectors emerges as a viable new
alternative for service delivery. Focusing primarily on collective action solutions
rather than the private sector, this book will also attempt a way of classifying the
myriad forms of service delivery and the factors required for success. Political,
sociological, economic, managerial and other perspectives are investigated for the
classification of good practice. The models reviewed will discuss public service
provision in the past using service performance and accountability through
top-down hierarchical control bureaucracy as well as the new public management
model which is more inclusive, local and influenced by the specific needs of the
target population.

viii Preface

To investigate these issues, this volume is divided into four parts. The first part
discusses issues of assessment and monitoring of performance in public health, tak-
ing case studies from countries as diverse as Columbia, India and the Philippines.
The first chapter analyses the 2011 health reforms in Columbia. The first reforms in
the health system took place in the early 1990s which included the creation of insur-
ance companies to support the poor and creation of affordable benefit packages for
the same. Authors Oscar Bernal and Juan Camilo Forero look at the second phase of
reforms in 2011 by analysing the satisfaction and trust levels of the main stakehold-
ers. The second chapter, by Rajib Dasgupta and others, characterizes the variables
that impact health systems, determines the influence of governance environments
on access and client behaviour, and identifies potential modifiable factors of gover-
nance. The third chapter looks at access to medicine in public hospitals. The authors
Santarupa Bandhyopadhyay, Arijita Dutta and Arpita Ghose analyse accessibility in
government-run hospitals in the Indian state of West Bengal. They look at two
issues, namely status of access and the barriers to access. The final chapter in this
part explores the policy agenda on hospital regulatory procedures and systems of
licensing in the Philippines. The authors Oscar P. Ferrer and Maria Clarisa R. Sia
evaluate the processes and practices adopted to attain social development.
The second part investigates infrastructure development and delivery. The chap-
ter by Ajit Kumar Vasudevan, Anand Kumar and R. K. Mittal derives a model for
cloud computing and examines the impact of the proposed model on Indian envi-
ronment, especially government policy and infrastructure. It also proposes a model
leveraging the existing infrastructure. The second chapter reviews the existing leg-
islative systems for small- and medium-scale industries in Fiji. The author Salvin
S. Nand highlights regulatory compliance difficulties from the public service deliv-
ery lens, using both qualitative and quantitative data. The next chapter by Ashish
Verma, S. Velmuguran and co-authors evaluates the current state of mobility in five
representative Indian cities and discusses the implications of the observed patterns.
The final chapter in this part discusses the vital issue of water security, where the
authors Subodh Wagle, Sachin Warghade and co-authors present findings of the
analysis of Water Regulatory Agencies and related reforms in India and highlight
the scenarios of aggravated threats to water security and sustainability.
The third part within this book investigates administrative capacity and perfor-
mance in the countries of the Russian Federation, the Philippines, Macedonia and
India. The author of the first chapter, Daria Prisyazhnyuk, looks at the professional-
ization of the Russian medical professionals. The chapter analyses the process and
develops a model for professionalization of the medical services. In the next chapter
on administrative capacity and performance, authors Joseph Capuno and Maria
Melody S. Garcia investigate 12 cities and municipalities in the Philippines where
fiscal decentralization has been introduced since 1991. They rate the performance
on different aspects and discuss the overall performance of the local government.
The chapter on Macedonia by Jadranka Denkova discusses the need for control
mechanisms and penalty provisions for responsible working of the administration.
The last chapter under this part analyses the accountability of the Karnataka state
police in India. The authors Meena Nair, Kollapudi Prabhakar and Prarthana Rao

Preface ix

study police stations and police personnel on their handling of complaints and sug-
gest an agenda for reforms through these learnings.
The fourth part evaluates reach and execution for rural and marginalized popula-
tions. Discussing housing for orphans, Sergey Vinkov, in the first chapter, reviews
the policy guidelines and practices regarding orphan care, with a focus on their
housing needs. The outcome is discussed in the light of the social adjustment skills
and the mobility of orphans. The second chapter by authors Linda M. Penalba and
Merlyne M. Paunlagui presents the role of informal credit providers to enable small
corn farmers to use corn varieties and discusses the effectiveness of the credit policy
reforms in the Philippines for improving corn farmers’ access to credit. The third
chapter discusses the cash grant scheme for the homeless in the Philippines. The
authors Ada Colico-Aquino and Jungbu Kim investigate the policy process of the
programme with particular emphasis on programme design, key actors, resources
and their interactions. The last chapter in this part looks at the role of the Philippines
government in private-led agriculture technology innovation. The authors R. D.
T. Baconguis, Linda Penalba, D. Elazegui and E. Dumayas present how the infor-
mal credit providers enable the small corn farmers to use genetically modified (GM)
corn varieties and how effective are the credit policy reforms in improving corn
farmers’ access to credit.
We invite you to review these case studies of public service delivery in develop-
ing countries. As an under-researched topic, there is a good deal of not only good
practice that is transferable across the developing world but also many lessons to be
learned so that the mistakes made in one nation are not repeated in others. If this
book speeds up the development of effective public service delivery across the
developing world, then it will have achieved its major objective. If it helps further
meet the needs of the citizens in the developing world that are provided through
public service delivery mechanisms, then it will have achieved its intention.

Bangalore, India Anjula Gurtoo

Sheffield, United Kingdom Colin Williams


This book is the realization of, on one hand, the diligent effort of the authors who
have patiently supported us throughout the making of the book and, on the other
hand, the successful completion of the International Conference of Public Policy
and Governance (PPG 2012), organized by the Department of Management Studies,
Indian Institute of Science, Bangalore, and the Public Affairs Centre, Bangalore.
First and foremost thanks are due to Dr. Suresh, Director, Public Affairs Centre,
and Dr. Kala Sridhar, co-chair of PPG 2012 and Professor, Institute of Social and
Economic Change, Bangalore (earlier with the Public Affairs Centre), for being
very supportive partners of PPG 2012 and for their encouragement towards this
We will also like to thank Prof. M. H. Balasubramanya, Chairperson, Department
of Management Studies, Indian Institute of Science, and Dr. P. Balachandra,
Department of Management Studies, Indian Institute of Science, for providing a
supportive environment, encouragement and active discussions to make the confer-
ence, and pursuit of this book, a success.
Without the patience and assistance of Sagarika Ghosh and Nupoor Singh of
Springer Publications, this book would not have been published. We are very thank-
ful to them. Finally, this acknowledgement will be incomplete without thanking
Ms. Kalaivani Pillai, who has supported us in several stages of this book, including
compilation, organization and formatting.
Any errors that remain are ours.

Anjula Gurtoo
Colin Williams



Part I Public Health: Assessing and Monitoring Performance

1 Access to Medicine in Public Hospitals
and Some Crucial Management Issues ................................................. 3
Satarupa Bandyopadhyay, Arijita Dutta, and Arpita Ghose
2 Reproductive Health Services in Ethiopia ............................................ 17
Rajib Dasgupta, Narendra Kumar Arora, Damen Haile Mariam,
Solomon Kumbi Hawas, Sanjay Chaturvedi, Ashok Patwari,
and Kalyan K. Ganguly
3 Analyzing the 2011 Colombian Health Reforms .................................. 31
Oscar Bernal and Juan Camilo Forero
4 Policy Reform and Governance in Philippine
Health Regulatory System...................................................................... 41
Maria Clarisa R. Sia and Oscar P. Ferrer

Part II Infrastructure: Development and Delivery

5 Technology Diffusion: The Case of Cloud Computing in India .......... 57
Ajith Kumar Vasudevan, Anand Kumar, and R.K. Mittal
6 Unlocking Public Service Delivery Impediments
for SMES: The Case of Fiji .................................................................... 79
Salvin Saneel Nand
7 Urban Mobility Trends in Indian Cities and Its Implications ............ 95
Ashish Verma, S. Velmurugan, Sanjay Singh, Anjula Gurtoo,
T.V. Ramanayya, and Malvika Dixit
8 Water Security: Assessing the Role of Reforms
Related to Independent Regulatory Authorities in India .................... 117
Subodh Wagle, Sachin Warghade, Tejas Pol, and Mandar Sathe


xiv Contents

Part III Administrative Capacity and Performance

9 Professional Status of Physicians in the Russian Federation .............. 137
Daria Prisyazhnyuk
10 Perceived Quality of Public Administration and Trust in Local
Government Officials in the Philippines ............................................... 153
Joseph J. Capuno and Maria Melody S. Garcia
11 Legal Basis for Responsible Working of the Administration
in the Republic of Macedonia: An Assessment ..................................... 167
Jadranka Denkova
12 Accountability in the Karnataka State Police in India ........................ 179
Meena Nair, Prabhakar Kollapudi, and Prarthana Rao

Part IV Rural and Marginalized Populations: Reach and Execution

13 Housing for Orphans Against the Backdrop
of Social Disparity in Russia .................................................................. 199
Sergey Vinkov
14 The Role of Agricultural Public Extension
in a Private-Led Technological Innovation ........................................... 217
Rowena dela Torre Baconguis, Linda M. Peñalba,
Dulce D. Elazegui, and Elvira E. Dumayas
15 Implementing a Cash Grant Program
for the Homeless in Metro Manila, The Philippines ............................ 235
Ada Colico-Aquino and Jungbu Kim
16 Enhancing Credit Delivery Facilities
to Support Farmer’s Use of Technology................................................ 257
Linda M. Peñalba and Merlyne M. Paunlagui
17 Public Service Delivery – An Integrative Framework ......................... 271
Anjula Gurtoo and Colin Williams

Index ................................................................................................................. 289


Narendra Kumar Arora INCLEN Trust International, New Delhi, India

Satarupa Bandyopadhyay Department of Economics, Bethune College, Calcutta,
Oscar Bernal School of Government, University of Andes, Bogota, Columbia
Joseph J. Capuno School of Economics, University of the Philippines, Baguio,
Sanjay Chaturvedi Community Medicine, University College of Medical
Sciences, New Delhi, India
Ada Colico-Aquino Department of Social Welfare and Development – National
Capital Region, Manila, The Republic of the Philippines
Rajib Dasgupta Centre of Social Medicine and Community Health, School of
Social Sciences, Jawaharlal Nehru University, New Delhi, India
Rowena dela Torre Baconguis Institute for Governance and Rural Development,
College of Public Affairs and Development, University of the Philippines Los
Baños, Los Baños, Laguna, Philippines
Jadranka Denkova Faculty of Law, University “Goce Delcev”, Shtip, Republic of
Malvika Dixit Department of Civil Engineering, Indian Institute of Science,
Bangalore, India
Elvira E. Dumayas Center for Strategic Planning and Policy Studies, College of
Public Affairs and Development, University of the Philippines Los Baños, Los
Baños, Laguna, Philippines
Arijita Dutta Department of Economics, University of Calcutta, Calcutta, India


xvi Contributors

Dulce D. Elazegui Center for Strategic Planning and Policy Studies, College of
Public Affairs and Development, University of the Philippines Los Baños,
Los Baños, Laguna, Philippines
Oscar P. Ferrer College of Social Work and Community Development, University
of the Philippines, Baguio, The Philippines
Juan Camilo Forero School of Medicine, University of Andes, Bogotá, Colombia
Kalyan K. Ganguly Indian Council of Medical Research, New Delhi, India
Maria Melody S. Garcia German Institute for Development Evaluation, Bonn,
Arpita Ghose Department of Economics, Jadavpur University, Calcutta, India
Anjula Gurtoo Department of Management Studies, Indian Institute of Science,
Bangalore, Karnataka, India
Solomon Kumbi Hawas Addis Ababa University, Addis Ababa, Ethiopia
Jungbu Kim Department of Public Administration , KyungHee University, Seoul,
The Republic of Korea
Prabhakar Kollapudi Participatory Governance Research Group, Public Affairs
Centre, Bangalore, India
Anand Kumar Electrical and Electronics Engineering, BITS- Pilani, Dubai,
United Arab Emirates
Damen Haile Mariam Public Health and Health Economics, Addis Ababa
University, Addis Ababa, Ethiopia
R.K. Mittal Director, BITS-Pilani, Dubai, United Arab Emirates
Meera Nair Participatory Governance Research Group, Public Affairs Centre,
Bangalore, India
Salvin Saneel Nand School of Law, The University of Fiji, Lautoka, Republic of
Ashok Patwari International Health, Boston University School of Public Health,
Boston, MA, USA
Merlyne M. Paunlagui Institute for Governance and Rural Development,
University of the Philippines Los Baños, Los Baños, Philippines
Linda M. Peñalba Institute for Governance and Rural Development, College of
Public Affairs and Development, University of the Philippines Los Baños, Los
Baños, Laguna, Philippines
Tejas Pol Resources and Livelihoods Group, PRAYAS, Pune, India

Contributors xvii

Daria Prisyazhnyuk Department of Sociology, National Research University –

Higher School of Economics, Moscow, Russian Federation
T.V. Ramanayya Indian Institute of Management, Bangalore, India
Prarthana Rao Participatory Governance Research Group, Public Affairs Centre,
Bangalore, India
Mandar Sathe Resources and Livelihoods Group, PRAYAS, Pune, India
Maria Clarisa R. Sia Centre for Policy and Executive Development, University of
the Philippines, Baguio, The Philippines
Sanjay Singh Indian Institute of Management, Lucknow, India
Ajith Kumar Vasudevan Process Development, Etisalat, Abu Dhabi, United Arab
S. Velmurugan Traffic Engineering and Safety Division, Central Road Research
Institute, New Delhi, India
Ashish Verma Department of Civil Engineering and Centre for Infrastructure
Sustainable Transportation and Urban Planning, Indian Institute of Science,
Bangalore, India
Sergey Vinkov Higher School of Economics, National Research University,
Moscow, Russia
Subodh Wagle Tata Institute of Social Sciences, Mumbai, India
Sachin Warghade Tata Institute of Social Sciences, Mumbai, India
Colin Williams Management School, University of Sheffield, Sheffield, UK

About the Editors

Anjula Gurtoo is an Associate Professor at the Indian Institute of Science,

Bangalore, India. Her research interest is in the area of public policy, and she has
published in the area of institutional reforms and decentralization, urban infrastruc-
ture, informal entrepreneurship, rural economy, and energy and environment. She
has been a fellow of the Social Science Research Council, New York, and of the
University of Leeds, UK. She has been awarded the Pt. Jawaharlal Nehru National
Award (2010–2012) for outstanding contribution in the field of Public Policy and
Social Science, by the Department of Science and Technology, Government of
Madhya Pradesh, India, and Social Science Research Award (2009) by the
International Development Research Centre, Canada – special mention for overall
contribution to research and also for best paper in the category ‘rural innovation
Colin Williams is a Professor of Public Policy at the Management School,
University of Sheffield, UK. Colin’s broad research interests are in re-theorizing the
nature of economic development and investigating the implications for public policy.
Spatially, his interests range across the full spectrum from local and regional
economic development in the UK through to the restructuring of Western economies,
post-socialist societies and the third (majority) world. Much of his work focuses
upon rethinking the meanings of ‘economic’ and ‘development’, which directly
feeds into the work of the Centre for Regional Economic and Enterprise Development
(CREED), University of Sheffield, UK. Colin currently serves as editor of two
journals – the International Journal of Sociology and Social Policy and the
International Journal of Community Currency Research. Some books authored by
him are Rethinking the Future of Work: Directions and Visions (Palgrave Macmillan,
2007), The Hidden Enterprise Culture: Entrepreneurship in the Underground
Economy (Edward Elgar Pub, 2006), A Commodified World? Mapping the Limits of
Capitalism (Zed Books, 2005), and Cash-in-Hand Work: The Underground Sector
and the Hidden Economy of Favours (Palgrave Macmillan, 2004).


Part I
Public Health: Assessing and
Monitoring Performance

Chapter 1
Access to Medicine in Public Hospitals
and Some Crucial Management Issues

Satarupa Bandyopadhyay, Arijita Dutta, and Arpita Ghose

1.1 Introduction

There has been a long debate on the role played by the government-run health
facilities in terms of both equity and efficiency. Originally it was thought that health
care being a public good, should be provided by the government for the people and
this way should correct the market failure in the health care provisioning. Truly,
health as a service, for its very nature, cannot be treated as a purely marketable com-
modity. Being rather a merit good, equal access to health care by all is essential to
reduce the inequality in population health. If left to market, its access is restricted
by the ability of an individual to pay. Hence, the role of public sector is essential in
case of health care service. In developing countries, where a considerable percent-
age of the population still lives below the poverty line and seeks treatment in gov-
ernment hospitals and health centres, the importance of the public health system
needs no mentioning. Hence, it also explains the magnitude of the impact a poor
functioning of public health sector can have on such society, as the access can be
denied due to supply side constraints and/or lack of quality. Public health system
provides health care service (both preventive and precautionary) at free or nominal
cost through public hospitals, hence, ensures free access to all the health care
services. This chapter focuses on access to free medicines. Despite the fact that the
health status of a nation is determined by many factors like access to improved

S. Bandyopadhyay
Department of Economics, Bethune College, Calcutta, India
A. Dutta (*)
Department of Economics, University of Calcutta, Calcutta, India
e-mail: dutta.arijita@gmail.com
A. Ghose
Department of Economics, Jadavpur University, Calcutta, India

© Springer India 2015 3

A. Gurtoo, C. Williams (eds.), Developing Country Perspectives on Public
Service Delivery, DOI 10.1007/978-81-322-2160-9_1

4 S. Bandyopadhyay et al.

drinking water, availability of physicians and hospital beds, empowerment and

education among women and food security, access to medicines (i.e., drugs,
diagnostics and vaccines) remains a pre-requisite to the attainment of good health.
In literature, access to medicine has been defined as having medicines continuously
available and affordable at public or private health facilities or medicine outlets that
are within 1 hour’s walk from the homes of the population (UNDG 2003). And the
indicator used to measure this is the percentage of the patient population that is able
to avail itself of medicines (WHO 2003). Accessibility is a function of both avail-
ability and affordability of the medicines. While availability refers to the sum of
domestic production and net import of exports, affordability is determined by the
total costs of procuring and using the medicine given the disposable income of the
patient and/or the public health system.
However, according to the recent reports, one third of the world’s population
does not have access to basic and essential drugs and this figure raises to one half if
the poorest parts of Africa and Asia are considered (Dukes and Paula 2004). Keeping
in mind that medicines are important in both curing and preventing diseases, the
ultimate goal of ʻHealth for All’ cannot be achieved if people do not have adequate
access to essential drugs and vaccines. At present, the international context is char-
acterized by a growing income gap, accompanied by an expanding health gap and
improving access to medicines can help reduce these disparities (Shyama 2012).
In this respect, India represents a paradoxical situation. The country not only
produces enough drugs to meet domestic consumption, but as one of the largest
exporters of generic and branded drugs, it is also known as the ‘global pharmacy of
the south’. Despite this seemingly commendable performance, a large part of the
population does not have access to basic and essential drugs (Planning Commission
2011). The main barrier to access in India is non-affordability and lack of proper
public distribution facilities.
Given this backdrop, this chapter attempts to analyse the status of accessibility of
medicine in government-run hospitals in West Bengal, a state that is a middle rung
performer in terms of health indicators among all Indian states. We chose this state
primarily because of two reasons: first, secondary data show that this state has
increased public spending in drugs significantly in the last decade (Planning
Commission 2011) and the long rule of the Left Front Government apparently
created a conducive environment of decentralization in decision making. Second, in
this state people prefer to go to public hospitals in far greater percentage than the
overall Indian average (Sarvekshana 2000). Thus, access to medicines in these
hospitals becomes critical in determining the overall health scenario of the state.
This chapter tries to find the answers to the following questions:
1. What is the state of access to medicine in West Bengal and how do the public
hospitals perform in terms of creating this access?
2. What are the barriers to access to medicines in these hospitals?
Section 1.2 of this chapter outlines a brief literature survey on the topic while
highlighting the research gaps. Section 1.3 gives a note on data and methodology.
In Sect. 1.4 the results of both the research questions are summarized. In Sect. 1.5,
the chapter focuses on the problems related to the access and raises the managerial
issues. Finally, it concludes with some policy recommendations.

1 Access to Medicine in Public Hospitals and Some Crucial Management Issues 5

1.2 Literature Survey

Availability of reports and research papers on access to drugs in government

hospitals and hence on access to medicines is rather limited. Cameron et al.
(2009) show that the median availability of critical drugs in public health system
was about 30 % in Tamil Nadu, 10 % in Haryana, 12.5 % in Karnataka, 3.3 % in
Maharashtra and 0 % in West Bengal. A recent study on Tamil Nadu and Bihar
by Selvaraj et al. (2010) shows that the mean availability of the basket of
Essential Drug List (EDL) drugs in Bihar on the day of survey was 43 % and in
Tamil Nadu was 88 %. In Rajasthan, Lalvani et al. (2003) point out that the EDL
was inadequately implemented, resulting in only limited availability of these
drugs. Within a state inequity in access to medicine is a further point of concern.
For Bihar, the district of Vaishali had coverage of 63 % while that for Darbhanga
was a shocking 0 %! On the other hand, Kanjilal et al. found that in West Bengal,
77 % of government hospitals reported that the drug supply was regular and
another 68 % reported that it was adequate (Kanjilal 2007), though the highest
source of out-of-pocket expenditure in this state was due to buying of medi-
cines. Studies also showed that the procurement models of Delhi and Tamil
Nadu particularly improved the access significantly in the two states (Chatterjee
2009). Survey by Ramesh Govindaraj and Gnanaraj Chellaraj (2002) reveals
that the public sector distribution of drugs is reasonably efficient in Tamil Nadu
and Karnataka, while it was grossly deficient in Uttar Pradesh. Another study
highlights that with the exception of Karnataka, there is a shortage of public
sector drug outlets, particularly in the rural and remote areas (Kotwani et al.
2007). Stock positions in the public sector in remote areas as well as storage
quality leave much to be desired in states such as Uttar Pradesh. Stock out days
for the essential drugs were three times as frequent in remote and rural areas as
in the capital cities.
Tamil Nadu is a state that has considerably done well in health indicators across
the board and also in access to medicines. Special attention has been given to storage
of drugs at district level, while keeping the inventory management in full swing.
However, autonomous agencies like Tamil Nadu Medical Services Corporation
(TNMSC) may incur difficulties if the authorities working are political appointees
and do not have authority to take independent decision, which is why many state
governments are not able to adopt such a system (Lalitha 2005).
Though these studies identified the basic status of access to medicines in some
states, they do not focus on both the consumers as well as hospital positions, and
neither do they attempt on identifying the barriers to access to medicine in these
states. They also do not focus adequately on the problems of the health care system
as a whole and its managerial aspect. This chapter tries to bridge this gap in literature
with special attention to the state of West Bengal.

6 S. Bandyopadhyay et al.

1.3 Data and Methodology

For analysis, the secondary data sources of NSSO (several rounds) and those of
governments of individual states and centre have been used. As part of the primary
data, a survey was conducted on 81 secondary level government hospitals (out of
total of 95) in 19 districts across West Bengal.1 These include District Hospitals
(DHs), Sub-divisional Hospitals (SDHs) and State General Hospitals (SGHs). A
sample of 2019 patients were surveyed from these hospitals during the period July–
November 2010. The number was divided among the hospitals according to their
relative bed sizes. Sample size for each hospital was then divided between two cat-
egories: inpatients and outpatients, based on the ratio of them in total number of
patients in each hospital for the period January–December 2008. Samples of each of
these categories were then divided among different morbidity categories using the
same method. Detailed hospital input and output data were also collected for the
financial year 2009–2010.
The methodology adopted in the chapter has been quantitative in nature using
simple analytical reasoning with econometric tools. For the first objective, some
descriptive statistics and data explorations are used. For the second objective, first a
multinomial logistic regression model is used at the individual patient level. The
patients were categorized into three sets depending on whether he/she has received
all or most of medicines, only some medicines or no medicines free of cost from the
hospital pharmacy and took these categories as dependent variables while taking
hospital type, morbidity type and district locations of the hospital as independent
regressors. The multinomial logit model was used to find out the barriers with the
second category of dependent variable considered as reference category. The rela-
tive risk ratios (RRR) are used to locate the significant barriers. Again, taking the
share of patients in each hospital, who are getting all or most medicines, as depen-
dent variable, we ran regression on typical characteristics of the hospitals, namely,
geographical location of the hospital, the demographic pattern of the area, bed size
categories, distance of the hospitals from the state capital Kolkata, the outpatient per
bed day of the hospital and its staff combination. The geographical location of the
hospital, named as Region, is a categorical variable (the categories are Region 1:
North Bengal, Region 2: Western Rahr, Region 3: Central Plain, Region 4: adjoin-
ing Kolkata). The percentage of Muslim population in the district and the percent-
age of Scheduled Tribe population in the sub-division have been taken to represent
the demographic pattern of the area where the hospital is situated. Bed category is
another categorical variable based on which we have grouped the hospitals accord-
ing to bed size. Outpatient per bed day is defined as the number of patients treated
in the outdoor per day divided by the number of beds which reflects the pressure in
the outdoors. Distance from Kolkata is a proxy of the control of the state head

The study was financed by Department of Health and Family Welfare, Government of West
Bengal, under the project ‘The Efficiency of Hospitals in West Bengal’. The executive summary of
the report is available at www.wbhealth.gov.in/notice/summary.pdf

1 Access to Medicine in Public Hospitals and Some Crucial Management Issues 7

Table 1.1 Access to medicine: free, partly free and on payment in India and West Bengal
1986–1987a 1995–1996 2004–2005
India: inpatient
Not received/required 12.85 3.56 3.12
Free 31.2 12.76 8.80
Partly free 15 15.71 17.08
On payment 40.95 67.97 70.99
India: outpatient
Not received/required 12.11 6.09 9.06
Free 17.98 7.30 7.14
Partly free 4.36 3.66 4.39
On payment 65.55 82.96 79.40
West Bengal: inpatient
Not received/required NA 2.90 2.10
Free NA 11.69 6.59
Partly free NA 36.07 40.58
On payment NA 49.34 50.73
West Bengal: outpatient
Not received/received NA 5.88 7.05
Free NA 4.74 4.15
Partly free NA 4.51 4.50
On payment NA 84.87 84.30
Source: Bose (2014) from NSSO 52nd and 60th rounds
Planning Commission 2011

quarter. We have also taken the efficiency score of each hospital derived by Data
Envelopment Analysis using input–output combination of them (Dutta et al. 2012)2
to test whether the hospital’s overall efficiency increases the access to medicines
among the patients.

1.4 Results

1.4.1 Research Question 1

From secondary data, we find that access to free medicine from hospital sources has
gone down significantly over the years in India, particularly in West Bengal.
Table 1.1 shows that availability of free medicine in India decreased over the period
of 1986–1987 and 2004–2005, though during that time the hospitalization rate in
public hospitals increased rapidly. In West Bengal, in both 1992–1993 and 2004–
2005 the share of patients receiving free medicine are lower than that of all India

Using the same data set as here.

8 S. Bandyopadhyay et al.

average in both hospitalized inpatient department (IPD) and outpatient department

(OPD) care, though the difference is radically pronounced in the latter.
Coming to the financing of drug in public sector, we find that on average India
increased its expenditure per capita on drug by 90.23 % in the last decade of 2000–
2001 to 2010–2011 while the corresponding figure for West Bengal was 234.72 %,
far higher than the average (Table 1.2). On the other hand, the share of drug expen-
diture in total health expenditure decreased in most states in India, though it rose in
states like Bihar, Gujarat, West Bengal and Andhra Pradesh, meaning that in these
states the government’s initiative was significantly better. However, detailed analy-
sis of West Bengal, Gujarat and Punjab showed that this expenditure was heavily
skewed and over 70 % of the drug expenditure was concentrated in tertiary medical
colleges (Planning Commission 2011), while there was acute shortage in primary
and secondary hospitals. This essentially hints towards a near draught of medicine
availability in smaller towns and villages, where majority of people live.
In the milieu of recent public debate of gross under-performance of government
hospitals in the state, we felt the necessity to look at the issue in detail at the second-
ary level hospitals where the access has been reduced in the state. Technically
speaking, secondary hospitals are defined as those which offer secondary care.
Secondary care is the health care services provided by medical specialists and other

Table 1.2 Trends in state-wise government drug expenditure

2001–2002 2010–2011 Change
Per capita Drug Per capita Drug Per capita Drug
expenditure expenditure expenditure expenditure expenditure expenditure
in drug as a % of in drug as a % of in drug as a % of
States (Rs.) HE (Rs.) HE (Rs.) HE
Assam 5.7 4.7 28.5 5 400.00 6.38
Bihar 2.6 3.1 13.8 7 430.77 125.81
Gujarat 5.3 3.7 26.4 7.6 398.11 105.41
Haryana 14.7 9.8 24.2 5.8 64.63 −40.82
Kerala 38.9 17 72.3 12.5 85.86 −26.47
Maharashtra 20.8 11.3 18.7 5.2 −10.10 −53.98
Madhya 13 11.8 17.1 9.3 31.54 −21.19
Punjab 3.7 1.4 5.6 1 51.35 −28.57
Rajasthan 15.9 9.3 5.7 1.5 −64.15 −83.87
Uttar 4.2 5.2 15.9 5.3 278.57 1.92
West Bengal 7.2 4.3 24.1 6.8 234.72 58.14
Andhra 16.6 9.6 27.9 10 68.07 4.17
Karnataka 14.7 7.9 25.1 6.3 70.75 −20.25
Tamil Nadu 28.9 15.3 65 12.2 124.91 −20.26
All India 13.3 8.4 25.3 6.7 90.23 −20.24
Source: Planning Commission 2011

1 Access to Medicine in Public Hospitals and Some Crucial Management Issues 9

health professionals who generally do not have first contact with patients,
for example, cardiologists, urologists and dermatologists. We chose the second-
ary level hospitals not only because of its huge geographical span in the state, but
also due to the fact that they bear the largest burden of patients, both outdoor and
From our primary survey, we find that only 10 % of the patients in OPD get all
the medicines prescribed at free of cost from the hospital. The IPD picture is even
graver where only 6 % of the patients admitted get the medicines. The predomi-
nance of share getting ‘some’ medicines was further investigated and it was found
that the cheaper medicines were mainly provided free of cost from the hospitals
while the expensive drugs were to be bought from outside. The study of district-
wise situation reveals that even the best performing districts in this field like Bankura
or Hugli cannot ensure at least 30 % of their patients all the medicines at free of
cost. In as many as seven districts, none of the inpatients interviewed reported to
have all the medicines free of cost. There is also variation within district between
drug access in OPD and IPD.
Table 1.3 shows the picture of medicine access across the hospital types.
However, in both IPD and OPD, DHs fare the worst. The best access in IPD is in
SGH may be because many of them are actually under-utilized with extremely low
Bed Occupancy Rate. Table 1.4 shows the situation across the morbidity types
which portray a very interesting observation. In both OPD and IPD, the patients
who have come for maternity- and gynaecology-related diseases enjoy the least
access to free medicines. This is in strong contrast with the fact that the prime focus
of Millennium Development Goals has been to ensure safe motherhood and maternal

Table 1.3 Share of patients receiving all medicines prescribed from hospital across type of
hospitals (both OPD and IPD)
Share of patients receiving all medicines
Type of hospital IPD OPD
District hospital 5.7 9.4
Sub-divisional hospital 4.7 11.2
State general hospital 7.8 9.5
Source: Analysis from patient survey

Table 1.4 Share of patients receiving all medicines prescribed from hospital across morbidity
pattern (both OPD and IPD)
Share of patients receiving all medicines
Type of hospital IPD OPD
General 7.45 12.52
Maternity and gynaecology 4.07 7.88
Others 6.96 10.17
Source: Analysis from patient survey

10 S. Bandyopadhyay et al.

care. But this does not seem to be a priority area when free access to medicines in
secondary level government hospitals of West Bengal is concerned.3
During the survey, a list of 30 drugs published by Health Action International or
HAI (www.hai.org) was collected, which according to HAI are bare essential drugs
that should always be available in any secondary level hospital. It was found that in
none of the hospitals at least half of those drugs were available and the mean avail-
ability was about 25 %. When this was tabled in the department, many of the offi-
cials refused to accept the HAI list, as according to them, the list included many
non-essential drugs. In order to get the true picture, our special survey team visited
six hospitals (two DHs, two SDHs and two SGHs in the vicinity of Kolkata) to find
out how many of the 123 drugs from the Central Medical Store (CMS) catalogue of
West Bengal were available in those hospitals on the date of survey. The maximum
availability was 40 %, while the average was 29 %.

1.4.2 Research Question 2

Now coming to locating the barriers to access, we ran a multinomial logistic regres-
sion to find out what factors determine the availability of medicine to the patients of
these secondary level government hospitals. We took the categorical variable (with
three categories, i.e., all or most drugs received from hospital, some drugs received
from hospital and no drugs received from hospital) as the dependent variable
(already discussed in Sect. 1.3). We formed five regional categories4 in IPD and
three categories in OPD.5 The following Tables 1.5 and 1.6 show the results of the
econometric model in terms of the RRR. An RRR more than one represents increase
in comparative probability, while an RRR less than one means a decrease.
In OPD the probability of getting all medicines compared to some medicines
increases by 2.03 times (Table 1.5) if one goes from DHs to SGHs and in IPD it
increases by 2.76 times (Table 1.6).
Though in OPD, the marginal effect of moving from DH to SDH is not signifi-
cant for getting all medicines compared to some medicines, it is significant in
IPD. Thus, in general, SGH and SDH have higher chance to get all medicines com-
pared to some medicines. On the other hand, the morbidity type has significant
impact in OPD, but not in IPD. In OPD, the marginal effect of getting all medicines

After submission of the report of the project, the government took immediate steps to provide free
medicine to all maternity patients in all hospitals in West Bengal. The result of that initiative, how-
ever, is not yet evaluated.
Clubbing Method of districts: IPD: D1: >50 % (Bankura, Malda); D2: 30 %–50 % (Hooghly,
E. Medinipur); D3: 20 %–30 % (N. 24 pgns, S. 24 pgns., Howrah, Purulia, Coochbehar); D4:
10 %–20 % (Murshidabad, W.Medinipur, U.Dinajpur); D5: <10 % (Birbhum, Bankura, Burdwan,
D. Dinajpur, Jalpaiguri, Nadia).
OPD: D1: >25 % (Coochbehar, Murshidabad, E. Medinipur, W. Medinipur, Purulia); D2:
20 %–25 % (Birbhum, Burdwan, D.Dinajpur, Howrah, N.24Pgns., S.24 Pgns); D3: <20 %
(Bankura, Hooghly, Jalpaiguri, Malda, Nadia, U. Dinajpur).

1 Access to Medicine in Public Hospitals and Some Crucial Management Issues 11

Table 1.5 Relative risk ratio of determinants on availability of drugs in OPD (some medicine
RRR for all or most medicines received RRR for no medicines received
Type of hospital DH (reference)
SDH 1.23 0.95
SGH 2.03** 1.29
Speciality general (reference)
Maternity 0.64** 1.45
Others 0.73* 0.93
Regional categories D3 (reference)
D1 2.28** 1.16
D2 1.54* 1.34
Source: Analysis from hospital survey data
Pseudo R2 = 0.2
*Significant at 10 % level
**Significant at 5 % level

Table 1.6 Relative risk ratios of determinants on availability of drugs in IPD (some medicine
Variables RRR for all or most medicines received RRR for no medicines received
Type of hospital DH (reference)
SDH 2.02* 1.34
SGH 2.76* 1.87
Speciality general (reference)
Maternity 0.84 1.01
Others 1.08 0.85
Regional categories D2 (reference)
D1 2.28 0.54
D3 0.3** 0.45
D4 0.22** 2.7*
D5 0.65** 1.83
Source: Analysis from hospital survey data
Pseudo R2 = 0.03
*Significant at 10 % level
**Significant at 5 % level

compared to some decreases significantly as we move from general type of morbid-

ity to maternity-related morbidity and other types of morbidity. One interesting
observation is that no variable, except the region D4 in IPD, has significant impact
on probability of receiving no medicines compared to some medicines. If the hospi-
tal is located in zone 4, not only does the probability of getting all medicines go
down significantly compared to some medicines, the probability of getting no medi-
cines increases too significantly.

12 S. Bandyopadhyay et al.

Next, we move on to the analysis at hospital levels. The rationale of this exercise is to
locate the hospital-specific factors that are crucial for determining the share of patients
in that hospital receiving all or most medicines. As we have already discussed, officials
at both district and local hospital level have some power to buy and distribute the essen-
tial drugs in need; this exercise is poised to spot the local level criterion for the access.
Therefore, we took the regressors as region, distance from Kolkata, share of Muslim
community in the district, share of Scheduled Tribe population in the sub-division (rep-
resenting the spatial distribution of the hospitals), bed category and nurse–non-nurse
ratio (representing the state level decisions), outpatient per bed day and specific effi-
ciency score of the hospital (representing the hospital level decision). The share of
patients at each hospital receiving all or most medicines has been used as the dependent
variable. Some variables were transformed using ladder analysis to correct the problems
of skewness and kurtosis. The results of the regression are reported in Table 1.7.
The results show that hospitals in adjoining Kolkata region have significantly
higher access to medicines compared to North Bengal, and at the same time greater
distance from Kolkata ensures higher possibility of access to all medicines. These two
results are not contradictory to each other as there are many hospitals in South Bengal
which are far off from Kolkata and perform very well. This is a good point to mention
that moving away from Kolkata does not necessarily curtail the possibility of better
access and this becomes a reality as there is still some power at decentralization level
to decision making. The variables of demography representing share of Muslims and

Table 1.7 OLS regression of access to medicine at hospital level (inpatient care)
Variable Coefficient P value
North Bengal (reference)
Western Rarh 9.39 0.41
Central Plain 14.57 0.17
Adjoining Kolkata 42.49*** 0.007
Bed category
<100 (reference)
100–200 −6.77 0.342
201–300 −30.09*** 0.008
>300 −25.32*** 0.001
Muslim share in district (log) −16.00*** 0.007
ST share in sub-division (log) −6.42*** 0.01
Distance from Kolkata (log) 9.76** 0.02
Efficiency score −36.4*** 0.005
Nurse– non-nurse ratio 33.12** 0.03
Outpatient bed per day (square root inverse) 35.49* 0.06
Constant 5.89 0.86
Source: Analysis from hospital survey data
*Significant at 10 % level
**Significant at 5 % level
***Significant at 1 % level

1 Access to Medicine in Public Hospitals and Some Crucial Management Issues 13

Scheduled Tribe in the locality significantly reduces the possibilities of getting access
to medicine, proving that the minority communities have not yet been able to grab
access from the government. Next, coming to bed categories, larger hospitals are
worse performers in providing free medicines to their patients probably because of
patient pressure. Increase in nurses vis-à-vis other hospital staffs increases the possi-
bility of better access mainly because they are the prime care givers to the inpatients
and control the access to top medicine within the hospital.

1.5 Where Does the Knot Exist? A Note for Managerial


According to World Health Organization’s report (WHO 1998), when the govern-
ment is involved in the supply of drugs, it has to ensure that it does not suffer from
(a) inadequate buying practices; (b) improper estimation of demand for the drug;
(c) inefficient procurement and distribution of drugs; and (d) irrational prescription.
However, based on these preliminary results, some problem areas were identified
due to which the WHO recommendations were not fulfilled in this state. We wish to
explore and analyse these untold stories to find out the causes of lack of accessibil-
ity to basic and essential medicines in secondary level government hospitals in West

1.5.1 Problem 1: Which Drugs to Buy?

In accordance with the recommendations of WHO, West Bengal also has an

Essential Drug List called Catalogue of Drugs and Chemicals, prepared way back in
1997 and has recently been updated. It has separate drug lists for primary, second-
ary, tertiary and super speciality level hospitals. However, no review on either dis-
ease profile or epidemiological changes or even morbidity pattern of the state was
done before preparing the list. Since the state comprises varied geographical regions
with different disease profiles, there must be different lists for different such regions.
From the above results, it is obvious that the existing catalogue does not cover or
even match the drug requirements of the patients in different hospitals. Though the
superintendents and doctors are supposed to meet once a month and discuss about
the rampant diseases in the locality to send a report to the district health authorities,
the system completely fails to work. The reason behind this may be that doctors
have a negative incentive in doing this and they very frequently write drugs outside
the available list purposely. Frequent visits of medical representatives to these
hospitals are self-explanatory!
Another source of problem is the flawed system of prescription in government
hospitals. Doctors write the original prescription comprising all the prescribed
drugs and then write the names and quantities of drugs available in hospital in a

14 S. Bandyopadhyay et al.

separate piece of paper. The drugs available in the hospital are given to the patients
from the hospital pharmacy on submitting the piece of paper. This paper is retained
in the pharmacy and a drug audit is done every week. On the basis of this audit, the
requirement list for the next month is prepared with a more or less 10 % adjustment.
However, there is no system to keep a copy of the full prescription. Therefore, the
hospital does not have any record about the drugs which were prescribed but not
available in the hospital. Thus there is no scope of estimating this unobserved part
of the demand. Therefore, there exists practically no match or balance between the
demand and the supply of drugs in this system.

1.5.2 Problem 2: Storage, Distribution and Registered Stock


This is a crucial problem but is very often neglected completely. All the districts
have their own stores, but proper storage system is not maintained. The district takes
care of the distribution of drugs to all the hospitals of the district. At the hospital
level, very few hospitals were found to have proper storage system. A number of
hospitals reported to have no trained pharmacist. No hospital reported to have com-
puterized inventory management system, as indicated by the State Drug Policy
(Government of West Bengal, 2004) and a very few reported to have proper logistic
and disposal system. Therefore, media reports often come out finding stocks of
drugs being piled on and being outdated in some hospitals, though that some drugs
are in heavy shortage in some other hospitals.

1.5.3 Problem 3: Rational Prescribing

According to WHO recommendations, the drugs must be prescribed in the govern-

ment hospitals in their generic names. There also exists a government order regard-
ing this rule. But in almost none of the hospitals are doctors found to follow this rule
barring a very few. There also exists a standard treatment guideline but there is no
system of checking whether doctors are following that guideline. To ensure rational
prescription by the doctors, the only measure in our opinion is to perform frequent
prescription audit.
Given the above discussion, it is clear that the barriers to access to medicines in
public funded hospitals in West Bengal are manifold. On one hand, there are big
gaps in the initial planning stage. The bed strength and staff composition are not
equitably distributed, which raises questions of inefficient decision making at the
state authority level. Lack of recording, storage, etc. too is serious shortcomings of
the health system per se. The local decision making is often ill-handled at district
level, while there are critical managerial problems at the individual hospital level.
Not receiving drugs for maternity-related morbidity occurs due to the lack of coor-
dination between district authorities and hospital management.

1 Access to Medicine in Public Hospitals and Some Crucial Management Issues 15

1.6 Conclusions

Therefore, in light of the discussion, we find that majority of the patients in the
secondary and primary health care facilities in West Bengal do not have proper
access to medicines in spite of thrust in overall government finance. Crucial inter-
vention is seeked in the field of medicine availability. It was found that median
availability of medicines in secondary level hospital system is 18.7 % and the mean
availability is 21.2 %, hinting towards outliers in access. Like Bihar, the state also
shows varied regional disparity, where the access to free medicine ranges from 0 to
26 % in OPD and from 0 to 20 % in IPD. The situation is similar to that in Rajasthan,
as observed by Lalvani et al. (2003). No proper scientific method was used for pre-
paring the EDL at least when the study was on. Survey of local morbidity pattern
should be used to fix the EDL of that district. More effort should be taken to sensi-
tize the doctors to prescribe adhering to guidelines and also to available drugs. To
monitor the situation, random prescription audit system should be initiated. The
pharmacists should be given all required infrastructure to store, maintain and regis-
ter the stock situation. And last but not the least, the unhealthy nexus among doctors
and pharmaceutical companies, where exists, should be broken. Some basic changes
in aggregate finance structure as well as detailed intervention at micro hospital level
are called for. In hospitals with more than 200 beds, the access to free medicines is
significantly lower. And if the number of nurses compared to other staff increases,
it significantly increases the same. Thus, optimizing the number of beds at less than
200 and increasing the nurse–non-nurse ratio would definitely improve the situation
at the micro level. Distribution of available resources equitably among different
tiers of health care system, as well as giving priority to socially backward regions
and areas far off from Kolkata would not only ensure equity, but would also help to
redress the balance of case loads among the tiers.
Universal access to medicine demands adequate investment in socially just and
economically robust health systems. The discussion is ended on a happier note since
after submission of the report, the State Health Department has taken some serious
measures like increasing monitoring on doctor’s attendance and using computerized
network. Most importantly, fair price outlets have been opened in all medical col-
leges, DHs and some SDHs (with a long-run planning of covering all the secondary
level hospitals) using a Public Private Partnership (PPP) model, the actual results of
this is yet to be evaluated though.


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who.int/medicines/mdg/MDG08ChapterEMedsEn.pdf. Accessed on 10 Dec 2010

Chapter 2
Reproductive Health Services in Ethiopia

Rajib Dasgupta, Narendra Kumar Arora, Damen Haile Mariam,

Solomon Kumbi Hawas, Sanjay Chaturvedi, Ashok Patwari,
and Kalyan K. Ganguly

2.1 Introduction

The highest incidence of maternal deaths occurs in Africa which accounts for up
to 40 % of the total maternal deaths for 20 % of the world’s births (World Health
Organization 2009). Recent research has found governance in health systems to
be a strong determinant of maternal health. Ethiopia’s maternal mortality rate
continues at an unacceptably high level. Ethiopian Democratic and Health Survey
2005 (Central Statistical Agency Ethiopia and ORC Marco 2006) suggested that
the maternal mortality ratio for Ethiopia for the period 1998–2004 was 673 deaths
per 100,000 live births (or approximately 7 deaths per 1,000 live births) (Marco
2006). Ethiopia is reported to have a poor performance in governance according
to World Bank indicators (World Bank 2009). Although the role and impact of

R. Dasgupta
Centre of Social Medicine and Community Health, School of Social Sciences,
Jawaharlal Nehru University, New Delhi, India
N.K. Arora (*)
INCLEN Trust International, New Delhi, India
e-mail: nkarora@incentrust.org
D.H. Mariam
Public Health and Health Economics, Addis Ababa University, Addis Ababa, Ethiopia
S.K. Hawas
Addis Ababa University, Addis Ababa, Ethiopia
S. Chaturvedi
Community Medicine, University College of Medical Sciences, New Delhi, India
A. Patwari
International Health, Boston University School of Public Health, Boston, MA, USA
K.K. Ganguly
Indian Council of Medical Research, New Delhi, India

© Springer India 2015 17

A. Gurtoo, C. Williams (eds.), Developing Country Perspectives on Public
Service Delivery, DOI 10.1007/978-81-322-2160-9_2

18 R. Dasgupta et al.

determinants of governance have been studied individually, how and to what

extent these variables influence each other and eventually impact access to mater-
nal health services are questions that remain unanswered. This study draws upon
various indicators for measuring governance and undertook a series of systematic
delineation and characterization of the variables that impact the governance of
health systems in relation to delivery of reproductive health services.

2.2 Objectives

The overall objective of the study is to systematically delineate and characterize the
variables that impact the governance of health systems in relation to delivery of
maternal and reproductive health services. The specific objectives were to:
• Map stakeholder perceptions about existing status of the above-mentioned gov-
ernance variables in relation to maternal and reproductive health services and
their influence on programme performance.
• Determine the influence of governance environments on access and client
• Identify strengths and weaknesses of existing governance environments that
influence programme performance.
• Identify potentially modifiable factors of governance that could expand the
accessibility of reproductive and maternal health services in the region and
encourage client participation.

2.3 Methodology

The study was conducted in two administrative units (districts), i.e. Ambo and
Fentale in Ethiopia, which were identified on the basis of performance indicators of
maternal and reproductive health programmes (Fig. 2.1). These include the ‘best’
and the ‘poorest’ performing districts respectively based upon a combination of the
Multiple Measurements Rating (MMR) of the districts and perceptions of key
experts in public health about the performance ranking of districts.
It was a cross-sectional study with purposive sampling of stakeholders.
Qualitative methods based on rapid appraisal procedures (RAPs) were used to
enable quick and systematic data collection. Data was collected through in-depth
interviews conducted with different categories of stakeholders and focus group dis-
cussions with mothers (who used and did not use maternal health services) and
doctors and other health providers. The stakeholders for the qualitative research
were chosen carefully to capture perceptions from all those who are likely to be part
of governance process either as contributors, facilitators or utilizers of the maternal
health services. The stakeholders were drawn from different levels: central or highest
policy level; provincial and district (the first administrative unit) levels; frontline
workers; NGOs; local influential persons; and representatives from women’s groups.

2 Reproductive Health Services in Ethiopia 19

Fig. 2.1 Location of study districts (Ambo and Fentele)

20 R. Dasgupta et al.

Supplementary data included desk review of key indicators of governance of

health systems; quality of care was assessed through direct observation of infra-
structure and quality of available services along with skills of health providers. One
hundred seventeen interviews and fifteen Focus Group Discussions (FGDs) were
conducted at the district level and another seventeen interviews at the state and
national levels with policy makers and senior programme managers were done. In
addition, 63 exit interviews were conducted with women utilizing health services.
Direct observations of infrastructure and quality of available services were done in
a total of 12 health facilities in both the districts (Table 2.1).
The responses were free listed to obtain the range of expressions for every cate-
gory of stakeholders. Domains were evolved on the basis of free-listed responses
that conveyed homogenous perceptions. Efforts were made to retain common
domains on similar issues throughout the stakeholder categories to enable compari-
son. The coding of free-listed items, according to the domains they belonged to, was
done. Every instrument had questions that covered broad domains of governance.
The domains with corresponding free-listed responses were initially summarized
and tabulated for broad governance domains across stakeholder categories.
The study was a programme evaluation exercise for existing public health activi-
ties in Ethiopia and did not involve any active intervention. The protocol was
approved by the Institutional Review Board in Ethiopia before initiating project

2.4 Results and Discussion

The analysis of data generated by this study throws light on key governance vari-
ables including political commitment and policy environment; accountability
issues; responsiveness to needs and expectations of stakeholders; sensitivity to
sociocultural factors; corruption; and donor influences. The discussion is driven
by interaction between governance variables and their influence on programme

2.4.1 Policy Environment

Political commitment is a key governance factor that impacts upon utilization.

Policy barriers and facilitating factors influence availability, quality and quantity of
health products and services. Although the political situation in a country can influ-
ence the policy environment due to several reasons, democracy alone may not be
sufficient in itself (Johansson 2005). Till recently, Ethiopia was without a national
health policy and population policy and was also marked by weak health care sys-
tem infrastructure and low government spending (World Bank 2004). In 1993, the
government formulated the first health policy setting the vision for the next two

2 Reproductive Health Services in Ethiopia 21

Table 2.1 Profile of stakeholders

Proposed conducted and
Level Stakeholders interviews/FGDs analysed
Indepth interviews
Central Policy makers Minister of Health 2 1
and Political members of 1 0
programme Steering Committee
managers National and state 4 2
Programme manager
Health Secretary 2 2
Ministries dealing with 2 1
women or child
Donors Multilateral 4 4
Bilateral 2 2
National research agency 1 1
Professional Association of 2 4
association Obstetricians
Association of Physicians
Total 20 16
District District administrator 2 2
Hospital administrator (non-medico) 4 4
Medical superintendent of district hospital 2 2
Obstetrician/gynecologist 2 2
General duty medical officer 16 14
Nurse/paramedical staff 16 17
Paramedic staff involved in family planning 16 14
Private practitioner 16 13
NGOs (in health sector) 8 5
Client who used maternal services 20 20
Client non-utilizers 20 19
Total 122 117
Facility observation
District Health facility observation 16 12
Exit interview
District Exit interview (clients) 80 63
Grand total 238 209
District Ambo Women/health personnel 11 7
Fentale Women/health personnel 11 8
Grand total 22 15

22 R. Dasgupta et al.

decades (FDRE 1993). The policy tried to reorganize health services delivery sys-
tem with the objective of contributing positively to overall socio-economic develop-
ment effort of the country focussing on fiscal and political decentralization,
expanding the primary health care system and encouraging partnerships and partici-
pation of non-governmental actors (FDRE 2002). An important change was to make
services available to larger segment of population by employing health extension
workers. The National Population Policy (NPP) was formulated in 1993, with sup-
port from the United Nations Population Fund (Haile 2004). Its objectives included
improving maternal and child health, a significant increase in contraceptive usage
and a dramatic reduction in fertility (Haile 2004; World Bank 2004).
Policy implementation had been attributed to the districts and below though per-
formance standards were set from the top which affected the accountability frame-
work. Some policy and programmatic decisions were appropriately made at the
federal level (including national health priorities, regulation and technical stan-
dards), and policies were aimed at taking care of poor, vulnerable and marginalized
groups. Strengthening health infrastructure emerged as an important agenda of the
current government, echoed by diverse respondents. Increased degree of commit-
ment has been marked by introduction of business process re-engineering (BPR)
reforms, increased participation of leaders in programme, agenda of political parties
demonstrating components of health sector reforms and engagement with women’s
rights groups (Pathmanathan et al. 2003; Danel et al. 2003).
While majority of policy makers claimed several mechanisms were in place to
evaluate policy impact, providers’ perceived inadequacies in the impact and rele-
vance. Most health administrators thought that evaluation of health policies should
be done by experts, consultants and professionals with advanced training, and with
multiple stakeholders including the media.
Accountability We analysed three types of accountability: political, performance
and resource/financial (Shreshtha et al. 2003). Using an accountability lens can:
help generate a system-wide perspective on health sector reforms; identify connec-
tions among individual improvement and effective interventions; and reveal gaps
that require policy attention.
Political Accountability Political accountability seeks to capture whether the
government delivers on electoral promises, fulfils public trust, represents citizens’
interests and responds to societal needs and concerns. In transitional economies,
tensions are aggravated by a lack of resources and capacity; facilities and providers
are frequently inadequately distributed, poorly equipped, and diversion of resources
occurs (Bloom 2000). Stakeholder opinions highlighted that the current government
was more accountable for maternal health programmes compared to earlier regimes.
Accommodating non-state stakeholders, allocating adequate financial support for
implementation, and regular monitoring and supervision against set goals to fix
accountability standards were perceived as positive efforts. Opinions were split on
monitoring of programmes. Those associated with programme delivery perceived
minimal political commitment; while, most of the policy makers and administrators
reported a well-built mechanism including reviews and appraisals.

2 Reproductive Health Services in Ethiopia 23

Performance Accountability It refers to demonstrating and accounting for

performance in the light of agreed-upon targets focusing on services, outputs
and results of public agencies and programmes. It is also linked to financial
accountability; emphasis of the latter is on procedural compliance whereas per-
formance accountability concentrates on results.
Performance appraisal seemed to be a recent phenomenon. Performance appraisal
was generally perceived to be merely a formality; in actuality not influencing careers.
Several policy makers described it as weak, and to a certain extent unfair; a handful
perceived it as a fair process. Punitive arrangements (ethical concerns were raised)
were seemingly stronger and operational than rewards. A variety of mechanisms
were in force to achieve three accountability goals: reducing abuse; assuring compli-
ance with procedures; and improving performance. Quality of care and services
delivered by providers was repeatedly questioned by clients and cited as an important
determinant of access and service utilization (Salmon et al. 2003; Gauri 2001).
Resource and Financial Accountability It concerns tracking and reporting (using
auditing and accounting) on allocation, disbursement and programmes of financial
resources. There was synergy among central and district-level providers that account-
ability in resource handling was being ensured by following a transparent process
and resources were handled as per strategic guidelines, rules and regulations; doctors
and administrators at the hospital level denied the claims that ‘Not-for-Me’ approach
was present among personnel at woreda (district) level leading to dilution of account-
ability and possibility of passing on the responsibility (Trivedi 2005).
Monitoring Checks and balances in the system were not reinforced until recently;
major changes were under way because of the implementation of BPR. Internal and
external audits were emerging as effective monitoring mechanisms. Regular review
meetings at regional/sectoral levels and monitoring during recruitment remain weak
Improving financial accountability: These included institutionalizing fee-waiver
mechanisms; aiding pro-poor insurance; strengthening legislative measures to
penalize offenders; formulating committees (involving higher officials) for trans-
parent handling of resources; screening and authenticating eligible beneficiaries;
and making drugs and supplies available at remote centres (to reach rural and pas-
toral communities). Stakeholders suggested decentralization of both decision mak-
ing and monitoring of programme activities through close cooperation of community
to encourage social audit and social accountability (Khuwaja 2000; Office of
Technology Assessment 1992; Cornwall et al. 2000).

2.5 Responsiveness

Responsiveness of the health system encompasses ways in which individuals are

treated and the environment in which they are treated. The WHO suggested measur-
ing responsiveness from two broad sets of criteria: respect for persons (dignity,

24 R. Dasgupta et al.

autonomy, confidentiality) and client orientation (prompt attention, quality of basic

amenities, access to social supports, choice of health providers) (De Silva 1999).
Choosing a facility: Different reasons influencing choice were proximity to
homes (geographical access); non-availability of any other health facility; bad prior
experience with other providers; availability of good quality of maternal and other
health services and/or trained manpower; and affordability.
Basic Amenities Almost half the clients were dissatisfied with general cleanliness,
seating arrangement, availability of drinking water, electricity and small rooms in
poorly kept old buildings. Another study in Ethiopia, examining the quality of care
from patients’ perspectives found that patients were generally dissatisfied due to
poor state of basic amenities and cleanliness (Abdosh 2006). A study on mothers in
Kenyaso reiterated that mothers were dissatisfied with the lack of cleanliness which
adversely affected service utilization (Mwaniki 2002).
Prompt Action Prompt action in health facility avoids anxiety and inconveniences
of long waiting. Clients linked accessibility of health services to receiving prompt
medical attention. The providers claimed that maternal health service delivery was
prompt, and thus it did not require any further improvement. In contrast, clients
talked about long waits to meet doctors and care providers. Several other studies
from Kenya and Ethiopia reported similar findings; short waiting time for registra-
tion and being seen by a provider were associated with high satisfaction scores
(Singh et al. 1999; Oljira and Gebre 2001).
Confidentiality Due to non-differentiation between waiting and services areas,
many utilizers complained of unsatisfactory experience of maintaining confidential-
ity during examination. In the crowded waiting-cum-examination room, and because
of the noise, patients and doctors often had to shout when talking about symptoms
and treatment.
Communication An effective doctor–patient communication not only leads to
patient satisfaction but in improved patient compliance, and better medical outcomes
(Neuwirth 1999; Grol et al. 2000). A majority of clients in the present study identi-
fied communication as an important barrier to use reproductive health services on
account of: (a) culturally insensitive behaviour and approach of the programme and
health personnel and (b) lack of sensitivity to linguistic familiarity while advising
and dissemination of Information, Education and Communication (IEC) materials
to clients.
Autonomy Patient autonomy implies that providers of health services respect
patients’ views and allow them to make informed choices (Valentine et al. 2003).
Almost half the clients observed that doctors, nurses and other providers did not
discuss with them about the available choices of treatment or procedures.
Dignity This refers to the ability of patients to receiving care in a respectful, caring
and non-discriminatory setting and protects each individual from potential abusive
practices, bodily infringements and mental harm. The clients were hugely unsatis-
fied by the health care provider’s behaviour. Majority of decision makers and care
providers acknowledged the perceptions of patients and attributed such practices to

2 Reproductive Health Services in Ethiopia 25

workload coupled with frustration, low job satisfaction, unavailability of drugs, lack
of reward/incentive and lack of training to treat patients in proper manner (Brugha
and Zwi 1998).
Grievance Redressal Mechanisms Currently, two types of grievance redressal/
feedback mechanisms were in operation. One set included: BPR system, sugges-
tions box, complaint register, grievance attending committee and designated staff
for collecting complaints from community. The other set included: community
meetings, interviews with clients and meeting with woreda leaders. Administrators
reported that when community and patients lodged complaints, a range of legal
actions were taken to address absenteeism and disrespectful behaviour to clients.
Majority of doctors, decision makers and other providers at various levels and NGO
professionals perceived that an effective and functional grievance rehearsal system
was yet to be put in place.

2.6 Corruption

Corruption flourished at the service delivery points affecting the quality of interac-
tion between health workers and patients. Corruption also existed within the depart-
ment for procurement of goods and supplies and HR-management. Corruption in all
its forms appeared to undermine the quality, access and use of health services.
Processes Vulnerable to Corruption Procurement was identified as the most cor-
rupt operational area. Health personnel were blamed for manipulating tendering
systems, misappropriating supplies and procurement of substandard/poor quality
commodities and equipments.
Types of Corrupt Practices Corruption within the health sector manifested itself
in a number of ways and mainly involved: unofficial/informal payment (bribes) for
services; payments by the health professionals to buy position/training opportuni-
ties; absenteeism; embezzlement; unnecessary referral to private health care provid-
ers; theft of drugs and other medical supplies (by health workers); favouritism/
nepotism; and misuse of power due to poor transparency. Favouritism and embez-
zlement/diversion of resources and absenteeism were the most common form of
corrupt practices (Fig. 2.2).
Two ‘flows’ of corrupt practices were observed: (1) from clients to health person-
nel (2) from health personnel to ‘system’ (another health official).
From Clients to Providers Almost half the clients reported paying in cash or kind
to health officials while seeking care, starting from the entry point of health facility
to the highest level. Reasons for bribery included: access to free services; reduce
waiting time; and access drugs, treatment or hospital meals.
From Health Personnel to ‘System’ Informal payments were made to purchase
public positions. About half the health personnel made payments to avail of prefer-

26 R. Dasgupta et al.


Misuse of power/absence of guidelines

Time theft/ embezzlement


Clients Facilitators Providers Administrators Central Level Decision Makers

Fig. 2.2 Perception of stake holders about prevalent corrupt and non-transparent practices

ences at the time of recruitment, promotion, transfer and opportunity for training.
Training was reported to be a particularly vulnerable area where trainees were pay-
ing bribes to gain a place in a medical school or passing exams.
Time theft, embezzlement and diversion of resources: Lack of accountability
facilitated time theft (pursuing private practices/self-referral of patients to own pri-
vate clinics) and absenteeism during working hours. Doctors justified this action to
their meagre incomes and often remained in dilemma, ‘either to serve the commu-
nity or to serve self’ (Barr 2004; World Bank 2004). Clients repeatedly mentioned
that doctors were spending official time in private practices, using public facilities
and equipment to treat patients in their personal clinics, or merely utilizing the pub-
lic system to channelize patients to their private practice.
Efforts were on in Ethiopia to tackle and reduce corruption. Some of the recent
strategies included: raising accountability standards through strengthening legisla-
tion for effective auditing; sensitising providers on ethics and providing an enabling
working environment; internal supervision complemented by external audits; unan-
nounced visits to health facilities and evaluation of services by clients and benefi-
ciaries. BPR has been instituted to revise the salary structure and introduce
performance linked incentives.

2.7 Influence of International Donors Agencies

The role of international donors in low income countries has repeatedly raised con-
troversial and divergent opinions; Ethiopian health services being considerably
donor-dependant is no exception.
Positive Influence Relevant to the national agenda: Decision makers and providers
at different levels appreciated technical assistance of donors to better manage pro-
gramme activities and scaling up and prepare project implementation plans, budget
and operational manuals.

2 Reproductive Health Services in Ethiopia 27

Financial support: Donors were perceived to help in reducing funding gaps and
enable governments to meet the community demands in order to improve maternal
health programmes.
Programme support: According to some doctors from the public sector, donors
provided support in the form of supplies, logistics (purchase of) equipments,
strengthening infrastructure, facilitate smooth functioning of programmes particu-
larly in situations of shortage.
Negative Influence Influence of Policy and National Agenda: International donors
have been able to prioritize and push their own agendas and relegate national needs
to the background on account of their financial and technical strengths. Dependency
and sustainability: Majority of stakeholders emphasized that donor agencies discon-
tinued programmes without planning an effective phase-out strategy. Donor-driven
actions often lacked ownership among the community and provision of incentives
raised expectations.
Institutional weakening: Some funding agencies drained technically competent
human resources from public health sector (including universities) by providing
attractive remuneration leading to losses to programmes.

2.8 Concluding Remarks

Governance variables have multidirectional influence; these interact among each

other and work on programme components (infrastructure, supplies, human resource
management and service delivery) in a cross-cutting manner. Accountability,
responsiveness, transparency and corruption and community processes along with
donor influence determined programme architecture, performance and the extent to
which policies were translated into practices. It was clear that good and well-inten-
tioned policies could probably only be translated into high performing accessible
programmes when a translation framework is generated for policies, services deliv-
ery, infrastructure, human resource management and community processes in the
country context in which donors and international agencies also function. Decision
makers at the highest level in consultation with the community shall have to decide
the architecture for the programme and to facilitate its accessibility.


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Chapter 3
Analyzing the 2011 Colombian Health

Oscar Bernal and Juan Camilo Forero

3.1 Background

3.1.1 Colombia, a Country in Demographic

and Epidemiological Transition: Health Care Challenges

The most radical health care reform in Colombia was carried out in 1993 with Law
100. Earlier, health system enrollment was around 30 %, the uninsured had to go to
the public provider network for free-of-charge services that were highly inefficient.
A high percentage of the population did not have access to health services. In 1993,
health insurers, most of whom were private, were introduced into the system. These
insurers acted as intermediaries, collecting health contributions from workers and
transferring them to the government, who in turn paid a defined premium for every
enrollee to the insurer. Enrollment was compulsory and the enrollee had to pay
according to income through a direct payroll tax. A benefits package was defined
that was originally different for both enrollment schemes with the Colombian gov-
ernment subsidizing enrollment for the poor with general taxes and a percentage
from employee contributions. The Ministry of Health and the Health Superintendent
act as the agents leading, monitoring and controlling, while insurers have to contract
a provider network (public or private) for their enrollees.
After 20 years of the reform, around 91 % of the population is insured, the ben-
efits package has been scarcely updated, corruption is a heavy burden for the system
and some stakeholders have dominant positions in the Colombian health market
(Bernal et al. 2012a). Colombia has experienced mediocre economic performance

O. Bernal (*)
School of Government, University of Andes, Bogota, Colombia
e-mail: obernal@uniandes.edu.co
J.C. Forero, M.D.
School of Medicine, University of Andes, Bogotá, Colombia

© Springer India 2015 31

A. Gurtoo, C. Williams (eds.), Developing Country Perspectives on Public
Service Delivery, DOI 10.1007/978-81-322-2160-9_3

32 O. Bernal and J.C. Forero

in the last decades and the economic gap between the country and the developed
nations has remained steady (Gavriria 2011). Social development, however, has
been faster than economic development, meaning that the social gap (life expec-
tancy, childhood mortality rate, literacy rate among others) between Colombia and
the developed nations is smaller (Gavriria 2011). In recent decades the country has
faced an important demographic transition characterized by a reduction in mortality
indicators and in the fertility rate: the total fertility rate for Colombia changed from
seven children per woman in 1965 to 2.5 at the end of the twentieth century (Gavriria
2011). Another important aspect regarding Colombian society is its high inequality
index. The GINI index for 2010 was 55.9, the highest in the region (World Bank
2013). This high inequality is the product of a fast economic transformation and
lagging education that has increased labor informality (Gavriria 2011).
Health status results show Colombia is going through a path of epidemiologic
transition. As a whole, the country is in the late phase of the transition, characterized
by a decline in infectious diseases together with a rise in chronic conditions (Ramos-
Clason 2012). However, disparities between regions have to be noted. The occur-
rence of consultation to the health system shows different profiles according to the
country’s different regions. In the center of the country, where most urban centers
are located, the frequency of consultation for chronic conditions is higher while in
the coasts and jungle areas (areas with lower access to health and sanitation ser-
vices) the frequency is higher for infectious conditions (Bernal et al. 2012b).
Violence has been one of the ten causes of mortality in Colombia for the past
20 years, mainly affecting males between 15 and 24 years old. This shows a mixed
disease profile for the Colombian population and a coexistence of health problems
that characterize both a developed society and a developing one. Colombia must
face this mixed demand of services and provide health solutions for a very wide
range of diseases. Regarding health indicators, life expectancy has risen in Colombia.
For the 2010–2015 period it is estimated to be 75.22 years of age, while for the
1985–1990 period it was around 68 years of age (Latorre and Barbosa 2012). Cause-
of-death data for the 1980–2009 period show myocardial infarction, heart failure,
arterial hypertension, violent acts, stomach and lung cancer and cerebro vascular
events were among the top ten causes of death (Latorre and Barbosa 2012).
Childhood and maternal mortality have declined, but the mortality rate for condi-
tions such as appendicitis and cholecystitis (whose outcomes are directly related to
health service quality and access) have risen from 2.04 deaths/100,000 inhabitants
in 1998 to 2.92 deaths/100,000 inhabitants in 2009 with a higher increase for women
(1.85/100,000 in 1998–2.85/100,000 in 2009) over men (2.23/100,00 in 1998–
3/100,000 in 2009) (Latorre and and Barbosa 2012).
On the other hand, the provision of health care in Colombia has experienced a
spate of litigiousness. Once an enrolled citizen is prescribed with a service not con-
tained in the benefits plan, an approval process has to be undertaken through an
insurance company. If this approval process is not favorable to the citizen, legal
action can be undertaken. If the judge rules in favor of the claimant, the health sys-
tem will cover the service demanded. Rise in these claims, known as “Tutelas,” has
been steep. The “Tutela” is a mechanism introduced in the 1991 Colombian

3 Analyzing the 2011 Colombian Health Reforms 33

constitution that seeks to protect the constitutional rights of the population. This
resource can be interposed in any court and is to be addressed by a judge within ten
business days. Since its introduction it has become a key element within the judicial
Between 1992 and 1996, when the Tutela system was created, health-related
proceedings represented 4 % of the total, in 2008, the percentage was 41 %
(Rodriguez Garavit 2012). In practice, these claims create a benefits package with
no effective limits given that over 90 % of claims are granted by judges. Services
outside the benefits plan that are approved by a Tutela or that are granted by the
insurance company represent an enormous economic burden for the health system.
In 2002, payments for services not covered by the benefits plan reached 23,495 mil-
lion pesos ($13 million USD), in 2010 the amount paid for such services was around
2,500,000 million pesos ($1,388 million USD) (Gamboa 2011). The claims origi-
nate from two causes: first, the benefits package has been scarcely updated in the
last 20 years. In 2011, the biggest update since the introduction of the 1993 reform
was carried out, but it was widely criticized by stakeholders that felt it did not con-
tain what the Colombian population needed. Given that some required services are
left out, citizens have to demand them through other means.

3.1.2 Health Care Reform in Colombia and Latin America

The drivers of the health care reform in Colombia in 1993 were equity, cost contain-
ment and efficient delivery of quality care. In a working paper written by
Chernikovsky, Guerrero, and Martinez in 2012, they perform an analysis of the
Colombian health reform process. The authors argue that “the positives and lessons
of the reform need to dominate Colombia’s health care system’s policy today … the
system has had achievements in health as well as income protection that run in
tandem with practically universal coverage to basic care funded by taxes and man-
dated non tax contributions.” Among the concerns that might have questioned the
Colombian reform, Chernichovsky and his colleagues list the country’s limited eco-
nomic, medical and managerial resources, “the political naiveté about the sustain-
ability of the political economy” and the consistency of the reform with the parallel
governmental and budgetary decentralization process that the country was imple-
menting in the last decade of the twentieth century (Chernichovsky et al. 2012).
Nonetheless, Colombia is not the only country in the region that has introduced
major health care reform in recent decades. Many Latin American countries have
expanded or introduced Social Health Insurance systems that have expanded cover-
age and improved financial protection while raising sustainability concerns given
that contributive social insurance coverage remains low vis-à-vis subsidized
schemes (Ribe et al. 2010). In the book Getting health reform right by Roberts et al.
(2004) the authors argue that despite the many health care reforms undertaken
around the world, stakeholders still complain about poor service, low salaries, and
costs of health delivery. They describe a health reform cycle as a process that

34 O. Bernal and J.C. Forero

requires the appropriate diagnosis, policy development, political will, and policy
implementation and evaluation. After the evaluation the process starts again with a
new problem definition and diagnosis creating an improvement cycle.
The Colombian health system faces many challenges, such as a mixed disease
profiles, service inequality, rising health provision costs, the heavy burden of cor-
ruption, an aging population and a litigious health service provision system. The
benefits plan has been difficult to define and claims difficult to contain. In this set-
ting, mistrust among the stakeholders is a major governance problem. In this con-
text, a new reform was carried out in 2011, as Law 1438, which intends to address
major health sector problems (Bernal et al. 2012a), such as benefits plan updates,
financial deficit correction, resource flow improvement, and strengthening of moni-
toring and control functions. In 2013, the Colombian government plans to propose
a new health system reform to the senate. In the exploratory phases, the health min-
ister has expressed his goal to change the nature of the insurance scheme concen-
trating it in a state agency and transforming the current health insurers into risk
managers that are not going to manage health sector resources. On the other hand,
he proposed a benefits plan reform that will include most treatments and population
needs. What these are, is not yet known, and heavy opposition in the senate by the
insurance companies is to be expected.

3.2 Purpose

To assess stakeholder satisfaction with the 2011 Colombian health reform and
measure distrust among major stakeholders, as well as political power perception
within the system.

3.3 Methods

A semistructured interview approach was used prior to which the investigators iden-
tified relevant health system reform topics (Table 3.1). A semistructured interview
form was developed that included the opinion and the qualification of trust and
political power perception regarding major health sector stakeholders ranging from
one to five with one being the lowest trust/political power possible and five the high-
est. Expert consultation was carried out involving 13 high-ranking officials from
major Colombian health stakeholders. Later, the questions regarding trust and polit-
ical power perception were openly sent online using the Universidad de los Andes
health-related mailing list, and 43 additional answers were received. Answers were
recorded and charted using Microsoft Excel.

3 Analyzing the 2011 Colombian Health Reforms 35

Table 3.1 Sample of major stakeholders interviewed

Major stakeholders interviewed
Organization Number of individuals interviewed
Major city health secretary 1
Municipal health secretary 3
Contributive regime insurers 1
Subsidized regime insurers 1
Public health service providers 1
Private health service providers 1
Patient unions 1
Academic associations 1
Pharmaceutical industry 2
National Institute of Health 1

3.4 Results

Law 1438 addresses issues of great relevance for the health system, such as benefits
package updates, decentralization of control and oversight, and cash flow improve-
ment. Most stakeholders, however, feel dissatisfied because these ideas were already
included in other regulations and were not applicable. Initially, general health sys-
tem perception was explored, finding that 7 of the 13 respondents believe that the
Colombian health system is off kilter. Mistrust is very high, on a trust scale from 1
to 5, any stakeholder was qualified with an average greater than 3.5 by the major
stakeholders that were interviewed. The results for the open survey were very simi-
lar, with the higher trust score of 3.6 corresponding to health workers. These results
are seen in Figs. 3.1, 3.2, 3.3, and 3.4.
The survey also explored political power perception. Health insurers and the
pharmaceutical industry are perceived as the institutions with the greatest average
political power (4.2 and 3.8 on a scale from 1 to 5) by the 13 major stakeholders
interviewed. The lowest scores corresponded to patient unions and the National
Health Institute.
Again, results from the open survey are very similar to the previous one. It is
important to mention that organizations perceived to have a greater political power
are the ones least worthy of trust in the eyes of the individuals interviewed.
Additionally, stakeholders interviewed expressed skepticism regarding Law 1438.
Everyone seems to agree that the law addresses issues that are very important for the
health system. But such issues have already been addressed in previous norms
which have not made a difference in stakeholder behavior or health system results.
Mistrust is a factor that impedes joint organizational work towards better outcomes.

36 O. Bernal and J.C. Forero

ry … … ts rs … … s rs
st lth lth en re lth th on ke
i ea ea u ea ea
l ni or
nm ns U
M a lH a lH v er
H ts W
lth on on go al
l at n th
ea ti ti l e ub riv tie ea
a ca H P P Pa H

Fig. 3.1 Answer to: how much do you trust the following institution? (Note: answer from the 13
major stakeholders. The score is an average)

ry … e ts s … … s s y
st l th t ut en rer ice ice on k er str
ni ea sti su er
v ni or u
i H In r nm In S S U nd
M al th ve th l th lth n ts th
a lI
th n l o l
ea ea tie l tic
al tio ea lg ea ea eu
e a H ca H H H Pa H
H N l
Lo ic t e ac
na bl va m
io Pu Pr
i ar
N Ph

Fig. 3.2 Answer to: how much political power do you think the following institution possesses?

There is uncertainty in the different organization functions within the system. In

practice, this means that some issues remain unattended given the belief that it’s
someone else’s responsibility.
Resource flow is an extremely important issue for the Colombian health system’s
stakeholders. In recent years, money flows have been so slow that the government

3 Analyzing the 2011 Colombian Health Reforms 37

4 3.8
3.5 3.4 3.4
3.1 3.2
3 2.9

2.1 2
ry ce te ts rs s s ns rs y
ist en tu en re er er io ke str
in d ti u v id vid n or u
M t en Ins rnm Ins ro ro tU W Ind
lth r in lt h ve lt h h
ien re ic al
ea pe ea lG
o ea alt alt Pa
t Ca ut
H Su al H ca H He He alt
lth tion Lo ic at
a bl He r m
He Na Pu Priv P ha
n al

Fig. 3.3 From 1 to 5, how much political power do you think the following institution possesses?
Average results from 13 major stakeholders

owes several million dollars to insurers, who in turn owe many millions to provid-
ers, making the actual state of things untenable over the medium term. In this con-
text, Law 1438 established payment periods and new revenue sources for health
institutions. However, stakeholders interviewed are very mistrustful of the results of
such measures, given that payment periods were already in order and were not met.
Additionally, they express that corruption is so rampant and the government’s over-
sight capabilities so small, that a huge part of the resources will be lost. Regarding
this issue, the law gives the National Health Superintendence more resources and
decentralizes it at the regional level. Again, most persons interviewed agree that
these are important steps towards better control of the system, but there is also the
perception of a lack of political will in the superintendence that makes some stake-
holders doubt the outcome the mentioned reforms will have.

3.5 Discussion

Governance can be closely related with government efficiency and the interrelations
within organizations that drive the performance of the health system. In this context,
power perception and organizational reliability are major determinants of political
will and action inside the organizations. As we have seen, there is a trust crisis in
Colombia that reflects both major stakeholder officials and general public opinion.

38 O. Bernal and J.C. Forero

4 3.8
3.5 3.3
3 3.1
3 2.9

2.5 2.3
2.1 2.2



ry ce te nts ers s s
er ider ions ker
s y
ist d en titu e u r id r u str
in n s m s o v o v U n o d
M inte th In vern h In Pr h Pr nt W l In
l t h e r a l o a lt l t h l t t ie a re tica
a p
He h Su al H ocal
e G
He Hea He
a Pa th C ceu
t n l i c t e al a
e al tio
u b i v a He arm
a P r Ph
lH N P

Fig. 3.4 From 1 to 5, how much political power do you think the following institution possesses?
Average results from open survey

Health sector analysis had been showing totally different results, going from very
positive results in a study call from too few to too many (IDB 1999) to a negative
one published in the book Lights and shadows of the Colombian health reform, law
100 of 1993 (Yepes 2010).
In this setting, distrust is a big obstacle in the process of public policy reform and
implementation. From the start, there is high skepticism about the effects and the
capacity to execute reforms. The fact that some points were mentioned in earlier
norms to no avail aggravates the situation. As was mentioned earlier, in the health
reform policy cycle proposed by Hsiao and colleagues, diagnosis, decision, and
implementation are key elements of the process. In a low-trust setting with a percep-
tion of disparities in political power, the decision-making process is difficult given
that stakeholders do not want to share information and responsibilities.
Colombia’s health system, like almost every other health system around the
world, has an incredible financial and organizational complexity. There are many
challenges to adequate health service provision in Colombia, like quality concerns,
high income inequality, mediocre economic performance, rising health care costs

3 Analyzing the 2011 Colombian Health Reforms 39

and litigiousness, high employment informality, and a mixed disease profile that
requires a very wide spectrum of health interventions. To overcome these chal-
lenges, stakeholders have to develop innovative ways of interacting, sharing infor-
mation, and working towards common goals. Health care reform can be very
difficult, both politically and economically, but is a key element for social develop-
ment. Although key health system issues were identified in Law 1438’s reform pro-
cess, stakeholders are highly skeptical of the results and the health system’s ability
to execute. There is the perception that needs and interests were not actually
addressed by the Law, further increasing mistrust, which hinders health sector prog-
ress and undermines governance.


Bernal O, Forero J, Forde I (2012a) Colombia’s response to healthcare crisis. Br Med J 344. doi:
Bernal O, Forero J, Villamil M, Pino R (2012b) Disponibilidad de datos y perfil de morbilidad en
Colombia. Rev Panam Salud Publica 31(3):181–187
Chernichovsky D, Guerrero R, Martinez G (2012) The incomplete symphony; the reform of
Colombia’s healthcare system. Draft working paper no. 2012-1, Proesa
Gamboa J (2011) Hacia una administración del régimen contributivo eficiente, transparente y sos-
tenible, Colombia
Gavriria A (2011) Colombia: Tendencias económicas y sociales. In: Ojeda G, Ordoñez M, Ochoa
LH (eds) Encuesta nacional de demografía y salud 2010. Profamilia, Bogotá, pp 13–25
IDB (1999) From too few to too many. Brookings, Washington
Latorre M, Barbosa S (2012) Avances y retrocesos en la salud de los colombianos en las últimas
décadas. In: Bernal O, Gutierrez C (eds) La salud en Colombia, logros, retos y recomendacio-
nes. Ediciones Uniandes, Bogotá, pp 11–66
Ramos-Clason EC (2012) Epidemiological transition in COlombia: fromi nfectious diseases to not
transmissible ones. Revista Ciencias Biomédicas 3(2):282–290
Ribe H, Robalino D, Walker I (2010) Hacia una protección social eficaz para todos en América
Latina y el Caribe – De los derechos a la realidad. World Bank
Roberts MJ, Hsiao W, Berman P, Reich MR (2004) Getting health reforms right. Oxford University
Press, New York
Rodriguez Garavit C (2012) La judicialización de la salud: síntomas, diagnóstico y prescripciones.
In: Bernal O, Gutierrez C (eds) La salud en Colombia – logros, retos y recomendaciones.
Ediciones Uniandes, Bogotá, pp 507–560
World Bank (2013) GINI index. Retrieved 2013, from World Bank Data: http://data.worldbank.
Yepes A (2010) Lights and shadows of the Colombian health reform. Universidad Javeriana,

Chapter 4
Policy Reform and Governance in Philippine
Health Regulatory System

Maria Clarisa R. Sia and Oscar P. Ferrer

4.1 Introduction

In 1990, devolution strategy for development caused the fragmentation of health

service delivery system in the Philippines (Republic Act 7160: Local Government
Code of 1991). Inequality remained high because of the unequal distribution of
health care facilities, i.e., hospitals in the country (cf. Annexure A – Policy reforms
of DOH since devolution). Thus in 1999, the Department of Health conceived the
Health Sector Reform Agenda (HSRA) to help streamline the different areas of the
health sector, namely hospital, public health, local health system, health regulation,
health care finance, and governance.
In 2004, the DOH requested the Asian Development Bank (ADB) to fund a study
for the Health Sector Development Program (HSDP) to be done in two phases, i.e.,
policy formulation in support of reforms under HSRA and the capacity building for
operationalizing the policies. As implementation framework of the HSRA, the
FOURmula One was developed to streamline policy and refine monitoring system
on the following outputs: public health activities, improved quality of health service
delivery, harmonized regulatory procedures, and increased coverage of beneficiaries
under Phil Health which is an insurance government agency (Administrative Order
No. 147s. 2004).

M.C.R. Sia (*)

Centre for Policy and Executive Development, University of the Philippines,
Baguio, The Philippines
e-mail: isasia@yahoo.com
O.P. Ferrer
College of Social Work and Community Development, University of the Philippines,
Baguio, The Philippines
e-mail: palferos5@yahoo.com

© Springer India 2015 41

A. Gurtoo, C. Williams (eds.), Developing Country Perspectives on Public
Service Delivery, DOI 10.1007/978-81-322-2160-9_4

42 M.C.R. Sia and O.P. Ferrer

For the medium term covering 2005–2010, the DOH developed FOURmula
One for Health as the implementation framework for health sector reforms in the
Philippines (Administrative Order No. 29s. 2005). It engages the entire health sector
to include the public and private sectors, national agencies and local government
units, external development agencies, and civil society. The program is directed to
achieve the following goals, i.e., better health outcomes, more responsive health
system; and more equitable health care financing. Particularly, it is aimed at achiev-
ing critical reforms with speed, precision and effective coordination directed at
improving the quality, efficiency, effectiveness and equity of the Philippine health
system as envisioned in the health regulatory reform system. In this context, an
evaluation study on “Harmonization and Streamlining of Hospital Licensing
System” was conducted in 2011 (Evaluation of the Harmonization and Streamlining
of the Hospital System 2011). The coverage of the evaluation study consists of three
stages: centralized (prior 2007), decentralized (October 2007–September 2000) –
implementation of decentralized system in regulation of tertiary hospitals (Levels 3
and 4) started January 1, 2008, up to January 8, 2011, and recentralized systems
(October 2011–present) – implementation of recentralized system in regulation of
tertiary hospitals (Levels 3 and 4) started January 8, 2011 (cf. Annexure B – Policy
mandates and directions on hospital regulatory system).
Health regulation is one of the reform strategies in this framework. It concen-
trates on the harmonization and streamlining of systems and processes identified by
DOH to make health regulation more rational and client-responsive. The main
objective of the health regulation under FOURmula ONE for Health is to assure
access to quality and affordable health products, devices, facilities and services and
good governance. The goal is to introduce interventions to improve governance
in local health systems as well as the national capacities to manage the health
Particularly, the study aims to
1. Determine the changes brought about by the DOH Administrative Orders in the
hospital licensing system (Republic Act no 4226; Administrative Order
No. 68-A s. 1989; Administrative Order No. 70-A s. 2002; Administrative Order
No. 147s. 2004; Administrative Order No. 29s. 2005; A.O. No. 2007 – 0021;
A.O. No. 2010–0035; A.O. No. 2011 – 0020; DM No. 2011-0135; and DOH
Executive order No. 102).
2. Determine the benefits/advantages as well as the risks/disadvantages of the
harmonized, streamlined, and decentralized systems on the three major stake-
holders, i.e., DOH central regulatory bureaus, Center for Healthy Development
(CHD), and the hospital regulatory industry.
3. Determine problems and ethical issues in the implementation of the
One-Stop-Shop (OSS) licensing system; and
4. Recommend health policy/determine program development implications.

4 Policy Reform and Governance in Philippine Health Regulatory System 43

4.2 Methodological Framework

As the first step, this section reviews relevant documents related to the basic concepts of
regulation of hospitals and regulatory governance (websites www.apps.leg.wa.gov;
www.chd2.doh.gov.ph/index.php/2011-10; www.llga.gov/Commission/jcar/admincode;
www.nj.gov/health/healthfacilities/documents; and www.scribd.com). Very limited
materials are published on this subject matter except those procedures followed in
the United States on hospital regulatory system in accrediting hospital operations. The
three U.S. health departments that defined their licensing system similar to that of the
Philippine DOH are as follows: (1) New Jersey Department of Health and Senior Services
(2005), (2) Illinois Administrative Code on hospital licensing requirements, and
(3) Washington State Legislature (WAC246-320-011) Department responsibilities-
Licensing-Adjudicative proceedings.
The primary reason for health regulation as indicated in the articles is to resist
extortion, oppression and manipulation related to drug price setting. Likewise, it
also concerns with the fees and charges, better enforcement of quality standard of
hospital care and licensing of construction of health facilities and application of
initial and renewal. In short, it means that the State sets rules and standards applied
to health facilities for sustained and focused control of the activities to serve the
public interest or for client satisfaction.
The DOH Health Policy Notes on “Sustaining the Gains of Effective Regulation
for Health” (Evaluation of the harmonization and streamlining of hospital system
2011), indicates that several legislations have been passed to improve the regulatory
and enforcement mechanisms of DOH regulatory bureaus in order to make health
regulation more rational and client responsive.
As the second step, in order to establish the bases of the policy evaluation study,
two major participatory governance methodologies were used. The focused group
discussion and survey were used to measure client satisfaction through the modified
Citizen Report Card (CRC) technique. Document analysis supported by key infor-
mant interview was used in undertaking the modified Continuous Improvement and
Benchmarking feedback. It also assessed the public service from its stakeholders’
point of view. The assessment was not based only on perceptions but more on
actual experiences in the process of identifying areas of strengths and weaknesses
of the systems.

4.2.1 Citizen Report Card

Primarily, a survey questionnaire was developed and administered based on the

problems identified during the Focus group discussions (FGD). The FGD asked
questions on accessibility and conduciveness of CHDs, processes involved during
application period, respondents’ preference relative to OSS licensing system and
decentralization of the licensing system. The sample size was 203 respondents –
randomly selected from a list of licensed government and private hospitals from

44 M.C.R. Sia and O.P. Ferrer

level 1 to 4, namely, Level 1 – Primary hospitals; Level 2 – Secondary hospitals;

Level 3 – Tertiary hospitals; Level 4 – Specialty hospitals. Many questions were
not adequately answered due to two reasons: difficulty of recall and some staff
involved had already resigned from the hospitals. Data were encoded and processed
using the SPSS.

4.2.2 Continuous Improvement and Benchmarking

Using document analysis and key person’s interview, this approach complements
the CRC for engaging partnership in analyzing what’s wrong with service delivery.
It facilitates a more in-depth analysis of what the service is and understanding the
service in order to set performance standards. Then the root cause of problems is
analyzed in a systematic way and provides practical alternative solutions. Then the
service is compared with the best practice in the industry to improve the service and
implement action reforms.

4.3 Results

4.3.1 Health Regulation Policies

Centralized Hospital Licensing System (2004–2007) – During this period, the

application for the different licenses was filed at the central regulatory offices
separately. The certificate of need and permit to construct a hospital as well as the
initial and renewal of licenses to operate were applied by all levels of hospitals
centrally with at the Centers for Health Development (CHD) without any account-
ability. Based on monitoring and evaluation of the DOH on this particular func-
tion, it was cost effective and client-responsive if this function was decentralized
and had unified license to operate. (Regulation/licensing of Level 1 and Level 2
hospitals had been decentralized since the time of then Health Secretary Bengzon,
in the early 1990s [1992–1994] while DOH-Central Office retained the regulation
of Level 3 and Level 4 hospitals, which was decentralized in 2008 but again re-
centralized in 2011.)
Decentralized Hospital Licensing System (2008–2011) – In 2007, Administrative
Order 2007-0021 (Streamlining and Harmonization of Regulatory Processes) and
0024 were issued to harmonize and streamline the hospital licensing system from
level 1 to 4 for both government and private hospitals. Beginning October 2007
(fully implemented in October 2007), these administrative orders were implemented
for initial and renewal of licenses for 2008 operations, particularly to streamline
regulatory systems and processes–establishment of OSS; reduce the cost of regula-
tion as well as transaction costs of the private sector; free-up resources that could be
used to strengthen standards development, enforcement, surveillance as well as the
oversight functions of DOH regulatory offices.

4 Policy Reform and Governance in Philippine Health Regulatory System 45

In effect, the licensing process was turned over by the central regulatory bureaus
(CO) to the Centers for Healthy Development (CHD) with the establishment of the
One-Stop Shop Hospital Licensing System in 16 regions of the country. Updates in
Hospital Licensing are as follows:
• A.O.No.2011–0020 “Stream lining of Licensure and Accreditation of Hospitals”
states that a DOH licensed hospital will automatically be accredited by Phil
Health as Center of Safety without the need for a separate survey by Phil Health.
This is DOH issuance in 2011.
• D.M.No.2011–0135 “A Survey of Services and Equipment Available in Hospitals
Nationwide” is a study conducted by BHFS to map out the services/equipment
in hospitals in keeping with Kalusugan Pangkalahatan/Universal Health Care.
Knowledge of the distribution will improve access to the much-needed hospital
services and equipment. This is DOH issuance in 2011 also.
• Draft policy entitled “Rules and Regulations Governing the New Classification
of Hospitals and Other Health Facilities” – soon to be approved. This draft policy
is already with the Office of the Health Secretary as of May 28, 2012.
Recentralized Hospital Licensing System (2012–present) – After 3 years of
implementation of the Administrative Orders, problems were reported in the imple-
mentation of the one-stop-shop licensing system from the perspective of the three
major stakeholders. To resolve these problems, Administrative Order 2010-0035-
“Re-Centralization of Issuance of DOH-PTC, LTO of New/Initial Hospitals and
Renewal of LTO of Levels 3 and 4 Hospitals” (fully implemented on January 8,
2011) was issued in December 2010 to recentralize the hospital licensing system
except the function of renewal of license to operate hospital levels 1 and 2 which
was retained with the CHD.
• DOH-BHFS is mapping out all services and equipment available in hospitals
nationwide, particularly Levels 3 and 4 hospitals.
• A rationalization plan is not evident after 2½ years of decentralization. There is
no approved rationalized standard staffing requirement.
• Inadequate number of CHD technical staff among the current members of
Licensing Regulation and Enforcement Division (LRED).

4.3.2 NCPAG Evaluation Results

After 4 years of implementing the changes in the hospital licensure system, DOH
felt that an evaluation be made to gather evidence on the effects of the changes. The
evaluation is also deemed important in determining the benefits that the stakeholders
have derived from the streamlined and decentralized licensure system. It is in the
above context that an “Evaluation of the Harmonization and Streamlining of
Hospital Licensure System” was requested by DOH from CPED-NCPAG through
UPPAF in 2010 to serve as bases to identify gaps and constraints in the efficient and

46 M.C.R. Sia and O.P. Ferrer

effective utilization of the single licensure system for hospitals through and offer
needed reforms such as systems modification and man power development.
The Center for Policy and Executive Development (CPED) of the National
College of Pubic Administration and Governance (NCPAG), University of the
Philippines is a policy think tank, research and consulting office. It has extensively
involved itself in capacity development initiatives and institution building programs
in the country as well as developing countries in the Asia Pacific Region.
It is a leading resource center on national, corporate and regulatory governance;
aid management; public policy studies and reform; public finance; and in develop-
ing ethical values and designing responsive programs on governance through net-
working and partnership with government, private sector, civil society and
international organizations. It has strong advocacy functions aimed at promoting
good governance and to effectively influence policy and decision making in the
country. CPED accepted the challenge of DOH to evaluate the harmonization and
streamlining of hospital licensure system, as an advocacy commitment to fellow
government workers towards improving their policies and refining its concomitant
implementation process.
On January 12, 2011, the CPED-UP-NCPAG Project team met with concerned
DOH staff to discuss the terms of reference of the evaluation study on the decentral-
ized, harmonized, and streamlined licensure system of the DOH. It was in May 2011
when the DOH gave the signal to proceed with the study. In May 2011, the DOH
identified the regions and provided the list of hospitals which served as samples of
the study. It can be gleaned from the communication annexed to this report the dyna-
mism and seriousness of the different stakeholders in the conduct of the study.
Generally, the following assessments can be mentioned:
• The licensing policy with centralized system, OSS and presently recentralized is
an attempt to meet the standards of health in view of its health for all mandate.
The CO (BHFS and other regulatory bureaus involved) and the CHDs are consci-
entious about their given tasks and responsibilities. There is no evidence of
default or that they are remiss in their duties. What needs to be pointed out,
though, is how responsive to the context and needs of stakeholders is the policy
is? This is a question of Governance delivery mechanism. There are good cases
and considerable achievements in the front lines, but these improvements are
humble compared to the enormous challenges faced by the constituents and the
country as a whole.
• Our stakeholders find it difficult to meet the requirements of the policy.
• Personnel requirement is always inadequate, which is a problem common to all
government units.
• In line with the style and method of work of personnel involved in the licensing
process, there are varied ways of operationalizing the implementation depending
on the professional degree, attitude, or interpretation of the policy.
• The continuity and sustainability of the policy suffer due to the political environ-
ment. The politics and bureaucracy has a cultic milieu, meaning it is person
oriented and not system oriented. The problem is, these leaders come and go.

4 Policy Reform and Governance in Philippine Health Regulatory System 47

Those who remain are the career personnel who stay and eventually retire from
their jobs.
• Corollary to the inadequate personnel, the budget support for the operations and
implementation of the licensing system is also insufficient.
• Delays in the immediate release of licenses occur due to inadequate communica-
tion, transmittal system, feedback mechanism and distance.
• The politics of the land, where political leaders meddle with procedural matters
also create problems in the strict implementation of the licensing process.
• The licensing system is a perfect tool and ensures the implementation of the
standards of excellence in health service delivery. The license plays that role and
reflects the level of compliance of hospitals, which assures our people and elicits
trust and confidence among our citizens.
• In view of the responsiveness and keenness which is a sublime expectation from
the government, for that is what it is mandated to do constitutionally, the decen-
tralized licensing system is a much favored policy.
• The future indicates a leveling up with the use of available more advanced tech-
nology, particularly the on-line system, which may address the proximity, bud-
getary, and personnel issue. It can also facilitate better management flow and

4.4 Recommendations by NCPAG and DOH

There are analytical dimensions implied in the findings of the study which were
validated in the national workshop, and subsequently formulated into policy recom-
mendations taking into consideration good practices in dealing with the subject of
the research.
The following were suggested to improve the hospital licensure system in the
• Decentralize the hospital licensure system to the CHDs for all hospital levels,
initial and renewal LTOs. The central office is recommended to do standard set-
ting, monitor the performance of the CHDs, and review their LTO issuances.
• Improve the OSS specifically in the area of online application and data basing.
• Publication of manual for the CHDs that will provide guide lines on hospital
licensure systems, procedures, requirements, and fees.
• Continue the yearly dialogues between the central office and CHDs to solve
procedural, technical, and policy problems and issues.
• Make LTOs valid for more than a year so that hospitals could focus on serving
the public, and to give enough time for the CHDs and the central office to moni-
tor them given the lack of manpower of the latter.
• Assign more permanent personnel at the CHDs, especially those needed for
inspection teams.

48 M.C.R. Sia and O.P. Ferrer

• Provide vehicles to CHDs or increase their budgets for transportation expenses

especially to those CHDs catering to remote areas/island provinces.
• Increase the budgets of the CHDs for staff recruitment and transportation
• Conduct more training to further professionalize the CHD staff especially in the
area of information and communication technology (ICT).
• Synchronize Phil health and DOH instruments for accreditation and licensing.
Significantly, all of these recommendations were formulated by regulatory offi-
cers of the Central Office and the DOH regions, together with representatives of
hospitals in the field who gathered on February 22, 2012, during a National
Workshop at the UP-NCPAG. These are substantive policy recommendations
endorsed after the plenary participants’ discussions during the workshop, which the
EXECOM or any other policy-making assembly of DOH can consider. In that way,
this policy research would truly be considered as database and feedback informa-
tion, in order for DOH to continually be nurturing, enabling and responsive to its
constituents and to the citizenry as a whole.

4.5 Conclusion

The general framework for understanding the organizational and systems efficiency
or the contrary in the licensing framework, is studied here in this research. The dynam-
ics concatenation of the elements, if functioning well, will result in a cohesive orga-
nization and excellence in service delivery. These elements are important, and they
are highlighted here to underscore the lessons: Organization and Capabilities,
Personnel or Human Resource, Budget, Management or Systems and Procedures,
Mechanism for Sustainability, and Proscriptions.
In other words, the whole hospital licensing policy of the DOH is complete with
the tapestry of elements needed to implement in a bureaucracy. The question, how-
ever, is how to improve on its efficiency, sustainability, and responsiveness to
humans involved in this whole process. This is what the policy research has done in
this evaluation. By looking into the three measures, it hopes to clarify where and
how the policy can be updated, refined, or improved towards a better system so that
the DOH’s clam or for higher standards on health delivery can be fulfilled. To this,
the following points can be mentioned:
The licensing policy with centralized system, is an attempt to meet the standards
of health in view of its health for all mandate. The CO (BHFS and other regulatory
bureaus involved) and the CHDs are conscientious about their given tasks and
responsibilities. There is no evidence of default or amiss in their duties. There are
good cases and considerable achievements in the frontlines, but these improvements
are humbled compared to the enormous challenges faced by the constituents and the
country as a whole. As an archipelagic nation, the island rural hospitals may not

4 Policy Reform and Governance in Philippine Health Regulatory System 49

easily access the licensing centers. Their resources and time are not adequate to
meet the requirements of the policy. If their rural health facilities’ mandate is to
deliver health services immediately to the people, then the licensing policy is a
deterrent and not an enabling policy. While it is our clamor to lessen bureaucratized-
tapes and make the bureaucracy work for our people without sacrificing the stan-
dards of excellence in health, the consequent effect is the contrary. It is not bringing
the government to the people. It is just the opposite. Therefore, the policy is consid-
ered not nurturing, not responsive, and an added burden to our constituents.
Our stakeholders find it difficult to meet the requirements of the policy. The
requirements about ancillary, bed capacities, staff and technician requirements,
license effectivity, processes, administrative implications, pharmacy regulations,
may need revisiting to accrue to the needs of our front line health service providers.
Personnel recruitment is always inadequate, which is a problem common to all
government units. In addition, there are technical expertise and specialization, not
just ordinary competences, needed in the whole licensing process. The need for a
health physicist, licensed medical technician, and a doctor in the team, is an exam-
ple that creates problem for personnel complement. In view therefore of sustain-
ability mechanism, what can be proposed to address this personnel requirement
given the reality that there are very few technical people around in the locality or
even in the Philippines?
In line with the style and method of work of personnel involved in the licensing
process, there are varied ways of operationalizing the implementation depending on
the professional degree, attitude, or interpretation of the policy. Some are stricter,
some others are flexible, some are accommodating, and some others are nurturing
and pampering. This is a small problem that can be addressed through pre-training,
if the Rate Plan would materialize. The continuity and sustainability of the policy
suffer due to the political environment. Every time there are changes in the leader-
ship, changes in the policies and platform of governance change too. The political
and bureaucratic milieu are very personalized and not system oriented. So it is antic-
ipated that there will be ever-changing policies each time a new DOH Secretary is
appointed. With this situation, the policy needs a more strategic perspective that
balances focus on both the career personnel who stay until they retire and the leader-
ship that are replaced often. Corollary to the inadequate personnel, the budget sup-
port for the operations and implementation of the licensing system is also insufficient,
which is common to all government offices. This in fact hinders the hiring of techni-
cal people and other complementary personnel to fully implement the policy. In
addition, there is no retention arrangement in the licensing fee generated from this
policy. If there is such an agreement, it can contribute to the Maintenance and Other
Operating Expenses (MOOE) of the offices implementing the policy.
There is a Project System (PS) budget, but the funding support and mobility
logistics to implement field monitoring and routine inspection to ensure compliance
and maintain standards in health among hospitals is lacking or none at all. Delays in
the immediate release of licenses occur due to communication means, transmittal

50 M.C.R. Sia and O.P. Ferrer

system, feedback mechanism, and distance. The politics of the land, where political
leaders meddle with procedural matters also create problems in the strict implemen-
tation of the licensing process. There are instances, where chief executives meddle,
and thus hinder the process of fulfilling the necessary requirements in issuing
license. Moreover, personnel movements where doctors and other technicians are
assigned in the locality are too often affected by the political affiliation or loyalties
of the latter. The licensing system is a perfect tool and ensures the implementation
of the standards of excellence in health service delivery. The license plays that role
and reflects the level of compliance of hospitals, which assures our people and elic-
its trust and confidence among our citizens.
In view of the responsiveness and keenness which is a sublime expectation from
the government, and is mandated constitutionally, the decentralized licensing sys-
tem is a much favored policy. Except for the initial application to operate, which can
be done at the Central Office to ensure the quality standard, the decentralized sys-
tem is more enabling, friendly, and responsive. The future indicates a leveling up
with the use of available advanced technology, particularly the online system, which
may address the proximity, budgetary, and personnel issues. It can also facilitate
better management flow and communication. In summary, licensing of hospitals is
a regulatory function of DOH in ensuring the compliance by both public and private
health care providers to basic standards. These standards are set not only to maintain
quality of services but also to prevent unwanted spread of diseases, ensure accuracy
of medical equipment diagnostic results, and maintain qualified professional hospi-
tal personnel.


Annexure A

Policy Reforms Since Evolution on Philippine

Health Regulatory System

The Philippines recognizes health as a basic human right. The protection and pro-
motion of the right to health of every Filipino and instills health consciousness
among them is given emphasis by the government.
Significant milestones in the country’s health care delivery system were adoption
of Primary Health Care in 1979, integration of public health and hospital services in
1983, reorganization of the Department of Health in 1987, and devolution of health
services in 1992 to Local Government Units in accordance with the Local
Government Code of 1991 (Republic Act 7160). The DOH streamlined its organiza-
tion and functions in 2000 through Executive Order No. 102.

4 Policy Reform and Governance in Philippine Health Regulatory System 51

Health Sector Reform Agenda

Health regulation has become a major function of the Department of Health, espe-
cially after the devolution of health services to the LUGs. In accordance with
Executive Order 119 issued in 1987, the regulatory functions of the DOH are vested
in the following agencies:
• Bureau of Food and Drugs that handles policy formulation and monitoring on
matters concerning processed food, drugs, medicines, medical devices, cosmet-
ics and household products containing hazardous substances, and the formula-
tion and implementation of rules, regulations and standards;
• Bureau of Licensing and Regulation (BLR) is the formulation of policies and
establishment of standards for the licensing and regulation of hospitals, clinics
and other health facilities, including the enforcement of laws concerning the
operations of these facilities.
• Bureau of Research and Laboratories that is responsible for developing and for-
mulating plans, and policies for the accreditation and licensing of laboratories,
blood banks and entities handling biological products;
• National Quarantine Office who is in charge of formulating and implementing
rules and regulations to prevent the entry and spread of quarantinable diseases
into the country subject to international health regulations. It has supervision
over the sanitation of all ports and airports of entry including their environs and
the vessels and aircraft using these entry points.
• Radiation Health Service is responsible for formulating and implementing stan-
dards for radiation facilities and devices, whether used in medicine, dentistry,
veterinary medicine, industry, education, research, anti-crime, military and con-
sumer applications.
FOURmula One for Health
FOURmula One for Health (F1) is aimed at achieving critical reforms with speed,
precision and effective coordination directed at improving the quality, effective-
ness, equity, and efficiency of the Philippine health system. It is directed towards
achieving the end goals of better health outcomes, a more responsive health sys-
tem, and more equitable health care financing. These goals are aligned with the
Millennium Development Goals (MDGs) and Medium Term Philippine
Development Plan (MTPDP) and are articulated in more detail in the National
Objectives for Health.
By virtue of Executive Order 102, “Redirecting the Functions and Operations of the
Department of Health,” the regulatory agencies are composed of the Bureau of
Food and Drugs, the Bureau of Health Facilities and Services which is formerly
Bureau of Licensing and Regulations, the Bureau of Health Devices and
Technology, and the Bureau of Quarantine.
Health regulation reforms aim to assure access to quality and affordable health
products, devices, facilities, and services, especially those commonly used by the
poor. One of the identified strategies under this reform component is Harmonizing

52 M.C.R. Sia and O.P. Ferrer

and streamlining licensing, accreditation, and certification systems. In order to

harmonize and streamline regulatory processes for health facilities; to reduce
transaction costs and the costs of provision of regulatory services; and to increase
customer trust and satisfaction, a One-Stop Shop System for the Licensure of
Health Facilities was established at the DOH Central Office and the Center for
Healthy Development (CHD). The system include the licensure of hospitals but
eventually cover other regulated health facilities that provide ancillary services
such as dialysis clinics, ambulatory surgical clinics, medical facilities for over-
seas workers and sea farers, and similar health facilities
One of the features of the One-Stop Shop Licensure System is that a single license
to operate is issued to the health facility that covers all services provided within
the premises of the health facility, including diagnostic and other ancillary ser-
vices. Another important feature is the automatic renewal of license where in the
license to operate is renewed upon submission of required documents without
prior inspection of the health facility. Compliance to regulatory standards is
determined during intensified monitoring visits by the regulatory officers from
CHDs and DOH regulatory bureaus.

Annexure B

Policy Mandates and Directions on Hospital Regulatory System

The basis of the legal authority for the inspection standards is Republic Act No.
4226, June 19, 1965: “An Act Requiring the Licensure of All Hospitals in the
Philippines and Authorizing the Bureau of Medical Services to Serve as the
Licensing Agency.”
Table 4.1 demonstrates the Issuances of the Department of Health relative to the
Implementing Rules and Regulations on licensure of hospitals from 1989 to 2005.
In Administrative Order No. 68 – As. 1989 Revised Rules and Regulations
Governing the Registration, Licensure and Operation of Hospitals in the Philippines,
hospitals were classified into primary, secondary, and tertiary. Tertiary includes both

Table 4.1 Classification of hospitals

AO 68-A s. 1989 AO 70-A s. 2002 AO 147 s. 2004 AO 029 s. 2005
Primary Infirmary Infirmary Level 1
First level- referral hospital Primary care Level 1
Secondary Second level- referral hospital Secondary care Level 2
Tertiary Third level- referral hospital Tertiary care Levels 3 and 4

4 Policy Reform and Governance in Philippine Health Regulatory System 53

teaching and nonteaching hospitals. This Order was superseded by Administrative

Order No. 70-A s. 2002, which was implemented in January 2003. However, the
Philippine Hospital Association lobbied against this Order which led to its suspen-
sion on November 19, 2003. Again, there was a move to restrain the implementation
of Administrative Order No. 147s. 2004 because of the clamor of some hospital
owners to delete infirmary from the hospital nomenclature. The current
Administrative Order No. 29 s. 2005 was implemented in January 2006 categoriz-
ing hospitals into four (4) levels.


Administrative Order No. 68-A s. 1989 Revised Rules and Regulations Governing the Registration,
Licensure and Operation of Hospitals in the Philippines
Administrative Order No. 70-A s. 2002 which was implemented in January 2003
Administrative Order No. 147s.2004
Administrative Order No. 29s.2005
A.O. No. 2007 – 0021 Streamlining and Harmonization of Regulatory Processes
A.O. No. 2010–0035 Re-Centralization of Issuance of DOH – PTC, LTO of New/Initial Hospitals
and Renewal of LTO of Levels 3 & 4 Hospitals
A.O. No. 2011 – 0020 Streamlining of Licensure and Accreditation of Hospitals
D.M. No. 2011–0135 A Survey of Services and Equipment Available in Hospitals Nationwide
DOH Executive Order No. 102 Redirecting the Functions and Operations of the Department of
Evaluation of the Harmonization and Streamlining of Hospital System: Project Overview, January
Republic Act No. 4226, June 19, 1965: An Act Requiring the Licensure of All Hospitals in the
Philippines and Authorizing the Bureau of Medical Services to Serve as the Licensing Agency
Republic Act 7160 Local Government Code of 1991
www.apps.leg.wa.gov (WAC 246-320-11 Department responsibilities – Licensing – Adjudicative
www.chd2.doh.gov.ph/index.php/2011-10 (Hospital)
www.llga.gov/Commission/jcar/admincode (Joint Committee on Administrative Rules-
Administrative Code on Public Health)
www.nj.gov/health/healthfacilities/documents (N.J.A.C. TITLE 8 Chapter 43 G Hospital Licensing
www.scribd.com. May 11, 2011 (Health Policy Notes – Sustaining the Gains of Effective
Regulation for Health)

Part II
Infrastructure: Development
and Delivery

Chapter 5
Technology Diffusion: The Case of Cloud
Computing in India

Ajith Kumar Vasudevan, Anand Kumar, and R.K. Mittal

5.1 Introduction

Today India is at the crossroads of history: there is the opportunity for economic
growth and the challenge of ensuring that its entire people benefit from it. Societies
and countries which have leveraged information technologies are better placed in
terms of quality of livelihood. The World Bank (2008) report on Global Economic
Prospects points to the fact that technology is a critical determinant to sustainable
growth and poverty reduction.
Cloud Computing is one technology on the horizon, developed as a result of the
information revolution and which has potential for far-reaching changes. This chap-
ter explores how the potential of Cloud Computing Technology in India can perco-
late not only at organization levels to ensure that the benefits of computing power
are made available to the masses.
Public service delivery in India has always been a monumental task, with its
multitudes, and the varying languages and culture among them. In this regard, an
often quoted analysis done in 1990s is that only less than 10 % of the money allotted
reaches the final beneficiary. It has been observed that public service delivery has
greatly improved in developed countries with the use of information technology,
however the methods used in developed countries cannot simply be copied in the
developing countries. The problems of public service delivery in India are unique

A.K. Vasudevan (*)

Process Development, Etisalat, Abu Dhabi, United Arab Emirates
e-mail: ajithv10@yahoo.co.in
A. Kumar
Electrical and Electronics Engineering, BITS- Pilani,
Dubai Campus, Dubai, United Arab Emirates
R.K. Mittal
Director, BITS-Pilani, Dubai, United Arab Emirates

© Springer India 2015 57

A. Gurtoo, C. Williams (eds.), Developing Country Perspectives on Public
Service Delivery, DOI 10.1007/978-81-322-2160-9_5

58 A.K. Vasudevan et al.

and the solutions to increasing its efficiency have to be built on an exponential scale
on solutions successful elsewhere.
Government of India in recognition of the potential of information technology has
embarked on many ambitious programs. It has initiated the issue of a unique digital
identification code to its entire citizen, to enable the government to properly identify
the recipients of public service. The government has also chalked out and started
implementation of a National e-Governance Program (NeGP) to build infrastructure,
encourage e-governance, and promote Information and Communication Technology
(ICT) and overall act as an incentive for innovation, research and development.
India has also deployed technology in various fields. One major success area to
mention would be the use of electronic voting machine to replace the paper ballot
system in electing governments to its three tiers of governance. It has also used ICT
technology in activities of daily need like application and processing of driving
licence, acquiring passports, banking transactions, train reservations, online pay-
ment of income tax and property tax, requesting utility services etc. Most of the
states in India have completed digitization of its land records.
Ever since Evert M. Rogers published his book Diffusion of Innovation in 1970,
various studies on diffusion of technology have been carried out (Everett 2003). All
the studies bring out the fact that new technologies however promising cannot be
left to the natural forces for its diffusion. Diffusion of any technology is dependent
on varying factors and has to be managed.
In short, Cloud Computing is a utility model of computing rather than the
present-day desktop model of computing. This chapter brings out a model for diffu-
sion of Cloud Computing technology in India. Technologically, it is a combinatorial
of Internet, telecommunication and software technologies. The chapter will study
the existing models of diffusion of Internet technology and factor in the socioeco-
nomic condition in India to build the proposed model of diffusion of Cloud
Computing in India. From such a Cloud Computing technology diffusion model,
the more influential parameters are analysed.
A statistical comparison of Internet penetration in various countries is made to
bring out the need of developing the digital infrastructure in the country. This chap-
ter addresses the need for a digital infrastructure model in order for Cloud Computing
Technology to diffuse and be made available on a large scale for individual users
and also explores if such an infrastructure model can be deployed in the short term.
This chapter would also explore the ideal business model for effective diffusion of
Cloud Computing in India.

5.2 Diffusion of Technology

Getting a new idea adopted, even when it has obvious advantage is often very
difficult. Many innovations require a lengthy period, often of many years,
from the time they become available to the time they are widely adopted.
(Quoted Everett M. Rogers in his book Diffusion of Innovations)

5 Technology Diffusion: The Case of Cloud Computing in India 59

Early Early Late

Innovators Laggards
Adopters Majority Majority

Technology Adoption Process

Fig. 5.1 Adoption of a technology by a population

Everett Rogers’ scholarly and scientific study of Diffusion of Innovations has

often been considered as the standard book of reference on diffusion studies.
Adoption and Diffusion: Technology adoption and diffusion theories have
attempted to model the whole process, to enable better management of the technol-
ogy. Adoption of a technology refers to the stage in which a technology has been
adopted, that is selected for use by an individual or an organization. Diffusion refers
to the stage in which the technology has diffused or one at which the technology has
spread to a large section of population for general use and application.
Technology Adoption Life Cycle: The technology adoption life cycle is a repre-
sentation of the response of any given population to the offer of an innovation and
can be generalized as is in Fig. 5.1.

5.3 Theory of Diffusion

Diffusion is the process by which (1) An Innovation (2) Is Communicated

Through Certain Channels (3) Over Time (4) Among the Members of Social
System. (Everett 2003, Diffusion of Innovations)

Innovation and Technology: Any idea, design, system or product that is consid-
ered by the unit of adoption which could be an individual or an organization as
something new is called as an innovation. Often the words ‘innovation’ and ‘tech-
nology’ are used synonyms. A technology often involves an instrumental action and
one that is perceived as new and which could solve a problem or better an existing
solution. A technology can be seen as having two parts to it. A hardware part –
which consists of the material, or physical aspect, that is the solution and a software
part – which is the information about the solution, its benefits, the way to use etc.
This definition of technology highlights the uncertainty-reduction aspect of

60 A.K. Vasudevan et al.

technology. Hence technology is actually information and the transfer of technology

is a communication process and therefore technology transfer is the communication
of information.
Diffusion of technology – the communication: In the process of communication
the participants to the process identify or create information, then share it with
others in order to reach a common conclusion. That is communication can be
defined as a process of convergence or divergence as the participants share the infor-
mation to converge (move towards each other’s view) or diverge (move apart)
depending on their perception to the information shared. In technology transfer the
communication is of a particular type in that the information shared is about a new
idea, design or product.

5.4 Classical Model of Technology Diffusion

The classical model as proposed by Rogers is depicted diagrammatically below in

Fig. 5.2.

5.5 Influences to the Classical Model

The actual process of diffusion of a technology has a number of influencing factors,

which are interrelated. This complexity can largely be built into a model and
managed. The main use of such a model is to manage the regularity in the process
and also to help in focusing the radars on the environmental factors of the environ-
ment it is diffusing in.

5.6 Technology Diffusion in Developing Countries

Diffusion of the same technology in varying cultures and countries has occurred at
varying rates because the environment in which it is being diffused is different.
However a distinctive pattern has been observed in diffusion of technology in devel-
oped and developing countries which is based on income level.
The World Bank report notes that, the level of technological achievement
observed in a country is positively correlated with income levels. However, consid-
erable variation is apparent within income groups. Among other things, this varia-
tion reflects the nature of the technology being observed, the impact of the overall
policy framework on the ability of technologically sophisticated firms to grow, and
the extent to which governments have given priority to and had success in delivering
services with a strong technology component.

5 Technology Diffusion: The Case of Cloud Computing in India 61

Antecedents Process Consequences

Receiver Adoption
Variable Adoption
1. Personality characteristics (e.g. general
attitude towards change ) 1. Replacement
2. Social Characteristics (e.g. cosmopolitanism) 2. Disenchantment
3. Perceived need for the innovation
4. Etc.
Communication Sources


Knowledge Persuasion Decision Confirmation


Perceived Later
Social Adoption
characteristics of Rejection
Variables Innovations
1. Social system norms 1. Relative advantage
2. Tolerance of deviancy 2. Compatibility
3. Communication 3. Complexity
Integration 4. Triability
4. Etc. 5. Observability


Fig. 5.2 Classical diffusion model

5.7 Mobile Communication Penetration in India

The study of diffusion of mobile communication technology in India has the

following characteristics.
• One of the major and recent success stories of diffusion of technology in India.
India has achieved a penetration of 62 mobile cellular subscriptions per 100
inhabitants against that of 64 for China, even though India introduced the mobile
phone 10 years after China.
• One area in which a regulatory authority was overseeing the diffusion of technol-
ogy and the government actively intervened with policies and framework
A comparison of the mobile tele-density (number of telephone lines per 100 people)
in China and India is presented in Fig. 5.3.

62 A.K. Vasudevan et al.

Fig. 5.3 Comparison of mobile tele-density between China and India (Based on ITU statistics)

The factors that have contributed to the diffusion of mobile communication

technology in India are as follows
• Low tariff
• Public–private participation
• Multi-level competition leading to a highly competitive market.
• Flow of investments

5.8 The Urban Rural Divide in India

India is a country where 69 % of its population live in villages and 31 % in cities

(as per 2011 Census of India). On this very account, it is important to analyse the
diffusion of technologies across rural India.
A comparison of urban and rural tele-density in India is presented in Fig. 5.4.
Even though a digital divide does exist between what has been achieved in
urban and rural India, it does not point to any insurmountable barrier. On the con-
trary it points to the need of a different ecosystem for diffusion of technologies in
rural India.

5 Technology Diffusion: The Case of Cloud Computing in India 63

Fig. 5.4 Urban and rural tele density (Based on telecom regulatory authority India statistics
(TRAI 2008a))

Table 5.1 Literacy rates in Classification Population Literacy rate* (%)

All India 1.2 Trillion 74
Urban 31 % 85
Rural 69 % 69
Source: Census (2011)
* The percentage of persons aged 7 and above who can
read and write with understanding in any language

5.9 Factors to Diffusion of Cloud Computing in India

5.9.1 Literacy

Sixty-nine percentage of India with a literacy rate of 69 % (refer Table 5.1 above)
provides a real potential for growth and diffusion of technologies. However rural India
does not constitute a homogeneous entity, rather have varying languages and culture.

5.9.2 GDP

The following statistics presents the strength of the economy of rural India.
• The contribution of the rural economy to national GDP is about 40 %
• Employment-generating schemes such as the NREGA are creating alternative
employment opportunities to agriculture, during non-harvest seasons, adding
more to disposable incomes

64 A.K. Vasudevan et al.

Table 5.2 Mobile coverage of rural areas in India

No. of inhabited Villages covered Villages covered % rural electric % rural mobile
villages (2001) by mobile by electricity coverage coverage
59,3731 407,112 473,136 80 69
Source: TRAI

Table 5.3 Comparison of Internet usage

No. of subscribers per 100 inhabitants
UK USA Brazil China India
85 79 41 34 8
Source: ITU

• Seventy percent of India’s gold demand (US$30 billion) comes from rural India
The Telephone Regulatory of India (TRAI 2003, 2008b) in its investigation
towards increasing rural mobile penetration had the following observations
• The Indian villager greatly values the return for the money invested.
• Infrastructure sharing in rural areas has not achieved the desired level.
• Unavailability of customized and locally relevant applications.
• Even though studies have shown on how telecom usage greatly affects the growth
of economy, villagers find it hard to perceive it and hence wants to avoid spending
hard-earned money.
A look at the figures (refer Table 5.2) points towards the pervasiveness of the mini-
mum infrastructure in rural areas of India and which should be leveraged for the
diffusion of Cloud Computing.

5.10 Computer, Internet and Broadband Access in India

Internet is one of the pillar technologies of Cloud Computing and hence it is impor-
tant to analyse the current penetration of Internet in India (Fig. 5.5).
The figures for Internet penetration in India is a very dismal one. A comparison
with other countries is presented above in Table 5.3. (Data Source: ITU Statistics
for 2010).
The increasing number of mobile Internet users in India provides a silver lining
to the issue and indicates the growing segment of Internet access. A study by Google
(Economist 2011) on Internet usage found the following.
• Fourteen billion web pages were accessed by mobile users in India in
February 2010.
• There are 25 million mobile Internet users in India.

5 Technology Diffusion: The Case of Cloud Computing in India 65

Fig. 5.5 Computer, broadband and internet usage in India (Source: ITU and MAIT (Manufacturing
Association of Information Technology 2011))

5.11 Cloud Computing: What Is in It for India?

The Cloud Computing architecture is comprised of two significant parts: the front
end and the back end. The front end is the side at which the user of the computer or
the client himself is able to access. This involves the client’s network or his com-
puter and the program or programs that he uses to access the database or the servers
that contain all the data. The back end of the Cloud Computing architecture is the
Cloud itself, which is the collection of all related information saved in the servers
that the client wishes to have access to. The front end and back end of the Cloud
Computing architecture are connected through a communication network, which is
mostly the Internet, because of its near ubiquity in the digital world.
Cloud Computing, taking advantage of the strengths of Internet technologies,
has opened the door for a new utility model of information technology. The user
instead of buying and setting up IT systems – the servers, the storage devices, the
networking, the software, the databases can now tap into the Cloud for his IT
requirements, regardless of where they are located.
In Cloud Computing the computing resources, the ability to process instructions
and store data is no longer in a desktop or a computer in a company’s IT centre, it is
moved to the Cloud – a network of data centres. This ensures that more powerful
resources are centrally located and used effectively. The situation is similar to the
one a century ago when users moved towards a model of purchasing electricity for
the amount that they consumed from power utilities, from the model in which the
consumers had their own power generators.
How is diffusion of Cloud Computing Technology going to help the Indian
society? The obvious answer to this question is it increases the computing power of
its citizens. And an answer to what an increase in computing power does to the
society, would be limited only by the horizon one visualizes.

66 A.K. Vasudevan et al.

Table 5.4 NRI rank comparison

NRI score NRI rank NRI score NRI rank
Country 2010–2011 2010–2011 2009–2010 2009–2010
India 4.03 48 4.09 43
Source: World Economic Forum

Table 5.5 Usage sub index published by World Economic Forum

Usage subindex Individual usage Business usage Government usage
Rank Country Score Rank Score Rank Score Rank Score
67 India 3.34 98 2.83 45 3.38 47 3.82

The report further also publishes a sub-index on the level of computer usage and
segregates it into individual, business and government level.
The World Economic Forum (2011) publishes a Network Readiness Index (NRI)
every year, an index which captures the extent to which countries leverage ICT
advances for increased competitiveness and development. The NRI Index for the
year 2010–2011 lists India five positions lower than that of year 2009–2010 as
shown in Table 5.4.
The report further also publishes (refer Table 5.5 above) a sub-index on the level
of computer usage and segregates it into individual, business and Government level.
India ranks at 98th position in individual computer usage among the 134 coun-
tries graded. This is one area, which the country needs to address urgently in its
march to progress. The possible reasons to this scenario are
• High cost of computer
• Acquiring additional storage
• Upgrading processor and other resources
• Cost of software
• Upgrading the software
• Lack of collaborative possibilities
Cloud Computing can overcome all of the above obstacles and ensure computing
power is available to all citizens. Cloud Computing turns capital expenditure into
operational expenditure, which makes things much easier and cheaper. Establishment
of a Cloud Computing infrastructure will see thousands and thousands of applica-
tions which will be useful to an ordinary citizen.

5.12 Methodology

The research problem has been selected based on researcher’s interest in doing
research that will provide some guidelines on using technology to benefit the com-
mon man in India and in ensuring the wealth reaches this common man. Cloud
Computing was chosen since it is still in the nascent stage. Furthermore, cloud
computing is currently driven by the industry for the industry. Using cloud

5 Technology Diffusion: The Case of Cloud Computing in India 67

computing for the common man or individual user has not been looked into in great
detail. Models exist for a number of underpinning technologies but not for cloud
computing technology. The goal was to provide solutions that can be acted upon
immediately yet based on reasonably strong theoretical foundations. Furthermore
the stakeholders for effectively taking cloud computing technology to the common
man include the government, industry and university.
The NRI statistics provided by World Economic Forum and computer usage
statistics by individuals, business users and government users for various countries
are correlated to the economic wellbeing of each country. In this applied research,
correlation methodology is used to study classic models of diffusion and the impact
of government regulation, societal need, customer need, return on investment and
purchasing power on this classical model. Theories of diffusion are correlated with
empirical models of diffusion. Correlation between Cloud Computing Technology
and the underlying technologies, i.e., computer technology penetration and Internet
technology penetration is explained and used to derive the parameters that are likely
to impact Cloud Computing Technology diffusion in India. Statistics of population
and literacy are correlated with tele-density in rural and urban areas in India. Statistics
of mobile communication technology penetration in India are correlated to obtain an
immediate infrastructure solution in implementing Cloud Computing applications.
Much of the statistics that has been used is provided by International
Telecommunication Union (2010) which is reliable since it publishes data obtained
through government sources in various countries. ITU collects similar data from
various countries and thus ensures that we can compare across markets in various
countries. ITU also has statistics than spans across two decades ensuring sufficient
quantity of data to enable reliable conclusions. The availability of this data has
ensured that the conclusions are based significant quantitative foundations rather
than only qualitative observations or analysis. The research process followed has
been a more structured approach and to a limited extent unstructured approach.
The Cloud Computing application proposals for the common man have been
drawn out of the requirements of the dominant individual user which would be in the
rural segment of the individual population based on population statistics provided by
government census. The statistics on geographical coverage of electrical supply to
homes is again available from government websites. The research process followed
has been controlled, rigorous, systematic, valid and verifiable, empirical and critical.
Industry models have been studied with theoretical models available in literature –
text books and journals. The analysis has been more objective than subjective.
Traditionally, a model is a simplified mathematical representation of the major
features of the process as a time series of indicators describing the events of impor-
tance. These mathematical models are mainly used to forecast based on the empiri-
cal data or to extrapolate outside the range of the empirical model.
Heuristic (loose) modelling is the method in which analyst understands the
process under study using available knowledge. The analysis studies the past per-
formance of the process and arrives at model for the future based on supportive
reasoning. Such a model is not used to forecast the output of the process rather
it is more used to manage the process itself. This chapter aims at creating such a
heuristic model.

68 A.K. Vasudevan et al.

5.13 Results

5.13.1 Model of Diffusion

The study of the diffusion of Internet by Goodman, and others in The Global
Diffusion of the Internet: Patterns and Problems and the generic model of diffusion
of Internet in this study are used as the base model to derive at the model of diffu-
sion of Cloud Computing in India.
As Internet would be the preferred channel for deployment of Cloud services,
parameters to its diffusion would also influence the diffusion of Cloud computing.
Based on this factor and the socioeconomic condition in India and the various
models of deployment of Cloud services the model of diffusion of Cloud computing
in India is presented below in Fig. 5.6.
The main players or the parameters in the diffusion of Cloud Computing technol-
ogy in India are depicted in white boxes in the above model.
The stages of diffusion of Cloud Computing in India (depicted in grey boxes) are
the following
Framework: The broad guidelines or the boundaries in which all the players would
act is the framework. Government by way of its ability to set the rules would be
the main determinant to the framework that would be defined.
Education: Education is the information required and acquired by all players to play
an effective part in the diffusion of Cloud Computing.
Commercialization: The stage in which all the players are ready, infrastructure is
mostly in place and the service offerings are easily available
Widespread Use: The stage in which a large section of the population have started
using cloud services.

5.13.2 Parameters of Diffusion

All the parameters identified above play a major role in the diffusion of Cloud
Computing Technology in India and hence have to be managed to ensure diffusion of
this technology in India. Two parameters which are the most important especially in
the initial stages of the diffusion are government and infrastructure. These two param-
eters are further analysed here to arrive at recommendations in managing them.
Parameter – Government: Price is one important factor to ensure adoption of
Cloud Computing Technology in India and to ensure that diffusion happens in the
next 10 years. Government, in its actions and formulating policies, should have the
following objectives while establishing the framework for diffusion of Cloud
Computing in India.
• Price (low)
• Need for a different ecosystem for rural areas
• Competition


Infrastructure Policies and


Communities Infrastructure
Providers Cloud
Government Providers

Framework Education Commercialization Widespread Use

IT Educators

ISPs Users
Technology Diffusion: The Case of Cloud Computing in India

IT Penetration

Language Culture

Fig. 5.6 Parameters to cloud computing technology in India

70 A.K. Vasudevan et al.

• Flow of investment
• Need for a regulatory authority
• Awareness
• Ease of availing services
• And above all, the framework needs to, as identified in the classic diffusion
process, have a structure for effective communication flow.
The following are the recommended directives that the government policies
should take to attain the above objectives.
• Resources employed by all stakeholders complement each other without any
wastage and are channelled towards the larger goal of diffusion of Cloud
• All stakeholders especially the private businesses and funding institutions are
confident of a long-term prospect and develop their plans accordingly.
• Address the legal issues of having e-governance and e-commerce transaction
over the Cloud and define technical and quality parameters.
• Encourage competition in market at all levels. However licensing with low
license fees should be introduced in sectors that require large capital. Infrastructure
especially rural infrastructure is one sector which requires large capital and
hence the number of players in this sector is to be controlled.
• Provision for the role of retailers at the local level in the framework. The role
of retailers is to make sure that the services (choosing the best infrastructure
provider, choosing the best device, choosing the best Cloud services) can be
availed very easily and act as the nodal point for creating awareness as well as
channelling feedback from the users and potential users to the various service
• Availability of Spectrum/Right of way – The ease and cost effective manner in
which the infrastructure providers obtain spectrum for wireless connectivity and
right of way for wired connectivity would prove to be a main factor deciding the
rate of diffusion of Cloud Computing in India.
• Oversee infrastructure deployment – Deploying new infrastructure or using
existing infrastructure for both wired and wireless connectivity would be the
main activity which requires time and money. Hence an authority to effectively
monitor and coordinate nationally and regionally the deployment of infrastruc-
ture should be placed.
• Interoperability – Users should be able to migrate seamlessly from one service
provider to another.
Business Model and Role of Retailers: It is essential that the framework devel-
oped as a result of the government policies should have a driving and coordinating
entity at the local level. This local entity should have a commercial interest in the
diffusion of Cloud services. The retailers at the local level are the recommended
entity to perform this role. The model recommended below enables the retailer apart
from carrying out his commercial role, to be the local node which provides the feed-
back of each locality, which in turn enables the various service providers like CSPs

5 Technology Diffusion: The Case of Cloud Computing in India 71

Fig. 5.7 Recommended business model for cloud computing in India

and infrastructure service providers to tailor their offerings to the user requirements.
The recommended business model for diffusion of Cloud Computing in India is
presented in Fig. 5.7.
Parameter Infrastructure – Availability of infrastructure is a primary determinant
in the diffusion of any communications network. The success of mobile communi-
cation and the lack of Internet penetration in India can all be attributed to this factor.
But it can also be argued that infrastructure would come up where there is a demand.
A look at the diffusion of Internet in United States and China would throw up adop-
tion of contrasting strategies. In the US the government had no major role in the
deployment of infrastructure for Internet whereas in China the government was
actively involved.
Deployment of infrastructure across the vast geographical area of India cost
effectively is a real challenge and hence this parameter has to be effectively man-
aged for the diffusion of Cloud Computing in India. The objectives of managing this
parameter would be as follows.
• Avoid duplication of infrastructure
• Leverage existing infrastructure
• Promote rural-infrastructure
• Integrate the local needs for all type of services
Recommended models of Infrastructure deployment – In order to leverage the
existing mobile infrastructure as well as to have infrastructure ready quickly two
models of infrastructure are recommended. Model-1 is a wireless infrastructure
model and which should be used as a stop gap arrangement. Model-2 is an integrated

72 A.K. Vasudevan et al.

infrastructure model. It is also the ideal model which should ultimately be in place
and also one into which Model-1 can be merged.
The models introduce an entity called ‘Infrastructure Service Providers (InSP)’
whose geographical area of operation would be as per the classification of urban/
semi-urban and rural area in the country. While all the entities in the models should
be players in an open market, the InSP for each area should be licensed for opera-
tion in order to ensure a balance between the need for competition and maintain the
potential to attract capital to develop the infrastructure in the area.
Model-1: The mobile infrastructure will be shared in a passive sharing mode,
where the active equipment and the spectrum will be owned by the mobile service
provider and all passive infrastructures like the towers, antenna, land, electricity etc.
will be shared. Deployment of 3G equipment and 4G equipment, on existing mobile
infrastructure provides the easiest way to provide high bandwidth Internet access
across the country. The Model 1 is illustrated in Fig. 5.8.
Model-2 Digital infrastructure in India should be seen as equally important to the
roadways infrastructure, as both have equal contributions to make to the economic
wellbeing of a region. Hence just like roads are developed by an independent entity
and not by the service providers like public transports of buses, taxis and trucks,
digital infrastructure should also be developed by independent infrastructure pro-
viders. And hence not only the direct revenue generated from this infrastructure but
also the indirect economic benefit accrued to the region should be taken into account.
The major differences from the Model-1 Infrastructure model are the following
• Both wired and wireless access to be deployed
• Spectrum will be licensed to the infrastructure provider

Cloud Service Mobile Service

Providers (CSP) Provider

Mobile Infrastructure
Service Providers



Digital User Access

Digital Highway Business Channel

Fig. 5.8 Model 1- infrastructure model to access to the cloud

5 Technology Diffusion: The Case of Cloud Computing in India 73

• The licensing (of infrastructure provider) for urban and rural areas shall be
• Active sharing of wired and wireless infrastructure
The Model 2 is illustrated in Fig. 5.9.
The following shall be the role of the Infrastructure Service Provider (InSP).
• Prepare a master plan for development of Internet infrastructure in the region
they have been allotted. Submit the plan to the national monitoring authority
for approval.
• The master plan for development shall strategize on urban and rural areas
• Identify whether existing mobile communication infrastructure covers the entire
area, coordinate with them of their plans to extend coverage, if not plan for the
• Should identify the easiest way to extend wired access to user homes and offices.
Example the possibility of extending fibre cables along with other utilities like
water supply and electric supply is to be explored.
• Be responsible for leasing the infrastructure to Internet Service Providers or
Cloud Service Providers.
• Provide the information regarding the infrastructure available and planned to the
retailers, who would then market the Cloud services accordingly.

Internet Service Cloud Service Wired and Wireless TV Service

Providers (ISP) Providers (CSP) Voice Providers Providers

Infrastructure Service
Providers (InSP) (Active



Digital Highway Business Channel Digital User Access

Fig. 5.9 Model 2 – recommended digital infrastructure model

74 A.K. Vasudevan et al.

• Provide assistance to the retailers in setting up the access to the Cloud Service
Providers from user devices.
• Maintain the infrastructure. Provide service level agreements with the service

5.14 Conclusion

It is no doubt that application of information technology will greatly increase the

efficiency of public service delivery. However application of information technology
to only one of the entity namely the government/service provider alone will not help
in the objective of increasing the efficiency of the complete process of public ser-
vice deliveries, the other entity namely the beneficiary also has to have the support
of information technology. To draw an analogy, building a road to a remote village
will only be useful if the villagers have modes of transportation available to them
simultaneously. The model of diffusion of Cloud Computing proposed by this chap-
ter precisely expects to achieve this requirement of infusing information technology
into all entities involved in public service delivery.
The diffusion of an innovation rarely takes place in a stable, unchanging, envi-
ronment and various diffusion models have been built incorporating the environ-
mental variables. Cloud Computing is one of the promising technologies on
today’s horizon and has the potential to create a revolution in the present-day
world order.
In a 2007 paper ‘Digital Prosperity’, Atkinson and McKay noted that there is no
doubt that the IT revolution has enhanced quality of life, from improving health care,
to making it easier for children to get better information and learn more, to giving con-
sumers more convenience in their interactions with business and government and mak-
ing it easier to measure environmental quality. But while these and other benefits are
important, perhaps the most important benefit of the IT revolution is its impact on
economic growth. In fact, in the United States IT was responsible for two-thirds of total
factor growth in productivity between 1995 and 2002 and virtually all of the growth in
labour productivity. To leverage the same benefit out of IT for India is what this chap-
ter’s main objective is. However there are certain unique environmental factors to dif-
fusion of IT in India. This chapter analyses the diffusion of mobile telephony in India,
the state of Internet penetration and the value for money factor vital for Indians, in
arriving at the proposed model of diffusion of Cloud Computing in India.
To highlight the revolution that Cloud Computing would bring it would be
worthwhile to refer a similar situation as reported in the Victorian Internet (Standage
1998): “During Queen Victoria’s reign, a new communications technology was
developed that allowed people to communicate almost instantly across great dis-
tances, in effect shrinking the world faster and further than ever before. A world-
wide communications network whose cables spanned continents and oceans, it
revolutionized business practice, gave rise to new forms of crime, and inundated
its users with a deluge of information. Romances blossomed over the wires.

5 Technology Diffusion: The Case of Cloud Computing in India 75

Secret codes were devised by some users and cracked by others. The benefits of the
network were relentlessly hyped by its advocates and dismissed by the sceptics.
Governments and regulators tried and failed to control the new medium. Attitudes
toward everything from newsgathering to diplomacy had to be completely rethought.
Meanwhile, out on the wires, a technological subculture with its own customs and
vocabulary was establishing itself.”
Based on the model of diffusion of Cloud Computing in India developed in this
chapter, two parameters that should be prioritized for attention and management
were identified: namely, government and Infrastructure. On further analysis of the
two parameters, the following recommendations were arrived at.
• The areas and directions the government policies should take.
• The business model which the government policy should help set up.
• The infrastructure model for Cloud Computing.
This chapter also identifies the third important parameter as ‘user devices’, which
needs further analysis and is left for future research.
The main thrust of the recommended government policy directions are towards
keeping the cost of Cloud service low and ensure availability of the service in rural
areas. Ensuring that right number of competitors are present and that investments
required are not duplicated are the key factors to achieve this objective. The recom-
mendation also highlights the need to have an overseeing or regulatory body to
ensure diffusion of the technology.
The prime motivator for recommending a business model is to provision the
presence of local retailers to ensure availability of services throughout the country
and to meet the prime requirement in diffusion of a technology namely to have a
feedback channel.
The second parameter to diffusion of Cloud technology in India, namely infra-
structure, is addressed by recommending two models. The models are built around
the objective of using the existing infrastructure and avoiding duplication of infra-
structure. To draw an analogy on avoiding duplicating infrastructure would be the
present trend among competing telecom service providers to share their network to
drive costs down.
The first model for infrastructure deployment expects to leverage the availability
of the wireless network prevalent across the country in the first phase. The second
model is built around the concept of having all communication services from voice
to video and including Cloud services using the same infrastructure to reach the end
user. This model introduces an entity called InSP which would be responsible for
development of the communication infrastructure in a region similar to the role of a
road development authority in development of roads.
Given that 69 % of Indian population lives in rural areas, the urban–rural digital
divide must be addressed. The encouraging factors to bridge this divide is the 69 %
literacy rate in rural areas and that the rural areas have again a 69 % mobile phone
coverage which is comparable to the rural electricity coverage. Effect of diffusion
of Cloud Computing in rural areas would be more revolutionary than urban areas
and would enhance the core rural industries including agriculture.

76 A.K. Vasudevan et al.

An example of what Cloud Computing can bring can be fathomed from the chap-
ter, “Harnessing the power of big data to deliver humanitarian assistance” by Patric
Meier. He writes about the emergence of in the past 5 years of the crisis-mapping
technology as a tool to help humanitarian organizations deliver assistance to victims
of civil conflicts and natural disasters. Crisis-mapping platforms display eyewitness
reports submitted via e-mail, text message and social media. The reports are then
plotted on interactive maps, creating a geospatial record of events in real time.
It is felt that adoption of the proposed model of Cloud Computing in India would
reinvent governance and public service delivery. It would transform the present sys-
tems of governance and public service delivery from being government-driven to
beneficiary driven as the following factors to public service delivery would be
• Communication: A vital parameter to public service delivery is greatly improved
and is direct between the service provider and the beneficiary.
• Access to the service: A critical success factor to public service delivery is also
greatly improved primarily due to the availability of information of the service to
all the intended beneficiaries and due to availability of all operational data per-
taining to the service
Overall the proposed model of Cloud Computing would compel and aid govern-
ment institutions and public service providers to change the present systems towards
an efficient one.
As outlined in the classic model of diffusion by Rogers, communication and
channels for communication has been the fundamental principle on which this
chapter has developed the model for diffusion of Cloud Computing in India.
This chapter also expects via the proposed model to change the perception of
development in India among its people. Just like the perception of the need to hav-
ing a road and being connected to highways is a prerequisite for development, it
would be prudent to have a digital highway and being connected to it as a prereq-
uisite for development.


Census (2011) Provisional Population Totals. http://censusindia.gov.in/2011-prov-results/paper2/

Everett MR (2003) Diffusion of innovations. Free Press, New York
International Telecommunications Union (2010) 2010 statistics. http://www.itu.int/en/ITU-D/
Manufacturing Association of Information Technology in India (MAIT) (2011) Annual reports.
Standage T (1998) The Victorian Internet 1998. https://tomstandage.wordpress.com/books/
Telecom Regulatory Authority of India (2003) Study paper on ‘Indicators for Telecom Growth in
India – TRAI. http://www.trai.gov.in/trai/upload/studypapers/2/ir30june.pdf

5 Technology Diffusion: The Case of Cloud Computing in India 77

Telecom Regulatory Authority of India (2007) Report on infrastructure sharing of passive, active
and backhaul networks, April 2007. http://www.trai.gov.in/trai/upload/PressReleases/447/
Telecom Regulatory Authority of India (TRAI) (2008a) Annual reports. http://www.trai.gov.in/
Telecom Regulatory Authority of India (TRAI) (2008b) Measures to improve telecom penetration
in rural India – the next 100 million subscribers, TRAI. http://www.trai.gov.in/Content/
The Economist (2011) Hailing the Google bus, report Oct 2011. http://www.economist.com/blogs/
World Bank (2008) Global economic prospects 2008-technology diffusion in the developing
world. Annual report published by World Bank. http://go.worldbank.org/794O72RHF0
World Economic Forum (2011) Global information technology 2010–2011. http://www.weforum.

Chapter 6
Unlocking Public Service Delivery
Impediments for SMES: The Case of Fiji

Salvin Saneel Nand

6.1 Introduction

Small and Micro Enterprises (SMEs) are a vital segment of an economy. If not most
vital due to SMEs’ ability to address significant economic and social issues, SMEs
are here with us and have considerable potential for socioeconomic development
(Fiji Institute of Applied Studies 2010). Especially characteristic such as growth
with clear benefits for poverty reduction puts a premium on SMEs in the very process
of economic growth. SMEs have long been significant in terms of generating income
for many Fiji Islanders, with up to 60 % earning an income from these categories of
enterprise (Fiji Bureau of Statistics 2002). The 2007 census revealed 17.3 % increase
in urban population since the first census in 1966. Informal sector alone generated
37 % of economic activity in 1996 (Chand 2002). The significance of the SME
sector as an ‘engine for economic development’ means economic policies must
consider the needs of the SME sector (Beck and Demirguc-Kunt 2005).
Despite various attempts to promote the SME sector by creating a more condu-
cive environment to enhance SMEs growth, this sector continues to face numerous
difficulties, such as poor policies, regulatory red-tape, and financial securities. The
policy concentration on the SME sector was mainly due to two reasons. Firstly, the
government recognized the ability of the SME sector to provide an excellent oppor-
tunity for formal and informal employment opportunities. Secondly, the SME sector
can be a good measure to improve service delivery through empowering SMEs.
These policies are introduced without any due diligence or cost analyses conducted to
see the effect of the policies on SMEs. The fact that SME policies are implemented
in response to the increasing poverty and high level of unemployment suggests that
these policies are based on the incrementalism model.

S.S. Nand (*)

School of Law, The University of Fiji, Lautoka, Republic of Fiji
e-mail: salvinn@unifiji.ac.fj

© Springer India 2015 79

A. Gurtoo, C. Williams (eds.), Developing Country Perspectives on Public
Service Delivery, DOI 10.1007/978-81-322-2160-9_6

80 S.S. Nand

Numerous studies have discussed that SMEs face high regulatory constraints
than larger firms. Little systematically documented literature appears available on
the subject in the case of Fiji, a socioeconomically disadvantaged country, inher-
ently vulnerable, small and in dire need of economic activity and growth. The pur-
pose of this chapter is to highlight regulatory compliance difficulties faced by the
SME sector and to investigate solutions for efficient enhancement of this sector, and
summarize impediments of public service delivery in Fiji. Both quantitative and
qualitative data were utilized to establish the regulatory compliance difficulties
faced by the SME sector. For qualitative data, structured interviews with question-
naires were submitted to 80 sample respondents in Fiji. This chapter also relied on
the survey conducted by Fiji Bureau of Statistics on 7,061 enterprises in 2004 (Fiji
Bureau of Statistics 2004) and a survey by the NCSMED on 164 sample SMEs in
2010 (National Center for Small and Micro Enterprises Development 2010).
A review of the current regulatory system suggests that, sluggish policy formula-
tion and implementation are the main reason why SMEs are unable to access public
services. It further suggests, while regulations are a necessary part of modern busi-
ness, compliance, administrative and regulatory costs are a significant concern for
SMEs ability to remain competitive. Robust regulatory burdens have forced SMEs
to remain in the informal sector of the economy. Therefore, if SMEs continue to
operate in an informal economy, it will adversely affect their potential growth and
will hinder the overall public/private sector. This has manifested itself with regular
calls for the reduction of state ‘red tapes’ and development of better regulation in
Fiji. To enhance SMEs development the current regulatory system should be stream-
lined, and a level playing field be provided for this sector.

6.2 The Emerging SME Sector

Fiji is a country in which SMEs dominate the business population. The government
in 2002 established a National Centre for Small and Micro-Enterprise Development
(NCSMED) to lead the development in this sector. The establishment of the
NCSMED was in response to the inability of the various governments’ to create
adequate formal employment opportunities to the rising labour force especially in
the urban areas, and the consequent realization that the largest labour absorption
capacity is in the SME sector. The NCSMED Act 2002 does not provide rules and
regulations concerning SMEs (National Center for Small and Micro Enterprises
Development Act 2002). The establishment of NCSMED is aimed to provide
income generation support to disadvantaged groups including women and youth.
The NCSMED Act 2002 defines ‘micro enterprise’, which has a, turnover or
total assets up to $30,000, and does not employ more than five employees. A ‘small
enterprise’ has a turnover or total assets between $30,000 and $100,000 and employs
between 6 and 20 employees. The Act does not define ‘medium enterprise’ that
would include business with 100,000–$500,000 turnovers and employs 20–50 per-
sons. A recent survey by NCSMED (2010) shows that from 164 surveyed businesses

6 Unlocking Public Service Delivery Impediments for SMES: The Case of Fiji 81

Table 6.1 Percentage of SME operators by gender, ethnicity and with formal education
Micro (n = 147) Small (n = 11) Informal/grey (n = 33)
Male 67 62 61
Female 33 38 39
Fijian 42 31 79
Indo-Fijian 56 38 21
Others 2 31 0
Primary education 32 15 52
Secondary education 49 31 36
Tertiary education 19 64 12
Source: 2010 NCSMED report based on NCSMED Expo 29–30 April 2012

based on annual income turnover, majority (147) of the business fall under micro
enterprises, 11 small enterprises and 6 medium enterprises (National Center for
Small and Micro Enterprises Development 2010). An additional 33 enterprises were
found to be operating in informal/grey markets. Table 6.1 shows that the SME sec-
tor is dominated by 63 % male business owners with only 36 % females. It also
shows that most SME owners only have either primary or secondary education with
few tertiary qualifications. Since its inception, SMEs have long been significant in
terms of generating income for the largest number of Fiji Islanders. Some 60 % of
the total 837,271 populations earn an income from these categories of enterprise
(Fiji Bureau of Statistics 2002). However, according to Reserve Bank of Fiji (RBF),
SME sector only accounts for 12 % of economic activity in Fiji (Whiteside 2012).
The SME sector has a presence in manufacturing, wholesale and retails and trans-
port sectors. However, SMEs are starting to invest in cash crop farming, bee farm-
ing, floriculture and handicraft products. Tax incentives are the basic reason most
SME choose to be in these sectors (Income Tax (Small and Micro Enterprise
Incentives) Regulations FJ 2006). The 2004 economic survey by the bureau of sta-
tistics suggested the majority of business registered were in the wholesale and retail
sector (23.5 %): 21.5 % in transport, 16.7 % in real estate and 10.3 % in education
(Fiji Bureau of Statistics 2004). Table 6.2 shows the percentages of SME business
registered under various economic sectors.
To provide better access to public service delivery, NCSMED introduced busi-
ness incubation centres in various parts of Fiji to promote the SME sector. Incubation
centres are aimed to produce successful businesses that are able to operate indepen-
dently and be financially viable. However, a full detail of goods and services pro-
duced by the SME sector is not possible here due to the limited literature and data
on goods and services produced by the SMEs.
The economic downturn in large business, declining employment and the num-
ber of hours worked many workers have turned to opportunities in informal and
informal SME sector, to either earn income or supplement their reduced earning. In
recognizing the importance of the SME sector, the government has introduced vari-
ous policies. The National Employment Center Decree 2009 is introduced to recog-
nize the potential importance of mentoring support for SMEs. The centre tries to

82 S.S. Nand

Table 6.2 SME by economic sector

Sector(s) Micro (%) Small (%) Medium (%)
Hotels 46.1 35.9 9.3
Construction 47.4 37.2 10.2
Electricity 16.7 33.3 8.3
Manufacturing 34.5 33.9 16.4
Mining 47.1 23.5 11.8
Transport 79.9 12.8 4.1
Wholesale/retail 57.0 32.2 8.0
Finance 23.8 44.4 29.6
Education 50.4 40.2 6.3
Relate estate 84.0 11.7 2.5
Source: 2004 Bureau of Statistic Economic Survey based on 7061 business surveyed

promote opportunities for decent self-employment and provides counselling

services, life/employment and entrepreneurship skills training. Both NCSMED and
National Employment Center are positive signs from the government to boost the
economic and social development of the SME sector.
The Government through people’s charter recognizes the importance of the SME
sector and has called for a national strategy “for the development of micro, and
small enterprises; and to improve access to micro finance at an affordable rate”
(Peoples Chatter Fiji 2008). In its effort to promote and develop the SMEs ability to
access finance, the government through the (RBF) has introduced a SME credit
guarantee scheme (The Reserve Bank of Fiji 2012). Under this scheme, the govern-
ment has allocated $3.0 million for RBF to assist commercial banks, licensed credit
institutions and the Fiji Development Bank to provide finance with 50 % guarantee
on principal outstanding SME loans up to $50,000 per business. However, to access
such finance a business has to be registered, leaving no option for grey/informal
market to find necessary startup capital for registration or to qualify for loans from
financial institutions. Some 60 % SME’s highlighted lack of finance, lack of know-
how and skills, and discriminatory government regulations as reasons why many
SMEs remain in the informal sector (Reddy et al. 2004). The present research scope
is to investigate how legislative policy review can unlock public service delivery
impediments for SMEs. Therefore, it will be difficult to provide detailed analysis on
all challenges faced by the SME sector.

6.3 Legislative Policy Process

We all understand public policy in different ways. During election time, we encoun-
ter the notorious policy promises in the run up to elections. Some protest a policy
and others applaud those they prefer. As citizens, we engage in processes and
debates that aim to shape and influence policies. However policy makers in Fiji have

6 Unlocking Public Service Delivery Impediments for SMES: The Case of Fiji 83

failed the policy making procedures, and there are obvious reasons. Policies are
formulated in an incremental manner rather than using rationalization approach.
Secondly, policies are not properly implemented even when some policies are rea-
sonably well formulated. In addition, policies in Fiji are often ethnic based and
favour ethnic Fijians, thereby failing to target the population (Reddy et al. 2004).
This makes one wonder, why policy makers are not following correct policy proto-
cols and what are the effects of radically formulated and implemented policies on
the end users. For example, how is the SME sector affected by the sluggish SME
policies in Fiji? With limited information from governments and lack of academic
writing on policies in Fiji, it becomes difficult to suggest how policies are made and
implemented in Fiji.

6.4 Problem Definition/Agenda Setting (Step One)

Normally policy change responses to problems in a sector and policy makers must
start policy formulation with an appreciation of the SME sector (Davis et al. 1993;
Rebecca 1999). In Fiji, SME policies are introduced not because the SME sector
had problems, but were introduced in response to the governments failing employ-
ment and private sector policies (Hon. Qarase 2004). To resolve the continuing
woes of unemployment, increasing urban unemployment, rising poverty and declin-
ing private sector, SME policies are considered as potential strategies.
Schemes such as agricultural assistance to rural farmers, education grants to
schools were established. However, 75 % of the recipients were Fijian (Government
of Fiji Cabinet 2005; Government of Fiji 1980). At the same time, there have been
numerous ethnic-based programs initiated by the government. This included most
of the 29 programs in the Affirmative Action Plan, like education program on the
establishment of the centre of excellence as part of the education blueprint, and to
increase Fijian and Rothmans participation in business (Government of Fiji and
UNDP 1997). These programs were to ensure the reservations of at least 50 % of
shares, licenses and contracts for Fijian- and Rothmans-owned companies. As these
strategies and policies continued to fail, new policies or additional capital to revital-
ize the old policies were accepted by the government(s), without assessing why
those policies failed at the first place (Kumar 2007).

6.5 Policy Formulation (Step Two)

At Policy formulation stage the policy makers normally attempt to assess as many
areas of potential policy impact as possible (Davis et al. 1993). The question here is
who develops policy options and how policies are developed. Policy options either
can be generated using Incrementalism model or rational model. Incrementalism is
a policy-making process which produces decisions only marginally different with

84 S.S. Nand

past practices (Lindblom 1979). In his 1959 article titled ‘Science of “Muddling
Through”’, Lindblom notes, “that in making decision, means and ends are not
always distinct, and that there is rarely the time, resource or inclination to conduct
a comprehensive search” (Lindblom1959). He further observed that the test of a
good policy is not whether it is rational but whether it is acceptable to participations
(Lindblom 1977). Many analysts describe Incrementalism as muddling through
policy planning. According to Dror, Incrementalism model is an “ideological rein-
forcement of the pro-inertia and anti-innovation forces prevalent in all human orga-
nizations, administrative and policy making” (Dror1964). He also argued that
Incrementalism can only work in a stable, pluralist society with relative consensus
about goals and acceptable means.
Rational model identifies policy making as a problem solving process, which is
rational, balanced and analytical (Lindblom 1979). The goal of this model is to
identify the common good and organise society to pursue it (Hewlett 1991; Michael
1980). This “process will ensure a rational outcome by selecting the most effective
means of achieving an end. It breaks down decision making into phases, ensures
comparisons of options and provides a single answer which is logical, supported by
evidence, and can be defended as the best choice” (Davis et al. 1993). According to
Scott, top-down policy making routinely fails to deliver on the objectives and are
typically accompanied with a range of unanticipated social and environmental
impacts (Scott 1998; Lane 2001). “Consultation and coordination with citizens,
social movements and voluntary associations came to be seen as providing an effec-
tive means of harnessing local knowledge and energy in both planning and imple-
mentation” (Lane 2001).

6.6 Policy Implementation (Step Three)

The implementation of policies should follow policy formulation. This is because

policy implementation is the crucial process of a policy cycle. Even the best designed
policies introduced with best of intentions still require good implementation and
delivery. As Pressman and Wildavsky suggested that history is full of well-
intentioned policies, which floundered through inadequate or flawed implementa-
tion strategies (Pressman and Wildavsdky 1984). It is essential to understand policy
implementation because implementation studies have emphasized advice to policy
makers of how to structure programs. The two main approaches to policy imple-
mentation are the ‘top-down’ and the ‘bottom-up’ approaches.
In a top-down model, normally policy makers of the governments design fea-
tures of the policy. As Neal Ryan stated, “top-down implementation strategies
greatly depend on the capacity of policy objectives to be clearly and consistently
defined” (Ryan 1995). This means that if the policy makers fail to formulate
proper policy objective than policy implementation through top-down approach
will be difficult. Sabatier and Mazmanian identified a variety of legal political and

6 Unlocking Public Service Delivery Impediments for SMES: The Case of Fiji 85

tractability variables affecting the different stages of the implementation process

(Sabatier and Mazmanian 1979; Sabatier 1986). The most problematic feature of
top-down models is the emphasis on clear objectives or goals. As Majone,
Giandomenico and Wildavsky argued, that few programs have a clear and consis-
tent policy objective (Majone and Wildavsky 1978; Majone 1989). Another prob-
lem with the top-down model is the assumption that there is a single national
government that structures policy implementation and provides for direct delivery
of services (Sabatier 1986).
The top-down model allows the government to neglect strategic initiatives com-
ing from the private sector, from street level bureaucrats or local implementing offi-
cials, and from other policy subsystems. Weatherly, Lipsky and Elmore clearly
summarized the difficulty associated with the top-down approach. As they believe,
this model will be difficult to use in situations where there is no dominant policy
(statute) or agency but rather a multitude of governmental directives. For example,
when implementing the SME policies, the policy makers in Fiji have failed to take
into account the views of the different level of SME sector (i.e., the small, micro and
gray market SMEs).
In bottom-up model, policy implementation begins by understanding the goals,
motivations and capabilities of the lowest level implementers and then follows the
policy design upward to the highest level initiators of policy. According to Benny
Hjern (one of the famous philosophers of this model) bottom-up policy implemen-
tation (Hjern 1982; Hjern and Porter 1981).
Starts by identifying the networks of actors involved in service delivery, in one
or more local areas, and asks them about their goals, strategies, activities and con-
tact. It then uses the contacts as a vehicle for developing a technique to identify the
local, regional and national actors involved in the planning, financing and execution
of the relevant governmental and nongovernmental programs. This provides a
mechanism for moving from street level bureaucrats (the ‘bottom’) up to the ‘top’
policy makers in both the public and private sectors.
This approach has several notable strengths. First, this model has developed an
explicit and replicable methodology for identifying a policy network. For example,
in the SME sector, the policy makers can start with a random sample of SMEs busi-
ness and then interview the owners in each business to ascertain their critical prob-
lems. The government then can use these contacts via a networking technique to
identify the implementation structure. Secondly, since this model did not “begin
with a governmental program but rather with the actor perceived problems and the
strategies developed for dealing with them, they are able to assess the relative
importance of a variety of governmental programs vis-a vis private organizations
and market forces in solving those problems” (Sabatier 1986). Finally, this approach
has the potential to deal with a policy/problem area involving a multitude of public
and private programs.
Notably, there are serious shortcomings in the bottom-up model. According to
Paul Sabatier “bottom-uppers are likely to overemphasize the ability of the Periphery
to frustrate the Centre.” In other words, this model overemphasizes the ability of the

86 S.S. Nand

street-level bureaucrats to frustrate the goals of top policy makers. Secondly,

bottom-uppers presume that target groups are active participants in the implementa-
tion process. This may be a misguided assumption since there is always a power
difference among target groups. As Anne Schneider and Helen Ingram (1992)
explain “some target populations are more positively constructed than others, with
the result that those with greater power can have a greater influence on the impact
of policies that affect them than can other groups.” To implement the legislative
compliance policies, most legislation, subordinate legislation, by-laws and rules set
by local authorities in Fiji were either adopted or directly copied from England,
Australia and New Zealand laws. The fact that these policies are based on developed
economic and social markets different to Fiji (developing country) suggests the
rooted problem in the legislative compliance application to the SME sectors’ sus-
tainability and development. For example, the Companies Act 1983 applicable to all
business is a replica of the English 1948 Companies Act. The Registrations of
Business Name Act, Income Tax Act, Business Licensing Act and the Town Planning
Act are still present from the colonial era.
This policy implementation allows the government to impose policies from top
to the sectors concerned without little consultations with key stakeholders and inter-
ested parties. This is exactly what happens in Fiji as large businesses are able to
portray their concerns through financial backing with governments when the SMEs
characterized by their smaller nature are unable to voice out their concerns, and
become the victim of policies implemented favouring large business. In compari-
son, it is vital to consider what these two approaches in policy implementation
designs do best. The top-down model is useful when there is a single dominant
program (Jeffrey 2006). However, bottom-up model is useful when there is no one
dominant program as in the case of the SME sector.

6.7 Policy Evaluation (Step Four)

Policy evaluation is difficult to conduct, and there are no widely accepted proce-
dures. To carry policy evaluation policy makers should foresee whether a policy
will meets its objective and once implemented, how much time a policy needs to
take effect. While, policy measurement should be on a continuous basis, prema-
ture attempts at assessment could misstate the effectiveness of the policy
(Rebecca 1999). Some of the fundamental question that should be asked at this
stage is (1) how well the policies meet their objective and (2) what effect do they
have on society.
If policy assessment reveals policies are not meeting its objectives, policy mak-
ers must determine whether the policies are inadequate, or whether poor implemen-
tation is at fault (Wadi and Demsky 1995). If implementations are correctly carried
out, and assessments reveal deficiencies, then policy makers must revise the policies
and developed policy adjustments or formulate new policies.

6 Unlocking Public Service Delivery Impediments for SMES: The Case of Fiji 87

6.8 Public Policy and Its Effect on the SME Sector

To investigate the effect of top-down and Incremental method of policy imposed on

SME in Fiji, several SMEs were interviewed. To gather information in both qualita-
tive and quantitative data, a survey was conducted with a selected sample of SMEs.
The biggest difficulty SMEs faced in complying with regulatory rules was the lack
of awareness of relevant laws applicable to their business. Some 70 SMEs out of 80
surveyed suggested that they were not aware of all business rules and regulations
when registering or renewing their business. All 80 participants reported that they
took formal advice in registering and filling relevant forms to renew their business
licence. The Table 6.3 shows considerable regulatory compliance impediments
faced by SMEs.
Most respondents claimed that there are too many laws and regulations not suit-
able for SMEs. Respondents highlighted the need for one stop checklist or stand-
alone legislation for SMEs. Many also claimed that regulatory institutions are
centralized in the capital city (Suva). Some 70 % SMEs suggested that NCSMED
should be decentralized by appointing suitable staffs in every town and city as part
of local government agency. This officer can assist the SME owners with rules and
procedures associated in establishing a business. Nearly all agreed that there was a
lack of legal literacy available at the basic level. Table 6.4 shows recommendations
by SMEs to improve the current regulatory system.
There are two basic attitudes towards governmental intervention to assist SMEs,
in an open competitive economy. On one hand, Reddy argues that, state intervention
is necessary to provide financial, infrastructure and technical support to promote
poverty alleviation (Reddy et al. 2004). On the other hand, he strongly emphasizes
reducing regulatory intervention – cutting the ‘red tape’ to allow more effective
competition. Therefore, one must ask, is deregulation better for a closed economy
like Fiji? Perhaps yes, as the current policies are the biggest hurdles for SMEs.

Table 6.3 Regulatory compliance burden on SMEs

Selected SMEs
Compliance issue by a sample of 80 %
Knowledge of ‘all’ existing SME related laws and regulations 10 12.5
Knowledge of changing laws and regulations concerning SME 8 10
Ability to understand and access laws and regulations 2 2.5
Accessing registration forms 80 100
Knowledge of business registration procedures 20 25
High cost associated in registering starting up business 70 87.5
Non compliance penalties in respective laws are harsh on SME 80 100
Knowledge and ability to access dispute resolution 10 12.5
Ability to meet regulatory requirements to access finance 8 10
Source: based on feedbacks provided by SMEs

88 S.S. Nand

Table 6.4 Recommendations

Suggestions SME
Implement a standalone legislation on SME 80
One stop checklist detailing procedures for registration, access to loan, dispute 80
resolutions, etc.
Implementing a toolkit for SME 80
Translating laws and regulations, in major languages in Fiji: Fijian and Hindi 80
Straining current laws suitable for SME 80
Legal training 80
Source: based on feedback provided by SMEs

In Fiji, there are several bureaucratic and legal hurdles an entrepreneur has to
overcome to incorporate and register a new company. The registration of business
and business name in Fiji is regulated by the Companies Act 1983 and the Business
Licensing Act. Anyone who wishes to start a business must first conduct a search the
business names and Trade Mark register to ensure that the name applied for is not
confusing with similar. This process is centralized, and that applications can only be
made with the registrar of companies located in Suva. There is an online computerized
website where application for name reservation can be made. However, internet
access is not available in all parts of Fiji.
Applicants with internet access will have to send their original documents. They
will be required, however, to pick their business incorporation certificate from the
company’s office or can have the certificate sent by post or through an agent who
will do so for a fee. The company’s office does not accept a hard copy application
unless the applicant has lodged an online application. The applicant has to pay name
reservation fee with the company’s office. It is difficult to understand the policy
reason behind online registration when all services are not available via electronic
mode. Once an application is lodged it takes 30 days before the name is reserved
and notified. Such requirements are most burdensome to especially the smaller to
micro enterprises that are geographically disadvantaged.
After obtaining the registration certificates, any person who wishes to open a
business in Fiji needs to apply for a business license from the respective town/city
councils. This is required for those businesses designated under the Business
Licensing Act (Cap 204) as requiring a license. Business licences may be obtained
from either: (a) relevant city and town councils; or (b) (in rural areas) from the
Commissioners of the relevant divisions. The functions of Commissioners have
been delegated to the District Officers in the area. Business licences must be renewed
every year.
Before a Business Licence can be granted, every business has to obtain a fire
compliance certificate from the Fire Authority under the National Fire Service
(Amendment) Decree 2009. According to section 11 of the Decree, business must
apply for fire compliance certificate from a city or town licences are granted. The
process of obtaining a business licence involves various complicated and time

6 Unlocking Public Service Delivery Impediments for SMES: The Case of Fiji 89

consuming steps. First, the applicant needs to complete a business licence application
form (which is only available in English language and can only be obtained from
town or city councils offices) and this has to be submitted to the relevant authority
with a fee. These fees vary from FJD50–2,000 per year. Most businesses fall in the
FJD100–200 range of fees per year. After the Business Licence application is lodged
it is processed internally and later forwarded for inspection and approval from: (1).
the council’s planning section or (for rural areas) the area Rural Local Authority;
and (2) for business requiring review related to health, the Health Department.
The regulatory red tapes in business registrations and effects of top-down policy
are the major challenges faced by SMEs. Lack of information on the know-how in
complying with a statutory requirement is the major concern in Fiji. The fact that
the business registration does not give differential treatment to people with financial
support to register their business and to people who are financially and geographically
disadvantaged, forces them to operate in informal sectors of the economy.

6.9 Impediment for SMEs to Access Public Service Delivery

Inflexibility or unpredictability in laws applicable to the SME sector is a principal

legislative compliance reasons most SMEs are struggling to survive. As discussed
above, public service delivery is a major problem in Fiji. The problem in Fiji is that
public service delivery is inconsistent with citizen preferences (Singh et al. 2010).
The Asian Development Bank highlighted ‘access’ to public service delivery is a
major problem in the Pacific region including Fiji (Asian Development Bank 2009).
The survey conducted on legislative policy difficulty reviled majority 80 % respon-
dents believed that ‘access’ to public services is a major hurdle. Lack of account-
ability, transparency and commitment in making services work for all types of
citizens are the major reasons for poor service delivery in Fiji (Naz 2011). The
World Bank in its report World Development identified accountability in service
delivery is a major constraining factor (World Bank 2004).
To investigate the quality of public service delivery, it is vital to study the struc-
tures, processes and procedures that allow people to deliver goods and services
(Osborne and Gaebler 1992). However, to achieve quality of service delivery, con-
sumer/customer expectation and requirements should be considered. The differ-
ence is between public service perceptions and public service expectation by
citizens (Seithaml et al. 2002). Some researchers say “customer satisfaction is the
difference between perception of public service experience and expectation of pub-
lic service” (Naz 2002). The survey on the SME sector in Fiji states that public
services are of low quality, inflexible and unpredictable. It also showed that lack of
accountability, weak supervision, and financial constraints is serious impediments
for effective service delivery. As Gani et al. discussed that quality of governance
affects service delivery, and is a major problem in Pacific Island countries (Gani
et al. 2007).

90 S.S. Nand

Public Service delivery is becoming a major problem in Fiji. Despite three

political up-evils of 1987, 2000 and 2006, public service delivery has improved in
the past decade. The study by Gani et al. showed that Fiji among other Pacific coun-
tries governance quality has gradually increasing. However, poor and marginalized
citizens are still muddling through to access or enjoy any improved public service.
Poor public service delivery has three main characteristics namely: efficiency, effec-
tiveness and equity of services. The NCSMED (2010) survey of 147 respondents,
60 % agreed that stringent regulatory compliance is the major factor affecting the
efficiency of service delivery targeted to the SME sector (Fiji Bureau of Statistics
2004). A survey conducted by Naz revels that of 198 surveyed respondents, 16.2 %
said public service delivery is very poor and 44.9 % believe service delivery in Fiji
is poor (Naz 2011). The survey by Naz further revelled that 70 responded viewed
public service delivery effectiveness is a significant problem in Fiji. Some 104
respondents raised efficiency in public service as a huge concern and 104 respon-
dents believed that public service delivery is not equitable but discriminatory.
Today citizens are becoming aware of their civic duties and rights and are expecting
better service delivery from the governments. In response to the decreasing public
service delivery, the current regime has pleaded to civil servants and bureaucrats “to
come out from their comfort zone and improve the delivery of service to the people”
(Ifereimi 2010). The Prime Minister also stated that service delivery in Fiji is ‘very
bad’. According to Reddy, Institutions in Fiji are either inappropriate or underperform-
ing (Reddy et al. 2004). To improve transparency and accountability within the public
service delivery, Fiji should improve its socioeconomic performance and develop effi-
cient political institution that can foster both private and public sector development.
There is an urgent need to implement effective legal, regulatory and good public
service management frameworks which are societal sensitive (Marcus 2006).
Gurmeet Singh and others say that public service delivery and customer satisfaction
has received little attention in the Pacific countries (Gurmeet et al. 2010). Pathak and
others revel that time and cost, regulatory red tapes, centralized decision making bod-
ies, poor redress mechanism and corruption within institutions are the major problem
citizen’s face in dealing with public service delivery in Fiji (Gurmeet et al. 2010).
Corruption and poor governance in public sector was highlighted as two major fac-
tors affecting the public service delivery in Fiji (Olaks Consulting Services 2001).
The government is trying to increase consumer confidence in public service delivery
through various civil service reforms. However, at present the quality of public ser-
vice provided to citizens of Fiji is poor and far from satisfactory. Poor public service
delivery is becoming major bottleneck for citizens to access equitable services.

6.10 Conclusion

This chapter suggests that one of biggest problems SMEs face is the regulatory
compliance burden. The robust regulatory requirements coupled with the financial
constrains have forced SMEs in Fiji to remain in the informal sector. If SMEs

6 Unlocking Public Service Delivery Impediments for SMES: The Case of Fiji 91

continue to operate in an informal economy, it will negatively impact Fiji’s socio-

economic development. It will also affect the potential development of informal busi-
nesses. There is an urgent need for reforms to foster the private sector development.
These reforms should address and eliminate public service delivery obstacles for
small business formalization. However, these reforms will not be successful if the
current policy process is not strengthened. A good public policy will be both socially
and economically viable and will not require additional resources and capital to revisit
or review the policies.
It is evident from the research that policy makers and respective agencies respon-
sible in providing public service to the citizens should recognize the requirements/
satisfaction in a timely and efficient manner. The regulatory policy needs to be
reviewed to provide efficient public service delivery for small and micro enterprises.
In general, there should be a “One Stop” checklist (according to the business type)
detailing all the regulatory compliance needed to be fulfilled in opening and main-
taining a business. Also, checklist should be readily available in different languages
and should come with considerable advice. Standalone legislation on SMEs may be
considered desirable for SMEs, rather than a plethora of provisions in different


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The National Center for Small and Micro Enterprises Development Act 2002 (FJ)

6 Unlocking Public Service Delivery Impediments for SMES: The Case of Fiji 93

The National Employment Center Decree 2009 (FJ)

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Bank/Oxford University Press, Washington, DC, APDIP E-Note 11

Chapter 7
Urban Mobility Trends in Indian Cities
and Its Implications

Ashish Verma, S. Velmurugan, Sanjay Singh, Anjula Gurtoo,

T.V. Ramanayya, and Malvika Dixit

7.1 Introduction

This study was done as a part of a larger study called the ‘Global Mobility Monitor
Network’ that aims to study the recent history, status quo and future prospects of
mobility patterns in the BRIC countries (Brazil, Russia, India and China), the USA
and Germany. The Network aims at overcoming the barriers for making existing
information on transport and mobility useful for decision makers. The scope of this

A. Verma (*)
Department of Civil Engineering and Centre for Infrastructure Sustainable
Transportation and Urban Planning, Indian Institute of Science, Bangalore, India
e-mail: ashishv@civil.iisc.ernet.in; rsashu@yahoo.com
S. Velmurugan
Traffic Engineering and Safety Division, Central Road Research Institute, New Delhi, India
e-mail: vms.crri@nic.in
S. Singh
Indian Institute of Management, Lucknow, India
e-mail: sanjay@iiml.ac.in
A. Gurtoo
Department of Management Studies, Indian Institute of Science,
Bangalore, Karnataka, India
e-mail: anjula@mgmt.iisc.ernet.in
T.V. Ramanayya
Indian Institute of Management, Bangalore, India
e-mail: tvr413@yahoo.com
M. Dixit
Department of Civil Engineering, Indian Institute of Science, Bangalore, India
e-mail: malvika.dixit@gmail.com

© Springer India 2015 95

A. Gurtoo, C. Williams (eds.), Developing Country Perspectives on Public
Service Delivery, DOI 10.1007/978-81-322-2160-9_7

96 A. Verma et al.

chapter is limited to studying the status quo of mobility trends in India. Following
are the insights the authors intend to provide through this chapter:
• A comprehensive analysis of the current mobility trends in five Indian cities
and the variations observed between the already saturated cities like Delhi and
Bangalore and the rapidly developing Tier II cities of Lucknow, Indore and
• The relationship between the observed mobility trends and the underlying fac-
tors responsible for the trends
• The implications of these trends to provide a base for planning and policy level
India is urbanizing at a fast pace. As per Census of India, in 2011, there were a
total of 53 cities with a population of more than a million and this number is
expected to rise to 68 by 2030 (McKinsey and Company 2008). To keep pace with
this rapid growth in the cities, the Indian government has launched massive urban
infrastructure development schemes like ‘Jawaharlal Nehru National Urban
Renewable Mission (JNNURM)’, ‘National Urban Transport Policy’ (NUTP), etc.
and has allocated an investment of 12,04,172 crore INR (221 billion USD) for trans-
port sector up to 2018 (Planning Commission 2013). These schemes are aimed at
improving the overall urban development in India with a special focus on
India has traditionally been a transit- and non-motorised transport (NMT)-
oriented country, but is now seeing a sharp growth in private vehicle ownership,
especially in urban areas. The public transportation systems in most of the cities are
not enough and are encouraging the use of private vehicles. The cities have a peak
hour travel speed of 15–20 kmph and the heterogeneous traffic makes the condition
worse. With inadequate provisions for cycle and footpaths, and high congestion
levels, the Indian roads have become practically unusable for cycling and walking.
Due to this, people have no choice but to use private modes of travel. Along with all
these, the number of fatalities due to road transport accidents is increasing year after
year. This chapter looks at all such transport-related issues as well as the underlying
causes behind them by taking a sample of five representative cities. The chapter is
divided into three sections. The literature review gives a summary of the past studies
that have been done in this area. The methodology section describes how the present
study was conducted – the data collection and the methods used for analysis. Finally,
the analysis and results section contains the detailed analysis and discussion.

7.2 Literature Review

Various studies in the past have looked at the factors that affect auto mobility.
Kenworthy and Laube (1999) studied the automobile dependence of cities and by
analysing the data of 46 cities around the world, they have established that it is
strongly related to the land use patterns and the cost of car ownership in the cities

7 Urban Mobility Trends in Indian Cities and Its Implications 97

and not so much related to the wealth of the city. Authors have also looked at the
dependence of car ownership rates of a country on its per capita income using the data
for OECD as well as some developing economies including India. Based on the
findings, they have projected the motor vehicle growth in the countries for 2015.
Most of such studies have looked at the data from developed countries and not
many studies have specifically looked at the urban mobility trends in developing
countries and specifically India. Singh (2006) tried to bridge this gap by providing
a reliable set of data for passenger traffic volumes for India from 1950–1951 to
2000. Ramanathan and Parikh (1999) have also looked at the transportation sector
in India in the 1990s and have projected the scenario for 2021 based on econometric
models. Ramanathan (2001) has tried to correlate the mobility indicators (pkm,
tkm) in India with the economic and industrial growth of the nation and has estab-
lished the future scenario for mobility based on the expected changes in economic
and industrial growth. Gakenheimer (1999) looked at the urban mobility in develop-
ing countries – the problems and the lessons to be learnt from developed countries.
It suggests measures like highway capacity building, road pricing, better public
transport management, etc. to tackle the increased transportation demand. Pendyala
et al. (2009) compared the mobility as well as socio-economic trends in India vs the
USA – what are some of the similarities in growth patterns and where do the two
countries differ.
While these studies have focussed on the national level scenario, Reddy and
Balachandra (2012), Singh (2005), and Pucher et al. (2005) have reviewed the trans-
portation patterns in India at an urban level and have discussed the issues of conges-
tion, environmental impact and health hazards related to transportation. Further, these
studies have suggested policy level measures like promotion and improvement of pub-
lic transportation, encouragement of footpath and cycle usage by providing the neces-
sary infrastructure, betterment of motor vehicle technology, etc. to curb the issues.
The present study focuses on the mobility patterns in five sample cities that are
at different developmental stages. It aims to provide a holistic view of mobility in
Indian cities by studying a wide range of indicators that cover the aspects of demo-
graphics and economy, transport demand and supply as well as transport policy and
transport costs. The aim is not to suggest measures to tackle the situation but to
study the status quo and its implications.

7.3 Methodology

7.3.1 Selection of Cities

The study has been conducted for a sample of five cities that represent the various
developmental stages, population ranges, GDP and cultural settings found in Indian
cities. Since the timeline for the project was only 6 months, the selection of cities
was also based on the availability of latest data in the cities. Table 7.1 gives the list
of the five cities used for the analysis:

98 A. Verma et al.

Table 7.1 List of sample cities

Population Location in
Sample city (2011) Developmental stage India Cultural setting
Delhi 16,314,838 National capital, high car North Hindi speaking,
ownership, higher income more of Punjabi
culture, distinct
from other chosen
Bangalore 8,499,399 Major service sector city South Kannada speaking,
culturally very
different than North
Indian cities
Lucknow 2,901,474 Capital of the largest Between Good mix of
populated state of India, North and Muslim and Hindu
will represent the North East population
second-order metropolitan
cities fairly well
Indore 2,167,447 Evolving transportation Middle Typical of regional
system, mainly middle habits in middle
income, typically called part of India
as mini-Mumbai
Guwahati 968,549 Gateway to North East, North East Assamese and
from economically less Bengali speaking,
developed region culturally very
different from rest
of India
Note: Although most of the analysis is based on these five cities, data from other Indian cities like
Ahmadabad, Kolkata, etc. has been included wherever it was felt necessary Data Collection and Validation

The study uses a set of indicators to depict the current mobility scenario in urban
India. These indicators have been grouped into three broad categories as shown in
Fig. 7.1. Indicators of demography and economy are important to understand the
patterns in mobility behaviour and the factors that directly or indirectly impact
mobility. Transport demand and supply highlight the current transportation scenario
and the issues being faced. Lastly, transport policy and transportation costs include
the existing as well as future policies and regulations that might have an influence
on mobility behaviour.
The data was collected for the urban agglomeration region of each of the cities.
The data was taken from various national and international secondary data sources
or through first-hand information from concerned authorities. After the initial col-
lection of data, it was thoroughly validated by the local stakeholders. Stakeholder
consultation meetings were conducted in each of the five cities where the data as
well as the analysis was presented and the necessary corrections were made. In
some cases, direct contact with the concerned authorities/organizations was made
for clarifications regarding the data. The authors have tried their best to maintain

7 Urban Mobility Trends in Indian Cities and Its Implications 99

Mobility Indicators

Demography and Transport Demand & Transport Policy &

Economy Supply Regulations

- Population - Road network - Regulations for parking in

- Area - Total passenger rail network cities
- Population Density - Dedicated lanes for transit - Regulations for entering
- Workforce - VKT & PKT for public transit cities
Participation - VKT & PKT for passenger cars - Costs for Parking
- GDP - Costs of Vehicle Ownership - Other policies and
- Slum Population - Costs for public transit investments
- Length of cycle path
- Foot path availability
- Availability of bicycle sharing
- Peak hour travel speed

Fig. 7.1 Categories of mobility indicators

uniformity in the data to the extent possible. However, due to the lack of stan-
dardised data collection process in India, some of the indicators were not available
for the same year for all the cities. In all such cases, the closest available year has
been used and has been explicitly mentioned. Analysis and Interpretation

After the collection of raw data, it was consolidated and standardized to form indi-
cators to enable comparative analysis. The overall methodology was to correlate the
trends observed in the key indicators with the underlying factors responsible for
them. Relationships were also derived based on the basic understanding of the
region and its behaviour. Comparisons have been made between India and other
developing countries like China and Brazil and some of the developed countries like
Japan, Germany, the UK and the USA. This has been done in order to provide an
understanding about how similar is India’s growth path with other developing coun-
tries and where India stands with respect to some of the developed countries.

7.4 Data Analysis and Results

As shown in Fig. 7.1, the analysis has been divided into three categories of indica-
tors and each of them has been separately discussed in the subsequent sections.

100 A. Verma et al.

7.4.1 Demography and Economy

India has been one of the fastest growing countries in the world in terms of popula-
tion. It has three of the ten most populated cities in the world (United Nations 2011)
and unlike some of the developed nations like Japan or Germany where the annual
growth rate of population is close to zero, the population in India is growing at a rate
of 1.4 % annually. Figure 7.2 shows the population for the five cities from 1971 to
2011. The population of the cities vary from almost a million in Guwahati to more
than 16 million in Delhi. There has been a steep growth in population since 1991,
especially in the cities of Bangalore, Delhi and Indore where it has almost doubled
in two decades. The sudden population growth in these cities has posed a high
demand for transport. It has also caused unplanned development in these cities lead-
ing to an increased need for travel. Such growth, if not supplemented by an equiva-
lent growth in transport supply, leads to reduced mobility levels impacting the social
and economic growth in the cities.
Table 7.2 shows the area, density, workforce participation and the per capita
GDP for the study cities. There is high variation in the size as well as density, with
Delhi being more than five times as big and thrice as dense as Guwahati. Size and
density are two of the most basic factors that have an impact on the mobility behav-
iour. The size of a city directly influences the trip lengths and subsequently the
choice of mode for travel whereas the density plays an important role in determin-
ing the transport demand like the capacity of public transit and road infrastructure
required. For instance, a small but dense city requires greater supply of public tran-
sit in terms of its capacity but not necessarily longer trip lengths.
The workforce participation, i.e. percentage of population working depicts the
need for work-based trips and a higher workforce participation implies higher
mobility demand, especially in peak hours. At a national level, India has a work-
force participation rate of 39 %, which is much lower compared to most of the
developed countries like the USA, Japan and Germany or even developing countries
like China and Brazil where this percentage is more than 50 % (World Bank 2011).
Among the study cities, Bangalore leads with a rate of 38.5 %, followed by Guwahati
and Delhi.

18 16
Population in Millions

15 13 Delhi
12 Bangalore
8 8
9 6 6 Lucknow
6 4 4 Indore
3 3
3 2 2 2 2 Guwahati
1 1 1 1 2 1
0 0 1 1
1971 1981 1991 2001 2011

Fig. 7.2 Population of sample cities 1981–2011 (Source: Census of India 1981–2011; Note: the
1981 data for Guwahati has been extrapolated as census data was not collected in 1981; For Delhi,
only national capital territory area has been included)

7 Urban Mobility Trends in Indian Cities and Its Implications 101

Table 7.2 Demographic and economic indicators for sample cities

Area Density (persons Workforce Per capita GDPa
City (sq km) per sq km) participation (2001) (2008–2009)
Delhi 1,483 11,014 32.8 % Rs. 101,381
Bangalore 1,241 6,851 38.5 % Rs. 147,250
Lucknow 530.4 5,470 27.6 % Rs. 39,534
Indore 505.3 4,290 32.1 % Rs. 65,782
Guwahati 264 3,669 35.1 % Rs. 45,813b
Source: Census of India (2011), RITES (2011a, b), LDA (2005), MP Town and Country Planning
Office (2008), Guwahati City Development Plan (2006), Government of NCT of Delhi (2009),
Government of Uttar Pradesh (2006), Business Standard (2013); Directorate of Economics and
Statistics, Karnataka; Directorate of Economics and Statistics, Uttar Pradesh; Directorate of
Economics and Statistics, Madhya Pradesh; Directorate of Economics and Statistics, Assam (2013)
District level
For the year 2007–2008

In terms of per capita GDP, India scores very low (1,509 USD) compared to the
developed countries like Germany (44,021 USD), the USA (48,112 USD) or even
developing nations like China (5,445 USD) (World Bank 2011). The GDP indicates
that the purchasing power of the people and cost of travel as a proportion of GDP
decides the choice of modes available. The per capita GDP for the five cities is
slightly higher for the cities compared to the national average. The values are reflec-
tive of the trend observed in workforce participation for the five cities. It has been
established that the per capita GDP is directly proportional to the per capita mobility
(Schafer 1998). Higher income enables more leisure based travel. In India with
GDP on the lower side, and most of the fuel imported, the proportion of income
spent on travel is much higher than many of the countries. People are hence com-
pelled to use public transport due to affordability issues.
Even though the per capita GDP is slightly higher for the cities, the income is
unevenly distributed. There is a lot of disparity between rich and poor in India and
the cities have a high percentage of their populations living in slums (Fig. 7.3). The
urban poor are often deprived of the basic means of mobility. For most of them, the
low public transportation cost is also not affordable and they rely on cycle/walk
trips. The trip lengths are hence limited to short distances. This further reduces the
economic opportunities available to them and hinders their economic growth.

7.4.2 Transport Demand and Supply Mode Choice Behaviour

Indian cities differ significantly from their counterparts in developed countries in

terms of traffic composition. India has a mixed traffic comprising of vehicles of
various sizes and speeds sharing the same right of way. Public transit and NMT
together constitute the majority of trips in Indian cities. Also, unlike most of the
developed countries, two-wheelers are a very popular mode of travel in Indian

102 A. Verma et al.

Percentage Population in
50% 45%

20% 18%
10% 11%
Delhi Bangalore* Lucknow Indore** Guwahati
(2008-09) (2011) (2011) (2011) (2011)

Fig. 7.3 Percentage of population living in slums (Source: Directorate of Economics and
Statistics, Delhi (2009), RITES (2011a, b); Lucknow Municipal Corporation, DUDA; DMG
Consultancy Services (2011); Guwahati Metropolitan Development Authority; *Although reported
as 10 %, according to Bruhat Bengaluru Mahanagar Palike, this percentage is more than 30 %;
**Though reported as 45 %, the actual percentage of slums for Indore are around 20–25 % as many
of the designated slums have now been rehabilitated)

100% 6% 11% 16% 9% 12%

14% 8% 6% Para transit
Percentage Tripss

80% 5% 18%
21% Cars
60% 42% 20% 2 Wheeler
35% 8% Public Transport
40% 19%
4% 21%
12% 16% Cycle
20% 5% 12%
21% 20% 21% Walk
17% 15%
Delhi Bangalore Lucknow Indore Guwahati
(2008) (2008) (2011) (2011) (2008)

Fig. 7.4 Mode share by various modes (Source: Ministry of Urban Development (2008), UMTC
(2012), and RITES (2012))

cities. Figure 7.4 shows the modal split in the five study cities. Bigger cities of Delhi
and Bangalore have a higher transit usage while the smaller cities have a higher
two-wheeler penetration. Para transit is still a popular mode of travel in most cities,
especially for short distances. It is often used as a substitute to public transit in cities
where the transit supply is not sufficient. Having established the basic mode choice
behaviour in the five sample cities, we would now go through each of these modes
one by one for a detailed understanding. Non-motorised Transport

As shown in Fig. 7.4, irrespective of city size, Indian cities have a high share of
cycle and walk trips ranging from 25 to 42 % in the five sample cities. Looking at
the cities from the developed countries, these values are much higher compared to

7 Urban Mobility Trends in Indian Cities and Its Implications 103

Table 7.3 Length of cycle path and footpath

City Length of cycle path Share of roads with footpath
Delhi 34.03 km 60 %
Bangalore 45 km 80 %
Lucknow 43.7 km 40.4 %
Indore 40 km 24 %
Guwahati 0 km 47.9 %
Source: Planning for non-motorised transport in Cities – DIMTS-UITP symposium (2010), DDA
(2007); CRRI (2002, 2009); Bruhat Bengaluru Mahanagara Palike; Mobility Indicators, DULT,
2010–11; UMTC (2012); Indore Municipal Corporation; RITES (2012), Wilbur Smith Associates
(2008); Guwahati Metropolitan Development Authority

the cities in the USA (9.5 % for Los Angeles, 10.2 % for Chicago), and comparable
to some of the European cities (32.1 % for Berlin, 39 % for Paris) and Japanese cit-
ies (37.4 % for Tokyo) (IFMO 2013). Despite such high share of NMT trips, there
is a massive lack of infrastructure required to support such trips. Table 7.3 shows the
length of cycle path and the proportion of roads with footpath for each of the sample
cities. These values are much lower compared to the cities around the world, where
walk and cycle trips are encouraged by providing safe and clean footpaths and seg-
regated bicycle lanes.
Even at the places where these cycle paths and footpaths have been provided,
they are often occupied by hawkers and utilised for on-street parking. Also, the
pavement surfaces are not up to the mark. The pedestrians and cycle users are hence
forced to share the same right of way with bigger vehicles thereby increasing the
risk of road accidents. Also with the heavy traffic in most of the cities, crossing the
road becomes an issue for NMT users. The NMT mode share, hence, is expected to
decline in all categories of Indian cities in near future (Ministry of Urban
Development 2008).
Bicycle sharing system is one concept that could be adopted and promoted as a
way of sustaining and increasing the bicycle usage in the cities. Currently, the
awareness of bicycle sharing systems is very negligible in Indian cities. In cities of
Bangalore and Delhi, it is being promoted as a feeder to metro systems. However, it
has not been very successful till now. Smaller cities like Indore and Lucknow have
more of a bicycle renting system where one can use and return the cycle to the same
station/shop at minimal charges. However, such system is limited to a closed user
group at most locations and is limited to low income areas, some of them around
transport terminals like bus stand, railway station, etc.
Many studies in the past have highlighted the need for developing NMT infra-
structure to cater to the needs of high share of NMT users in India (Reddy and
Balachandra 2012; Pucher et al. 2005; Singh 2005). Santos et al. 2010 suggest a lot
of physical measures that could be used to make NMT travel more attractive. Some

104 A. Verma et al.

of them which could be adopted in Indian cities include making the streets safer,
cleaner and well-maintained with attractive street furniture, safe crossings with
shorter waiting times, dedicated cycle paths, lower speed limits, etc. Public Transit

Along with NMT, public transit is another heavily used mode of travel in India,
especially in the bigger cities like Delhi and Bangalore (Fig. 7.1). Indian cities have
an advantage of having a much higher share of public transit compared to the cities
around the world, e.g. 4.5 % in Chicago, 2.3 % in Los Angeles, 15.8 % in London,
23.6 % in Berlin and 30.7 % for Tokyo (IFMO 2013). However, for most of the
Indian cities, buses are the only means of public transportation. Most of these buses
are government operated and are run by the respective State Transport Undertakings
(STUs). The concept of metro rail is relatively new to India. It was first introduced
in the city of Kolkata in 1984. Following its success, Delhi started the operation of
its metro system in 2002 and is now running successfully for a length of 187 km.
Bangalore has also introduced a metro line in 2011, which is yet to be fully devel-
oped. Some of the Indian cities like Mumbai and Hyderabad, which are not included
in this study, have a successfully running suburban rail system.
Table 7.4 shows the annual vehicle km (vkm), passenger km (pkm) per day and
passenger km per population per day by various transit modes for the five sample cit-
ies. The larger area and in turn the longer trip lengths account for the higher values of
passenger km per population in bigger cities. As demonstrated by the modal split also,
the public transit usage is very low for the cities of Lucknow, Indore and Guwahati.
For Delhi, metro forms the majority of public transit travel. Between Delhi and
Bangalore, although the area of both the cities is comparable, the passenger km per

Table 7.4 Annual vehicle km travelled by urban public transport

Annual vehicle Passenger km Passenger km travelled by
km travelled travelled per day public transport (2011)
City Mode (2011) (2011) per population per day
Delhi Bus 292.07 million km 24.81 million km 1.52 km
Metro 47.8 million km 270.12 million km 16.56 km
Bangalore Bus 465.5 million km 62.73 million km 7.38 km
Metroa NA NA NA
Lucknow Bus 16 million km 1.23 million km 0.42 km
Indoreb Bus 9.24 million km 1.27 million km 0.58 km
Guwahatib Bus 3.907 million km 0.32 million km 0.33 km
Source: CIRT (2011); Delhi Metro Rail Corporation Limited; Bangalore Metropolitan Transport
Corporation; Uttar Pradesh State Road Transport Corporation; RITES (2012); Assam State Road
Transport Corporation; RITES (2011b)
For buses, this includes data from State Transport Undertakings only and does not take into account
the private bus service providers
Metro system for Bangalore was introduced in October 2011, hence it has not been included here

7 Urban Mobility Trends in Indian Cities and Its Implications 105

Table 7.5 Cost of travelling a 10 km distance in public transport

City Ordinary bus Express bus/low floor bus A/C bus Metro
Delhi Rs. 10 Rs. 10 Rs. 20 Rs. 16
Bangalore Rs. 14 – Rs. 50 –
Lucknow Rs. 10 – Rs. 15 NAa
Indore Rs. 12 – – –
Guwahati Rs. 11 Rs. 15 – –
Source: Delhi Transport Corporation; Delhi Metro Rail Corporation; Uttar Pradesh State Road
Transport Corporation; Atal Indore City Transport Services Ltd; Assam State Transport
Bangalore metro serves only 7 km presently the fare for which is Rs. 15

person per day by public transport for Delhi is more than twice of that of Bangalore
suggesting heavy usage of the metro services in Delhi.
The cost of public transport in various cities much lower compared to cities from
developed countries. The cost per passenger km as a proportion of the per capita
GDP is 0.00040 % and 0.00055 % for Delhi and Bangalore, respectively, whereas
in cities from developed countries, even though the fuel prices are much lower, this
ratio is much higher (0.0075 % for London, 0.0048 % for Berlin, 0.0027 % for
Tokyo) (IFMO 2013). But, even the low public transportation cost is not affordable
to many of the urban poor. Table 7.5 gives a comparative view of the cost of public
transport in the five sample cities for a distance of 10 km. Air-conditioned (A/C)
buses are available only in Delhi, Bangalore and Lucknow.
It is interesting to note that even though the transportation cost is highest for
Bangalore and Delhi, the services are very popular with a mode share of more than
45 % (Fig. 7.4). The A/C buses in these cities are operated in order to cater to the
needs of people in the middle income group. In both Bangalore and Delhi, around
400 out of a fleet size of 6,000 buses are A/C buses.
In Bangalore, these buses are especially popular among the IT professionals. The
sudden population growth in the cities (Fig. 7.2) has posed high demand on public
transit. The growth in public transit in most cities has not been sufficient to cater to
the increased demand and is now resulting in growth in private vehicle ownership
(Singh 2005). The increased congestion due to this and hence the decreased speed
and inefficiency of buses further make public transit less attractive. The government
is making an effort to solve this problem by providing reserved transit routes in the
form of bus rapid transit lanes and metro rails in many Indian cities. Currently, very
few Indian cities have reserved transit routes. These are summarised in Table 7.6,
along with the values for some of the developed cities. For most Indian cities, they
are still under construction and are yet to be fully developed. Among the five sample
cities, only Delhi and Bangalore have reserved transit routes. Some of the other
Indian cities like Mumbai, Kolkata, Ahmedabad have them in place and many cities
like Indore, Bhopal, Pune, etc. have plans of introducing them in near future.
As the government introduces new transit modes in the cities, it is important to
integrate the various public transit modes to provide an optimised network.

106 A. Verma et al.

Table 7.6 Length of rapid transit (km) per million population (2011)
Length of reserved transit routes
City (m) per 1,000 population
Bangalore (Metro) 0.82
Kolkata (Metro) 1.81
Ahemdabad (BRTS) 7.43
Delhi (Metro + BRTS) 10.07
Mumbai (suburban rail) 16.17
Berlin 140.16
Tokyo 92.39
Source: Delhi Metro Rail Corporation Limited; Bangalore Metro Rail Corporation Limited; CRRI
(2002, 2009); IFMO (2013)
Two-wheelers per 1000

500 429
400 347

309 335 2 Wheelers per 1000

300 269 273
226 population (2007)
200 196
144 2 Wheelers per 1000
100 61 84 population (2011)
National Delhi Bangalore Lucknow Indore Guwahati*

Fig. 7.5 Two-wheelers per 1,000 population (2007 and 2011) (Source: Ministry of Road Transport
and Highways (2011, 2012b), GMDA (2009b); District Transport Office, Kamrup, Guwahati;
*Estimated using the total motor vehicle registrations in 2004 and the average growth rate)

Currently, both in Delhi and Bangalore, the bus and the metro services are operated
by different organisations leading to overlapping of routes and competition. The
timetables and routes need to be organised so as to provide seamless intermodal
travel. Integrated ticket systems are also important to make inter modal travel more
attractive and convenient. Successful examples of such systems can be found in
Singapore and London. Private Vehicles

As shown in Fig. 7.5, two-wheelers are especially popular in Lucknow and Indore.
They provide the much required ease of manoeuvring in the narrow streets in these
cities and are hence very popular. Also, the shorter distances in these cities make
them a convenient mode choice. Figure 7.5 shows the two-wheeler ownership rates
for the year 2007 and 2011. At a national level, there are 84 two-wheelers per 1,000
population. The low income in India is also one of the factors responsible for the
high usage of two-wheelers here. Among the five cities, the number is highest for
Indore where there is almost one two-wheeler for every two persons. The growth
though has been the highest for Bangalore.

7 Urban Mobility Trends in Indian Cities and Its Implications 107

Cars per 1000

114 Cars per 1000
100 90 87 population (2007)
51 63 61 61
43 41 Cars per 1000
11 16 population (2011)
National Delhi Bangalore Lucknow Indore Guwahati*

Fig. 7.6 Cars per 1,000 population (2007 and 2011) (Source: Ministry of Road Transport and
Highways (2011, 2012b), GMDA (2009b), District Transport Office, Kamrup, Guwahati;
*Estimated using the total motor vehicle registrations in 2004 and the average growth rate)

Table 7.7 Ex-showroom price of vehicles

City Honda Activa Toyota Corolla Altis 1.8J Maruti Suzuki Alto 800 (STD)
Delhi Rs. 46,387 Rs. 1,111,149 Rs. 240,776
Bangalore Rs. 48,927 Rs. 1,135,343 Rs. 252,372
Lucknow Rs. 47,685 Rs. 1,116,482 Rs. 250,470
Indore Rs. 48,231 Rs. 1,132,025 Rs. 250,058
Guwahati Rs. 49,599 Rs. 1,142,788 Rs. 270,232
Source: Primary survey

Cars are not a popular mode choice in Indian cities, as shown in the modal split
in Fig. 7.6. The number of registered passenger cars per 1,000 population is
extremely low (16) compared to developed countries like the USA (423), Germany
(517), Japan (453) (World Bank 2011). Figure 7.6 shows the number of registered
cars per 1,000 population for the years 2007 and 2011. As expected, the car owner-
ship rate is higher for the urban areas and among the five sample cities, Delhi has
the highest number of cars per 1,000 population followed by Bangalore and
Guwahati. The higher incomes in bigger cities contribute to the high car ownership
there. However, Guwahati is an exception with a car ownership rate comparable to
that of Bangalore. Although Delhi has the highest car ownership rate, the growth in
car ownership has been the steepest for Bangalore with an increase by 75 % in
4 years since 2007. Delhi, on the other hand, had the lowest increase (23 %) in car
ownership among the five cities.
Compared to countries around the world, the cost of vehicle ownership in India
relative to the income levels is much higher than the developed countries, which is
one of the major factors responsible for the low vehicle ownership. The fuel costs
also are much higher for India, making the vehicle ownership even more expensive.
The cost of 1 l petrol in India is 37 % of the average daily income, whereas for the
countries like the USA, Germany, Japan, etc. it is less than 2 % (Institute for
Mobility Research, Germany). In India, the cost to be paid at the time of purchasing
a car includes the sticker price of the vehicle, the vehicle registration cost and
additionally the insurance charges. Tables 7.7 and 7.8 show the sticker price and the
registration costs, respectively, for the five sample cities. Honda Activa to represent
the two-wheeler category, Maruti Suzuki Alto 800 as a basic non-luxury car and

108 A. Verma et al.

Table 7.8 Vehicle registration cost for new vehicles

City Registration cost – 2-wheelers Registration cost – 4-wheelers
Delhi Rs. 650 to Rs. 1,525 based on Rs. 3,815 to more than Rs. 11,590 based
engine capacity on weight
Bangalore 10–12 % based on price 13–18 % based on the price and floor area
Lucknow 7% 7–8 %
Indore 7% 7%
Guwahati NA NA
Source: Department of Transport, Delhi (2013); Regional Transport Office, Karnataka (2010);
Uttar Pradesh Government, Transport Sub-division (2012); Madhya Pradesh Transport Department

Percentage Households

80% 32% 33%

45% 49%
5% 67% 2 Wheeler
60% 21% Car
40% No Vehicle
47% 44% 16%
23% 17% 25%
National Delhi Bangalore Lucknow Indore Guwahati
(2005) (2010) (2011) (2011) (2005) (2008)

Fig. 7.7 Vehicle ownership of households (Source: Socio-economic factors influencing car own-
ership by Indian Households, NCAER; RITES (2011a, b); Lucknow Municipal Corporation;
RITES (2012), GMDA (2009a)

Toyota Corolla Altis1.8J in the luxury car category have been used for comparative
analysis of sticker price. The variation in the ex-showroom price is mainly due to
the logistics cost. It is highest for Guwahati followed by Bangalore.
The registration cost is also very high for Bangalore. It has consciously adopted
a high registration cost for new vehicles to inhibit growth of vehicle population on
its roads. Delhi, on the other hand, has a very low registration cost for both cars and
two-wheelers, which is one of the factors responsible for the higher number of per-
sonal vehicles there.
If we look at the vehicle ownership by households, a significant proportion of
households still do not own a vehicle in big cities because of affordability issues.
Also, the efficient supply of public transit in these cities makes it possible for the
people to survive without a private vehicle. As shown in Fig. 7.7, vehicle ownership
in second-order metropolitan cities like Indore is as high as 83 %, which is in-line
with the low mode share of public transit there.
Figure 7.8 shows the car km travelled per population per day for the cities of
Delhi, Bangalore, Lucknow and Indore. Even though the city size is comparable for
Delhi and Bangalore, the car km travelled per population per day for Delhi is more
than twice of that in Bangalore. Lucknow and Indore have a very low car usage

7 Urban Mobility Trends in Indian Cities and Its Implications 109


population per day

Car km per

(2001-02) 1.5

0.13 0.13
Delhi Bangalore Lucknow Indore

Fig. 7.8 Car km travelled per population per day (Source: CRRI (2002); Lucknow Municipal
Corporation; Mehta & Associates (2010), Wilbur Smith Associates (2008); Guwahati Metropolitan
Development Authority)

Table 7.9 Passenger and vehicle km travelled per day by passenger cars
2001–2002 2009–2010
Million passenger Million vehicle Million passenger Million vehicle km
City km travelled /day km travelled /day km travelled /day travelled /day
Delhi 67.52 30.69 149.27 67.85
Bangalore 13.85a 5.35 30.61a 11.82a
Lucknow 0.77a 0.3 1.72a 0.66
Indore 0.449 0.199 – –
Source: CRRI (2002, 2009); Lucknow Municipal Corporation; Mehta and Associates (2010)

compared to Delhi and Bangalore. Table 7.9 shows the passenger km travelled
(PKT) and vehicle km travelled (VKT) for cars for the years 2001–2002 and 2009–
2010. Both PKT and VKT for Delhi are very high and have almost doubled in
8 years.
The use of private vehicles in the cities is closely related to the supply of public
transit in the cities. Reddy and Balachandra (2012) studied the urban mobility in
some of the megacities in India and noted that even though the vehicle ownership
had increased in the cities of Mumbai, Kolkata and Chennai, the pkm by private
vehicles had not increased equally because of the efficient supply of public transit
in these cities. In the five sample cities also, the growth in four-wheelers has been
the highest for Bangalore, at an average of 19 % per year, but the growth in pkm has
been only 15 % per year on an average. Whereas for Lucknow, the same 15 %
growth in pkm by cars has resulted from a 12 % per year growth in vehicles, imply-
ing the higher growth in usage due to inefficient supply of public transit. Road Infrastructure

India has an average road length of 3.87 m per person. The road density is much
higher for developed countries like the USA, Japan and Germany having a road
network length of 21, 9 and 8 m per person, respectively (Ministry of Road Transport

110 A. Verma et al.

Road Network (m) per

1.96 2.06

National Delhi Bangalore Lucknow Indore Guwahati

(4,690,342km) (32,000km) (10,200km) (5,308km) (1,710km) (2,000km)

Fig. 7.9 Road length (m) per population

Peak Hour Travel Speed

17 16
16 15
(in kmph)

Delhi Bangalore Lucknow Indore Guwahati

(2008) (2008) (2011) (2011) (2008)

Fig. 7.10 Peak hour car travel speeds (Source: Ministry of Urban Development (2008), UMTC
(2012), and RITES (2012))

and Highways, India; Institute for Mobility Research, Germany). Because of the
higher population density, this ratio is significantly lower for urban areas. Guwahati,
closely followed by Delhi, has the highest road length to population ratio among the
five study cities (Fig. 7.9). In terms of absolute length, Delhi has the longest and the
densest road network among the five cities whereas it is the least for Indore
(Fig. 7.9). Guwahati has the highest road network among the smaller cities. Congestion

All the cities, irrespective of size, are facing similar congestion issues. Figure 7.10
shows the peak hour travel speed for the five sample cities. The speeds range from
15 kmph in Lucknow to a maximum of 20 kmph in Guwahati. Although the car
ownership rate is much lower compared to many international cities, the congestion
levels are almost the same, one of the reasons being insufficient road infrastructure.
The increasing congestion encourages people to use personal vehicles over public
transit, which in turn is adding to the congestion in cities. Although the road length
per population is much higher for Guwahati and Delhi, the congestion levels are
similar. Studies have shown that expansion of road infrastructure increases the

7 Urban Mobility Trends in Indian Cities and Its Implications 111

200 196 195

Fatalities per million
population (2011)

150 127
100 81


National Delhi Bangalore Lucknow Indore Guwahati

Fig. 7.11 Fatalities per million population due to road transport accidents (2011) (Source:
Ministry of Road Transport and Highways (2008–2011); Guwahati Traffic Police)

congestion levels rather than decreasing them, by inducing travel demand (Hills
1996). Hence, the solution lies not in increasing the supply but in managing the
demand. Some of the measures have already been taken in this direction by the
Indian government which are discussed in Sect. 7.5. Fatalities Due to Road Accidents

The number of fatalities due to transport-related accidents for India is alarmingly

high. In 2011, a total of 142,485 people died due to road transport accidents, which
is the highest for any country in the world (Ministry of Road Transport and Highways
2008, 2011). It is observed that the fatalities per million population due to road
accidents is much higher in case of second-order metropolitan cities like Indore,
Guwahati and Lucknow (Fig. 7.11) compared to the bigger cities of Delhi and
Bangalore. The lower fatality rate in bigger cities is also explained by the higher
public transit mode share, which is less prone to accidents. A majority of these
fatalities involve pedestrians, cyclists and two-wheeler users. Compared to the
national average (118 per million population), the fatality rate is higher for most of
the cities. Again, it is interesting to note that even though the private vehicle owner-
ship is India is much lower, the road fatalities per million population is much higher
than what is found in the countries of Germany (45), Japan (45) and Australia (61)
(International Transport Forum 2011). The major factors responsible for such high
accident rate include non-abidance of basic rules of road safety in the country due
to lack of enforcement. Only 27 % of Indian drivers wear seat belts, whereas only
50 % wear helmets (WHO 2011). The road infrastructure also is not up to the mark
with very little importance given to road safety.

7.5 Transport Policy and Regulations

The rapid urbanisation taking place in India has caused the government to take the
issue of transportation more seriously and in 2006 the Ministry of Urban Development
launched the National Urban Transport Policy with an aim to address mobility needs

112 A. Verma et al.

of the cities. It has given a framework of transportation infrastructure development.

The objectives include promotion of integrated land use and transport planning,
measures to enable equitable allocation of road space, priority to public transport
and non-motorised transport, promotion of intelligent transportation systems, use of
technology in public transportation systems and integration of public transportation
systems, use of cleaner technologies, reorganisation of parking spaces and increase
in parking charges, etc. Jawaharlal Nehru Urban Renewal Mission (JnNURM)
scheme launched by the Indian government in 2005 supports the implementation of
NUTP by providing financial assistance for transportation infrastructure develop-
ment projects on a cost sharing basis with the state and local governments. The
launch of both of these policies has led to massive improvement in transport infra-
structure in India but they have not been able to completely solve the transportation
issues. A lot of measures are planned to curb the rising traffic by de-incentivising
private vehicle usage and providing alternatives in the form of better public transit.
There are plans of introducing metro systems as well as bus rapid transit system
(BRTS) in many of the rapidly growing cities and an investment of 160,329 crore
INR is planned for the same by the Planning Commission. The 12th 5-year plan
recognises the Indian urban transport problems of lack of integrated land use and
transportation planning, low investment in improvement of public transit and NMT
services and the focus on supply instead of managing transport demand.
Currently, there are a very few schemes to control the use of private vehicles.
Among the five cities, only Delhi has regulations for entering the city where com-
mercial vehicles older than 15 years are not allowed to enter the city. Also, only
CNG-fitted buses/autos/taxis can operate in the National Capital Territory of Delhi
(NCTD). There are restrictions on trucks entering the central business districts
(CBD) area of majority of Indian cities during the day time.
Regulations for parking are also not very strong in majority of Indian cities.
On-street parking is a common phenomenon, with as high as 45 % of the streets
being utilized for parking in Guwahati (Ministry of Urban Development 2008).
Parking is haphazard and a major contributor to congestion in CBD area of most
cities. Some of the cities are constructing multilevel parking spaces to curb this
issue. As listed in Table 7.10, the parking charges are very nominal compared to
cities from developed countries, where the high parking charges act as a deterrent to
the use of personal vehicles. To be used as a demand management tool, it is neces-
sary to increase the charges to a level where it can be used as a disincentive for
personal vehicle usage. It has been reported that a 10 % increase in parking charges
results in an average reduction of 1−3 % in vehicle trips (Vaca and Kuzmyak 2005).
To limit private vehicle usage, the Ministry of Urban Development (2013) has
recently released an advisory for the Urban Local Bodies of various Indian cities for
the introduction of congestion charging in the central business districts of the cities.
It is expected that this will ease out the heavy motor vehicle volume found in the
central areas of the cities and at the same time generate funds for transportation
infrastructure development.

7 Urban Mobility Trends in Indian Cities and Its Implications 113

Table 7.10 Average parking charges in CBD area for sample cities
City On-street/off-street Shopping malls
Delhi Rs. 20 for the first 2 h Rs. 40 for weekdays, Rs. 50 for weekends,
(6 h for metro) no time limit
Rs. 5 for every additional hour
Bangalore Free of cost for most places Four-wheeler – Rs. 40 for first 2 h and
Meters have been installed at two Rs. 10 for every additional hour
streets that charge Rs. 5 for every Two-wheeler – Rs. 30 for 2 h and Rs. 10
half hour for every additional hour
Lucknow Rs. 10 for two-wheeler and Rs. Rs. 15 for two-wheeler and Rs. 20 for
20 for four-wheeler for 4 h four-wheeler for 8 h on weekdays
Rs. 20 for two-wheeler and Rs. 25 for
four-Wheeler for 8 h on weekends/holidays
Indore On-street – no charges (free) Mostly free parking. Have weekend
Off-street – Rs. 10 for 4 h for charges at some places – Rs. 20 for
cars, Rs 5 for two-wheelers two-wheeler, Rs 40 for four-wheeler
Guwahati Rs. 10 for first hour; Rs. 5 for –
every additional hour
Source: Primary survey

7.6 Summary and Conclusions

The aim of this chapter was to study the mobility patterns in Urban India based on
three aspects of mobility – demography and economy, transport demand and supply
and transport policy. This was done by taking a sample of five Indian cities that
represent different population ranges, GDP, developmental stage, geographical
location and cultural settings. The following points summarize the findings of the
– The cities have had a high growth in population due to urbanisation which has
lead to a sudden growth in travel demand.
– Public transit and NMT together constitute the majority of trips, but are slowly
being replaced by private vehicles due to lack of proper infrastructure to support
these trips.
– The cost of transit is much lower compared to the cities around the world. But
due to the high economic disparity found in Indian cities, even the low cost is not
affordable to a high proportion of population in the cities.
– Two-wheelers also form a major share of trips, especially in the smaller cities of
Indore and Lucknow where the transit supply is insufficient.
– Even though the car ownership in Indian cities is much lower compared to other
countries, it is growing at a fast rate. It increased by 23–75 % in the cities in 4
years since 2007. The highest number of cars per 1,000 population is found in
Delhi, but the growth has been the highest for Bangalore.

114 A. Verma et al.

– The government policies, as of now, do little to control car ownership. The only
disincentive for buying cars is the high cost of ownership and higher fuel prices
compared to the cities in developed countries.
– Along with the ownership rates, the passenger and vehicles km travelled have
also increased significantly. This growth has been higher for the cities where the
transit supply is not enough.
– The road length per population is much lower in India compared to the cities in
developed countries. It ranges from 0.79 m per population in Indore to 2.06 m
per population in Guwahati.
– Irrespective of the size, all the cities are facing similar issues of congestion with
a peak hour speed ranging from 15 to 20 kmph. The fatalities are also alarmingly
high, especially for the cities of Indore and Guwahati.
The various trends observed in the study lead us to the thought that Indian urban
mobility scenario is quite different from other countries and the same solutions can-
not be applied as it is. While most countries around the world are consciously mak-
ing an effort to move towards sustainable modes of transport, we already have a
high share of transit and NMT trips. The task ahead is to maintain, if not increase
the share by providing better facilities for both transit as well as NMT. With such
alarming growth in car ownership rates, it is important to have policy level interven-
tions to curb the usage of private vehicles and encourage people to use transit and
NMT. The solution does not lie in building more roads, or increasing the capacity of
existing road, but in providing more sustainable options for the people. Also, for the
smaller cities that are growing at a fast rate, the two-wheeler ownership is increasing
sharply and needs to be controlled by providing suitable alternatives. The National
Urban Transport Policy promotes mixed land use which can be very effective in
decreasing travel demand. In the smaller cities like Indore, Lucknow and Guwahati,
along with introducing new modes like Metro and BRTS, it is also important to
improve the capacity and frequency of existing transit system. There are only 110
buses in Indore that serve a population of 2.1 million, whereas Bangalore has a bus
fleet size of 6,000 to serve a population of 8.5 million. The lack of integration of
public transport is also one area that needs to be improved while investing on intro-
ducing new modes in the cities.
Due to lack of time and unavailability of data, the present study is based on only
five urban areas and limited to the study of the status quo of mobility trends. As a
potential research area, the study can be extended to cover more cities to make it
more comprehensive. Also, taking the present study as the basis, it would be inter-
esting to look at the future of urban Indian mobility.

Acknowledgements The study would not have been possible without the support of the funding
agency – Institute for Mobility Research (IFMO), Germany. The authors would also like to thank
the numerous organizations which gave us access to their data and extended goodwill and kind

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Chapter 8
Water Security: Assessing the Role of Reforms
Related to Independent Regulatory
Authorities in India

Subodh Wagle, Sachin Warghade, Tejas Pol, and Mandar Sathe

8.1 Introduction

Delivery of public services directly influences lives and livelihoods of the service
users through accessibility and reliability of the services. Security and sustainability
of provision of public services are therefore critical (Wagle and Dixit 2006).
Provision of water being the most critical public service is the focus of the assess-
ment of reforms presented here.
The water sector in India is undergoing significant reforms that have potential to
fundamentally alter the way in which water is governed in the country. The intro-
duction of new regulatory institutions in the form of ‘independent regulatory agen-
cies’ (referred to hereafter as IRAs) is one of the most critical reform measures that
are gradually evolving in the sector. The IRAs are generally established by enacting
special laws in the respective legislative houses. This is considered necessary to
ensure that IRAs do not become agencies of governments (and remain truly autono-
mous and independent), and, at the same time, to provide legitimacy and legal
authority necessary for being effective. The laws enacted to establish the IRAs are
expected to spell out details of the structure and functioning of the IRAs. In doing
so, the laws not only establish the IRA as a new institution of governance in the
sector, but also bring in a host of other reforms in different aspects of governance of
the sector. All these reforms are referred here by an umbrella term, the ‘IRA-related

S. Wagle • S. Warghade (*)

Tata Institute of Social Sciences, Mumbai, India
e-mail: subodhwagle@gmail.com; sachin.warghade@tiss.edu; sachin.warghade@gmail.com
T. Pol • M. Sathe
Resources and Livelihoods Group, PRAYAS, Pune, India
e-mail: tejaspol@gmail.com; mandarsathe@gmail.com

© Springer India 2015 117

A. Gurtoo, C. Williams (eds.), Developing Country Perspectives on Public
Service Delivery, DOI 10.1007/978-81-322-2160-9_8

118 S. Wagle et al.

8.2 Evolution of IRAs in the Water Sector in India

The roots of the reforms related to IRA can be found in the projects for improvement
or restructuring of the water sector that are undertaken by various states in India.
These projects, financed by the World Bank (WB), include a component of ‘institu-
tional restructuring and capacity building’. ‘Developing sound regulatory framework’
has been an action point under this project component of such projects in states like
Rajasthan, Karnataka, and Andhra Pradesh.1 Establishment of a separate regulatory
commission or authority is included as a separate project component in projects of the
states like Madhya Pradesh, Uttar Pradesh, and Maharashtra2 (PRAYAS 2009a).
Accordingly, it was the state of Maharashtra which became the first state in India
to pass an IRA law in 2005 for establishment of a regulatory authority named as,
‘Maharashtra Water Resources Regulatory Authority’ (MWRRA 2010). This law is
often referred to as MWRRA law. Arunachal Pradesh (ArP) passed such a law in
2006.3 Uttar Pradesh (UP) passed a similar law with some changes in 2008 and
established the regulatory authority by the name, ‘Uttar Pradesh Water Management
and Regulatory Commission’ (UPWMRC). Andhra Pradesh (AP) took a very dif-
ferent position on water reforms by passing a law in 2010 which does not conform
to the model that MWRRA Law set for other states. Although the law for establish-
ment of the ‘Andhra Pradesh Water Resources Regulatory Commission’ (APWRRC)
is passed, this particular regulatory agency has not yet accorded decision-making
powers in areas like water allocation or tariff setting. Thus, by 2010, four states in
India had passed IRA laws or laws for establishment of separate regulatory agencies
in the (state) water sector.
These state-level reform initiatives have been followed by repeated and strong
recommendations from the central agencies to all states to establish water regulatory
agencies like the MWRRA of Maharashtra. Recently, the report of the Thirteenth
Finance Commission of India stated that ‘…the grant provision [for the water sector]
is conditional on setting up by states of an independent Water Regulatory Authority
by 2011–12. The Maharashtra Water Resources Regulatory Authority set up in August
2005 serves as a possible model for consideration by other states’. The Finance
Commission further states that, ‘[a]n incentive grant of Rs. 5,000 crore is recom-
mended for this purpose’.4 Thus, the move towards establishment of IRAs in the
water sector is expected to gain momentum in the remaining states as well.

Refer project information and appraisal documents of following projects: Rajasthan Water Sector
Restructuring Project, Andhra Pradesh Water Sector Improvement Project, Karnataka Urban Water
Sector Improvement Project.
Refer project information and appraisal documents of following projects: Maharashtra Water
Sector Improvement Project, Madhya Pradesh Water Sector Restructuring Project, Uttar Pradesh
Water Sector Restructuring Project.
The law in ArP is ad verbatim copy of the Maharashtra Law.
Refer para 12.39 and 12.57 of the Report of the Thirteenth Finance Commission 2010–2015,
Government of India, December 2009.

8 Water Security: Assessing the Role of Reforms Related to Independent Regulatory… 119

The developments related to the IRAs in the water sector in India should also be
looked at from the context of broader reforms in water as well as other sectors.
There are several problems and concerns in the water sector such as water security,
climatic variability, disparity in water availability, inefficient and wasteful water
utilization, and decrepit economic and financial conditions of the sector. The roots
of such problems are often traced to the institutional structure in the developing
countries, and especially to the overarching role of the state institutions. The rem-
edy suggested by the international agencies is to restructure the role of the state and
the market (Briscoe and Malik 2007; WB 2005a, b; PRAYAS 2009a; Cullet 2007).
This has remained an important agenda of ‘reforms’ in the infrastructure sector. This
model of ‘reforms’ essentially proposes that the state should play the role of a ‘facil-
itator’ in the infrastructure sector, instead of being the owner and controller of these
sectors. This is aimed at prevention of concentration of authority with state institu-
tions, and thereby, achieving overall improvement in the efficiency and economy in
the function of water service provision. The proposal for establishment of IRAs
stems from this analysis, as IRAs are supposed to take up the role of ‘regulator’ and
even ‘decision-maker’ which is played by the state before the reforms.

8.3 Implications of IRAs for the Water Sector

Governance functions of a public service sector include policy formulation, policy

implementation, and compliance monitoring. Reforms in the sectoral governance
therefore have implications on the principles underlying policy making, the chan-
nels and methods of policy implementation, and the mechanisms for monitoring
compliance in formulating and implementing policies.
The reforms emerging from the IRA laws in the water sector would lead to
fundamental changes in policies, organizational structures, regulations, rules, norms
as well as to changes in the basic principles underlying governance of the sector.
The water-IRA laws passed to date in India accord a wide range of powers and
responsibilities to the IRAs. IRAs, the arrowhead of governance reforms, are poised
to become the most critical governance agency in the sector. This is because they are
now entrusted with critical governance functions, such as review and clearance of
water resource projects, determining water allocations or entitlements, setting of
tariff, licensing of service providers, monitoring and regulating water utilities, regu-
lating operational efficiency, regulating water conservation, and facilitating private
sector participation (PRAYAS 2009b).
Considering the wide range of powers and functions accorded to IRAs in the
water sector, it is clear that the IRAs have the potential to create tremendous impact
on the water sector in India. They will also have serious implications for various
problems and concerns related to water security. For example, the IRAs function
of determination of water entitlements has direct linkage with the water rights of
different stakeholders. Similarly, water tariff, set by the IRA, will determine the

120 S. Wagle et al.

effective access to water services for the poor sections. Thus, these and other such
dimensions of IRA reforms will have diverse, indirect, as well as direct implications
for water security. Hence, it was found necessary to undertake an analysis of the
IRA laws—which determine the structure and functioning of the IRAs—as well as
the actual functioning of the IRAs.
The laws related to IRA are ‘surface-water’ centric. Although there are provi-
sions for groundwater regulation in MWRRA law the same is with respect to
groundwater in the command area of dam projects. Hence, IRAs in its current form
have larger implication to surface water than groundwater. However, there are
attempts being made to bring complete groundwater regulation under the purview
of the IRAs. This policy development is still in its nascent stage and hence not dis-
cussed in this chapter.5

8.4 Framework for Analysis: ‘Critical Areas of Reforms’

Security of provision of a public service translates into coverage of service provi-

sioning, and assured provisioning over time, that is, sustainability of provision of
the service. Coverage of the service encompasses allocation of right to access and
affordability of the service for all sections of the society. Sustainability of the ser-
vice provisioning would depend on the financial sustainability of the service pro-
vider utility and environmental sustainability of the public service sector on the
whole. Therefore, analysis of the reforms in public service delivery (water, for the
specific case presented here) encompasses these areas critical to security and sus-
tainability of service delivery. Both financial sustainability and affordability of the
service are dependent on the tariff or user charge for the service, and hence tariff is
a directly relevant area of analysis of reforms from the perspective of security and
Here, it will be helpful to begin by briefly explaining the terms, ‘water security’
as understood and interpreted by the authors for the purpose of this chapter. The
term ‘water security’ indicates the certainty or guarantee of the supply of water of
adequate quality and quantity as per the norms for minimum levels. Thus, ‘water
security’ will be affected by various physical, economic, and other barriers to access
to water, which are experienced by various sections of the society. As the last part of
the previous sentence suggests, the term ‘water security’ does encompass the
dimension of equity. It requires that the security—as defined before—is ensured for
all, and even for the most disadvantaged sections of society.

The Maharashtra Groundwater (Development and Management) Bill, 2009, was tabled in this
regard in the state legislative assembly and its approval stands pending since the same is referred
to Joint Select Committee for review.

8 Water Security: Assessing the Role of Reforms Related to Independent Regulatory… 121

The main concern guiding this chapter relates to: the impact and implications of
IRA-related reforms for ‘water security’ (PRAYAS 2007a). Considering the inter-
pretations of this term enunciated in the previous paragraph, the framework accepted
for this chapter comprises three ‘critical areas of (water sector) reform’.6 These are
the areas of water governance, which, on one hand, have been significantly affected
by IRA-related reforms. On the other hand, changes in these areas of governance
have serious implications for theme of concern, viz., water security. Hence, these
areas are called here as ‘critical areas of reforms’ and reforms in these areas are
analysed in detail to assess their implications for ‘water security’. These areas are
listed in the following paragraphs and their connections with the theme of ‘water
security’ are briefly explained:
(a) Reforms in ‘regime of water rights’: Here, the focus is on the reforms envisaged in
the IRA laws that pertain to rights or entitlements to water. Rights and entitlement
to water, as the terms suggest, determine allocation, and hence, access to water for
different users of water. Thus, the reform in ‘rights or entitlement regime’ has seri-
ous implications, especially for the physical dimension of security of water.
(b) Reforms in ‘system for tariff determination’: In this area, the focus is on the
principles of and procedure for determination of water tariff which are included
in the IRA laws. Tariff or different types of charges for water will significantly
affect the economic dimension of water security, as it will determine afford-
ability of water for different sections of society.
(c) Reforms in ‘financial regulation’: The IRA is mandated to regulate the financial
aspects of water resource projects and services, which are analysed under this
particular area. The regulation of financial aspect of the sector’s functioning
will largely determine the financial health of the sector. It is proposed that the
financial health of the sector, in turn, will affect both physical and economic
dimensions of water security. It will also affect the dimension of environmental
The analysis of IRA-related reform in these three areas is presented in the subse-
quent section. It is primarily based on the comparative assessment of the IRA laws
and other related reforms in the states of Maharashtra, UP, AP, and ArP.7

The other two critical areas that can have some implications for ‘water security’, viz., ‘reforms
affecting environmental aspects’ and ‘reforms shaping political legitimacy of governance’ are not
dealt within this chapter due to limitations on length of the chapter. However, they are discussed in
detail in the unpublished working paper titled ‘Security and sustainability of water sector:
Assessing the role of reforms related to IRAs in India’, which can be availed from the authors.
These laws have been referred in the paper as IRA laws. Following are the IRA laws studied for
the paper: MWRRA, 2005 (MWRRA); Uttar Pradesh Water Resources Regulatory Commission,
2008 (UPWMRC); Andhra Pradesh Water Resources Regulatory Commission, 2010 (APWRRC);
Arunachal Pradesh Water Resources Regulatory Authority Act, 2006 (ArPWRRA). The IRA law
in ArP is a word-to-word copy of the law in Maharashtra and hence a separate mention of the law
in ArP is not necessarily included in the subsequent sections of the analysis.

122 S. Wagle et al.

8.5 Analysis of the IRA Reforms in Critical Areas

Establishment of IRAs is a reform that cuts across all governance functions. This is
since IRA laws can mandate the IRAs to formulate sectoral policies, evolve rules
and regulations for implementation of those policies, and promulgate sanctions
based on the compliance of various governing agencies to the policies, laws, or
other policy instruments.
In this section, the analysis of the IRA-related policy instruments (such as laws,
policy statements, and other relevant documents) is presented along with the analy-
sis of implementation processes related to IRA reforms. This is based on various
assessment areas identified in the previous section of the chapter.

8.5.1 Reforms in Regime of Water Rights

Determining legally enforceable rights in the form of ‘water entitlements’ is a major

component of the IRA-related reforms in the water sector. It is argued that such
legally enforceable regime of rights will enable the market to determine economi-
cally beneficial water allocations (Briscoe and Malik 2007; Hodgson 2006; Saleth
and Dinar 1999). Hence, creation of the ‘entitlement’ system is considered as one of
the preconditions for evolving such a market-based system for water allocation.
Entitlements are defined in the IRA laws as ‘usufructuary rights’.
The entitlement system is also, in a sense, a licensing system, wherein no water
use is permitted without getting entitlements from the competent authority.8 The key
provisions related to the ‘water entitlement system’ (WES) in IRA laws in India are
summarized in Table 8.1.
The IRA in AP is mandated, as per APWRRC Act, to determine only the water
‘requirement’ and not ‘entitlements’ for various categories of users.9 However, the provi-
sions in all the IRA laws are related to water allocation and shall finally determine who
will get water and how much. In light of this implication, an analysis was undertaken
from the perspective of ‘equity’, which is mentioned in the IRA laws, while determining
entitlements or water requirements. This is discussed in the next subsection.

8.6 Inadequacies of Equity Considerations

Incorporated in the IRA Laws

The analysis of IRA laws indicates that ‘equity’ considerations find mention in
the different IRA laws in different forms. This is briefly summed up in Table 8.2.
The table on equity considerations shows that there are some positive efforts to
incorporate the equity principle in the decisions related to water entitlements and

Refer Section 14(1) of MWRRA Act.
Refer Section 14(1)(a) of APWRRC Act.

8 Water Security: Assessing the Role of Reforms Related to Independent Regulatory… 123

Table 8.1 Key provisions related to entitlements in IRA laws

Provisions States
1 Determination of entitlements (by the IRA) for various categories Maharashtra, ArP, UP
of use of water, within each categories of use, or for various water
user entitiesa
2 Trading of water entitlements: ‘Entitlements…are deemed to be Maharashtra, ArP
usufructuary rights which may be transferred, bartered, bought or
sold…within a market system…’b
3 System of enforcement, monitoring, and measurement of the Maharashtra, ArP, UP
entitlements for the use of water that will ensure that the actual use
of water, both in quantity and type of use are in compliance with
the entitlements as issuedc
Refer Section 11-(a) of MWRRA Act and ArPWRRA Act
Refer Section 11-(i) of MWRRA Act and ArPWRRA Act
Refer Section 11-(o) of MWRRA Act, Section 12(e) of UPWMRC Act

Table 8.2 Equity considerations included in the IRA laws

Forms of equity considerations States
1 ‘Equitable’ allocations and utilization of water in the ‘preamble’ of the Maharashtra,
laws ArP, UP
2 IRA to determine equitable distribution of entitlements of water within Maharashtra, ArP
each ‘category of use’a
3 IRA to determine equitable distribution of available water during Maharashtra, ArP
periods of scarcityb
4 For equitable distribution of water in the command area of the project, Maharashtra, ArP
every landholder in the command area shall be given quota (i.e., share
of entitlement)c
5 No water for perennial crops (i.e., sugarcane, grapes, or other such Maharashtra, ArP
perennial cash crops) from the canal, unless drip or other water-saving
technology is used. Water saved to be used first for drinking purpose
and then remaining water to be distributed equitably in command area
and the adjoining areaf
6 Ensure that the principle of ‘tail to head’ irrigation is implementede Maharashtra,
7 IRA to determine water requirement of farmers’ water associations AP
based on the cropping pattern approved by the project authorities on a
yearly/seasonal basis, and implement the same (i.e., water guaranteed
for farmers as per cropping pattern which is subject to change on
annual or seasonal basis)d
Refer Section 11(a) of MWRRA Act and ArPWRRA Act
Refer Section 11(c) of MWRRA Act and ArPWRRA Act
Refer Section 12(6)(a) of MWRRA Act and ArPWRRA Act
Refer Section 14(1)(b) APWRRC Act
Refer Section 12(7) of MWRRA Act and ArPWRRA Act, Section 14(3)(c) APWRRC Act
Refer Section 14(4) of MWRRA Act

124 S. Wagle et al.

distribution. But, it is clearly seen that there is no consistency in the incorporated

measures for equitable water distribution across the laws. For example, the ‘equity’
principle is not included in the preamble of the IRA law in AP, while the legal provi-
sion for ‘equitable’ distribution is not included neither in IRA law in AP nor in
UP. There is also no provision in IRA laws in AP or UP for equitable distribution
during scarcity periods. The guarantee of water entitlement or quota for every
farmer in the command is included only in the law in Maharashtra.
It should be noted that the IRA Laws in Maharashtra and ArP include a provision
which makes it obligatory on any person with more than two children to pay one-
and-half times the normal water charges for getting entitlement for agriculture pur-
pose.10 In light of the accepted wisdom on the linkage between poverty and family
size, this provision is socially regressive. It is argued that using water tariff as disin-
centive for large family size and that too only against farmers is unfair. The provi-
sion would also lead to inequity within agriculture sector due to the possibility that
even a marginal farmers with more than two children would end up paying more
water tariff than a large farmer having two or less than two children (Cullet 2007).
In all the laws, the equity principle receives limited cognizance. It is not a core
value underlying the laws (Warghade and Wagle 2009). Further, the interpretation
of the equity principle is very limited in scope. For example Maharashtra law limits
the application of the equity principle only to farmers within the command.
However, no concrete measures are provided or suggested to implement even this
limited interpretation.
Overall, there seems to be serious absence of consistency or depth in application
of the ‘equity’ principle in the area of ‘water entitlements or distribution’ in the IRA
laws. Hence, concerns are raised by civil society actors regarding security of access
to water for the poor and marginalized sections (PRAYAS 2009b). The particular
concern appears to be justified based on the actual experience of implementation of
reform in Maharashtra. This is explained in the following subsection.

8.7 Failure of MWRRA Law in Protecting

Water Rights of Farmers

The MWRRA law provides for water entitlements to every landholder in the com-
mand area of the irrigation project. However, this has not been proved to be ade-
quate in protecting the farmers’ rights over water. In 2003, a ministerial level high
power committee (HPC) was constituted for granting reservation on available
sources of water for nonirrigation use. The minutes of the meetings of the commit-
tee over a period of 8 years obtained through right to information (RTI) revealed
startling information. Almost 1,500 M Cum (or million cubic meters) of water was
found to be diverted by the HPC from irrigation use to nonirrigation use, since 2003,
from 38 different irrigation projects in Maharashtra. It is estimated that the

Refer Section 12(11) of MWRRA Act and ArPWRRA Act.

8 Water Security: Assessing the Role of Reforms Related to Independent Regulatory… 125

diversion of this water will adversely affect about 2,62,504 Ha (or 6,48,661 acres)
of irrigation area (PRAYAS 2010). The HPC has given orders for collecting Rs. 7.13
billion as irrigation rehabilitation cost from some of the nonirrigation users who
benefitted from the water diversion. However, these funds have not been utilized to
benefit the farmers who lost the right over water due to diversion.
It needs to be noted that about 90 % of this water was diverted after 2005, the
year in which MWRRA law was passed and MWRRA was established. This was
in contravention of the law and amounted to gross usurpation of the authority of
the IRA by the state government. A petition was filed before MWRRA against one
such case of water diversion.11 But the IRA (i.e., MWRRA), apart from acknowl-
edging the receipt of the petition, did not initiate any action on the petition even
after 9 months. In another case against water diversion filed before the High
Court, it is learnt from the petitioners that the MWRRA did not assert its powers
related to water entitlements before the court.12 It is clear from this experience that
the MWRRA either did not attempt to or was not able to protect the water rights
of these farmers.
Overall, despite the limited interpretation of the principle of equity, it is doubtful
whether IRAs will be able to protect the rights of the farmers, which they are legally
bound to protect. This failure will also affect, apart from farmers, all other rural poor
including agriculture laborers whose livelihoods depend on agricultural production.
This clearly shows that the IRA laws, unless equipped with adequately specific and
mandatory provisions to protect water rights of the marginalized sections of the
society, will fail to protect rights of these sections due to the regulatory capture by
dominant groups.

8.8 Neglect of Critical Equity Considerations

in the IRA Reforms

The provisions related to water entitlements, especially in the MWRRA law, also
include provisions pertaining to tradability of water entitlements. These could be
interpreted as a legally strong and concrete effort to gradually move towards a
market-based entitlement system wherein allocations will be determined by market
forces. This push has given rise to various concerns, expressed by researchers and
social activists, related to water security of the different sections of the society,
especially, that of the poor and other marginalized sections (Thakkar 2007; PRAYAS
2009b; Iyer 2009). Apart from the threats posed by provisions related to the trad-
ability of entitlements, the IRA laws in India seem to have failed in other important

The petition, dated 20th April 2010, was filed against the decision of the High Power Committee
to divert water from the Hetavne irrigation project in the Raigad district of Maharashtra. The peti-
tion was filed by Prof. N D Patil, advocate Surekha Dalvi, and the authors of this chapter.
This petition was filed by Mr. B.T. Deshmukh and others against the diversion of water from
Upper Wardha irrigation project. The information was obtained through personal communication.

126 S. Wagle et al.

ways in ensuring protection of right to water for basic life and livelihood purpose
(Joy and Paranjpe 2009). Table 8.3 summarizes some of these key concerns in this
regard. The table also draws from the comparative analysis of water reform instru-
ments in various South Asian countries (Wagle and Warghade 2010).
Thus, Table 8.4 indicates that, while the new entitlement regime would create
near-permanent—though of usufructuary nature—rights of some water users on
water, the IRA laws disfavor those sections that have been historically disadvan-
taged or neglected in water allocation.
Thus, the analysis presented in this entire section shows that the provisions in the
IRA laws related to reforms in water rights are not adequate to protect the rights of
the marginalized or historically disadvantaged sections such as rural- and agro-based
water users. Rather, many provisions either neglect or effectively disfavor them further.
This poses a direct threat to the rights of and access to water for the marginalized
groups. The possibility of tradability of these entitlements further accentuates this
threat. This is primarily due to the obvious inability of the marginalized groups to
mobilize financial resources required to buy water entitlements in the market system
(Bauer 2004; Romano and Leporati 2002). Thus, in short, the new system of entitle-
ments will have a major impact on the water security of these sections of the society.

8.8.1 Reforms in System for Tariff Determination

There have been various attempts in India to undertake reforms in the area of water
tariff, especially, on the basis of the principle of ‘cost recovery’. But, it is for the first
time that the IRA laws have provided legal enforceability to the ‘cost recovery’
principle in the water sector (Warghade and Wagle 2009). In this regard, the choice
of the costs to be recovered from users through tariff has been one of the major issues.
This issue is framed by some in terms of ‘levels of cost recovery’ (Revels 2005).
A brief analysis of the ‘levels of cost recovery’ is presented in the following subsec-
tions, which then is followed by their implications on affordability of tariff.

8.9 Levels of Cost Recovery

Recovery of all costs associated with water services, including the capital costs, is
seen as an important measure for ensuring good financial health of the water sector.
Various levels of ‘cost recovery’ are proposed as part of reforms in water tariff. The
lowest level of cost recovery pertains to the situation wherein even operation and
maintenance (O&M) costs are not recovered, while the highest level pertains to only
recovery of not just O&M costs but also of investments and return on investments,
that is, profits (Revels 2005).

8 Water Security: Assessing the Role of Reforms Related to Independent Regulatory… 127

Table 8.3 Equity considerations neglected in IRA laws

Broad areas of concerns Key concerns
1 Neglect of the right to There is no constitutional provision for the ‘right to water’, nor
‘water for life, and are there provisions in the IRA laws that provide clear security,
livelihood’ in any form, of ‘water for life and livelihoods’
There, is also no provision in the IRA laws for conferring
‘natural rights’ for use of ‘water for life and livelihood’. A
similar provision is proposed in the reform law in Bangladesh
where no license or entitlement is required for water use
covered under the natural rightsa. The provision for ‘water
reserve’ in the South African water legislation is also an attempt
to ensure protection of natural rightsb. However, no such
measures are found in the IRA laws in India
2 Neglect (and thus No consideration of rights of landless over water resources
perpetuation) of past No consideration of rights over water, flowing through artificial
inequities in water or natural watercourse, of people outside the defined command,
distribution or the riparian zone, or people who can be considered as
third-party users of water (such as inland fishermen)
No consideration of inequity created due to past appropriation
of water resources by dominant or favorably located water users
such as urban and industrial centers
3 Inadequacies of Lower priority of use is given to ‘agriculture’ compared to
provisions stipulating ‘industry’ in the Maharashtra State Water Policyc. Hence,
‘priority of use’ for irrigation water is being diverted to urban and industrial use as
resolving inequity or a matter of policy. MWRRA Act, in this situation, is not able to
assuring equity protect water rights of farmers
Higher priority of use is given to agriculture compared with
industry in the State Water Policies of UP and AP. But the
policies also provide for modifications in the priority as per
‘requirements’d. As against this, there is no categorical
provision for protection of water rights of farmers in the
UPWMRC and APWRRC laws. In fact, change in cropping
pattern on annual or seasonal basis is permitted in APWRRC
law, thus, allowing reduction of quantity of water supply for
irrigation in futuree
4 Neglect of third-party No consideration in Maharashtra IRA law for avoiding adverse
impacts of water impacts on third parties, such as fishing communities or other
markets third-party users, of trading of water entitlements between two
entitlement holders
For more details on the content of the table refer to: Wagle and Warghade (2010)
Refer Section 20 of Draft Bangladesh Water Act, July, 2009
Refer Section 16 of the National Water Act, 1998 of Republic of South Africa
Refer Para 4 of Maharashtra State Water Policy, 2003
Refer Para 5.1 and 3.1 of State Water Policy of UP (1999) and AP (2009), respectively
Refer Section 14(1)(b) APWRRC Act

128 S. Wagle et al.

Table 8.4 Provisions pertaining to cost recovery levels in IRA laws in India
Provisions States Recovery levels
1 Water charges shall reflect the full recovery of the Maharashtra, ArP O&M only
cost of the irrigation management, administration,
O&M of water resources projecta
2 Water charges shall be based on consideration to all UP Higher than
costs including administration, operation, O&M
maintenance, depreciation, and subsidiesb
3 State shall ensure provisions for full O&M AP Not even O&M
requirements of water projects as determined by the
IRA, through an appropriate budgetary supportc
Refer to Section 11(d) of MWRRA Act and ArPWRRA Act
Refer to Section 12(n) of UPWMRC Act
Refer to Section 14(2) of APWRRC Act

Recovery of O&M is seen as the first step to move towards higher levels of
recovery. However, one IRA law in India also provides for higher level of recovery
as shown in the summary of related provisions in Table 8.4.
It is seen from Table 8.4 that the ‘cost recovery’ principle in tariff determination
has been incorporated as one of the legally obligatory principle in IRA laws, with the
exception of AP. The IRA laws in Maharashtra and ArP mandate recovery of only
O&M cost, while the AP law requires provision of O&M costs through government
budget. The IRA law in UP, however, makes it obligatory to recover some other
costs in addition to the O&M costs. The provision for recovery of ‘depreciation’
from water tariff made in this IRA law makes a way for allowing recovery of that
part of the capital, which gets reduced due to aging and use. In accounting terms,
depreciation is often equated with the cost of repayment of loan. Hence, part of
the tariff can be used to repay the loan (the principal amount) on capital assets.
The depreciation amount collected as part of the tariff can also be used for renewal,
rehabilitation, or replacement of capital assets (Wagle and Warghade 2009a).
Also, it should be noted that provision in the UP law requires the tariff to be
based on recovery of ‘all costs’ including the levels mentioned in the table. In absence
of the definition of the term ‘all costs’, it could be interpreted as including all capital
cost as well as the return on investments or profits. Thus, the IRA law in UP repre-
sents a landmark decision to recover a portion of capital cost from water tariff.
Making the ‘cost recovery’ principle legally enforceable and allowing recovery
of capital costs may pave the way for higher level of commercialization of water
services. This will directly result in increase in cost of services for the water users.
Recovery of capital costs also creates conducive environment for privatization in
the water sector in future. Hence, the legalization of ‘cost recovery’ and increasing
its levels raises serious concerns about possible threat to affordability and access of
water to the poor and marginalized sections of the society, thus, affecting their
water security.

8 Water Security: Assessing the Role of Reforms Related to Independent Regulatory… 129

8.10 Neglect of the Principle of Affordability

The analysis of the IRA laws shows that adequate consideration has not been given
to the social concerns involved in tariff regulation. Apart from the ‘recovery’ prin-
ciple, the IRA laws do not provide any other principles that should guide tariff
determination by the regulator. None of the IRA laws explicitly mandates inclusion
of the principle of ‘affordability’, while determining water tariff.
The principle of affordability is operationalized often through tariff subsidies.
Hence, a review of the ‘subsidy’ related provisions in the IRA laws would throw
light on considerations of affordability in the IRA laws. The results of this review
are presented in brief in Table 8.5.
The review presented in Table 8.5 shows that the IRA laws in India, except for
Andhra Pradesh, demonstrate reluctance to make categorical commitment for pro-
vision of subsidy to the poor and marginalized sections. Instead, the emphasis of the
IRA laws is on ensuring that subsidy, if given by the government, does not affect the
‘cost recovery’ principle. In fact, the UPWMRC Act also contains a provision
requiring recovery of ‘subsidy’ from the water tariffs. This means that the IRA is
mandated to fix tariff in such a way that the revenues from tariff should also recover
subsidy given to poor. Thus, this law attempts to close the option of government
subsidy by putting the entire cost burden of subsidy on revenues obtained from
water tariff paid by other water users. Effectively, such a provision would act as a
very strong deterrent to giving subsidies, as it will spark resistance from other
water users.
In contrast to this, the recently proposed Water Act in Bangladesh includes
categorical commitment in the form of pricing policy that ‘…differentiate[s] on
equitable basis’ (Wagle and Warghade 2010). The draft law clearly spells out the
differentiation of the tariff based on: (a) geographic area (different tariff for rural,
urban, or backward region), (b) category of water users (different tariff for domes-
tic, agriculture, industry category), (c) level of water consumption (low tariff for
lower consumption and vice versa), and (d) individual affordability (based on

Table 8.5 Subsidy related provisions in IRA laws

Subsidy related provisions States
1 IRA to ensure that cross subsidies, if given by the government, Maharashtra, ArP
are totally offset by stable funding from such cross subsidies or
Government paymentsa
2 ‘Subsidy’ as a cost to be considered (i.e., recovered) while fixing UP
water tariffb
3 Government to provide full O&M through budgetary supportc AP
Refer Section 11(r) of MWRRA Act and ArPWRRA Act
Refer Section 12(n) of UPWMRC Act
Refer Section 14(2)(b) of APWRRC Act

130 S. Wagle et al.

financial status of individual users).13 This is an example of how legally enforceable

social policy considerations are being proposed for integration in the water laws.
Such a consideration is conspicuous by its absence in the IRA laws in India.

8.11 Implications of Lack of Statutory Provisions

for Affordability Principle

The implication of not making a categorical commitment for ‘provision’ of subsidy

to the poor in the IRA laws could be seen from the case of tariff determination
process in the state of Maharashtra initiated by MWRRA (PRAYAS 2007b, 2009c).
The MWRRA appointed a consultant to prepare an approach paper for tariff
determination. The consultant followed the mandate given in the law. The approach
paper developed by the consultant was made public by the MWRRA for consulta-
tion process. The analysis in the approach paper clearly indicated that the consul-
tant did not give adequate attention to social considerations like affordability or
subsidy to different groups of disadvantaged water users. The principle of ‘afford-
ability’ did not find any mention in the chapter on principles for tariff setting14
(PRAYAS 2009d).
The intervention by civil society organizations during the official consultation
process was constrained by the fact that the law did not explicitly provide for any
such considerations. Only after a strong criticism and opposition to the approach
paper by farmers and other civil society groups, the approach paper was revised to
include various social considerations. These social considerations proposed after-
wards included: differential tariff based on land-holdings, free water for tribal com-
munity, special concession to backward regions, and lower tariff to rural areas.15
However, there is a concern that these considerations would be changed in
future, depending on the inclination of the future members of IRAs, since there
are no statutory provisions for these considerations in the IRA law. In case the
farmers and other civil society groups in Maharashtra had not been able to mobi-
lize mass support, resources, and expertise for effective interventions in the tariff
determination process, the approach paper prepared by the consultant would have
been accepted by the IRA without any significant changes in this regard. This
shows that, in absence of statutory provisions in the IRA laws, the regulatory
process of tariff determination may completely ignore the social considerations

Refer Section 65 (3) and (4) of Draft Bangladesh Water Act, July, 2009. The differentiation based
on level of consumption in included in the para 14.4 of the National Water Policy of Bangladesh
Refer Chap. 6 of the following document circulated by MWRRA for consultation: ‘Approach
Paper On Developing Regulations for Bulk Water Pricing in the State of Maharashtra’, submitted
to MWRRA, September 2008.
Refer: MWRRA 2010. This is the document finalized as per decision of MWRRA after

8 Water Security: Assessing the Role of Reforms Related to Independent Regulatory… 131

required to make water affordable and accessible to the poor and the marginalized
sections of the society.
The statements of State Water Policies from different states, including
Maharashtra, mention the need for subsidy and cross subsidy. However, these
policies are not mandatory on the IRA, compelling them to take cognizance of
the principle of affordability. The important point to note here is that some of the
states in India, like UP, do not include the consideration related to subsidy even in
their respective State Water Policy statements, which are nonbinding in nature. As a
result, in absence of the categorical and mandatory provisions for including ‘afford-
ability’ as the criteria for tariff determination, the IRA—as seen in the case of
Maharashtra—would tend to pay no heed to this principle.
This analysis shows that the IRA laws in their current form do not guarantee
affordable access to water to the larger public and most importantly to the poor.
Thus, emphasis on the principle of cost recovery with push for the increasing levels
of cost recovery in the IRA laws, combined with their near total neglect of social
considerations pose serious threats to the water security of poor.

8.11.1 Reforms in Financial Regulation

The review of IRA laws shows that none of the laws provide for ‘independent’
regulation of financial aspects of the water resource projects and services. Water
tariff regulation is considered as one of the tool for financial regulation. But, the
experience of tariff determination process in Maharashtra shows that the IRA is
reluctant to undertake measures for financial regulation, which could involve
regulation of costs and expenditures including the capital expenditures (Wagle and
Warghade 2009b).
Demands were made by the CSOs in Maharashtra for independent scrutiny of the
capital costs as well as O&M costs by the IRA before deciding tariff. But the IRA
chose to limit its role to the review of the ‘norms’ for the O&M cost to be set by the
Water Resource Department and not the actual costs. Also, the role was further
limited only to the extent of ensuring that the norms for O&M cost are not
‘inadequate’ for quality O&M.16 Thus, in effect, the IRA would not look into unjus-
tifiable excessive O&M costs, if any. Also, the IRA would not at all undertake any
review of capital costs to ensure that they are prudent and justifiable.
This shows that, in absence of clear legal mandates, the IRAs are not inclined to
undertake meaningful ‘cost’ regulation. Overall, it is seen that the reform laws lack
provisions for empowering the IRA to directly regulate the financial aspects of
water sector. This is one of the major lacunas in the current regulatory framework.
Lack of strong mechanisms for financial regulation in a capital intensive sector like
the water sector puts the financial sustainability of the sector under threat, espe-
cially, when huge capital was infused and is still being infused in the sector.

Refer para 8.1 of MWRRA 2010.

132 S. Wagle et al.

8.12 Conclusion: Problems and Prospects

The analysis of the IRA-related reforms in the water sector affecting the three
‘critical areas’ provides insights into some major concerns and threats pertaining to
the core theme of ‘water security’. The main findings related to these threats are
summarized in this concluding section and lessons are drawn for addressing
these threats. The two major concerns and threats identified in the previous section
of the chapter are summarized as in the following.
1. Threat to water rights of the poor and marginalized sections of the society:
This involves threat to the ‘right to water for life and livelihood’ affecting also
the availability of water required by different agriculture-dependent communi-
ties. These rights are threatened due to various elements of the emerging ‘entitle-
ment system’. The threat gets further accentuated when ‘tradable’ entitlement
system would be introduced, wherein markets, in future, will determine the
distribution of entitlements.
2. Threat to affordable access of water to poor and marginalized sections of the
society: This threat emerges from practical implications of the ‘cost recovery’
principle. This would result in tariff increase, making water unaffordable to poor
sections. While making this principle legally enforceable, the IRA laws fail to
bring in specific and enforceable provisions for ensuring affordable access to all,
especially, the poor and the marginalized sections of the society.
3. Threat to financial sustainability of water resource projects and services: This is
evident from the analysis of the provisions that shows that the crucial elements
of ‘financial regulation’ such as regulation of capital costs and other costs is
totally missing from the IRA laws. In effect, Indian water IRAs are essentially
‘cost- recovery’ agencies, because, while determining tariff, they neither look
into physical losses nor costs, both of which are critical determinants of tariff.
Based on the earlier-mentioned summary and the framework for analysis, the
threats and their implications for various dimensions of water security are briefly
presented in Table 8.6.
After over a decade of adoption of these reforms, far too many people lacked
access to basic public services, and efforts are underway to especially improve the
access to these basic services (Planning Commission 2007, 2012). The threats pre-
sented by the reforms undertaken in India’s water sector portray the failure of
reforms to address security and sustainability of a public service as basic as water.
Reforms in public service delivery encompass the three critical areas (determination
of entitlements/allocation, tariff determination, and financial regulation) examined
for the water sector here. On one hand, the economic reforms focused on financial
sustainability of service provisioning through increased user charges for better cov-
erage and more inclusive provision. On the other hand, as demonstrated in the case
of water sector, ill-targeted tariff increase and lack of cost regulation negatively
affected affordability and access to the service for the disadvantaged sections. This
and such failures of reforms in the critical areas of access to public service

8 Water Security: Assessing the Role of Reforms Related to Independent Regulatory… 133

Table 8.6 Implications of IRA laws on water security and sustainability

Impacted dimension of
water security or
Threats Specific implications sustainability
Threat to water rights of The availability of water for the poor Physical dimension of
the poor and marginalized and the marginalized sections will be water security (quantity
sections of the society adversely affected of available water)
Threat to affordable The availability of water for the poor Economic dimension of
access of water to poor and the marginalized sections will be water security (price of
and marginalized sections adversely affected due to water)
of the society unaffordable water services
Threat to financial Due to deteriorating financial health Physical and economic
sustainability of water of water projects and services, dimensions of water
resource projects and quality, quantity, and price of water security (quantity, quality,
services supply will be adversely affected and price of water)

provisioning are reflected in the lack of security and sustainability of public service
provisioning in India.
The analysis of the problems related to the current water-IRA reforms in India
in this chapter provides some insights for possible pathways for addressing the
challenges therein. This can be a theme for future research in this area. However, it
needs to be noted that this research does have critical implications for practice of
reform in the water sector.


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Part III
Administrative Capacity
and Performance

Chapter 9
Professional Status of Physicians
in the Russian Federation

Daria Prisyazhnyuk

9.1 Introduction

The medical profession is traditionally understood as a socially important

occupation, which usually attracts wide public attention in most national contexts.
This chapter focuses on the professionalization of the medical profession in Russia.
In the Russian Federation changes in medical professional relationships are increas-
ingly becoming the subject of both political and media debates and academic
research. The problem of the dynamics of medical doctors (MDs) as a professional
group has become acute since the mid-2000s when Russia began to implement “The
Health” (GOR, 2006–2011), a national priority project which aimed to improve the
quality and accessibility of primary health care for its population. The concept of
Russian health care reform during the first decade of the millennium started from
the assumption that a qualitative upgrading was possible by improving health care
management, improving facilities by introducing high-tech equipment and enhanc-
ing the prestige of the medical profession (The directions, the main activities and
parameters of the priority national projects 2007). It was assumed that additional
economic incentives could solve the major problems in the health sector, including
the lack of personnel in clinics and the prevalence of informal payments for health
care, both of which affects the access to quality medical care for patients.
Unfortunately, official governmental reports regarding the implementation of the
national project “Health” focus only on the material component of the reform pro-
cess, namely the quantity of purchased equipment and the amount of funding spent
(Katrenko 2012). Until now, there has been little assessment of the sociopolitical
processes involved in reforming the health care system and little understanding of

D. Prisyazhnyuk (*)
Department of Sociology, National Research University – Higher School of Economics,
Moscow, Russian Federation
e-mail: daria.prisyazhnyuk@socpolicy.ru

© Springer India 2015 137

A. Gurtoo, C. Williams (eds.), Developing Country Perspectives on Public
Service Delivery, DOI 10.1007/978-81-322-2160-9_9

138 D. Prisyazhnyuk

whether the socioeconomic status and prestige of the medical profession have
improved. This chapter seeks to fill that gap.
Russian reform in the health care system in the first decade of the new millennium
attracted considerable public attention. On the one hand, the media ran many stories
about the plight of physicians and the reductions in the prestige of medical profes-
sion, but in a contradictory manner and on the other hand, also about the increase of
salaries of doctors and their qualifications. This chapter provides an attempt to
understand the processes which are taking place in the medical community and to set
out the model of professionalization of the medical profession being implemented.
The professionalization of physicians in the Anglo-American tradition of the
sociology of professions means the increasing of status, which can be observed
through three main resources available for medical doctors, namely economic,
cultural, and power (Freidson 1994; Parkin 1974; Larson 1977). Economic resources
are indicated by means of the level of income and social protection of physicians,
whilst cultural resources are expressed in the form of the social prestige of the pro-
fession, and power in the social closure, autonomy, and self-regulation of this occu-
pational group. This chapter deals with these resources and the mechanisms through
which the medical community was able to strengthen its financial position, indepen-
dent of the external forms of control, and also its social prestige, during the health
care system reforms in the 2000s.
To commence, the focus will be on the theory-building, showing the explana-
tory potential of the neo-Weberian paradigm, which is the orthodox theoretical
framework of the Anglo-American literature on the sociology of professions, as an
explanation for the process of professionalization of Russian physicians. Following
this, the focus will be put on the stages of professionalization of doctors in Russia
since the eighteenth century until the present day. The configuration of the con-
temporary health care system and the main directions of modern reform in this
area will be studied in a more detailed way. Finally, we will focus on three com-
ponents of professional status and define the vector of the professionalization of
Russian doctors.

9.1.1 Methodology

The empirical data reported in this chapter is based on national statistics on health
care reform (1995–2011) and several mass surveys of Russian physicians and the
population, namely the Russian longitude monitoring survey (RLMS-HSE, HSE,
2005–2011, N = 12641), and “The prestige of the medical profession in Russian
society” (Moscow, St. Petersburg, Novosibirsk, HSE, 2011, N = 120). The analysis
of the tactics of professional position strengthening, as well as their social mean-
ings, that emerge and their interpretation in the transforming context of the profes-
sional groups became possible due to a series of semi-structured interviews
undertaken with medical personnel of Russian polyclinics (40 interviews, 2008–
2012). A body of collected semi-structured interviews with the representatives of
Russian medical associations was also analyzed in order to identify the collective

9 Professional Status of Physicians in the Russian Federation 139

mobilization strategies of the medical community. This chapter also includes a

comprehensive analysis of the public discourse dedicated to the means of regulation
commonly applied by physicians themselves. The identification of these discourses
is based on the results of both qualitative and quantitative content analysis of the
media (Izvestia 2005; Medical Newspaper 2011).

9.1.2 Theoretical Background

The social power and the unique position of professional groups in the social struc-
ture of society has led to the emergence of a separate sub-discipline of sociology,
namely the sociology of professions. However, within this sub-discipline, there are
different opinions about the professional’s role in society. The functionalist tradition
of the sociology of professions was developed in the so-called taxonomic approach.
The contributors of Herbert Spencer and Talcott Parsons, Millerson J., Flexner A.
continued to allocate criteria by which professional groups can be understood. Such
scholars highlight a number of important elements which characterize professional
1. Special theoretical knowledge
2. Sufficient experience of formal training
3. Special implicit knowledge
4. Social significance of the work
5. Professional autonomy and ability to make decisions within the profession
6. Professional commitment and solidarity
7. Ethical codes and standards of behavior (Millerson 1965).
This taxonomic approach assumes that professionals have several socially important
characteristics which distinguish them from other types of occupation (Saks 2012).
In the Anglo-American scholarship on the sociology of professions, these are under-
stood only as a high-status intellectual activities. The contributors of a taxonomic
approach distinguish the high level of altruism as an essential attribute of a profes-
sional activity. This point, however, has been criticized by many other researches
(Halmos 1973). The taxonomic approach is liable to some significant limitations.
The macro-level analysis of the situation may be superficial, whereas the processes
of professionalization develop differently depending on the country or historical
period considered.
In the modern field of the sociology of professions, particular attention is con-
tinuously paid to the process of transformation of high-status occupational groups.
Certain issues excluded from the taxonomic analysis are currently subject to a num-
ber of contemporary European and Russian studies, such as the specificity of occu-
pational professionalization as well as their competing with the range of
institutionalized professions (Saks 1999).
The neo-Marxist approach towards the study of the sociology of professions
notes the recent loss of the privileged position of professions in the society. The
point is that the process of de-professionalization occurs among various professions

140 D. Prisyazhnyuk

(for instance, physicians) due to the standardization and the routinization of their
respective professional practice (Freidson 1970). The consequences of this dynamic
are directly related to the loss of professional autonomy and the growth of profes-
sional regulation by the state or the market.
From a neo-Weberian perspective, the professional groups may be analyzed by
means of a number of macro-level factors as well as in historical perspective. This
approach is associated with a specific understanding of professionalization, which
incorporates the increase and accumulation of power, economic, and cultural
resources by a certain professional group striving for monopoly in the market or the
public sector. Following the logic of neo-Weberian approach, the professionals can
convert their expert knowledge into economic resource as well as into high level of
prestige and authority (Saks 2012). Professional groups compete with each other in
order to maintain their position in the social structure of society as well as to get rid
of excessive control of the state and the market.
The analysis based on the neo-Weberian approach puts a stress on the active role
of professions in the process of monopolizing their domain. They tend to hold their
positions by means of a so-called process of social closure, by which is meant the
process by which social groups act in their own interests, providing a relatively
small group of selected practitioners with opportunities to monopolize the market
(Parkin 1974). Social closure is seen as imposing strict application limits on profes-
sions and in producing inner control over licensing, certification, and qualification
standards. Self-regulation is carried out through professional associations which
promote the interests of the group, allowing for inclusion and exclusion of its mem-
bers and providing the focus for their dealings with the state and the society.
Thus, professionals put their claim for the broad legal, moral, and intellectual
credentials of their profession, collectively imposing various strategies on the gen-
eral public. Following the logic of the neo-Weberian approach, professionals main-
tain a high degree of autonomy in their activities as they provide socially important
services and require specialized expertise and verification. In such cases, the social
contract between professionals, government, and society is established. The profes-
sionals maintain the high quality of their activities by implementing codes and sanc-
tions, as well as by means of control over the admission of new members into their
field. Government and the general public in turn provide the professionals with a
high degree of autonomy and a significant level of income and social prestige. The
presupposed trust in professional groups as functioning for the benefit of the society
lies at the core of this social contract (Larson 1977).
The variety of theoretical approaches aimed at understanding the subject of pro-
fessions arises from the fundamental dissimilarity of the public policy principles
that exist in different countries. There are two models of professionalization that are
usually singled out in the study of the sociology of professions: the Anglo-Saxon
and Continental models (Collins 1990).
The continental model is characterized by the leading role of the state as an agent
of institutional regulation of occupational and professional groups. In those coun-
tries where this model is applied (for instance, in Germany), professionalization
has been closely associated with the growth of the state and the state bureaucracy.

9 Professional Status of Physicians in the Russian Federation 141

The system of governmental certification, credentials, and bureaucratic hierarchy

serves here to maintain the high status of professionals and a high degree of credi-
bility with the public. In this case, we are talking about the notion of professional-
ization imposed “from above”, when the state, in collaboration with professional
associations (McClellend 1990), checks the level of training and monitors the qual-
ity of the work (Evetts 2012).
The Anglo-Saxon (Anglo-American) model of professionalism, meanwhile, is
premised on a greater degree of freedom for self-regulation of the professional
groups. The countries which apply this model of professionalization are character-
ized by a lesser degree of state centralization and a larger number of private or at
least relatively independent universities and by the broader variety of directly
market-oriented professions. Originally the control over the education, examina-
tion, and licensing of such professions has been executed here by guilds and later on
by professional associations. This Anglo-American model of professionalism is
represented by self-employed practitioners and monopolistic self-regulating profes-
sional associations, which maintain a high level of prestige and credibility among
the clients and the general public. Thus, the continental model of professionaliza-
tion presupposes the close link between the bureaucracy and the logic of profes-
sionalism, whereas the Anglo-Saxon tradition puts more emphasis on the connection
between professionals and the market (Freidson 2001).
Despite the fact that in 1990, Collins could still distinguish two types of profes-
sionalization (Collins 1990), recently, an increasing number of sociologists identify
that a convergence of these two models is taking place, this being caused by the
strengthening of the positions of the state structures in certain counties reinforced
by the simultaneous tendency for the market relations in the other. The point is that
nowadays a close link between the professional groups, the state, the market, and
the civil society is being established in many countries. Such processes are also cur-
rently occurring in Russia, thus providing a useful context for the sociological study
of the process of the professionalization of physicians in the context of the neo-
Weberian theoretical framework.

9.1.3 Stages of Medical Service Professionalization in Russia

The professionalization of the medical profession in the Russian Empire developed

within the scope of the continental model in close connection with the growth of the
state and state bureaucracy and in accordance with the increase of the external gov-
ernmental control over medical practice. The beginning of the nineteenth century
has seen the strengthening of the physicians’ positions as governmental employees.
Facing the problem of mortality rate increase caused by incessant epidemics, the
government started to expand the number of medical schools as well as the promo-
tion of medical personnel training programs. Thus, it became the main sponsor
of medical education and the sole agent for issuing medical licenses (Frieden 1977).
In order to attract students to the newly established medical universities, substantial

142 D. Prisyazhnyuk

scholarships were amassed from state-run funds. In return for such economic
support, new doctors and medical personnel were obliged to work at the state-run
medical establishments for at least 10 years, which meant a 2-year payback for each
of the 5 years of university studies.
The peculiarity of the professionalization of doctors in Russia determined
their social status and position in the social structure of the society. The physicians
employed in public or military service were usually associated with low social
status and authority (Frieden 1977). Despite this, private medical practice was not
that attractive for the representatives of the medical profession. Self-employed
physicians mostly could not achieve a high income and were socially unprotected
(Frieden 1976), while those in the public sector could obtain a higher social position
and pension.
The increasing number of medical universities and qualified specialists in the nine-
teenth century led to the occurrence of the first medical associations. These were
based on the altruistic view of the medical profession and were focused on the pro-
motion of hygienic knowledge and combating such social problems of the time as
the high mortality rate, diseases, and so forth (Mirskiy 2005). Not only would the
state support the medical associations by funding their activities, but also gain con-
trol over them by the same means. Thus, the government could set the rules of the
game by deciding what the main expense items would be. The financial support was
being provided only for the most reputable associations, which in fact were those
affiliated with the government.
In the middle of the nineteenth century doctors started to reassess their roles,
social status, and working conditions. Some researchers signal this period as the
time when doctors as a professional group were struggling for their rights. This
struggle resulted in some institutional changes of the configuration of relationship
between physicians and the state (Atkinson 1982). These changes occurred in 1964
with the introduction of a new model of state regulation based on the system of local
governmental bodies (Zemstvo). Doctors allocated to Zemstvo were not in the state
service but still could benefit from a number of rights and privileges, for example,
they could rise to certain ranks within the state’s ranking system (Volkova 2010).
Zemstvo obtained the independent jurisdiction over certain aspects of local man-
agement. For example, they could determine and apply the preferable forms of
monitoring for the hospitals, were free to implement vaccination and other anti-
epidemic programs and strategies. For doctors being employed within the Zemstvo
system meant an alternative way of building up their careers compared with the
possibility of taking a more dependent position within more bureaucratic and strict-
regulated state-run medical establishments and institutions. Thus, Zemstvo gradu-
ally started to form a basis for medical professionalization.
Certain processes started in the largest Zemstvos which demonstrated the
increase of the level of doctors’ authority. For instance, special medical offices had
been established in order to solve some practical issues of treatment and disease
prevention. Their worked out recommendations were often taken into consideration
by the local government (Frieden 1977). A new round of reforms in 1900 led to the
further enhancement of the social status of doctors. The so-called “New Charter”

9 Professional Status of Physicians in the Russian Federation 143

provided for a wider spectrum of doctor authorities and established the juridical
basis for the functioning of specialized medical establishments dealing with disease
prevention. During the next few years, such zemstvos-run medical offices went
through rapid growth and expansion, thus providing additional professional support
for the physicians as well as protecting them from the possible outcomes of state
interference in their professional activities. Thereby, zemstvos-run establishments
started to function as the agents supporting and reinforcing the autonomy and self-
regulation of the medical profession as a whole. Applied to the Russian doctors,
these health care system reforms can be described in terms of the Anglo-Saxon
model of professionalization.
After 1900, the government nevertheless realized that disposing of some of its
functions and the delegation of the respective authority to independent experts may
cause a threat to autocracy. All the benefits previously granted to doctors were
removed and state control over the medical profession was reinforced, thus bringing
them once more under the rule of centralized governmental decisions.
The resultant Soviet health care model during the period 1918 –1947 was devel-
oped by N.A. Semashko. This model fully relied on funding from the state’s budget.
Mostly, the medical services were provided by the government public sector finan-
cial pool (Ustilentsev 2011). Thus, within the scope of such a model, government
served as a major purchaser and provider of medical care and executed control over
the methods and the quality of medical services provided. Herewith, Soviet doctors
maintained a high social position and level of prestige and were generally reckoned
to be among the “intellectuals.”
Medical societies in USSR showed no attempts at voicing (at least publicly) any
yearnings for autonomy and self-regulation of medical practice. Instead of that they
declared their main goals were lying in the spheres of increasing professional skills
of the medical community as well as implementation of the latest achievements of
medical science in public medical practice. They also stated a desire for the estab-
lishment and development of international professional links and relations and
strived for the promotion of national medicine (Volkov and Lemenev 1972). In fact,
the members of the Soviet medical associations discussed new methods of diagnosis
and treatment leaving aside the possible ways of solving certain professional insti-
tutional problems.
With the collapse of Soviet Union in early 1990s and the resulting need for fun-
damental reform of all state institutions, Russia had taken steps to reform the health
care system. In the first place the amendments were made to the scheme of financial
supply of the sector. The state transferred federal authority to the regional and
municipal levels and introduced a system of compulsory health care insurance.
During this period, a new principle of relationship between professionals and state
emerged, characterized by preservation of state control over the sector and imple-
mented via the approval of voluntary standards, including the list of medical ser-
vices and algorithms of health care procedures.
Despite the persistence of the physician’s regulation “from above” in the 1990s,
the trend showed a reduction of state control over the professional group of doctors
in some areas, particularly in the commercial health sector. Public rhetoric broadcast

144 D. Prisyazhnyuk

these innovations in terms of liberalization and the freedom of choice. However, the
main reason for the introduction of market relations to the health care sector lay in
the fact that the state proved to be inefficient in carrying out the majority of medical
services (Rechel 2006).
The health care reform in the 2000s in Russia has been aimed to strengthening
the position of physicians who are working in the primary health care sector. The
main transformation of the Russian health care system in the 2000s was linked to the
implementation of the priority national project “The Health,” which aimed to
increase the level of availability and quality of primary health care for citizens, as
well as to create conditions for further reform of the sector. The reform is imple-
mented in three main areas: through the rising priority of primary health care,
prevention, and increasing the accessibility of high-tech medical care. According to
the logic of the national project, “Health”, the increase of salary of medical person-
nel will cause quality and accessibility of medical care for patients.
Thus, during the period of successive reforms of the health care system, the state
policy was in a way similar to a pendulum motion. A swing towards more autonomy
and authority is granted to the physicians and then a swing back occurs towards
close state control over the medical profession.
How does the new government policy affect the doctors, employed in the
primary health care sector? What is the current state of economic, power, and cul-
tural resources of Russian doctors? Here, each of the three resources is considered
in turn.

9.1.4 Economic Resource: A Growing Heterogeneity

of the Medical Community

As a result of Russian healthcare reform that took place in 2000s, there has been a
growing tendency for socioeconomic differentiation within the professional group
of doctors, most obvious at the level of medical specialization and various types of
regional medical institutions. Despite the official discourse that claims that this
reform has brought the physicians’ salaries to increase, the comparative comprehen-
sive analysis of the salary dispersion in different economic sectors shows this to be
unlikely and those workers involved in nonmedical economic sector tend to earn
more than medics (Shcherbakova 2008).
The recent Russian longitude monitoring survey (RLMS-HSE) displays this
trend. During the period of “The Health” project, the number of physicians whose
salary rate is below the poverty line has reduced from 21.8 % in 2006 to 15.25 % in
2011. On a par with this positive dynamic, there has been a growing divergence
between the average doctors’ salary compared to those earned by general popula-
tion. Whereas in 2006, the average salary for medical staff amounted to 61.3 % of
the average Russian salary, in 2011 it dropped to 48.5 % (see Table 9.1). Thus the
implementation of “The Health” national project has led to a certain increase of the
economic resource maintained by the professional group of doctors accompanied

9 Professional Status of Physicians in the Russian Federation 145

Table 9.1 The average salary of doctors and general population ratio, 2006–2011
2006 2011
The average salary in Russia for all types of economic activities ($) 341.6 900.1
The average salary of physicians ($) 209.3 437
% of the average salary of general Russian population 61.3 % 48.5 %
N= 119 177

Table 9.2 The average monthly nominal salary of health care workers in the organizations by the
type of ownership, Russia, %
2000 2005 2009 2010
Type of property % of the average monthly salary in the health care sector in general
Всего total 100 100 100 100
Federal 104.3 111.8 116.6 117.1
Municipal 90.6 87.6 83.0 81.2
Private 111.8 115.9 104.7 116.1

by a growing proportion of medical staff with below the national salary index
income rate.
The pace of salary increase for the physicians employed by the municipally run
institutions is slower compared to that of the employees working for the organiza-
tions characterized by other forms of ownership. Thus, contradictory to the official
discourse concerning the various economic incentives designed for creating a finan-
cial stimulus for the municipal health care centers’ personnel, their real wages
remain low compared with the salaries of those involved in other sectors of employ-
ment (see Table 9.2).
However, the increase of physicians’ salary rate is heterogeneous and largely
depends on specialty. For example, in 2011, physicians in Saratov charged $4.1 for
an outpatient appointment. This index is significantly lower in comparison with the
prices charged by endocrinologists ($7.9). Throughout the years of “The Health”
national project implementation, the tariff sums varied depending on the specializa-
tion of the services provided. For example, the cost of a single appointment with a
therapist has increased by 34.2 % since 2008 until 2011, whereas the cost of appoint-
ment with a surgeon has risen by 48 % during the same period of time (Government
of Russia 2007, 2011) (see Table 9.3).
The salary amounts for medical staff differ from region to region. The population
of Russian regions with the lowest payroll rate for the health care workers suffers
from the respective problem of lesser availability of the medical services caused by
the shortage in medical personnel. On the contrary, in the regions with the higher
payroll rates (for example, in St. Petersburg and Moscow), medical services tend to
be more available.
The implementation of “The Health” national project has slightly improved the
financial position of Russian doctors. On the one hand, it has reduced the number of
physicians with a salary rate below the poverty line, but on the other hand it has

146 D. Prisyazhnyuk

Table 9.3 The rates of the outpatient services in Saratov region

Medical speciality The rate at 2008 ($) The rate at 2011 ($) The increase of the price (%)
Therapist 3 4 33.3
Endocrinologist 5.7 7.9 38.5
Neurologist 3.5 4.8 37.1
Surgeon 3 4.4 46.6
Urologist 2.5 3.5 40.0
Otolaryngologist 2.5 3.4 36.0
Ophthalmologist 2 2.7 35.0

reinforced the socioeconomic disparities between different groups of doctors. In

this case, the widening diversity of informal practices aimed at economic resource
amassing serves as one of the main indicators of socioeconomic frustration and
dissatisfaction. The Russian doctors who work now in the situation of constant
reform do not hold the economic monopoly that would enable them to set the fixed
prices for the services they provide, which is an essential attribute of professional-
ization according to the neo-Weberian approach of the sociology of professions.

9.1.5 The Power Resource: The Increasing Control Over

the Medical Profession

The matter of trust, being an important asset of medical profession, has been liable
to changes since the mid-2000s when the increasing number of publications about
the medical mistakes and the following lawsuits started to appear in Russian press.
The contents of the articles on medical mistakes differ from those on bribery issues:
specialized medical journals are inclined towards the excusatory discourse, whereas
in the popular press the medical staff is often accused of incompetence, disposition
towards bribery, and excessive material interest.
Modern Russia formed a special relationship of trust, shifting from trust to the
medical profession as an institution to trust towards a particular doctor. Hoping for
the best service, many patients seek the paid medical services rather than free health
care. In addition, the commercial sector, compared to government health clinics,
provides a much wider choice of treatments, and increasingly popular is alternative
medicine, provided mainly by private practitioners or doctors employed on a com-
mercial basis. In the medical literature, in response to such a transfer within the
monopoly of the medical profession, there are publications which assert to build
trust between the doctor in polyclinics and the patients they need to improve the
quality of care. For the doctor, the confidence of patients provides a more secure
professional status, as it reduces the risk of lawsuits and complaints.
As a result of reforms, the transformation of the social contract between
government and professionals can be observed. The state, attracting additional
funding into the health system and trying to solve a number of institutional problems

9 Professional Status of Physicians in the Russian Federation 147

in this area, increases the control over the implementation of reforms. The
formalization and standardization of specialist knowledge is an important step to
professional autonomy, with regulation provided by the members of the profes-
sional community. Reforms in the Russian health care system led to an increase in
the number of standards and regulations within the medical activity, which finds its
expression in the increased accountability to government regulatory agencies. The
first order of the Ministry of Health and Social Development of standards of care №
11 539 on April 12, 2008 (The Order of Ministry of the Healthcare and Social devel-
opment 2008) was a recommendation, while the Health Ministry of Russia Order №
570n of July 28, 2010 on the procedure for reporting is mandatory. The four tables
attached show these regulations. New regulations for this document were estab-
lished on April 1, 2011 (The Order of Ministry of the Healthcare and Social devel-
opment, 2011), when an increased and complicated system of reporting medical
institutions was created. On the other hand, doctors emphasize that the standards are
related to reporting, rather than with the actual practice of medicine in which they
feel relatively free.
Tendencies in the regulation of health professions can be characterized as a pol-
icy for “downward” professionalization. The specificity of medical practice is that
it is difficult to be standardized, there is a lot of individuality to the approaches. In
pursuit of fulfillment of his/her economic interests, a physician can always justify
his/her choice of treatment so that the latter makes it possible for him/her to make
additional money from a patient. Government control over public health, repre-
sented as an external monitoring of the system, leads to the intensification of corrup-
tion within medical practice.
Due to the policy of self-regulation of the medical profession, the state has suc-
ceeded in finding a compromise between the social mission and the corporate inter-
ests of physicians. It is the placement of low-efficient external control by an internal
one that is at stake, through granting an access to economic resources of public
health to physicians. The medical community, on its behalf, turns out to be inter-
ested in self-regulation, because it is forced to carry the full responsibility for the
realization of its activities. In the conditions of a self-regulatory framework of medi-
cal activity, transformational vectors act from below being directed upwards to
acquire an official legislative form in recent years. Responsible for their fellows’
competence, medical communities seek for effective barriers to entry, qualification
control, and medical treatment quality control, while the state benefits from their
partial withdrawal from the sector.
The majority of Russian medical associations limit their functions to the arrange-
ment of scientific seminars, conferences, and courses for professional development.
In fact, there are three medical associations (RMA, RMC, NMC) that communicate
with government on the questions of self-regulation. Nonetheless, currently there
remains an overall weakness of medical associations. First of all it is due to uncon-
solidated character of the medical community. There is no single position regarding
whether it is necessary to implement such practices. There are groups that advocate

148 D. Prisyazhnyuk

the idea as well as groups standing against, as well as groups that are interested
solely in a mixed type of public health regulation.
Training for physicians is held every 5 years under Russian Federal law. This
process is supervised by the medical community, specially created centers and med-
ical associations. However, the exams on these trainings, in practice, are often a
formality, since it is often for the course can be shortened to 1 day and the certificate
may be issued automatically. The doctors of clinics might take the trainings without
the risk of being dismissed. Physicians, despite the reform of the health system are
not economically wealthy and the prestige of the profession remains low. In this
regard, if a clinic’s administration fires a doctor, it runs the risk of not finding a
According to the interview data, the reduced quality of training courses becomes
more complicated by the fact that among the various organizations is competition.
Each of them is economically interested in increasing the number of customers. In
this situation, the organization responsible for completing training courses, fall in
direct dependence on doctors and they offer the most convenient ways to pass the
courses. The general situation affects the reduction of social closure of the medical

9.1.6 Cultural Resource: The Reduction of Prestige or

the Increase of Attractiveness of the Profession?

The increasing degree of professionals’ publicity alongside the spread of expert

professional knowledge has led to the transformation of the general image of the
number of professional occupations. Work activities become more exposed for the
scrutiny and criticism from the general public (Romanov and Iarskaya-Smirnova
2012). In this regard, even those professional groups which used to be in the highest
regard during the Soviet period are now forced into the search for adequate mecha-
nisms of maintaining their positive image. During the initial stages of the “Health”
national project, the physicians were successful at their attempts of preserving their
high level of prestige. According to the polls taken in 2007–2009, the medical pro-
fession was regarded as the most prestigious one.
The results of the mass surveys taken after 2009 show the decline of the prestige
of the medical profession. According to the quantitative data survey (“The prestige
of the medical profession in Russian society”, 2011) in 2011 only 4.1 % of respon-
dents reported the rise of the prestige of this professional group. According to this
survey’s results, 46.7 % of physicians believed that the prestige of the profession
has not changed, and 48.4 % indicated its falling. The survey results provided by the
Public Chamber Commission on Health in November 2011 also show a decrease in
the prestige of professional doctors, indicated by the 43 % of the respondents. Thus,
the medical community has not managed to develop effective mechanisms of main-
taining a positive public image of their professional group (Table 9.4).

9 Professional Status of Physicians in the Russian Federation 149

Table 9.4 The number of students, interchange dynamics

The number of students 1995/1996 2000/2001 2005/2006 2009/2010 2010/2011
Students total 24.7 35.0 38.6 41.6 41.6
General medical practice 13.1 16.4 16.7 18.0 19.3
The ratio to the total 53 % 46.9 % 42.3 % 43.3 % 46.4 %
Pediatrics 4.8 6.0 5.7 6.3 6.5
The ratio to the total 19.4 % 17.1 % 14.8 % 15.1 % 15.6 %
Dentists 2.6 3.7 4.9 5.6 5.6
The ratio to the total 10.5 % 10.6 % 12.7 % 13.5 % 13.5 %
Russian statistical annual, 2011 (The Federal Office of Governmental Statistics 2011)

Despite the obvious recent decline in the prestige of the medical professions, the
number of those applying for the studies in medical schools keeps on increasing. In
2010 there were 209,583 applications and in 2011 their number rose to 253,533.
This makes a 21 % year-by-year increase. However, the attractiveness of different
branches of medical education is unequal.
The discrepancy between the decrease of doctor’s professional prestige and the
increasing number of medical students suggests that the attractiveness of medical
practice varies depending on the medical specialty. This hypothesis is supported by
the expert opinion claiming that some medical specialties, such as surgery (brain
surgery in particular), urology, and gynecology, are associated with a particularly
high level of prestige. Such social segregation within the medical community may
lead to the further disintegration of the Russian medical staff corpus, thus undermin-
ing the functioning of state medical institutions and hampering the availability and
affordability of qualitative health care services.

9.2 Conclusions

The rhetoric of neoliberal reforms in the Russian system of public health care
includes the professional group of doctors as a social institute in the regulation pro-
cesses. In practice we observe the rather weak tendencies of medical professional-
ization. The increasing of trust in the medical profession and dissociation of the
medical community, leads to the governmental regulation under the medical profes-
sion. Medical doctors in polyclinics have limited possibilities of strengthening their
professional autonomy and self-regulation as the state carries out procedures of
licensing and establishes standards for medical professionals. Uneven distribution
of the economic resource within the medical community preserves the level of

150 D. Prisyazhnyuk

prestigious attractiveness of certain medical specialties despite the general tendency

for decline of the prestige of the medical profession.
The perspective of professionalization “from below” becomes complicated
because the medical community has not developed a uniform position about ways
of regulation in the public health services system. We have discussed three ideolo-
gies about the self-regulation practice developed in the medical profession.
According to the first, self-regulation is understood as the integral element of the
further reforming of public health services. The second ideology supports ideas
about the introduction of the mixed type of regulation by a medical profession.
The third ideology supports preservation of the governmental control over health
care system. Which way the Russian medical system turns next is, like previous
pendulum swings, a matter for only the future to behold.

Acknowledgements I would like to express sincere gratitude to my research adviser Professor

Pavel Romanov for his important critical comments and advice throughout my studies. This pub-
lication would not be possible without his support.
The study was conducted within the collective project “A variety of the types of social cohesion
under the conditions of Russian reforms: conceptualization and qualimetry” (Russian Scientific
Fund, grant №14-18-03784).


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Chapter 10
Perceived Quality of Public Administration
and Trust in Local Government Officials
in the Philippines

Joseph J. Capuno and Maria Melody S. Garcia

10.1  Introduction

Many developing countries have adopted fiscal decentralization to improve service

delivery. However, the demand for and supply of local public services are inextrica-
bly linked to the people’s perception of the quality of local public administration
and their trust in local officials. If the people perceive that fiscal resources are equi-
tably or efficiently allocated or that local government personnel are effectively
deployed to serve their needs, then they will favorably rate their local government’s
performance. To reflect the people’s overall assessment as well as to encourage bet-
ter performance among public agencies seem to be the objective behind the citizen
report cards, satisfaction surveys, media exposure and performance ratings intro-
duced in India, Bangalore, Philippines and other developing countries (Gopakumar
1998; World Bank 2001; Paul 2002; Malena et al. 2004; Ravindra 2004; Peruzzotti
and Smulovitz 2006; Sirker and Cosic 2007; Bjorkman and Svensson 2009; Singh
and Vutukuru 2010). It has been found that people are more inclined to pay taxes or
comply with laws and regulations when they find their government officials trust-
worthy (Scholz 1998; Fjeldstad 2004). With the people’s trust, officials then can
also perform their duties and undertake programs unencumbered. The policy ques-
tion then is what can build trust towards government officials and improve views on
the quality on local governance.
Several studies have found strong correlation among trust in government, perfor-
mance of government agencies and quality of public administration, whether
these are measured objectively with fiscal data or subjectively through satisfaction

J.J. Capuno (*)

School of Economics, University of the Philippines, Baguio, Philippines
e-mail: jjcapuno@up.edu.ph
M.M.S. Garcia
German Institute for Development Evaluation, Bonn, Germany
e-mail: melody.garcia@deval.org

© Springer India 2015 153

A. Gurtoo, C. Williams (eds.), Developing Country Perspectives on Public
Service Delivery, DOI 10.1007/978-81-322-2160-9_10

154 J.J. Capuno and M.M.S. Garcia

surveys (e.g., Mizhari et al. 2009; Morgeson and Petrescu 2011). However, the
causal links among these variables are less clear theoretically and empirically (e.g.,
Yang and Holzer 2006; Bouckaert and van de Walle 2003b; van Ryzin 2007). The
people’s perception of how well their government performs may depend on their
initial level of trust in government or prior expectations (van de Walle 2002;
Bouckaert and van de Walle 2003a; van Ryzin 2004). The reported relationship
between satisfaction and use of public services may not be linear (van Ryzin and
Charbonneau 2010). Providing citizens some factual information about government
agencies may have only limited effect on building trust and the effect is conditioned
by preexisting beliefs (Grimmelikhuijsen 2012). Arguably, more evidence is needed
to guide policy, especially in developing countries where public service delivery is
crucial to alleviate poverty.
In this chapter, we investigate the issue with a case study of 12 cities and munici-
palities in the Philippines, where several performance ratings have been introduced
since fiscal decentralization was adopted in 1991 (Capuno 2007). We take advan-
tage of the experimental setup of the pilot study that introduced a particular perfor-
mance rating in the 12 local government units to measure its impact on the perceived
quality of public administration and trust in local officials. We find some differential
effects on the overall perception on the quality of local governance but none on trust
in local officials.

10.2  The Good Governance and Local Development Project

To investigate the link between the perceived quality of public administration and
trust, we use a case study of a dozen local government units (LGUs) included in the
Good Governance and Local Development (GGLD) Project of the Philippine Center
for Policy Studies (PCPS), a nongovernment organization.1 The main objectives of
the GGLD Project were to develop indicators of good local governance and devel-
opment and to advocate for the institutionalization of the indicators in the Philippines.
Conceptualized in 2000, the Governance for Local Development Index (GI) was
designed to assess an LGU’s performance in terms of meeting the public service
needs of its constituents, expenditure priorities and the extent of its public consulta-
tions. To validate the GI in terms of its practicability in various setting and its impact
on civic participation, local government responsiveness, quality of public adminis-
tration and trust in local officials, it was piloted in 2001–2003 in 12 cities and
municipalities in the Philippine provinces of Bulacan and Davao del Norte.
To account for the diverse socioeconomic conditions across jurisdictions within
each province, three LGUs among the relatively high-developed areas and another
triple from among the relatively low-developed areas were randomly chosen as pilot
sites. In the province of Bulacan, just north of Manila, the selected highly developed
LGUs are San Jose del Monte City, Baliwag and Plaridel, and the less-developed

 This section draws heavily from Capuno and Garcia (2010).


10  Perceived Quality of Public Administration and Trust in Local Government… 155

LGUs are Guiguinto, Angat and Bustos. In the province of Davao del Norte, in the
southern island of Mindanao, the chosen well-off LGUs are Panabo City, Sto.
Tomas and Tagum City, and the less privileged areas are Braulio E. Dujali, the
Island Garden City of Samal and Asuncion.
In each province, four of the six selected LGUs were designated as “treatment”
sites where the GI scores were generated and publicly disseminated by local part-
ners (of PCPS under the GGLD Project). Of the four local partners, two were the
corresponding city or municipal planning development offices of the LGUs, and
the other two were local civil society organizations (academic institutions, busi-
ness/civic organizations or nongovernment organizations). In each province, the
two nontreatment sites were designated as “control” sites where the local partners
only generated and did not divulge the GI scores. To standardize the intervention
(or “treatment”), the PCPS provided the same training, logistical and technical
support to all 12 local partners, and monitored the partners’ GI-related activities
as well.
In the treatment sites, the local partners announced the GI scores in at least three
public presentations in 2001 and 2002. Additionally in 2002, they presented the GI
scores to key local government officials in special meetings or during the regular
sessions of the local legislative councils. The total number of participants in these
public presentations in Bulacan are 496 in 2001 and 565 in 2002. The correspond-
ing totals in Davao del Norte are 428 and 596. In each year, about 60 % and 45 %
of the participants in Bulacan and Davao del Norte, respectively, were from the
private sector or not working in government.
The local partners further disseminated GI information materials to households
and in municipal halls, bus terminals and other public places. In 2001, they distrib-
uted komiks (a type of popular magazine) and posters equivalent to about 30 % and
3 % of the local population, respectively. In 2002, they handed out the same materi-
als (with updated contents) equivalent to up to 10 % and 5 % of the local population,
respectively. In the same year, they also gave out stickers to as many as 2–13 % of
the local population.
The timing of the project activities in the 12 LGUs were as follows. Before the
local partners carried out their first set of activities, a baseline survey was conducted
in April–May 2001 in all sites. Then, the first round of GI scores were generated and
publicly announced in June–August 2001. In the first quarter of 2002, a mid-line
survey was undertaken. Then, the second round of GI scores were computed and
disseminated in March–September 2002. Finally, an end-line survey in February–
March 2003 concluded the pilot activities. All surveys followed a uniform sampling
design with a random sample of 100 household respondents per site. These surveys
were designed to elicit household-level information on their socioeconomic charac-
teristics, civic participation, perceived responsiveness and quality of the local gov-
ernment, and satisfaction with and trust in local officials. The survey data,
supplemented with project documents and administrative records, constitute the
quantitative information that will be used in this analysis.
The 12 LGUs also had other similarities and dissimilarities worth noting. Most
of their constituents were Christians, with some Muslims and indigenous tribes in

156 J.J. Capuno and M.M.S. Garcia

Davao del Norte. In 2003, the average poverty rates were 31.7 % in Davao del Norte
and 7.5 % in Bulacan. Prior to the implementation of the GGLD Project, all 12 sites
had already established their mandated local consultative bodies to engage private
sector representatives in health, education, peace and order and development plan-
ning. Some of them like Panabo City and Braulio E. Dujali were already introduced
to official indicators systems like the Local Productivity and Performance
Measurement System and Minimum Basic Needs Index. A few have won Galing
Pook Awards for innovations in service delivery, and Clean and Green Awards for
environmental services. All but 3 of the then 12 incumbent mayors were reelected
in the local elections held in May 2001. In 2001, San Jose del Monte City and the
Island Garden City of Samal just became cities, while Braulio E. Dujali was then a
newly created municipality.

10.3  Empirical Framework

Arguably, the introduction of the GI in the pilot sites resulted in some changes that
may have had direct or indirect effects on the perceived quality of public administra-
tion and overall level of trust in local government officials. For example, the desired
outcomes could be the immediate results of the changes in local government fiscal
decisions and processes, which in turn follow from the greater awareness of local
officials and their constituencies of the local governments’ GI scores. The fiscal
decisions may include setting expenditure priorities, targeting of beneficiaries
(say, through redeployment of service providers to far-flung villages) and equitable
revenue mobilization. A participatory budget planning will count as well as a desired
adjustment in fiscal processes. Presumably, these fiscal changes are more evident in
places where the voters have voices, as manifested in their participation in elections
or other community activities, or where the local officials are monitored and made
accountable for their performances. While active citizens and responsive local gov-
ernments may be found in any jurisdiction, these desired qualities of the local polity
arguably manifest more when the local government’s performance is rated and the
ratings are known to all. We take advantage of the experimental design of the GI
pilot study to control for factors other than the announcement of the GI scores that
could explain the differences.

10.3.1  Tests of Hypotheses

To ascertain whether the residents in the treatment sites are more likely than those in
the control sites to favorably perceive the quality of local governance or express
greater trust in their local officials, we perform tests of proportions. In the following,
let Y be the outcome variable (say, quality of public administration), T be the index
for treatment site and C be the index for control site. We denote the favorable with a

10  Perceived Quality of Public Administration and Trust in Local Government… 157

value of “1” and the not favorable with “0”. Our null hypothesis is that there is no
statistically significant difference in outcome Y between the two sites. We implement
the tests as comparison of the proportion of positive outcomes (i.e., “1” responses)
between the treatment sites and control sites, that is,

H 0 : Prop [YT = 1] − Prop [YC = 1].

If the tests show that the proportions are not equal in the two sites (rejection of
the H0) and are greater in the treatment sites than in the control sites, then we may
infer that the differences is due to the introduction of the performance ratings (GI)
in the former. An equivalent test of hypothesis is performed to establish the link
between GI and trust in local officials. Instead of test of proportion, however, we
apply the Kruskal–Wallis test of equality of population rank. The latter test is
deemed appropriate given our trust rating is an ordinal ranking. All statistical tests
are performed in STATA 11.

10.3.2  Data and Outcome Variables

To carry out the aforementioned tests, we use the survey data collected under the
GGLD Project. Further, we draw from project documents and field observations to
provide the context for understanding the actual implementation of GI-related activ-
ities in the ground and the dynamics among local officials and other stakeholders
involved.2 From the survey data, we constructed three indicators of the respondent’s
perceived quality of public administration and expressed level of trust in local offi-
cials. The first indicator of the quality of public administration − called good munic-
ipal governance − takes on a value of 1 if the respondent considers that the municipal
or city government is managed well (and cleanly) and 0 otherwise. Our second
indicator, good management by local officials, takes on a value of 1 if the
respondent considers that the local officials manage the local government well and
0 otherwise. Thus, whereas the indicator good municipal governance serves to
assess the overall quality of public administration in the LGU, the indicator good
management by local officials serves to appraise the overall quality of the local
public managers (both elective and appointive officials). Finally, our trust variable
(trust) is an integer rating from 1 (lowest) to 5 (highest) that indicates the respon-
dent’s level of trust in local elected officials. The trust score is an overall rating and

 The materials are partly drawn from the following PCPS reports: Process Documentation on the
Application and Impact of the GOFORDEV index (The Six Pilot Areas of the Province of Davao
del Norte: Asuncion, B.E. Dujali, Island Garden City of Samal, Sto. Tomas, Panabo City and
Tagum City) by Manuel Javier, The Second Phase of the Piloting Phase of the GOFORDEV index
in the High Growth Areas in Bulacan: Looking at its Impact on Budgeting Process and Budget
Development for Three Areas in Focus by Alfredo M. Antonio, and Process Documentation of the
GOFORDEV Project in the Municipalities of Guiguinto, Angat and Bustos, Bulacan by Juanito
G. Berja, Jr.

158 J.J. Capuno and M.M.S. Garcia

does not refer to any particular local elected official in the LGU. The correlation
among these three ­outcome variables ranges from 0.23 to 0.34. The wide range
indicates that the three variables reflect different aspects of local government

10.3.3  Check of Balanced Characteristics

To ensure the validity of the tests of proportion, we first check if the populations in
treatment and control sites have balanced characteristics. Table 10.1 shows the
mean values of selected socioeconomic and demographic characteristics of the
sample respondents. In general, there are no statistically significant differences
between the two population groups in terms of mean age in years (age), attainment
of college education (college), average monthly electric consumption (electric bill,
a proxy for household expenditures), employment in government (government
employee), ownership of the house and lot they inhabit (house owner), marital
status (married), family size and the gender (male) and household headship of the
Yet, there are also some statistically significant differences. A higher proportion
of the population in the control sites was aware of other performance indices and
awards schemes (other index) in 2001 and 2003. They also had higher average
monthly family income (income) in 2002 and 2003. More of them had regular jobs
in 2003 and lived in high-density barangays (or villages) in all years. The possible
confounding effects of these differences will be taken into account in the discussion
of the test results.

10.4  Results

10.4.1  Good Municipal Governance

The top rows of Table 10.2 show the results of the tests of proportion for 2001, 2002
and 2003. The null hypothesis is there is no difference between the treatment LGUs
and control LGUs in their proportion of respondents who said there is good munici-
pal governance in their jurisdictions. At baseline (2001), the p-value indicates that
the null hypothesis can be rejected. In fact, the proportion in the control sites
(0.8425) is higher than in the treatment sites (0.7312). The same pattern is found at
end-line (2003), where the proportions in the control sites and treatment sites are
0.8215 and 0.7185, respectively. In 2002, however, there is no statistically signifi-
cant difference between the treatment and control LGUs. While there is a slight
improvement from 2001 to 2002 for the treatment LGUs, their relative gain is due
more to the decline in the control sites over the same period.

Table 10.1  Mean socioeconomic and demographic characteristics of survey respondents, treatment and control sites
2001 2002 2003 All
Characteristics Treatment Control p-value Treatment Control p-value Treatment Control p-value
Other index 0.490 0.450 0.191 0.348 0.452 0.000 0.196 0.258 0.015 0.359
Age 41.294 40.35 0.274 41.855 41.561 0.754 42.539 43.252 0.440 41.838
Incomea 8.654 8.654 0.999 8.567 8.730 0.010 8.481 8.700 0.000 8.61
College 0.282 0.302 0.471 0.249 0.220 0.271 0.245 0.232 0.633 0.256
Electric bill 457.48 487.48 0.406 488.22 411.47 0.127 471.28 450.49 0.539 464.85
Regular job 0.510 0.525 0.567 0.618 0.608 0.737 0.538 0.600 0.049 0.562
Government employee 0.065 0.063 0.868 0.062 0.06 0.865 0.060 0.068 0.613 0.063
House owner 0.728 0.755 0.308 0.600 0.550 0.098 0.674 0.705 0.272 0.668
Married 0.805 0.830 0.295 0.778 0.792 0.553 0.800 0.785 0.579 0.797
Household head 0.351 0.335 0.577 0.416 0.470 0.077 0.364 0.412 0.101 0.387

Spouse 0.512 0.540 0.369 0.400 0.380 0.504 0.478 0.452 0.413 0.461
Family size 5.175 5.305 0.364 5.113 5.025 0.516 5.321 5.200 0.373 5.194
Male 0.300 0.315 0.595 0.322 0.280 0.133 0.311 0.295 0.565 0.306
Live in high-­density barangay 0.672 0.795 0.000 0.672 0.800 0.000 0.673 0.795 0.000 0.713
No. of observations 800 400 800 400 800 400 3,600
In natural logarithm. The p-values are calculated using two sample tests of proportions for nominal variables and two sample t test for continuous variables in
10  Perceived Quality of Public Administration and Trust in Local Government…

STATA. Some variables have less number of observations, namely age (3,598), income (3,557), electric bill (3,509) and family size (3,592)
160 J.J. Capuno and M.M.S. Garcia

Table 10.2  Tests of proportions: H0: no difference between treatment and control sites, by year
Indicators Treatment Control p-value
Good municipal governance
2001 0.7312 0.8425 0.000
2002 0.7325 0.710 0.4106
2003 0.7185 0.8125 0.0004
Good management by local officials
2001 0.7238 0.7875 0.0169
2002 0.7638 0.775 0.6636
2003 0.7388 0.79 0.0514

Table 10.3  Kruskal–Wallis test of equality of populations rank: trust ratings (H0: no difference
between treatment and control sites)
With no ties With ties
Tests Chi-squared statistics Probability Chi-squared statistic Probability
2001 0.992 0.3139 1.121 0.2897
2002 0.191 0.6618 0.223 0.6366
2003 0.363 0.5466 0.447 0.5038

10.4.2  Good Management by Local Officials

The bottom rows of Table 10.2 show a similar pattern of results for the tests of pro-
portion of respondents who reported good management by local officials. In both
2001 and 2003, the null hypothesis of equality of proportions is rejected; again, the
proportions are higher in the control LGUs than in the treatment LGUs in these
2 years. Also, no statistically significant difference between the two sites is detected
in 2002. However, the differences in the proportions between the treatment LGUs
and control LGUs are smaller for this indicator than those for the good municipal
governance.  Trust

Finally, Table 10.3 presents the results of the Kruskal–Wallis tests of equality of

population ranking for the ordinal trust rating. Consistently for all years, the null
hypothesis (or no difference in trust rating) cannot be rejected. Hence, the co-­
movements of the trust ratings in the two sites through the years partly accounts for
the lack of difference in their trust rating in each year.

10  Perceived Quality of Public Administration and Trust in Local Government… 161

10.5  Discussion

The results have shown that local government performance rating may improve the
people’s perception of the quality of public administration but not necessarily their
trust in their local officials. Moreover, the favorable perception of the quality of
public management may not last long. To better understand these “negative” results,
this section further elaborates on the design and context of the GGLD Project. The
first important aspect is the verification of the underlying “theory of change” that is
supposed to link the performance ratings to the expected outcomes (White 2009).
As shown in Fig. 10.1, there are several chains in the link that need to be established
before the desired results can be realized.
As mentioned above, the local partners undertook some activities to inform the
local citizens and government officials of the GI scores. While there were only
around 10 % of the 800 survey respondents in 2002 and 2003 who claimed to have
read a komiks, seen a GI poster or attended a public presentation of the GI scores,
apparently that was enough for these small number of residents to become more
active citizens. In particular, they are found to be 20–60 % more likely than their
matched comparators (individuals with similar characteristics) from the control
sites to join a community-level organization or participate in the planning, imple-
mentation or monitoring of local government program or project (Capuno and
Garcia 2010).
There is also some evidence that local officials in the treatment sites were induced
to improve their management and delivery of public services. Presumably, they
were compelled because some of their informed citizens became more interested
in local government affairs, the local officials themselves became more certain of
their constituents’ needs and sentiments, or both sides knew that the performance
ratings were publicly announced.

Local officials
are aware of GI
Treatment LGUs Changes in Quality of
Consti- Civic local public
tuents are parti- government administra-
aware of GI cipa- fiscal decisions tion, Trust
tion and processes

Control LGUs

Comparator units GI announcement Public administration, Trust

Fig. 10.1  Linking performance ratings to the quality of public administration and trust in local
government officials

162 J.J. Capuno and M.M.S. Garcia

In one of these public forums, the then mayor of Guiguinto instructed the
­ unicipal health officer to visit the barangay health stations more regularly in order
to serve those unable to seek care in the main health facility located in the pobla-
cion. Again in Guiguinto, certain budget items were reclassified to reflect the alloca-
tions for social and economic services. In Panabo City, the city government used the
GI as reference during public hearings for its Annual Investment Plan for 2002
(Capuno et al. 2007).
However, not all local government officials took their (low) ratings as ‘wake up
calls” and vowed to attend to their constituents’ concerns immediately. In fact,
many of them reacted strongly against their “low” GI scores. Those in Angat even
cancelled the then ongoing GI presentation during a meeting of the local legislative
In addition to the adjustments in fiscal procedures, the actual budget allocations
were also modified during the pilot phase. Table 10.4 shows the respective expendi-
tures on social services (i.e., education, health, nutrition and social welfare) and
income from local sources (i.e., excluding central fiscal transfers) of the 12 LGUs.
Over the period 2001–2003, the average annual percentage change in real per capita
spending on social services was positive in six treatment sites (Angat, Baliwag,
Guiguinto, San Jose del Monte City, Braulio E. Dujali and Island Garden City of
Samal) and in only one control site (Bustos). Among these six treatment sites,
Guiguinto, San Jose del Monte City, Braulio E. Dujali and Island Garden City of
Samal also consistently raised the shares of social services in their annual budget
expenditures. Among the control sites, only Bustos and Tagum City raised the same
budget shares. Note that the outlay for social services is included among the GI
indicators for expenditure priorities.
Moreover, Baliwag, Guiguinto, San Jose del Monte City and Braulio E. Dujali
were able to mobilize higher revenues from real property taxes, fees and charges,
which helped reduced their dependency on central fiscal transfers. In contrast, no
control site increased both its income share from local sources and spending share
on social services during the period, despite being exposed to the same socioeco-
nomic factors in the province.
However, the active citizens and budget improvements in the treatment LGUs
were not enough for their constituents to assess them consistently in more favorable
terms. In particular, the treatment sites are not perceived better than the control sites
in terms of good municipal governance or good management by local officials in the
2 years when the ratings were announced. Arguably, these results are partly due to
advantage (in both aspects) of the control LGUs at baseline. Hence, it may be the
change rather than the levels of favorable assessments that is directly linked to per-
formance rating. However, the treatment LGUs exhibited only minimal annual
improvements in either aspect. This seeming missing link may be explained by two
reasons suggested in other studies. First, there could be an asymmetric treatment
between “good performance” and “bad performance”: the former is typically unno-
ticed while the latter always attracts attention (Huseby 2000). Second, the perceived
quality of public administration may be more sensitive to personal circumstances or
contextual factors. Although it has been shown that the mean characteristics of the

Table 10.4  Expenditures on social services and income from local sources, 2001–2003
Expenditures on social services Income from local sources
Real per capita (in 2000 prices) Percent share in total expenditures
Ave annual Ave annual Ave annual
Pilot sites 2001 2002 2003 change (%) 2001 2002 2003 change (%) 2001 2002 2003 change (%)
Angata 1.50 1.43 1.64 4.97 18.98 18.98 16.80 −5.77 3.51 3.36 2.87 −9.35
Baliwaga 1.48 1.67 1.68 6.49 21.28 22.01 20.17 −2.45 3.51 3.76 3.53 0.48
Bustosb 1.26 1.48 1.50 9.17 18.32 20.21 19.49 3.39 2.25 2.11 1.59 −15.33
Guiguintoa 1.98 2.00 2.81 20.80 24.23 23.51 27.00 5.94 4.11 4.82 5.31 13.77
Plaridelb 2.57 1.42 1.40 −22.91 36.86 29.87 21.59 −23.35 2.99 3.51 3.26 5.21
San Jose del Montea 1.31 2.15 2.08 30.54 26.55 29.74 29.37 5.39 1.66 2.11 2.07 12.41
Davao del Norte
Asuncionb 1.23 1.17 1.13 −4.00 17.11 15.58 13.77 −10.26 0.81 0.86 0.99 10.37
Braulio E. Dujalia 1.21 1.30 1.82 23.81 12.06 12.37 16.13 16.51 1.77 1.64 2.06 9.10

Samal Citya 3.11 3.21 3.17 0.88 14.65 14.83 15.50 2.87 2.96 2.30 1.44 −29.81
Panabo Citya 2.18 1.21 1.44 −12.80 26.19 11.07 9.05 −37.98 3.32 4.53 4.80 21.26
Sto. Tomasa 1.03 0.95 0.80 −12.07 15.38 11.38 11.31 −13.30 2.16 2.08 2.33 4.17
Tagum Cityb 2.13 2.41 1.93 −3.58 12.46 15.76 12.42 2.64 6.91 6.66 6.00 −6.75
Sources of raw data: local governments of Angat, Baliwag, Bustos, Guiguinto, Plaridel, San Jose del Monte, Asuncion, Braulio E. Dujali, Samal, Panabo City,
Sto. Tomas and Tagum City; National Statistical Coordination Board; Bureau of Local Government Finance. Authors’ calculation
10  Perceived Quality of Public Administration and Trust in Local Government…

Treatment site
Control site
164 J.J. Capuno and M.M.S. Garcia

sample respondents in the treatments and control LGUs are balanced in general,
some of the differences in area-level factors (like other performance indicators or
awards schemes) may have influenced the respondents’ views. Hence, it will be use-
ful to account for these possible confounding factors in future studies.
The results also indicate that trust in local officials may be harder to earn,
despite improvements in fiscal decisions and processes and in the perceived quality
of public administration. Possibly also, there could be little variation in the gener-
alized trust in local officials through time and across jurisdictions, especially since
a majority of the mayors (and most elective officials) were only recently re-elected
in 2001. Possibly, they were still enjoying then their constituent’s trust in them.
Perhaps greater variations can be observed when trust levels for specific officials
are measured. It is possible as well that the performance ratings led to lower levels
of trust, either the constituents’ expectations of their local governments were
not met or that they formed a poorer assessments of the officials’ competence
(Grimmelikhuijsen 2010). These issues are worth exploring further.
However, some caveats are worth noting. First, although the study employed an
experimental design and maintains the individual-level structure of the data in the
analysis, the number of clusters is relatively small (12 municipal sites per year).
Increasing the number of clusters in future studies would increase the precision of
the estimates (Green and Vavreck 2008; Wooldridge 2003). Second, the credibility
(or effectiveness) of the announced performance ratings must also be tested. While
this is not explicitly tested, the public disclosure of the GI scores through printed
media and presentations by the local partners provided opportunities for open
debates, clarification and validation. Third, the results presented here are based on
interventions for 2 years only. Arguably, performance adjusts as local officials learn
to adapt and innovate and trust is earned in the process albeit with lag. Hence, the
long-run effects of performance ratings may be positive as voters learn to trust their
officials even as their performance falters in the short run. To paraphrase (Glaeser
et al. 2000), it would be worthwhile as well to explore in future studies if the varia-
tions in trust ratings could be due to divergence in beliefs about the trustworthiness
of local officials, dissimilarities in understanding of who are the local officials, or
differences in interpretation of what it means to trust local officials.

10.6  Concluding Remarks

Based on case study of 12 LGUs in the Philippines, we find that for some the
announced local government performance ratings will confirm their initial beliefs or
disabuse them of their long-held views about the quality of public administration.
For most, however, the same ratings will not necessarily shake their initial trust
(or distrust) in their local officials.
Notwithstanding the data limitations, the results suggest a sensitive policy issue
under decentralization. While performance ratings are advocated to exert pressure
or to motivate local governments to improve their delivery of frontline services, the

10  Perceived Quality of Public Administration and Trust in Local Government… 165

ratings, if not fully understood by the constituents, may not improve the level of
trust (or distrust) in their local officials. When that happens, local officials may
become less inclined to reform when service delivery temporarily worsens before it
gets better. This could probably explain why, for example, performance monitoring
may not lead to better public services (Khemani 2008). To minimize such tenden-
cies then, it is important to inform or educate the people as well about the intricacies
of public administration reform.

Acknowledgements The authors gratefully acknowledge the institutional support of the

Philippine Center for Policy Studies and The Ford Foundation, and the comments and suggestions
on an earlier version of this chapter from the book editors, and the participants in the NONIE
Meeting in Bonn, Germany in 2010, IPSA-ECPR Conference in Sao Paolo, Brazil in 2011, and
International Conference on Public Policy and Governance in Bangalore, India in 2012. The
authors retain responsibility for all errors.


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Chapter 11
Legal Basis for Responsible Working
of the Administration in the Republic
of Macedonia: An Assessment

Jadranka Denkova

11.1 Introduction

The basis for reforms of the state administration in the Republic of Macedonia has
been founded in the “Strategy for Reforms of the Public Administration” which was
passed in 1999. Since then, the ruling political party follows and applies these basic
principles of the Macedonian administration system for transparency, competency,
stability, responsibility, predictability, equal treatment for all, efficiency, and ethics.
The most comprehensive strategy for the reform of the public administration refers
to the period from 2010 to 2015, and it contains specific activities and changes for
modernization of the administration in the Republic of Macedonia. The basic aim of
the strategy is creation of public administration which will secure highly quality
services for the citizens and the business, with highly professional support of the
government. For this purpose steps have been planned with essential organizational
and legal changes. The emphasis is on increasing effectiveness, efficiency, transpar-
ency, and openness of the administrative system, along with improvement of service
quality. Three specific changes have taken place:
• Transformation of the Ministry of Information Society into the Ministry of
Information Society and Administration (MISA)1

Official Gazette of the Republic of Macedonia number 167/10.
J. Denkova (*)
Faculty of Law, University “Goce Delcev”, Shtip, Republic of Macedonia
e-mail: jadranka.denkova@ugd.edu.mk

© Springer India 2015 167

A. Gurtoo, C. Williams (eds.), Developing Country Perspectives on Public
Service Delivery, DOI 10.1007/978-81-322-2160-9_11

168 J. Denkova

• MISA taking over the authority from the domain of the state and public
• Passing of the Law of Public Staff that established new category of employees in
the public services3
Through passing of the Law of Public Staff, the rights, obligations, and the
responsibility of the government staff have been established. This has influence on
the way various welfare schemes and public services will be delivered, namely,
labor and social affairs, social and children protection, institutions, funds, public
companies founded by the Republic of Macedonia, and municipalities. In this law
distinction has been made between the state and public administration. The law
represents a unique legal frame which defines the basic principles and standards for
achievement of the function of the public administration.
Additionally, for improvement of the selection of the public/civil servants, a psy-
chological test and the test for the integrity have been introduced. The tests evaluate
the profile of the candidate for specific posts. A one year probation has been intro-
duced for each working position. During the probation, the public/civil servants
have a tutor who directly instructs them on the job. The final grade for the work of
the public/state servants is given through a professional exam. Motivation for effec-
tive and efficient execution has been supported by shorter terms and simpler criteria
for promotion. However, there are some serious lacunae in the regulations. For
example, standards of execution of the services and legal norms on the responsibil-
ity of the holders of state functions are open to debate.

11.2 Research Objectives and Methodology

In this research we critically analyze the role and the setting of the state administra-
tion in the Republic of Macedonia, for effective and efficient functioning of the state
authority. We analyze the laws through “closing the circle of responsibility.” The
research is conducted through the analyses of the relevant legal documents and
interviews of over 20 respondents, namely, four state secretaries, six section manag-
ers, five state counselors, three department managers, one counselor, and one state
audit. The interviewees were from 16 institution of the state authority. In order to
confirm the responsibility of the administration, we start from the analyses of the

Ministry for preparation of legal and sub-legal acts for the development of the policies and stan-
dards for management for human resources and for following of the employment and management
with human resources in the state and public service. With article 26-a paragraph (2) law for orga-
nization and work of the organs of the state management, the state management inspector is an
organ as a part of the Ministry for information society and administration.
Law of public clerks (Official Gazette of the Republic of Macedonia) number 52/10).

11 Legal Basis for Responsible Working of the Administration in the Republic… 169

legal and sub-legal documents, where the authority and responsibility are defined,
followed by interviews.
Currently, there is no accepted definition for the terms of public administration
and state administration. The mission of “the state administration” coincides with
the functional mechanism of the state authority. The mission of the state administra-
tion is to make professional, normative, legal, and executive management, in accor-
dance to the law.
Two variables are significant for our analysis, organizational culture of account-
ability and political will. Through the circle of the responsibility, we will first under-
stand the existence of organizational culture of accountability. But the aspect of the
organizational culture is not sufficient. It has to be explicitly and undoubtedly sup-
ported by political will. Political will is a fluid political category which represents
“the relation toward achievement of the political aim, where the power and influ-
ence in the decision making is used and leads to ineffectiveness and inefficiency.”
The state administration as service is directly subordinated to the political power of
the authority structure. The role of the state administration is not limited in the con-
dition of the policy but also influenced by the political process.
We will start the analysis by looking at the conceptual frame and the normative
setting, from the aspect of aims and tasks of the administration, in order to locate
various responsibilities. The existence of clear, legal, and sub-legal documents
which regulate the responsibility of the administration produces creation of effec-
tive and responsible administration in one country.
This paper is founded on the empirical research by using qualitative methodol-
ogy. With the qualitative methodology, a deep interview and analyses of the content
of legal documents relevant for this paper have been applied. The deep interview is
realized on the basis of target sample, where all holders of public authorization
(state secretaries, section managers, and department managers in the organs of the
state management) and state clerks from the organs of the state management and
state authority have been covered.

11.3 Results

11.3.1 The Rule Book

The basic legal document in the state departments which regulates the authorization
and the responsibility is the Rule Book. This is the basic legal document which is
made by each state department and confirmed by the agency of administration. It
contains data for the organizational structure, the working positions, and the descrip-
tions of the various positions. Besides this another document is enacted titled
“Directions for protection of Rule Book for organizing and systematization of
working position.” The aim of this document is to define the legal regulations for the
civil servant, and it contains precise and exact tasks for each position. Although, this

170 J. Denkova

Agency of administration
Ministry of Education and Science
Ministry of Defense
Ministry of Internal Affairs
Ministry of Labor and Social policy
Ministry of Living Environment and social planning
Ministry of Finances
Ministry of Justice
Ministry of Local self - government
State Institution of Revision
State attorney
State Institution of Statistics,
Direction of protection of personal data,
Department of hydro-metrological affairs
Crisis management center



There are no clear distinctions of the authorizations and responsibility

There has been preserved only the planned form for their preparation
F The hierarchy of the I responsibility has been set according to titles
I There have not been distinct characteristics of the working position
N There has not been clear responsibility of the working position
The suffix ‘‘performs other works’’is a constitutional part of each description,
I which represents basis for the unclearness in the authorizations

N They have been made by people who are not professional enough

G The organizational structure is not corresponding to the organ necessities

S The horizontal setting of the organizational units in state office is not
corresponding for all state departments.

Frequent change of the Rule books for the systematization as a result of the
political and organizational change of the officials

Fig. 11.1 Analysis of the Rule Book

Rule Book is used as a road sign, the description of the working position with all
characteristics is not being respected. Figure 11.1 illustrates the details.

11 Legal Basis for Responsible Working of the Administration in the Republic… 171

The analysis reveals the following lacunae which are discussed in the next
• There are no clear distinctions of the authority and responsibility.
• The hierarchy of the responsibilities has been set according to titles and not dif-
ficulty of work.
• There have not been distinct characteristics of the working position.
• There have not been clear characteristics of the working position.
• The suffix “performs other works” is a constitutional part of each description,
which represents basis for lack of clarity on authority.
• The organizational structure is not corresponding to the department necessities.
• The horizontal setting of the organizational units in state office is not
corresponding to the state departments.
• Frequent change of the rule books for the systematization as a result of the politi-
cal and organizational change of the officials.
Regardless of the formal position that the civil servants has, he is frequently
directed to perform working tasks in another section. Performing other working
tasks is technically a violation of the working discipline.4 This directs to gaps in
responsible working of the employee. Due to this flaw, if any violation occurs in the
other section, there is no accountability.
The horizontal setting of the organizational units in the state service according to
the Law of Civil Servants is problematic as well. Certain activities, for efficient
functional execution, require a vertical system of hierarchy of responsibility.5
Horizontal units can lead to bad solutions which are reflected in the functional
working of the civil servants.
State department which performs the control function should be separated from
the other state departments which perform the functional roles. For example, the
public attorney of the Republic of Macedonia, whose role is to control the working
of the administration, should be set apart in order to achieve its functional autonomy
and not be equalized with the administration departments. Due to the legal overlap-
ping, the hierarchy cannot be established correctly and leads to unclear circling of
the responsibility.

Regarding this one respondent would say: “I am on the post as a manager of public supplies and
I make the violation as a manager of a department for international cooperation. When there is no
clerk, I have been given a task from another type of post and I have made the violation there, but
why do I have to take the liability as a state clerk?”
For example, I list the statement of one respondent: “Certain sections have been imposed pursuant
to the law of state clerks as a matrix. So, the Section for euro integration in that direction is set with
all sections equally horizontally, although it should be set vertically because it covers all segments
of a concrete activity in the part of the European integration. So, it is dysfunctional. So, the manger
of the section in the part of his job enters into authorizations of all sections or has no job at all.”

172 J. Denkova

Agency of administration
Ministry of Education and Science
Ministry of Defense
Ministry of Internal Affairs
Ministry of Labor and Social policy
Ministry of Living Environment and social planning
Ministry of Finances
Ministry of Justice
Ministry of Local self - government
State Institution of Revision
State attorney
State Institution of Statistics,
Direction of protection of personal data,
Department of hydro-metrological affairs
Crisis management center


F The obligation for preparation of strategically plans is formal

I Frequent deviations from the passed strategic plans

N No procedures for evaluations of the realization of the strategic plans

D Shortening of the financial means on the account of the already started

strategic activities without explanation by the Government
N There are no procedures when why and under which conditions the
financial means have been shorten of the state departments

G The incident changes of the strategic plans are without previous

S analyses and procedure

Fig. 11.2 Strategy activity

11.3.2 Strategic Activity and “Law of the Civil Servants”


In this part results from the analyses of the legal and sub-legal acts connected to the
responsibility and responsible working of the administration have been presented
(Fig. 11.2). The results show that the Rule Book for evaluation of the civil servants,
the reports from the evaluation, and the form for the evaluation represent as indica-
tors for the effectiveness and efficiency of the work of the civil servants. Through the
evaluation form, the evaluation of the working of the past year has been made and

11 Legal Basis for Responsible Working of the Administration in the Republic… 173

the working aims for the following year are set. A compositional part of the evalua-
tion are also the discipline measures which have been set during the past year.
The shortcoming of the strategic activities are as follows:
• The obligation for preparation of the strategic plans is informal.
• Frequent deviations from the past strategic plans.
• No procedures for evaluations of the realization of the strategic plans.
• Reducing finances of the already started strategic activities without explanation
by the government.
• There are no procedures as to when and under which conditions the financial
means are decided for the state departments.
• The strategic plans are without previous analysis and procedure.
Regarding the strategic planning of the state departments, an obligation has been
established for formation of a department for strategic planning.6 Such departments
or sections should be established almost in all departments, but only in seven insti-
tutions these are established and people who can perform this function have not
been trained.7,8,9
Regarding the legal decisions, the only legal documents that regulate the issues
for the responsibility of the civil servants are the Law of Civil Servants and the Rule
Book.10 Figure 11.3 details the flaws in the Law of Civil Servants document.
These are:
• Inconsistency of the legal regulations creates difficulties in proving responsibil-
ity on any individual.
• The inconsistencies lead to few cases for disciplinary actions, that is, misusing of
the office post and nonfulfillment of the assigned tasks.
• The discipline irregularities of disrespect of the working hours have few fines.
Only five cases refer to the redistribution of the post with lower titles.

In article 8 from the Decree for the principles for internal organization of the organs of the state
management (Official Gazette of RM number 93/2000 14/2002 105/07).
Regarding that the opinion of the respondent was “very frequently Government passes conclu-
sions which have not been planned and gives priority on the account of already planned in the
strategic plans of the departments.”
So, one of the respondents stated the following: “We can not realize the projection of the strategic
plan I do not have known who decided to shorten the budget without taken into consideration the
strategic plan. It is a flaw and the only sample that taken the Ministry of finance for the shortening
of the budget is the realization, so it means only that there is low realization in the organ, there is
shortening of the budget but they do not take into consideration the reasons why it is like that.
Sometimes the nature of the activity itself enables relations to be executed in September.”
So not only the change of Ministry is the reason for changing of the strategic plan, very frequently
the strategic plan is changed by the same Ministry in a period of 1 year.
The Rule Book for the way of leading of discipline procedure for confirmation of discipline
offense number 01-6846/1 form 31.05.2006 reached by the manager of agency of civil servants.

174 J. Denkova

Agency of administration
Ministry of Education and Science
Ministry of Defense
Ministry of Internal Affairs
Ministry of Labor and Social policy
Ministry of Living Environment and social planning
Ministry of Finances
Ministry of Justice
Ministry of Local self - government
State Institution of Revision
State attorney
State Institution of Statistics,
Direction of protection of personal data,
Department of hydro-metrological affairs
Crisis management center


F The inconsistency of the legal regulations proves responsibility very hard.

I The inconsistency leads to small number for started and solved disciplines
N procedures. The discipline violations refer to the misusing of the office post
and unfulfilment of the working tasks
I The discipline irregularities refer to disrespect of the working hours and the
fines are monetary.
G Five cases refer to the redistribution of the post with lower title

Fig. 11.3 Law of Civil Servants

The disciplinary measure for civil servants is to demote them11 for a period of
6 months and then return them to the post with the previous title. This is not enough
to teach the civil servant to not repeat the same mistakes. Hence the measure is inef-
fective. Moreover in the Law of Civil Servants, there are limited actions for disci-

In the Law of Civil Servants (Official Gazette of RM clear text 108/05) article 76 which says (1)
for the violation of the official duty of the state clerk, one of the following discipline measures can
be by decision passed: (1) public notice, (2) fine in the amount of 10–30 % of the 1 month salary
paid for the last month before the execution of the violation of the official duty, (3) distribution on
post with lower title for a duration of 6 months to 1 year, and (4) termination of the employment.
(2) When passing the discipline measures, the weight of the violation of the official duty is taken
into consideration, the consequences of that violation, the level of the liability of the state clerk,
and the circumstances under which violation has been done, his former behavior, and performance
of work as well as other releasing and aggravating circumstances.

11 Legal Basis for Responsible Working of the Administration in the Republic… 175

plinary violation or inconsistency in work. Disciplinary processing also has

problems. The regulation is applied primarily in front of the Commission (single
person) for processing of offenses. One person (not a committee) can easily make a
wrong application of certain regulation or make a wrong interpretation.
Furthermore, the Rule Book leaves gaps for lodging of appeals, and for formal
oversights in the procedure. This leads to tendentious and malicious direction of
certain regulations. The disciplinary process has the tendency to be prolonged and
become obsolete. For the violation of the official duty (lower level of violation
that is criminal act), the procedure itself should be simpler. A characteristic exam-
ple would be paragraph 2 of Article 16 which says “for ending and continuation
of the processing the Commission makes special conclusion against which an
appeal is allowed” and paragraph 2 of Article 18 which says “the terms which due
to the end of the procedure stopped, started to be valid since the day when the
commission passed the decision for continuing of the procedure.” For one and the
same continuation of the processing, the Rule Book confirms passing of two dif-
ferent legal acts, “Conclusion and Decision.” The lacunae in the disciplinary pro-
cedures are as follows:
• It is unclear which characteristics will support harder types of criminal
• The Rule Book contains regulations which only complicate the overall proce-
dures and make it difficult to conduct disciplinary procedures smoothly.
• The inconsistency in the regulations for monitoring work, its delivery, and the
continuation of the procedure.
The regulations, moreover, do not provide clear distinction of the responsibility
between the political power and the state administration. The reason is that the
Republic of Macedonia adopted a new system without tradition and habits, and it is
still far from being professional. This is due to the fact that political parties feel an
obligation to thank those who voted for them, so they employ them in the public
service without bothering for professionalism and competency. Therefore the
attempts to professionalize the state service face pressures and privileges that result
from the political function. Drastic change of laws is frequent (Fig. 11.4).

11.4 Discussion and Conclusions

The current setting of the legal and sub-legal acts does not give directions for where the
authority and the responsibility of the civil servants are clearly listed. It is especially
important to pay attention to the establishment of clear procedures to ensure clear circle
of responsibility and strategic planning of the state departments. The employees under-
stand this as unclearly defined obligations, rather than something useful.
The strategic aim of the state laws, what scientific analyses it is based on, and
which experts are behind such policy are not clear. When we go lower in the hierar-

176 J. Denkova

Agency of administration
Ministry of Education and Science
Ministry of Defense
Ministry of Internal Affairs
Ministry of Labor and Social policy
Ministry of Living Environment and social planning
Ministry of Finances
Ministry of Justice
Ministry of Local self - government
State Institution of Revision
State attorney
State Institution of Statistics,
Direction of protection of personal data,
Department of hydro-metrological affairs
Crisis management center



F It is unclear with regulations which are characteristic for confirmation of

I harder types of responsibility such as criminal processing.

D The overall Rule book contains regulation which only complicate the overall
procedure disable it and they make it difficult to conduct
N The inconsistency in the regulation for the personal delivery, the ending or the
G continuation of the procedure.

Fig. 11.4 The Rule Book for the way of leading disciplinary procedure

chy of the authorization, there should be indicators and clearly set rules with clear
distinction of the state from the public administration. It is important to emphasize
that regardless of the fact which political structure has the power, by which the
responsibility can be located, we cannot say that we have closed circle of
In this context the recommendations are as follows:
• Introduction of a system of analyses of policies for influencing the economy and
society in the frames of all the ministries.

11 Legal Basis for Responsible Working of the Administration in the Republic… 177

• Introduce the process of decentralization which will make the government closer
to the citizens.
Furthermore, some other steps include plan for measures for public satisfaction
from the services, introduction of standards for public services, development of
systematic checking of opinions and citizens’ expectations as consumers of public
services through quantitative and qualitative measures, development of policies for
the collection of appeals and complaints, and pilot of decisions for the promotion of
professionalism of public services. Introduction of these measures will contribute to
increasing of the trust and legitimacy of the public administration and services and
will contribute for professional and effective management with public sections
which will directly influence to creation of public values.12
Moreover, these conclusions are supplemented by the recommendation that one
of the basic standards that should be established is for prevention of corruption.
Definition of the merit system of the employees should also be defined, in all the
fields, namely, health, education, science, culture, and social protection. It is neces-
sary to strengthen the rules for employment, promotion, evaluation, and responsibil-
ity of the employees. With some significant changes, the Law of Civil Servants as
well as other laws which manage the employment promotion and responsibility in
the state service will contribute to the Republic of Macedonia.


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Chapter 12
Accountability in the Karnataka State Police
in India

Meena Nair, Prabhakar Kollapudi, and Prarthana Rao

12.1 Introduction

Citizens’ active involvement and participation in governance is today seen as a criti-

cal component for any reform agenda. Policy makers, development practitioners,
academia and civil society around the world are increasingly realizing that it is the
voices of the commons that act as a strong catalyst for change, especially in an envi-
ronment where the state, operating as a monopoly provider of services, is not tuned
to receive and respond actively to citizen’s feedback (Paul 2006). While the situa-
tion is bad enough among common public services such as drinking water, sanita-
tion, streetlights and roads, collecting citizen’s experiences to advocate for change
on services such as those provided by the police department, generally considered
to be non-transparent, offer a bigger challenge. However, it is important to remem-
ber that the police department is as much a service provider as any other and as
much obliged to offer itself to public scrutiny. This chapter outlines one such effort
that was undertaken by Public Affairs Centre (PAC), an independent not-for-profit
think tank, to assess the quality of services provided by the Karnataka State Police
Department through feedback from both its users and personnel.
In democratic societies like India, the active face of state regulation is seen
through its police activity. Under the Indian Constitution, the police are the concern
of the state governments. However, similarities exist in terms of the structure and
regulation of the police force being governed by the Police Act of 1861, deployment
of senior officials of the India Police Service (IPS) to the states and the central gov-
ernment maintaining a coordinating role with the state government being in charge
of its supervising its police force.

M. Nair (*) • P. Kollapudi • P. Rao

Participatory Governance Research Group, Public Affairs Centre, Bangalore, India
e-mail: meena@pacindia.org; prabhakar.nird@gmail.com; prarthanarao@gmail.com

© Springer India 2015 179

A. Gurtoo, C. Williams (eds.), Developing Country Perspectives on Public
Service Delivery, DOI 10.1007/978-81-322-2160-9_12

180 M. Nair et al.

The bulk of the Indian Police is comprised of forces in the states. Each state has
its own force headed by a Director General of Police (DGP) who is equivalent in
rank to his counterpart in the Union Government forces. A number of Additional
Directors General or Inspectors General of Police (IGP) who look after various
portfolios, such as Personnel, Law and Order, Intelligence, Crime, Armed Police,
Training and Technical Services, are located at the State Police Headquarters and
report directly to the DGP. Major cities in a state are headed by a Commissioner of
Police (CP) who, again, reports to the DGP. Areas outside these cities in a State are
divided into districts of varying size. Each district is headed by a Superintendent of
Police (SP) and supervized by a Deputy Inspector General (DIG) whose jurisdiction
is called a Range, composed of a group of three or four districts.1
As is the case with all Indian States, in the state of Karnataka, the Police are
responsible for the maintenance of law and order, internal security and assistance to
citizens for the protection of their life and property and redress of their grievances.
The state is divided into six Police Ranges and three Commissionerates in Bangalore,
Mysore and Hubli-Dharwad. Among the different types of police stations (total of
8802) in the state, there are 786 Law and Order police stations including 10 women
police stations.3 These police stations are served by about 65,100 police personnel
belonging to different ranks – Police Inspector (PI), Sub Inspector (SI), Assistant
Sub-Inspector (ASI), Head Constables (HCs) and Police Constables (PCs). They
perform all the duties that form part of the police station functions. Statistics shows
that one policeman in Karnataka serves a population of 802 persons as against the
national average of 771 persons.4 In a state populated by about 53 million people,
the total number of registered cases (under IPC and SLL) is 1,47,191 in 2008,5
which is about 2.5 % of the total registered cases in India.
The local police station is the focal point for the discharge of these functions as
far as the people are concerned. It is not easy, however, to judge how well the police
stations are serving the public as official records may or may not contain all the
relevant information. The treatment meted out to a complainant is known only to
that person and his/her experience is unlikely to be noted in any record. Besides, the
decentralized nature of police work makes it difficult for higher officials to track the
progress of all the cases at each and every police station. This imbalance of informa-
tion on the performance of the police stations and their personnel is an important
barrier to the design of proper interventions and programmes to improve their

Information downloaded from the National Crime Records Bureau.
Others are Railway police stations (18) and Traffic police stations (76).
From “Data on Police Organisations in India – as on 01.01.2008” brought out by the Bureau of
Police Research and Development (BPR&D); http://www.bprd.gov.in/images/pdf/data-on-
Crime in India 2008 – Statistics, National Crime Records Bureau, Table 1.1, p. 193.

12 Accountability in the Karnataka State Police in India 181

In order to remedy this gap, an assessment of the delivery of services at the level
of police stations through a random sample survey of users (who in this study were
the complainants) and police personnel was undertaken by PAC, Bangalore. While
the survey of complainants focused on their experience in reporting and/registering
and resolving their grievances/problems, interviews with the police personnel elic-
ited their views on how well they are able to process and settle the complainants’
problems and the difficulties and constraints they face in the course of this and other
every day work. The analysis of the survey data helped to identify areas of both
weaknesses and strengths in the functioning of the police. The insights generated
through this assessment became an aid to the top policy makers to evolve a strategy
to deal with the problems identified and thus improve the department’s performance
and public image.
The methodology used by PAC was the Citizen Report Card (CRC) approach, its
own flagship product, which is a simple and credible tool to provide systematic feed-
back to public agencies about various quantitative and qualitative aspects of their per-
formance. CRCs elicit information about users’ awareness, access, usage and
satisfaction with public services thus bringing in the dimension of a ‘bottom-up’ assess-
ment of public services. CRC identifies the key constraints that users face in accessing
public services, their appraisals of the quality, adequacy of public services and the
quality of interactions they have with the providers of the services. In its recent applica-
tions, the CRC approach has included in its ambit, other stakeholders such as service
providers themselves, as well as community representatives to bring about a balanced
approach and comprehensiveness to the service(s) being covered. In this unique CRC,
the Karnataka State Police Department (KSPD 2009) was assessed in terms of its per-
formance as a service provider. The study was undertaken in partnership with funding
from the KSPD with support from the DG&IGP (Director General and Inspector
General of Police) who sought PAC’s assistance for conducting this study.

12.2 Scope and Methodology

The scope of the study was limited to core services of the police stations. There are
clearly other functions that the police department performs, but these were not part
of the assessment. The objectives of the study were as follows:
1. To systematically assess the quality, responsiveness and outcomes of the basic
services provided by police stations to the public.
2. To generate a better understanding of the problems and constraints being faced
by the police personnel in their role as service provider to the community.
3. And, to assist the police department to use the information and knowledge
generated through the study so that actionable policies and remedies can be
To cover all aspects of the study, five sets of data collection instruments were designed,
which included observation schedules and interview schedules. These were:
1. Observation schedule for police stations
2. Interview schedules for police personnel

182 M. Nair et al.

3. Complainant information checklist

4. Interview schedules for complainant
5. Interview schedules for non-registered complainant (exit interviews)
The scope of the data collection instruments for both the complainants and
personnel included aspects related to availability of the service, access and usage,
quality and reliability, problem incidence, responsiveness and problem resolution,
extra costs including corruption and finally satisfaction. Along with these, the inter-
view schedule for police personnel also included a section on their morale, attitudes
and work–life balance.
The sampling design for the survey covered the entire state of Karnataka includ-
ing all the six ranges and three Commissionerates. While all the three
Commissionerates were covered in the study, 50 % of the districts were selected
(15) through random sampling to represent the six ranges of the state. Complainants
were selected randomly from the registers kept at the selected police stations, and
interviewed in their homes. The police personnel to be interviewed were selected
from the same set of police stations included in the sample. The personnel com-
prised of inspector, sub-inspector, head constable, constable and writer. During the
study it was observed that there is a problem of complainants not being able to
register their complaints in a police station. In a further extension exercise to under-
stand this phenomenon, non-registration of complaints was covered through exit
interviews from 21 of the selected 100 police stations. The sample size thus covered
for the study is given in Table 12.1. Regional teams from PAC’s partner organiza-
tions consisting of members from respective districts were selected. Data entry was
carried out by a professional agency based at Bangalore.

12.3 Results: Feedback from Complainants

Every service provided by the government has its own set of users. In the case of the
services provided by the police it is the complainant, who on being confronted by a
problem goes to a police station to lodge a complaint. Two thousand complainant
informations were analysed; they comprised of those who registered their complaint
and had their details in the Crime Register, the official complaint registration book
maintained at every police station.

Table 12.1 Sample size for survey

S. no. Sample size N
1 Observation of police stations 100
2 Interviews with personnel of police stations 500
3 Interview with complainants 2,000
4 Non-registration of complaints (exit interviews) 104

12 Accountability in the Karnataka State Police in India 183

77 79
71 73
67 70



Fig. 12.1 Proportion of complainants feeling at ease about visiting a police station. CM commis-
sionerates, C central, S southern, W western, E eastern, N northern, NE north eastern

77 79
71 73 70



Fig. 12.2 Proportion of complainants reporting complete satisfaction. CM commissionerates, C

central, S southern, W western, E eastern, N northern, NE north eastern

12.3.1 Entry to a Police Station: Lodging a Complaint: Not

a Frightening Task

More than one-third of the complainants went to the police station to lodge com-
plaints on matters related to quarrels/disputes (31 %), followed by accidents (26 %).
More than two-third of the complainants reported that they felt free to visit the
police station (Figs. 12.1 and 12.2). This was highest in the Southern Range (88 %)
and lowest in the Eastern Range (34 %). It is interesting to note that the Eastern
Range has the highest proportion of complainants belonging to SC/ST, who are
generally at the lowest rungs of the society and would be least comfortable dealing

184 M. Nair et al.

with authorities such as the police. However, 58 % of the complainants were not
aware of the process of registering a case; neither did they know the person to be
contacted at the police station (60 %).
Upon entering the police station, 95 % complainants found the staff available at
their seat, 89 % reported that someone from the police station did attend to them
immediately and that person listened to their complaint (99 %) as well. Among
those who were not attended to immediately, 58 % complainants had to wait for
upto half an hour while 32 % waited for upto an hour to talk to someone about their
complaint. Reasons given by the police for not attending to them immediately were
mainly about attending other urgent work (60 %) followed by those asking them to
wait for the senior officer to arrive (29 %).

12.3.2 Non-registration of Complaints: Disturbingly High

During the study it was observed that there is a problem of complainants not being
able to register their complaints in a police station. In the extension exercise that
was carried out (exit interviews outside selected police stations) to understand this
phenomenon, the findings revealed that
• Nearly 40 % of the respondents had come to follow-up on complaints that they
had lodged previously.
• Rest of the respondents had come to the police station to lodge a complaint. Of
them, 51 % of the respondents got their complaints registered, while the rest
49 % were not able to get their complaints registered. This clearly indicates a
ratio of 1:1 in terms of registered vs. non-registered complaints. However this
does not imply that all cases of non-registration were arbitrarily done; some may
have not been registered as they may not constitute criminal cognizable offences.
• Among those who got their complaint registered that day, less than two-third of
the complainants (62 %) got an acknowledgement/FIR of their complaint.
• Of those who could not get their complaints registered, reasons given by the
police for not registering their complaint that day included – wanting to carry out
preliminary enquiries first (42 %), unavailability of the SHO (36 %) and trying
for a compromise (23 %).
• When asked what they planned to do next, 55 % said that they would continue to
come to the police station. Another 13 % said that they would approach the com-
munity leader. There were 23 % respondents who said that they would not pursue
the matter; they were the same respondents who also admitted to agreeing to a
compromise with the opposite party.
• Interviews with complainants who could not get their cases registered on the
same day at police stations, revealed that more than half of them had visited the
police stations earlier as well in an attempt to register their cases; none of them
was refused, only asked to come later; the type of cases that they wanted to reg-
ister were no different from those who were successful in getting their cases

12 Accountability in the Karnataka State Police in India 185

12.3.3 Complaint-Lodging Process: A Protracted Exercise

Complainant experiences revealed that in most cases, they were able to lodge
their complaint on the first visit itself (84 %) and on the same day (89 %). An
average of 2.5 hours’ time was taken to register their complaint. In more than half
the cases (53 %), the Writer wrote the complaint (85 % in North Eastern and
61 % in Northern Ranges) though one-fourth complainants reported that this was
not read out to them after writing/recording, while 30 % of the complainants
wrote their own complaint. Only two-third of the complainants received a copy
of the FIR/Acknowledgement after lodging their complaint. Fortunately, more
than two-third of the complainants did find the process of lodging a complaint a
simple affair than a difficult one.

12.3.4 Corruption

Only 9 % complainants reported that they had to pay a bribe to the police personnel
to get their work done. In nearly half the cases, this was demanded. Some of the
purposes for which extra money was paid included payment for conducting the
enquiry faster (30 %) and to nab the accused (20 %). The reasons given by the
police to the complainants, on the other hand for taking the money, were to make
arrangements for investigation (76 %), for personal needs (21 %) and for station
maintenance (10 %). Average bribe amount given was about Rs. 2,100/-.

12.3.5 Outcome and Satisfaction: Need for Better Police–

Public Interface

A mixed picture emerged from the complainants as regards the follow-up and out-
come of their cases. Having lodged their complaints, only 55 % of the complainants
expressed awareness regarding the status of their complaint; the rest had no infor-
mation with them reflecting the lack of any evidence of pro-active advice. Nearly
two-third of the aware complainants (64 %) actually got to know about the status of
their complaint only when they visited the police station, and among those who
were informed by the police personnel, 28 % complainants reported occasional vis-
its, 28 % reported weekly and 25 % reported monthly visits, indicating lack of
consistency/a norm that could be made universally applicable.
The difficulties faced by complainants were clearly reflected in their expression
of complete satisfaction with various aspects of service delivery by the police – only
about half or less than half of the complainants were completely satisfied with
aspects such as helpfulness of staff (52 %), interest of the police in solving their
problems (49 %) and their own overall experience (47 %).

186 M. Nair et al.

Lastly, in spite of their unhappy experiences with the police, more than three-
fourth complainants (78 %) did express their trust in the police department.

12.4 Results: Feedback from Police Personnel

The main objective of this study was to assess the process and quality of services
provided by the police stations to the public and in the process attempt to under-
stand the problems and constraints faced by the police personnel while discharging
their duties. The knowledge generated through this exercise provided the basis for
actionable policies and remedial measures.

12.4.1 Duties: All Work and No Play

Multi tasking was a general feature observed among the police personnel at all lev-
els, increasing workloads at the cost of general entitlements such as weekly off and
leave. More than one-third of the police personnel were reportedly assigned three or
more duties at the same time in the department. These included general duty (79 %),
bandobast and escort duty (49 %), enquiry/investigation (44 %). Information elic-
ited on work hours indicated that more than 40 % of the staff put in 13–16 h of duty
on a normal day. This was the highest in the Commissionerates (50 %); 45 % police
personnel in the Eastern Range were put in 17–24 duty hours presenting a worst
case scenario.
Weekly off, an entitlement stipulated for all government employees, was report-
edly ‘never’ given regularly to 64 % of the police personnel; the situation was some-
what alarming among the higher levels, where 96 % SI and above ranked personnel
reported this as against 54 % ASI and below ranked staff. Allowance to take leave
was mainly given only once in 2–3 months (45 %) though monetary compensation
was received (61 %) by the police personnel. Nearly one-fifth of the SI and above
cadre reportedly had ‘never’ been allowed to take leave as against 7 % in the ASI
and below cadre. However on a positive note, 82 % of the staff still reported that
they were able to discharge their duties with the current station strength.

12.4.2 Support: Strong Tangibles but Weak Intangibles

Solid infrastructural facilities were in place to provide work comfort but lack of
human development support within the department seemed to be plaguing the sys-
tem. It was disturbing to note that in terms of staffing, there was a shortage of staff
in a substantial number of police stations. On an average there was a shortage of
6 % staff.

12 Accountability in the Karnataka State Police in India 187

Internal support from various sources within the department were yet to reach
and benefit all police stations and police personnel as indicated from the feedback
collected. For example, the survey revealed that only 53 % of the interviewed
police personnel had participated in a training programme in the past 3 years.
Among the reasons cited by those who did not attend any training programmes
(47 %) include that despite being interested they did not get an opportunity to
attend one (63 %), and that due to insufficient staff strength, they were not allowed
to attend one (11 %).
Appreciation for the work done so far as a mechanism of internal support was
received by 70 % of the police personnel. This was through formal means such as
cash rewards (68 %), ‘good work’ entry in service records (49 %) as well as infor-
mal means such as public acknowledgement (40 %), praise from superior officer
(37 %). In terms of support from the reporting/higher officer, nearly 88 % personnel
reported getting all the necessary support; 81 % have rated their support as ‘good’.
Karnataka is one of the few states that provides Investigation and Contingency
funds to every police station for the smooth running of the station and its duties.
With regard to investigation funds, almost all (94 %), and for contingency fund only
52 % police stations received the allocated funds on a regular basis. Only 62 % of
the police stations receiving investigation funds felt that this amount was sufficient
quoting an average additional requirement of Rs. 7,200/- to manage (in addition to
the average Rs. 9,700/- received). When asked from the police personnel about their
awareness of these funds, surprisingly more than 40 % of the interviewed personnel
(44 %) were not aware [this was more among ASI and below ranks (53 %) than SI
and above ranks (15 %)]. Among the rest who were aware, 77 % mentioned that the
funds were utilized for meeting investigation expenses.
External support of various types were received but considered ‘interfering’ in
some cases. Existence of Citizen Committees indicating community involvement
was acknowledged by 93 % of the interviewed police personnel. Of them, more than
90 % reported that Citizen Committees held regular meetings and feel that the
Citizen Committees did support the activities of the police department. However, a
major issue seemed to be the involvement of people of influence interfering in the
course of work of the police personnel, whom more than one-third of them (37 %)
had experienced or come across. These influential people mostly comprised of local
politicians (90 %), caste/community leaders (46 %) and higher police officers to
some extent (14 %). They were considered to be more of a hindrance as expressed
clearly by 62 %.

12.4.3 Work-Related Attitudes: Reflective of Changes in Time

A few statements which reflect the universal beliefs of the common man about
police in general were read out to the police personnel to understand their perspec-
tive. The statements and the proportion of police personnel agreeing to them are as
follows (Table 12.2).

188 M. Nair et al.

Table 12.2 Proportion of police personnel agreeing to statements related to work culture
S. no. Statements % agreeing
1. Honesty does not pay all the time 38
2. Behaving sternly/harshly is required to command respect 20
3. There is no harm in using foul language with the suspects 24
4. Use of physical force is the only way to extract information 15
5. Corruption is a part of the system 38
6. Things do not move without political favour 22
7. Be in the good books of the higher officers to move up in your career 77
8. Being in the police force is not a social services as perceived by people 13
9. People from the vulnerable sections of society are mainly responsible 34
for crimes in the locality
10. Crime prevention requires convergence with other departments/ 77
11. Discipline means blind obedience to one’s superior officer 17
12. Credit for good work done is mostly taken away by the superior officer 55
13. Often senior officers curry favours with politicians/influential persons 41
and let down their subordinates

As can be observed from the responses, internal politics within the department
seemed to be quite in play affecting the way the police personnel view themselves
and their colleagues in their department.

12.4.4 Personal Life: Comfortable but More Support Required

More than three-fourth of the police personnel (77 %) had their families staying
with them at their current place of residence. Reasons given by the rest for not hav-
ing their families with them included – children’s education (31 %), not wanting to
uproot their families from their native places/villages (22 %) and not getting police
quarters (17 %). Support at the personal level coming from the police department
included housing, health, education and recreation facilities.

12.4.5 Department Structure: Rigid Top-Down Approach

Based on their experience in the police department, more than three-fourth of the
police personnel (77 %) believed that following departmental rules and regulations
was the right approach to discipline, though 25 % also believed that the term ‘disci-
pline’ comprises of obedience to superior officers. Feedback received on the current
structure of hierarchy in the police department indicated the existence of a rigid
structure as expressed by almost 90 % police personnel. The above two aspects get

12 Accountability in the Karnataka State Police in India 189

reflected in the response received when asked if they were given any opportunity in
the department to come up with new or innovative ideas to act upon. More than
90 % of the police personnel said that they did not receive any such opportunity.

12.4.6 Corruption and Grievance Redress: Bribery Practices

Very Much in Place

In terms of external corruption, more than one-fifth of the interviewed police per-
sonnel (21 %) agreed that there were practices involving taking of money or per-
sonal favours from complainants/accused/the public in the department. The reasons
cited for the same included – personal greed (64 %), to meet expenses of the police
station (30 %) and to influence decision on cases related to complaints (13 %).
With regard to internal corruption, when asked about their experiences of paying
money or doing any personal favours to anyone in the department to get their work
done, only 7 % reported in the affirmative. Reasons for bribery comprised of mainly
for recruitment/transfer/posting (49 %) followed by getting entitlements such as
leave, allocation of work shift and reimbursement of expenses (42 %).
More than 80 % of the police personnel (86 %) believed that both external and
internal corruption practices can be reduced if senior officers in the department
resolve to take it up seriously.

12.4.7 Problem Incidence and Grievance Redress

Only 17 % of the interviewed police personnel reported that they faced problems
within the department. This was more among the SI and above ranks (26 %) than
among the ASI and below ranks (14 %). Some of the important problems cited
included not allowed leave (7 %), pressure from officers at various levels (6 %),
health-related issues (5 %) and transfer-related issues (5 %). Interestingly, 28 % did
not approach anyone; in most cases, the problem remained non-resolved as reported
by 82 % of the aggrieved police personnel.

12.4.8 Outcome and Satisfaction

The outcome of the work carried out by the police personnel is reflected in the status
of the cases that have been registered in the police stations. As per the information
collected from the selected police stations, the current status of the cases indicated
that more than one-fourth of the cases had been closed (27 %). While 40 % of the
cases had been charge sheeted, 5 % had been identified as false cases. Nearly 20 %
of the cases were under investigation while 7 % were declared to be undetected.

190 M. Nair et al.

High rates of satisfaction with their job were expressed by the police personnel
with their department (89 %), with 99 % reporting complete satisfaction and almost
all (97 %) had trust in their own department. Some of the reasons for satisfaction
included aspects such as getting respect from society (68 %), the job helps them to
reach out to people (67 %) and it instills a sense of discipline (49 %). Among the
few personnel who reported dissatisfaction, the main reasons were less family time
(73 %), round the clock duty (73 %) and being underpaid (60 %). Some of the most
pleasant experiences in the police department as reported by the personnel included
appreciation from the public (42 %), appreciation from higher officers (26 %) and
successful investigations (20 %).

12.4.9 Complaint Lodging: Procedural Gaps

While the previous section assessed the experiences of the complainants as they
went about the process of lodging complaints in the police stations, the police ver-
sion of the same process indicates a different story. A written complaint was taken
in most cases (79 %), when a person came to register a case; 30 % of the police
personnel also mentioned carrying out a preliminary enquiry. More than 90 % of the
police personnel reported that the complaint was ‘always’ read out to the complain-
ant. An acknowledgement in the form of an FIR copy was given to the complainant
as reported by 94 % police personnel and was given immediately after recording the
complaint (91 %).
Reasons cited by those who reported that they do not file FIRs immediately,
included checking up on any suspicion of complainants misdirecting the official
or suppressing facts, followed by exploring the possibility of compromise.
When asked about the provision of IPC Sec 193–195 given to the police to
tackle such cases where complainants have misled them, most police personnel
(83 %) admitted to not availing the same, mainly due to lack of awareness
(50 %).
More than 80 % police personnel (89 %) reported that they do update the com-
plainant on the progress of the investigation; however this was mostly done when
the complainant approached or makes enquiries (49 %); some said they do it on a
monthly basis (15 %). While more than one-fourth police personnel said that they
had not faced any problems when a complainant came to their station to lodge a
complaint, more than 10 % complained about facing pressure from people with
political influence, complainants not being able to relate the complaint properly
(5 %) and complainants coming to the station after drinking binges creating prob-
lems (4 %). It was interesting to note that the same questions elicited varied
responses from the two sides (police personnel and complainants) as shown in
Table 12.3.

12 Accountability in the Karnataka State Police in India 191

Table 12.3 The complaint lodging process as reported by police personnel and complainants
Police vs. complainants
Reading out the complaint – 93 % Reading out of complaint – 75 %
FIR copy/acknowledgement given to the FIR copy/acknowledgement received – 66 %,
complainant – 99 %, immediately – 91 % on demand – 34 %
Updating the complainant on investigation Awareness regarding current status of
status – 89 % complaint – 55 %
Updation on current status – through visits to
the police station – 64 %
Status of closed (including those identified as Status of solved and closed cases – 35 %, status
false cases) – 32 % of unsolved but closed cases – 13 %

12.5 Conclusions

The provision of essential public services to the people is a basic function of the
government (Paul 2002).6 In most countries, the state is the sole provider of public
services and therefore is responsible for the efficient implementation of the same.
However, ascertaining whether its services are reaching the people or not, is some-
thing that governments do not take into consideration. Consequently, scarce
resources are ploughed into those aspects of service delivery which may not be criti-
cal for its users. The only way a government can identify the areas of improvement
in public services is to ask its users about the quality and value of its services. While
this may be an easy process in the case of general services, specific services such as
those of the police require careful and systematic feedback mechanism that will
provide a mirror to the provider in terms of its performance.
A brief but comprehensive literature review that looked at some of the studies
carried out in other states of India related to police behaviour and their work
(Guruprasad 2008; Kumar 2009; Mishra 2005; Munshi 2009; Singh 2009; Nair
et al. 2010; Sekhar et al. 2007, 2009; Shinar 2009) revealed that user feedback was
one aspect that had been rarely collected or analysed. While official documents such
as the Karnataka Police Manual presents the duties of the department and also the
entitlements of the personnel, it does not provide for a continuous monitoring and
evaluation mechanism for continuous improvement in service delivery. Nor were
there any studies that looked at complainant experiences or perspectives, except for
anecdotal references in newspapers and journals. At the same time there were quite
a few reports on police attitudes and behavioural patterns based on feedback from
police personnel. This study has contributed to fill that gap.
In general, the study found that a majority of the complainants were low income,
less educated and disadvantaged citizens. Thus, it is truly the ‘Aam Aadmi’ (common

Paul, Samuel (2002), Holding the State to Account: Citizen Monitoring in Action, Books for
Change, Bangalore, p. 2.

192 M. Nair et al.

man) who seeks the intervention and assistance of the police. The conclusions of the
study as mentioned below provide the way forward for improving the functioning of
this critical department.
1. Easy access to the Stations: The study findings showed that the presence of
most of the police personnel at their seat and being able to register the cases the
same day were satisfactory. Police were also able to give acknowledgements.
While these were positive features, the main problems faced by the complain-
ants had to do with the efficiency and responsiveness displayed by the police
when their complaints were being taken. Information from the exit interviews
made one suspect that one out of two complainants failed to get his/her case
2. Fear of the Police: There is evidence of a significant proportion of the public
not feeling at ease in dealing with the police. This probably reflects psychologi-
cal barriers which have been nurtured over the years through the conduct of the
police or the lack of self confidence of the citizens. For SC/ST and illiterate
people it is not at ease. Whether this problem has been reinforced by the police
culture or the low social status of the complainants is an issue worth
3. Weak system of follow-up: A significant issue is the high percentage of com-
plainants who were unable to get information on their current status. It seems
that information is provided only after repeated visits. It is possible that the
police culture is not proactive towards complainants. Or it could be that over-
load of work limits the ability of the staff to be more responsive.
4. Existence of corruption: There is evidence of corruption that arise at the time of
interaction of the complainant (9 %) with the police. The interviews with the
police (21 % of respondents agreeing) also confirm the same conclusion and
this issue again needs further probing.
5. Limited awareness: The study highlights a major problem of limited awareness
of the citizens about the procedures at the police station regarding registration,
whom to approach, getting an FIR copy etc. No proactive steps have been taken
by the department to inform and educate the public about the steps involved in
lodging complaints and clearly this problem calls for sharing of information
about the police procedures and other matters that the public need to know.
6. Timeliness of case closures: Feedback from the complainants as well as from
the police confirms that one-fourth of the cases registered were solved during
the same year. It is difficult to judge whether this is an adequate or satisfactory
outcome or not. But it is clear from the forgoing conclusions that if the problem
of responsiveness, information and empathy for the average citizen are dealt
with, the outcome in terms of resolution of cases could be further improved.
7. Loyalty and trust: Among the police, there were both positive and negative
responses. An encouraging finding is the high degree of loyalty and trust of the
police personnel in their department.
8. Rigid hierarchy: The downside of the police culture that has come out of the
study clearly shown that a high rigidity, hierarchical structure and discipline are

12 Accountability in the Karnataka State Police in India 193

in place, and it does not permit much openness to ideas from the field to the top.
The remedies for this very important set of problems may not necessarily lie in
the formulation of new policies but rather in a more careful implementation of
existing norms.
9. Satisfaction contrasts: One of the interesting findings of the study was the con-
trast between the satisfaction levels indicated by the police personnel as opposed
to the satisfaction levels of the complainants. Since the department is primarily
concerned with this aspect, greater attention is to be given to find ways to
improve the citizen satisfaction level and not take comfort in the reported high
levels of satisfaction mentioned by the staff.
10. Work–life balance: As regards the police personnel and their performance, the
key issues involved are clear. There needs to be a better work–life balance
which to some extent can be improved by filling in the sanctioned posts, and
through better human resource management.
11. Wide regional variations: Almost all the issues discussed above varied widely
across the ranges and Commissionerates of the department. This is important to
know because the policies affecting the ranges and Commissionerates are uni-
form and resource allocations are also perhaps based on similar norms. Needless
to say, ranges vary in their socioeconomic conditions and levels of develop-
ment. What these wide variations point to is the need to pay greater attention to
the quality of management, supervision and the types of training being pro-
vided in the ranges and the Commissionerates.
12. Influence of service quality on satisfaction: An important finding of this study
was that the satisfaction scores of complainants are significantly influenced by
whether they received prompt and effective service at the police stations.
Satisfaction levels are higher when their complaints are promptly attended to at
the stations, they receive a copy of the FIR/acknowledgements upon submis-
sion of the complaints, no problems are faced in their interaction with the
police, no bribe had to be paid, and their cases are solved. Personal attributes
such as the complainant’s education level, gender or income did not determine
the satisfaction scores of the complainants. Though satisfaction measures have
an element of subjectivity, evidence from this study shows that quality of ser-
vice is their key determinant.

12.6 Follow-up Action

A study of this nature cannot be considered successful if its recommendations are

not taken into consideration. The purpose of this exercise was to assist the Karnataka
State Police Department (KSPD 2009) initiate reforms and improvements based on
both internal discussions and consensus building. To disseminate the findings, a
press conference was held upon completion of the study, where the PAC study find-
ings were presented before the media followed by a statement by the DGP on the
steps he has taken or will take deal with the issues highlighted by the study.

194 M. Nair et al.

The DG&IGP also shared the findings of the report with all the Commissioners
of Police, Range IGPs and District level Superintendents of Police. Many actions
were taken by the DG&IGP to improve the performance of the department that
1. A toll free number 1800 425 0100 that was installed in the office of the
DG&IGP, for easy access for the public to voice their problems, was given
greater publicity and the functioning of this number was also streamlined. This
number was advertized in the media.
2. Information boards were put up in all police stations in order to assist the public
with information that would help them to register cases or other complaints.
3. Desks were installed in District Headquarters to receive complaints from pub-
lic who were unable to lodge a complaint at the police station in their
4. The police department established procedures for the speedy return of proper-
ties to the complainants.
5. To deal with the problem of repeated visits by the public to the police stations
for follow-up of their cases, a new system of holding meetings with the com-
plainants every third Sunday of the month was initiated in all police stations. At
this meeting, complainants were informed about the progress of their cases.
6. Every police station is now reimbursed the expenditure incurred on investiga-
tion of cases. The Investigation Fund amount of Rs. 20 crore is included in the
annual budget of the KSPD, therefore making it unnecessary for the public to
pay any amounts to the police for the investigation of their cases. This was
widely advertized for the benefit of the public. In order to improve awareness,
SHOs of all police stations in Karnataka were provided with details of contin-
gency amounts sanctioned and the funds available for case investigation. This
circular was put up on the police station notice board.
7. The DGP instructed all officers that weekly off should be given to Police
Constables, Head Constables and Assistant Sub-Inspectors.
8. A circular was issued from the KSPD to all Compols, Dispols and Range IGPs
requesting SHOs of all police stations to hold monthly interactive sessions with
the staff at the police station level, which were to be minuted and monthly
reports of the same to be submitted by the SDPOs/ACPs to SPs/DCPs; this was
in response to the finding of the study that police personnel at the police stations
did not feel that they get an opportunity to get their views/ideas heard by their
9. The DG&IGP instructed senior officials of the department to form sub-
committees to consider the findings to come up with actionable measures to
bring about positive changes in the work culture of the department and would
continue on a self-sustaining basis.
10. Advertisements in the electronic and print media in Kannada, English and Urdu
languages were issued to educate and thereby empower the public on the fol-
lowing five initiatives:

12 Accountability in the Karnataka State Police in India 195

(a) That there are office, residence and mobile telephone numbers of the SHO,
Circle Inspector, Superintendent of Police and the Toll free number of the
office of the DG&IGP displayed on a board outside each police station in
Karnataka requesting people to contact any one of them in case their com-
plaints are not received or delayed.
(b) That a Desk is available in the office of the SP in charge of the District/DCP
in the Police Commissionerates where complaints can be presented in case
refused in the police stations.
(c) That property return programmes are held every quarter in all districts and
Police Commissionerates to return the property to the complainants.
(d) That sufficient fund is available with the police to defray the cost of
(e) That every third Sunday, complainants can visit the police station between
11:00 am and 1:00 pm to know the progress of their cases. They can visit
the police station for this purpose also at any other time.
The above-mentioned remedial measures and actions were initiated within a month
after the submission of the report.


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behaviour, mental makeup and stress levels: a study report
Karnataka State Police Department (2009) Police manual, government of Karnataka. http://www.
ksp.gov.in/home/policemanual/index.php. Accessed 16 Nov 2009
Kumar P (2009) Indian police. Publish America, Maryland, USA
Mishra V (2005) National workshop on media on police reforms. In a workshop by Commonwealth
Human Rights Initiative & Press Institute of India Venue, University of Jamia Milia Islamia,
New Delhi, March 23 and 24.
Munshi P (2009) Making breakthrough innovation happen – shifting policing paradigms -Trichy
Police, HarperCollins, Noida, UP, India
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police. Public Affairs Centre, Bangalore
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the Public Affairs Centre, Bangalore
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Sekhar S, Nair M, Kollapudi P, Rao P (2009) Study of Sarva Shiksha Abiyan initiatives on univer-
salization of elementary education in Karnataka with special reference to concerns of gender
and equity. Public Affairs Centre, Bangalore
Shinar A (2009) Accountability for the Indian police: creating an external complaints agency.
Human Rights Law Networks, Bangalore
Singh SR (2009) Management of stress and coping behaviour of police personnel through Indian
psychological techniques. J Indian Acad Appl Psychol 35(1):47–53

Part IV
Rural and Marginalized Populations:
Reach and Execution

Chapter 13
Housing for Orphans Against the Backdrop
of Social Disparity in Russia

Sergey Vinkov

13.1 Introduction

Russian history of the late twentieth century manifests to the world’s community
that it is impossible to build social relations based on total equality within the frame-
work of a social system. Apparently, the relationships between individuals in a soci-
ety are bound to be imbalanced, especially in the financial sphere, owing to particular
circumstances and solid forms of differentiation. Thus, regulating the level of social
disparity becomes an important social agenda, as a high level of stratification engen-
ders negative tendencies of the future society development.
Orphans belong to a particularly vulnerable social category, and securing this
part of the population by means of certain rights stipulated by international and
national legislations is one of the tools to implement the aforesaid regulation. The
transformation of the social disparity and social differentiation system of Russian
society renders monumental the sociological studies concerning the vulnerable
social categories, conducted both for the purpose of improving the state social policy
and identifying the particularities and patterns of various forms of social disparity.

13.2 Social Differentiation in Modern Russia

In 2011 the total population of Russia was recorded to be 142.9 million people, with
25.9 million under the age of 18 (UN 2011). At the moment, Russia comprises 83
self-governing constituent units (GOR 2012). All the subjects of the Russian
Federation are significantly different in terms of economic resources, their social

S. Vinkov (*)
Higher School of Economics, National Research University, Moscow, Russia
e-mail: svinkov@hse.ru

© Springer India 2015 199

A. Gurtoo, C. Williams (eds.), Developing Country Perspectives on Public
Service Delivery, DOI 10.1007/978-81-322-2160-9_13

200 S. Vinkov

and economic potentials. They are all able to have their own social policies.
However, all the regions share similar problems created by social disparity.
O. Shkaratan, one of the leading scientists in the sphere of stratification of
Russian society, notes that “modern Russia has developed a unique type of social
stratification, which has been consistently reproduced over the recent years and has
a form of entangled social class hierarchy and elements of class differentiation”
(Shkaratan 2012; Shkaratan and Yastrebov 2010). He has empirically determined
that social disparity in Russia is largely governed by the attitude to property and by
the amount of available power. In his study of the Russian society structure split by
occupation Shkaratan proves the hypothesis that, in contrast to the Western coun-
tries, Russian researches distinguish occupations by the nature of the work per-
formed (i.e., its content and conditions), rather than by the status characteristics
determined by corporate spirit or common trade, which in its turn suggests that the
Russian society is an etacratic society (Shkaratan 2012) where customs prevail.
According to the studies of O. Shkaratan, the largest segment of the population,
representing about 74 %, does not possess any property or authority in the
workplace. He suggests referring to this part of the population as the lower and
intermediate layers of the Russian society. Middle class, having the average level of
power and amount of property in ownership, according to him, constitutes 22 %
of the working population. And only 4 % of the population, including the actual
property owners and senior managers, are considered to belong to the upper middle
and upper strata of Russian society (Shkaratan 2012).
After a careful analysis of the distribution of total income between the groups, a
constant and relatively high polarization of Russian society by the level of income
becomes conspicuous (Fig. 13.1).

0.480 0.467
0.456 0.459
0.420 0.418
0.400 0.398
0.400 0.395 0.398



1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Fig. 13.1 Gini coefficient, 1999–2009 (www.gks.ru). Calculated on the basis of the data provided
by: http://www.gks.ru/bgd/regl/b09_11/IssWWW.exe/Stg/d01/07-10.htm. http://www.gks.ru/bgd/

13 Housing for Orphans Against the Backdrop of Social Disparity in Russia 201

At the same time, the post–Soviet Russian society was characterized by a falling
level of human capital and that capital was hardly productive. The level of human
capital plays a minor role in matters related to compensation for work. Differences
in wages are caused primarily by the structural component of the economy. In
Russia, the same amount of human capital can be associated with a high as well as
low income, hence the ambiguous connection between income and the level of
human capital. For example, “the cleaning lady at the bank, today as in the 1990s,
still receives a salary higher than the salary of a professor” (Shkaratan 2012).
Despite the different approaches to the social stratification of Russian society,
many researchers agree on one thing – it is now essential to study the categories of
people with low income and belonging to the lower strata (Tihonova 2011b); these
categories are key to enlarging the middle class which has modernization potential
and is able to drastically change the structure of Russian society.
Tihonova (2011a) singles out the following characteristics of the lower class in
Russian society:
1. Representatives of the lower class and its periphery have, for the most part,
occupational statuses that are typical of the “classic” lower class, characterized
by a spatial settlement model that does not coincide with the localization points
of jobs requiring the extensive use of relatively low-quality manpower.
2. Low level of resource assets, in particular the low quality of their human capital,
including their cultural assets, and, to a large extent, the specific character of
their positions in the labor market, is specifically predetermined by the fact that
they are only able to offer the labor market their own “ordinary ability to do
physical work”.
3. In order to belong to the well-off strata of the population in today’s Russia it is
essential to come from a family where the father had an education at least as high
as a secondary specialized education.
Tihonova assumes that “in the near future Russia may confront the problem
of the formation of a mass lower class and also the emergence of the typical under-
class of large cities, because in cities the social inequality is relatively deeper”
(Tihonova 2011a).
Altshuller (2011) recognizes the main cause of mass poverty in Russia to be low
incomes resulting from the slow production in Russia (caused by the defects of the
economy of resources that shatters the country by excessively high petrol prices)
along with monopolistically inflated prices for vital products, for example, food.
As a member of the Public Chamber of the Russian Federation, he claims that most
of the complaints and petitions to the Public Chamber relate to the housing issues.
In addition to the chronic problem of homeless orphans, he raises the question of the
urgency to address the predicaments of families with over three children, including
those children who are considered to be “legally homeless”, that is, deprived of
social benefits, compulsory health insurance, dairy food etc. In his speech, he noted
that “these homeless-for-life families with 3-5-7 children huddle in small shabby
apartments they rent next to giant new buildings offering commercial apartments.
And against the same backdrop of a considerable number of apartments for sale

202 S. Vinkov

there are people in Moscow who are on the ‘legal’ waiting list and who have been
expecting better housing and living conditions for 20-25 years.”
In fact, the transformation processes that accompany today’s social and eco-
nomic development of the Russian Federation involve many problems accumulated
over decades in various spheres of Russian society, including housing, which is the
epicenter of the country’s social issues such as violating the human right to adequate
housing, the low level of housing provision, moral and technical aging of the largest
part of Russian residential stock which requires replacement or improvement, etc. It
is important to take into account that the housing sector incorporates plenty of social
and economic contradictions, manifested in the fact that the economic opportunities
of Russia cannot satisfy the housing needs of the population. Russian housing
policy can be characterized by the features listed below (Tihonova et al. 2007;
Shomina 2007; Vihavainen 2005; Gurtov 2009).
• Shift from paternalistic to market based housing policy on condition that only a
small part of the society can join in these processes, only one third of the popula-
tion has savings, the rest simply get by.
• The majority of the population do not have dwelling (77 % belong to the lowest
four strata where the money is enough only on the current spending, that is why
they satisfy their dwelling needs through rents or the use of staff housing).
• There is a large share of ill-equipped buildings and shabby dwelling (there is no
system of water or gas supply, or sewerage).
• Imperfection of legislation (there is no definition of housing, no technical
requirements for comfortable housing)
• Lack of the integrated urban development policy and area planning at the
state level.
V. Bobkov (2011) highlighted the structure of the Russian Society by the criteria
of income and the quality of housing, and estimated the change in population in
each layer in 2008 relative to 2004.
1. Poor – 16.4/20.7
2. Low income – 30.4/31.1
3. Income below average – 37.5/36.5
4. Average income – 13.8/10.6
5. High income – 1.9/1.1
His calculations give us to understand that the real social structure of Russian
society is, in respect to well-being, mainly represented by the most needy and poor
layers. In total, they make up about half the population. Another 40 % of the popula-
tion has financial security below average. Approximately 15 % of the population
has medium and high financial security.
Thus, he believes that structuring Russian society by the level of well-being
and evaluating the quantity of representatives of the social strata and groups with
different financial situations will help estimate the nature and extent of economic
disparity; on this basis, several scenarios of the state social policy, intended to
reduce poverty and economic inequality, can be drafted.

13 Housing for Orphans Against the Backdrop of Social Disparity in Russia 203

13.3 Orphanhood in Russia

In his presentation called “‘Child’s estimation’ of poverty and inequality: food,

housing, leisure. On immediate measures to address the problems,” Boris Altshuller
(2011) emphasizes that “Russian poverty has ‘a child’s face.’” The average number
of Russian citizens living below the subsistence level is 13.5 %, whereas the same
figure for children equals 19 %. Poor families with children comprise 32 % of the
total number of households and 58 % of all the families have over three children;
furthermore, working families with children make up just 50 % of poor families.
For a huge number of families having a baby means a “leap” into poverty and
unbearable living conditions – there is no way to provide for the children and
nowhere to live with them.
Orphanhood, being a social phenomenon of mainly children left without parents
during their ontogenetic development due to various circumstances, is an integral
part of any civilization (Vasiliev 2007). However, when orphanhood starts to grow
into the dimensions that threaten society as a system, vivid researches are launched
to detect the source of this disaster, to characterize the main indicators of the situa-
tion and possible ways to resolve it. This problem falls within the domain of many
social and humanitarian scientists (social scientists, economists, philosophers,
anthropologists) and practitioners (social workers, psychologists, lawyers).
In Russian scientific research, the term “orphan” is used in different contexts and
at least two key aspects: the legal aspect – formulating the legal status of an orphan
by the legislation; the social aspect – being the indicator of the fact that a child does
not have any connection to parents due to various circumstances. The most general
approach is to understand “orphan” as a child at the age of 0–17 whose parents died.
However, in the context of the modern transformation of the society loss of parental
care occurs on other ground as well, and, as a rule, those grounds are specified in the
national legislation.
Since Russia ratified the UN Convention on the Rights of the Child in 1990, the
Russian legislation of children’s right has begun to transform according to the stan-
dards of the International Law (Kravchuk 2009). Adopted in 1993, the Constitution
of the Russian Federation officially set out a wide range of civil, political, eco-
nomic, social, and cultural rights and freedoms, thus laying the foundation for the
formation of a fundamentally different model of social security system, where direct
responsibility for the observance of democratic values was imposed on the govern-
ment, and Russia was proclaimed a social state where the International Law plays a
key role. One of the ways Russia proves following the obligations according to the
Russian Constitution, Article 27 of the UN Convention on the Rights of the Child,
concerning the provision of food, clothes, and dwelling, is providing orphans with
free housing if they have none. These standards are stated in the Russian Housing
Code (2004) and in the Federal Law “On additional guarantees on social protection
of orphans and children, deprived of parental care” (1996) (Radina 2004).
The national legislation of Russia provides a list of circumstances that can
cause a child to be recognized as orphan. The main of the aforesaid circumstances
are listed in Article 121 of the Family Code, for example, the death of parents;

204 S. Vinkov

termination of parental right; restriction of parental rights; parents’ incompetence;

parents are gravely ill; parents are absent for a long time; parents fail to raise chil-
dren or to protect their rights and interests; parents refuse to take their children out
of childcare, health care institutions, social security institutions, and other similar
establishments. Article 1 of the Federal Law “On additional guarantees on social
protection of orphans and children deprived of parental care” recognizes these
circumstances as those where parents are deemed: missing, in hospitals, serving
sentences in penitentiaries, imprisoned, in custody as suspects or accused. The Act
does not contain an exhaustive list of grounds to ascribe to a child the status of an
orphan. In the English language, this wide range of circumstances may include the
category of “neglected children” and “vulnerable children” – children who have
been neglected, abandoned, or who are considered children at risk.
This list of circumstances with a high degree of formality is divided into two
groups: (1) depending on the will of the parent(s) (subjective factors) and (2) inde-
pendent of the will of the parents (objective factors). It should be borne in mind that
the termination of parental rights may be either due to antisocial lifestyle (mostly
subjective factors), or objective factors – when parents are declared incompetent
due to certain diseases.
The aforesaid makes it clear that the legislation recognizes two categories of
orphans. One category includes individuals under 18 years whose parent(s) died, the
other category encompasses children deprived of parental care due to social reasons.
Since both categories have the same amount of social privileges, they are not
distinguished for the purpose of this study.
The sociological literature provides another classification: ‘full orphan’ – when
one or both parent are dead, social orphans – when parents are alive.
Quite interesting is the classification of orphanhood by the World Bank: maternal
orphans – children under 18 whose mother and possibly father died; paternal
orphans – children under 18 whose father and possibly mother died; double
orphans – children under 18 whose mother and father died (World Bank 2006).
Double orphans are very close to the Russian concept of “orphaned children” –
orphans whose both biological parents died.
Russian law stipulates that an orphan before turning 23 is moved to the category
of orphaned children and children deprived of parental care. Besides, orphans may
be individuals who lost one or both parents while studying in any type of state and
municipal institutions of primary, secondary, and higher education [12, cl.3 art.6].
These children start receiving full state support,1 which is for them a vital source of
living. For example, the incident could occur due to the death of a parent in single-
parent low-income families with no support from relatives.

Full state support means providing orphans and children deprived of parental care during their
studying in a state or municipal establishment, in a foster or guardian family, with free food, free
set of clothing and shoes, free medical treatment or compensation for treatment; orphans studying
in secondary and higher educational establishments at the age of 18–23 have a right to receive full
state support and additional social guarantees until they graduate from the full-time professional
educational establishments. (Article 1, the Federal Law “On additional guarantees on social pro-
tection of orphans and children, deprived of parental care.”)

13 Housing for Orphans Against the Backdrop of Social Disparity in Russia 205

Following the logic of legal documents, in order to conceptualize the term

“orphan” and to further use it in this study, the following definition of an orphan
applies: an individual deprived of parental care (parent) due to various life circum-
stances during childhood or adolescence, and having in view of such circumstances
special rights to social security in line with the national law. However, as it has been
noted before, in this study children whose parents died and so-called social orphans
(whose parents are alive) are often referred to collectively as “orphans.”
The Federal Law “On additional guarantees on social protection of orphans and
children deprived of parental care” sets forth the unique rights of orphans in the
educational sphere (free preparation courses and admission to institutions of voca-
tional education, special terms of receiving grants during the period of professional
education, permission to live in the dormitory of the educational establishment free
of charge), health care (free medical treatment and surgery in the state and municipal
health care establishments), professional life (special unemployment allowances,
priority for orphans/care leavers in the choice of an employee), in court while
protecting their rights and interests, and in housing.
As a rule, orphans are provided with state support until they turn 23. The status
of an orphan is beneficial in its own right, and if an orphan is disabled, the spectrum
of his/her benefits and social privileges becomes wider. The aforesaid concept can
be defined as “multibeneficiarity” which is a status combining various beneficial
statuses that exist in many state welfare systems.
The notion “multibeneficiarity” (from “beneficiary” – one who receives profit,
Lat. multus – numerous) may be better understood if explained in the following
way: it is a social and legal status of an individual which provides a combination of
rights for one person to obtain privileges pertained to different categories of people.
Thus if an orphan is entitled to claim his housing rights as a disabled person, or an
unemployed, or a poor, etc., his status may be defined as multibeneficial.
Even a brief look at the data in Table 13.1 makes evident that the number of
orphans has a constant positive trend in relation to the number of children in the
country. The share of orphans in child population reaches 2.7 % in 2007 and hardly
changes in 2008. According to the Children’s commissioner of Russia, in spite of a
fall by 4.1 %, the number of children deprived of parental care remains high during
the last 3 years (2009–2011).
The research by the Independent Institute of Social Policy (Korchagina et al.
2010) demonstrates that there is no direct cause-and-effect link between economic
growth and the scale of orphanhood, thus the issues related to the ever-increasing
number of orphans are to be solved by improving social policy in accord with the
market economy in order to create a favorable environment for raising these children.
The modern procedures of orphan protection comprise several types of care:
(1) family care (adoption, guardianship, or foster care) and (2) any type of institutions
for orphans and children deprived of parental care (educational institutions, including
family-like children’s homes, medical institutions, social security establishments,
and other similar institutions). Thus the existing forms are divided into family
and nonfamily (residential care) types. Other types include public care that often
integrates the features of family and nonfamily forms defined by the Family Law


Table 13.1 The number of orphans for a year ended, 1999–2009, thousand people
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Children n/a 34,579 33,487 32,298 31,180 30,150 29,054 27,939 27,014 26,055 n/a
aged 017
Total number n/a 667.6 690.7 707.7 720.9 726.9 726.6 726.6 727.1 714 n/a
of orphans
Annual number 113.913 134.611 140.097 140.013 142.103 145.385 146.405 140.052 136.790 126.095 114.715
of orphans
recorded in the
current year
In childcare 34.937 36.215 36.112 37.240 39.319 41.155 40.824 35.120 29.797 29.006 28.176

Adopted by 67.645 74.258 77.842 75.879 76.334 76.750 78.200 77.370 82.365 74.272 66.269
Adopted by 6.265 6.292 5.777 6.926 7.860 9.419 6.904 6.689 4.536 4.125 3.815
foreign citizens
Calculated on the basis of data provided by: Statistical Yearbook of Russia (2009), Сhildren in Russia (2009), Korchagina et al. (2010), http://www.gks.ru/bgd/
regl/b10_13/IssWWW.exe/Stg/d2/07-11.htm. http://www.gks.ru/bgd/regl/b03_13/IssWWW.exe/Stg/d010/i011820r.htm
S. Vinkov
13 Housing for Orphans Against the Backdrop of Social Disparity in Russia 207

[SOS Kinderdorf (a type of a settlement with children’s homes where a small number
of children live and are raised in the environment similar to a family environment],
monastery shelters etc.) (Albitsky et al. 2007). All forms of orphan care, except for
adoption, imply full state support, that is, a child is mainly provided for by the state.
Adoption is an exception due to its legal consequences: “adopted children and their
offspring in relation to the adoptive parents and their relatives and adoptive parents
and their relatives in relation to the adopted children and their offspring are equal to
the biological relatives in moral and economic rights and obligations” under Article
137 of the Family Code of Russia.
It is worth pointing out that Article 124 of the Family Code prioritizes adoption
(adoption) over other orphan care types. In other words, when a child is recognized
as an orphan, the responsible officials and family authorities (child protection ser-
vices) start looking for adoptive parents for the child before they consider other
options. In addition, the article states that if it is deemed impossible to put these
children into a family of Russian citizens residing in the territory of the Russian
Federation, or into the care of the relatives regardless of their nationality or place of
residence, children are allowed to be adopted by foreign citizens. This article of the
Family Code enables orphaned children to exercise their right to a family, even if
the result is international adoption. Meanwhile, new developments in the social
policy of the Russian Federation severely discriminate potential adopters from
abroad. The debates in the government resulted in an official ban on the US adop-
tion of Russian children passed on January 1, 2013, by Russian lawmakers. In addi-
tion to the discriminatory rules for potential adopters, this ban significantly restricts
the rights of orphans to a family. The ban is certainly noteworthy to analyze in a
separate research, but for the purposes of this particular study Table 13.1 was com-
plied to reflect the statistics of international adoption. The table shows that the
annual share of international adoption (share in the total number of orphans
per annum) is not stable, the maximum level of 12.27 % was observed in 2004,
while in the pre-crisis 2007 it went down to 5.51 %. From 1999 to 2009, the share
of foreign adoptions became almost 1.5 times less. Against the backdrop of the
overall dynamics of foreign adoption rate the policy of national adoption is exacer-
bated, but it is still more productive than international adoption with institutional
care being the most common form of care, as it was in the Soviet era.
The residential care system has its flaws; consequently, negative public opinion
nowadays provokes the public policy to focus on expanding family-based types of
orphan care (Schmidt 2012). The policy is aimed at so-called deinstitutionalization –
reducing the number of institutions for orphans. Psychological studies confirm that
in the process of a child’s socialization in an institution, their psychological func-
tions as individuals are violated (Shipitcina 2005):
1. The majority of orphanage residents have mental retardation with different
degrees of severity in comparison to the age norm, in other words, psychic depri-
vation is obvious.
2. At an early age apathy is observed in children, which is manifested in emotional
restraint, narrow mindset, the fact that children are not always familiar with the
phenomena of the world, objects of everyday life.

208 S. Vinkov

3. Many children display a significant deficiency in the ability to manage their

behavior, observe rules without adult supervision, which leads to a lack of inde-
pendence and self-discipline.
4. Younger children in residential care have difficulties to communicate. They are
unable to establish equal relationships with a child they do not know or to ade-
quately assess their qualities that are necessary for maintaining companionship.
5. Life experience of orphanage residents is limited. As a result, the main source of
information is the educator (member of the staff). Superhero movies with
extraordinary situations do not give children an adequate idea of challenges
which they may face in real life.
Nevertheless, the total number of institutions for orphans and children deprived
of parental care amounted to 1,344 as of the end of 2011. They all have a different
legal form, and their number varies widely from region to region (see Table 13.2).
This type of institutions does not belong to the category of social services (GOST
2006), while, in fact, these institutions provide a wide range of social services, that
is, different forms of social assistance aimed at helping the recipient to live through
a difficult situation, which is exactly the form of help orphans need in their situation.
The reason for this is probably the traditional state practice applied for years, where
orphans were supported by the state by means of several federal organizations,
which arbitrarily can be divided into educational establishments for parentless
children (children’s homes, school type orphanages, boarding schools) and social
institutions where education is little or hardly provided (orphanages for mentally
and physically handicapped children, social rehabilitation centers for parentless
children, social asylums). Currently, the Ministry of Social Development and
Health care and the Ministry of Education and Science have the leading position
in this sphere.
The purpose of educational establishments for orphans is creating conducive
atmosphere close to the domestic (family) one, ensuring social security, medical,
psychological and pedagogical rehabilitation and social adaptation (Ministry of
Education 2002). However the work of such institutions is still poorly investigated,
and the problem of implementing housing rights of orphans and the problem of
housing deprivation are still very much present. Thus the results of the investigation
by Russian Education Supervision Department, on September 1, 2010, showed that
40,797 parentless children aged 16–18 and 73,248 orphans and parentless children
over 18 need housing.2
Experts in the sphere of housing rights for orphans estimate that the country
average waiting period in Russia for orphanage-leavers (children without parental
care) to receive housing is 4.3 years; in regions this period varies considerably –
from 0 to 15 years (Semya 2006). Many of the orphans have to, so to say, “get in
line.” The line is a valuable component of the distribution of material goods in a
society, and it forms when in the “distribution point” there are several contenders for
the consumption of goods or services, which they receive while the other



Table 13.2 Number institutions for orphans and children out of parental care, by regions, 2011 (www.fedstat.ru)
Number of Number of Number of
orphan care orphan care orphan care
Region institutions Region institutions Region institutions
Republic of Ingushetia 0 Samara region 8 Volgograd region 17
Republic of Karachayevo-Cherkessia 1 Smolensk region 8 Republic of Komi 17
Nenets autonomous district 1 Astrakhan region 9 Kirov region 19
Republic of Altai 1 Kamchatka territory 9 Saratov region 20
Republic of Chechnya 1 Kostroma region 9 Republic of Udmurtia 20
Chukotka autonomous district 1 Sakhalin region 9 Yaroslavl region 22
Republic of Kabadino-Balkaria 2 Kursk region 10 Moscow city 24
Republic of Adygeya 2 Orel region 10 Krasnodar territory 25
Republic of Kalmykia 2 Pskov region 10 Novosibirsk region 26
Republic of Mariy El 3 Kaliningrad region 11 Arkhangelsk region 28
Magadan region 4 Kurgan region 11 Vologda region 28

Penza region 4 Lipetsk region 11 St. Petersburg city 28
Republic of Tuva 4 Republic of Sakha 11 Republic of Bashkortostan 28
Jewish autonomous district 5 Tomsk region 11 Omsk region 29
Republic of Dagestan 5 Voronezh region 12 Primorsky territory 32
Republic of Mordovia 5 Murmansk region 12 Stavropol territory 32
Housing for Orphans Against the Backdrop of Social Disparity in Russia

Republic of North Ossetia-Alania 5 Orenburg region 12 Krasnoyarsk territory 35

Republic of Khakassia 5 Perm territory 12 Rostov region 38
Republic of Chuvashia 5 Tambov region 12 Altai territory 39
Novgorod region 6 Republic of Karelia 14 Trans-Baikal territory 39
Belgorod region 7 Republic of Tatarstan 14 Irkutsk region 39

Table 13.2 (continued)

Number of Number of Number of

orphan care orphan care orphan care
Region institutions Region institutions Region institutions
Bryansk region 7 Ulyanovsk region 14 Khabarovsk 40
Kaluga region 7 Vladimir region 15 Nizhny Novgorod region 42
Ryazan region 7 Tver region 15 Moscow region 44
Tyumen region 7 Ivanovo region 16 Chelyabinsk region 55
Khanty-Mansiysky autonomous district 7 Leningrad region 16 Kemerovo region 59
Yamalo-Nenetsky autonomous district 7 Tula region 16 Sverdlovsk region 66
Republic of Buryatia 8 Amur region 17 Total 1,344
Data on institutions for orphans and children out of parental care, Forma No. D-13, Federal State Statistic Observation, 2011. Regions’ translation provided by
Coalition for U.S.-Russia Trade (www.usrbc.org)

S. Vinkov
13 Housing for Orphans Against the Backdrop of Social Disparity in Russia 211

contenders have to wait for their turn (Nikolaev 2005). The line as an integral part
of the modern housing policy, based on the model of “razdatok”,3 will obviously
endure for a long time, because today most processes taking place in the housing
sector are still governed by the state apparatus instead of market mechanisms
(Bessonova 2011; Bessonova et al. 1996).
On January 1, 2013, amendments to the Federal Law “On additional guarantees
on social protection of orphans and children deprived of parental care” – N159-FZ
(1996) came into force, which fundamentally alters the process of providing
housing for orphans and solves a specific range of problems associated with the
implementation of orphans’ housing rights. Before the law was amended, care
leavers had been obliged to go back to their parents, who were exhibiting deviant
behavior and antisocial lifestyle, now; however, this situation is not acceptable.
The new legislation has a record of certain regulations being first used in Moscow
and its region where over a period of time a young orphan received a dwelling place
but did not have the right of ownership. This regulation has been introduced to pro-
tect orphans from fraud and people trying to illegally deprive these young orphans
of their home. Comfortable housing will be allocated under a specialized lease
contract which sets forth that the property cannot be privatized until the contract
terminates. Such contract is usually made for 5 years.
Control over the use and disposal of the property received by orphans is executed
by local authorities regardless of whether the property is in ownership or in posses-
sion. Thus, lawmakers seek to protect orphans from “black realtors.”
At the same time, the existing law does not solve the problems that arise because
the relevant documents are not executed by the officials of residential care facilities
in time (Vasyutin 2009), orphans are not familiar with their rights and mechanisms
for exercising them (Karlinsky 2004). Besides, many orphans become passive,
waiting for someone else (e.g., nongovernmental human rights organizations) to
solve their problems (Nazarova 2001).
Another negative factor is the nature of Russia’s social policy, which is charac-
terized by the fact that social services and the implementation of fundamental rights
and freedoms of citizens are based on the registration of citizens (official residence
registration), confirmed by affixing the stamp on page 5–12 of the passport.
In Russia there are two types of registration: residence registration and temporary
registration. Thus, no residence registration (no relevant stamp in the passport)
makes medical care, unemployment benefits, employment services, pensions and

“In conditions of low fertility of cultivated lands, emergence of a razdatok-economy system
(Russ ‘razdavat,’ to give) helped the ancient Russian state to survive. Over its centuries-old history,
razdatok-economy provided for the restoration of the land and replenishment of other natural
resources, these being the sources of public wealth.
Economic institutions unique only to the razdatok-economy system have been established in
the course of its evolution. They secured the basic relationship between the people involved in the
process of developing the new lands and the management of the economy. A service-labor system
was the basis for the razdatok-economy. It defined the rules of economic activity for all the mem-
bers of the society who were involved in using the public resources” (Bessonova et al. 1996).

212 S. Vinkov

access to local labor markets unavailable, and opportunity to receive vocational

training anywhere but the place of official residence impossible for orphans.
Thus, the analysis of the current law and social security of orphans shows con-
stant improvement in the area, but still does not give any solution to the inconsis-
tency of legal rules or opportunity to develop a holistic approach to solving the
housing problems of orphans and get rid of the socialistic rudiments in the market
economy of the country.

13.4 Conclusion

Freedom and equality in human dignity and rights are recognized by the modern
democratic society as belonging to a person from birth, consequently, their imple-
mentation begins from childhood as a continuous process transitioning from
childhood to adolescence, from adolescence to adulthood, and, finally, to maturity.
The process also applies to the implementation of housing rights of orphans.
Analyzing housing for orphans against the backdrop of social disparity in Russia
helps to reveal unique features of Russian social policy, because housing performs
three core functions in market relations (Khohlov 2006).
The first function is providing an opportunity to use housing as a material good
that meets the vital needs of a person. The second function is serving as a commod-
ity where housing is an object of sale or exchange but is differentiated from other
types of commodities. The key characteristics of housing as a commodity are listed
1. Real property. In this regard, the value of housing is greatly influenced by its
2. Capital-intensive commodity. The high cost of housing calls for extensive mate-
rial, labor, land and financial resources for production and operation of
3. Durable commodity. In view of the long operation life of buildings, existing
homes prevail over new homes. Therefore, great consideration should be given
to the process of operating and renovating the residential stock that already
4. Nonhomogeneous commodity. Each residential building is unique and has its
individual properties. At the same time, if buildings are categorized, it facilitates
the analysis of different housing market segments, for example, single- and
multi-family housing, housing with improved layout, elite housing.
5. Housing is a commodity at any stage of its operation cycle or exchange.
The third function of housing is providing commercial use, that is, through leas-
ing. This function combines the functions of housing as a material good and a
commodity. In fact, the owner leases out the property and receives lease payments
in order to be compensated for partial depreciation of housing as a commodity, as
well as for the failure to receive housing services. On the other hand, the customer

13 Housing for Orphans Against the Backdrop of Social Disparity in Russia 213

(lessee) pays to the owner to be able to use housing as an economic benefit, that is,
to have a right for housing services.
The availability of housing is one of the most important prerequisites for human
capacity development, factors of normal functioning in life, personal development,
and, consequently, satisfying the needs to learn, to work, etc. For Russian orphans
and young people fully supported by the state using housing as a material good or a
commodity is impeded by the transformation of Russian economy as well as by the
nature of socialization of orphans.
Inna Nazarova (2000) was the first to use the concept of “housing socialization”
in Russian academic literature while studying the practice of solving housing prob-
lems of orphans (homelessness, poor housing, etc.) which limit social mobility and
impede adaptation and rehabilitation, negatively affect the integration of orphans
into the society. The concept is partly justified, as housing is a factor influencing the
socialization of young generation, and both enabling social processes and serving as
a material basis of the primary element of the society – the family (Bartlett 1997).
Rowlands and Gurney (2000) define housing socialization as the process of a
person becoming familiar with relationships, norms, and values associated with
housing from early childhood.
Noteworthy is also the fact that now it is becoming possible to consider housing
socialization as an integral part of socialization in general, where social experience
in acquiring housing is formed and an individual’s role set in respect of housing is
determined (e.g., homeless, tenant, owner, landlord, etc.). Several specific functions
of housing socialization may already be singled out:
(a) Legal and regulatory function which is creating and regulating life of an indi-
vidual regarding the use, ownership, and disposition of housing facilities;
(b) Moral function which is forming a system of values and assigning specific
meaning to material objects of the surroundings (e.g., my house is my castle,
the temple is the house of God);
(c) Compensatory function which is reconstructing relevant physical, mental and
intellectual properties, and qualities of a person by giving the person indepen-
dence in a certain part of the housing space;
(d) Creative function which is transforming housing space by the inhabitant in
accordance with their taste or ideologies (home design, landscape design).
The specificity of housing socialization of orphans makes it evident that the most
widespread socialization institutions for orphans in Russia are still those which
were historically formed and partly inherited from the Soviet society collective
types of care (children’s homes, shared apartments, dormitories, etc.), where indi-
vidual responsibility of a person as an owner of a home and a participant of market
relations is hard to develop.
Generally, the research related to housing provision for orphans in the context of
various inequalities and disparities of Russian society remains understudied.
Numerous investigations of such problems as child abandonment, Russian housing
policy and analysis of social disparity in Russia are published in the Russian
language, and they are often insufficient to lead to more in-depth findings and

214 S. Vinkov

interpretations of the data. M. Lokshin (2008) is right to comment that Russian

studies in the area of poverty and relevant problems are not integrated and require
an international academic dialogue “between Russian and international scientists,
and exposing Russian researchers to the international norms and accepted practices
in international academic society.”
Given the polarization of social disparity in Russia today, the modern state hous-
ing policy cannot satisfy the demand for housing among socially vulnerable groups
of the population, it limits human potential of orphans and prevents their successful
social integration and adaptation in the society.

Acknowledgements This work was supported by the Basic Research Program of the National
Research University Higher School of Economics, project “Mathematical models, algorithms,
and software tools for knowledge discovery in big data given by relational and textual collec-
tions,” 2013.


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Chapter 14
The Role of Agricultural Public Extension
in a Private-Led Technological Innovation

Rowena dela Torre Baconguis, Linda M. Peñalba, Dulce D. Elazegui,

and Elvira E. Dumayas

14.1 Introduction

Extension is associated with diffusion of innovations which has significantly led to

the transformation of farming practices. Originally a concern mainly of the national
government, the provision of agricultural extension services underwent major trans-
formations because of changes in the economic structure, entry of the private sector,
shifts in philosophical governance principles, and advances in information commu-
nication technology.
Agricultural extension, as a major policy instrument of agriculture and commu-
nity development, is tasked with facilitating knowledge management to accelerate
agricultural growth and community development by managing appropriate innova-
tion systems in a community. Extension systems have been involved in the transfer
and diffusion of technologies to farming communities. Agricultural technology
plays an important role in the development of farming communities. The Green
Revolution, characterized by the introduction of new varieties, support for access to
fertilizer and pesticides, and provision of irrigation contributed significantly to
increases in crop production and reduction in rural poverty (Hazell 2009).
National agricultural extension systems were set up to provide scientific tech-
nologies and knowledge to agricultural producers which give them a competitive

R. dela Torre Baconguis (*) • L.M. Peñalba

Institute for Governance and Rural Development,
College of Public Affairs and Development, University of the Philippines Los Baños,
Los Baños, Laguna, Philippines
e-mail: rowena.baconguis@gmail.com; lmpenalba@gmail.com
D.D. Elazegui • E.E. Dumayas
Center for Strategic Planning and Policy Studies,
College of Public Affairs and Development, University of the Philippines Los Baños,
Los Baños, Laguna, Philippines

© Springer India 2015 217

A. Gurtoo, C. Williams (eds.), Developing Country Perspectives on Public
Service Delivery, DOI 10.1007/978-81-322-2160-9_14

218 R. dela Torre Baconguis et al.

edge in confronting problems of access to agricultural information and technologies

to make informed decisions. Normally associated with donor agencies, extension
systems were established as centrally funded and top-down in structure. As a result,
extension operations have been one of the largest development efforts of donor
institutions. Determining the impact of agricultural extension systems, however, has
been problematic given the lack of time series data, which are difficult to obtain at
the national level. Anderson and Feder (2004) found a 58 % median rate of return
on investment in extension and 49 % in research. However, the high variability of
rates of returns on investment documented by Anderson and Feder (2004) and the
perceived lack of success of public extension systems has led to a revamp of exten-
sion system to include privatization, devolution, or decentralization.
The Philippine extension system operates on a decentralized setup that puts the
extension function at the provincial and municipal level at the same time that it
recognizes the importance of the role of the private sector extension, civil societies,
and the state colleges and universities. Specifically, the Local Government Code
(LGC) of 1991 lists duties and responsibilities of the provincial agricultural offices
pertaining to applied research; prevention and control of plant and animal pests;
maintenance of dairy farms, livestock markets, breeding stations, and animal insem-
ination centers; and assistance to collective organizations. For the municipal agri-
cultural offices, activities largely included the distribution of private goods such as
dispersal of livestock and poultry, fingerlings, seedling material, and seeds. Subject
matter specialists and management of laboratories (e.g., soil analysis) remained
with the Department of Agriculture, whose personnel provide technical assistance
to the local government units when needed.
Agricultural technology plays an important role in the development of farming
communities. Tripp (2001) emphasizes that plant genetic research, particularly the
development of new varieties using techniques of biotechnology, will be a mainstay
of the agricultural technology. The Philippines recognizes the role of agricultural
biotechnology in increasing crop productivity and was tagged “Biotechnology
Mega Country” in 2005, 3 years after the first commercial release of Bt corn (MON
810) in 2002. As of 2011, GE corn varieties include insect-resistant Bt corn,
herbicide-tolerant (HT) corn, and stacked trait (ST) corn which is a combination of
the insect-resistant and herbicide-tolerant traits.
As early as 1990, the Philippines had institutionalized mechanisms for bio-
safety. The National Committee on Biosafety of the Philippines (NCBP), formu-
lated the National Biosafety Framework (NBF) which is in adherence to the
Cartagena Protocol on Biosafety. The potential of biotechnology to help poor farm-
ers is dependent on factors ranging from clear understanding of the technology,
affordability and accessibility of varieties, and access to credit and markets. As
biotechnology innovations continue to expand its markets, this study seeks to
investigate biotechnology adoption patterns and characteristics of farmer users to
determine the role of public extension in private-led innovations such as

14 The Role of Agricultural Public Extension in a Private-Led Technological Innovation 219

14.2 Methodology

The study used both, primary and secondary data, collected through a survey of
corn farmers, and key informant interviews of representatives from private compa-
nies and distributors, and extension workers from local government units. Primary
data used in the study covered the 2010 dry and wet cropping seasons. Four types of
corn growers were interviewed from among those planting Bt corn, herbicide-toler-
ant (HT) variety, stacked trait (ST) variety, and conventional hybrid or non-GE corn
varieties. The survey respondents were randomly drawn from the list of corn farm-
ers obtained from the Office of the Municipal Agriculturist in the corn-growing
municipalities based on the records of the Department of Agriculture (DA). Six
major corn-producing provinces, Cagayan, Isabela, Quirino, Bukidnon, North
Cotabato, and Tarlac, were covered by the study. From these provinces, the top two
corn-producing municipalities and the top three corn-producing barangays in these
municipalities were selected as study sites. A total of 1,206 respondents, catego-
rized into three types of GE corn growers and hybrid yellow corn growers (non-
GE), were interviewed using structured questionnaires (Table 14.1). Qualitative and
quantitative methods of data analysis were employed.

14.3 Results and Discussion

Corn is a major agricultural commodity in the Philippines which accounts for

13.13 % of the total value of crop production and 6.27 % of the value of total agri-
cultural production at constant prices (Department of Agriculture). Corn is a major

Table 14.1 Distribution of respondents by study site, 2010

Province Municipality GE Non-GE Total
Cagayan Baggao 138 46 184
Alcala 36 20 56
Isabela Cauayan City 255 24 279
Ilagan 251 13 264
Quirino Madela 114 10 124
Nagtipunan 53 38 91
Bukidnon Cabanglasan 49 7 56
Malaybalay 28 10 38
North Cotabato Alamada 27 13 40
Carmen 36 10 46
Tarlac Concepcion 12 0 12
San Manuel 13 1 14
Total 1,014 192 1,206

220 R. dela Torre Baconguis et al.

staple food for some Filipinos, a major supplement in times of rice scarcity, and a
major source of livelihood and ingredient for feeds. There are more or less a million
corn farmers, most of whom are resource poor (Tanchuling 2007).
The demand for corn as food, feed, and for other industrial uses has been increas-
ing annually. Based on estimates, corn self-sufficiency was at 99 % in 2005. But
with yellow corn alone, the sufficiency was only at 88 % and the demand from feed
millers is increasing (Tanchuling 2007). The National Corn Program specifies that
local government units and other stakeholders develop and manage their own corn
production plans and programs suitable to their respective localities (http://www.
da.gov.ph). To increase supply, either there should be expansion in hectarage planted
or increase in yield through better farm management practices or use of improved
varieties. However, area planted to corn has not changed over the years as shown in
Fig. 14.1.
The categories for national statistical reporting of corn area harvested does not
differentiate GE corn from other hybrid corn varieties although data on area planted
can be gathered from Bureau of Plant Industry (BPI). In 2009, it is estimated that a
total of 327,226 ha accounting for 20 % of total corn area, was planted to GE corn.
Of these, 14.67 % were planted to Bt, 14.30 % were planted to HT, and 71.02 %
were planted to ST corn varieties (BPI).

14.3.1 Corn Seed Industry

Corn breeding was dominated by government research institutes. Breeding for

open-pollinated varieties (OPVs) started with the establishment of the UPLB CA in
1908 and breeding for hybrid seeds started only in the 1950s (Logroño et al. 1996).
The government invested in research institutions with the establishment of the
Institute of Plant Breeding and its expansion of regional breeding stations in various

Area of Corn Harvested, by Corn Type, Philippines, 1994 to 2011
Thousand Hectares






White Corn Yellow Corn Corn

Fig. 14.1 Area harvested to corn, 1994–2011 (Peñalba et al. 2013)

14 The Role of Agricultural Public Extension in a Private-Led Technological Innovation 221

areas of the country. The entry of the private sector to corn breeding in the country
started with Pioneer in 1975, shortly followed by Cargill in 1982. Area planted to
hybrid corn has since increased from a mere 38 ha in 1992 (Logroño et al. 1996) to
its current level of almost 1,500 ha.
Currently, Monsanto, Pioneer, and Syngenta are the main sources of GE seeds in
the study areas. Packaging comes in 9 kg bags good for half hectare in contrast to
non-GE corn which is packaged in 18 kg good for 1 ha. The average price of GE
corn ranged from PhP3,400 to 4,200/9 kgbag, which was more expensive than non-
GE corn varieties. Despite this, dealers report that GE corn is becoming more popu-
lar. The comparison of prices per kg of corn is shown in Fig. 14.2.
The promotion and distribution of GE corn varieties is a private-led sector, at
times in coordination with local extension workers who help organize the technical
briefings. Distributors and dealers are supported by companies through their sales,
promotional, and technical staff. The sales person books sales and collects payment
from distributors, the promotional staff handles farmer meetings, does merchandiz-
ing work with dealers, handles promotional incentives, and organizes farmer cara-
vans. The technical staff of the private company supports the sales and promotional
staff by serving as technical consultant and speaker during major events like product
launchings and seminars. The company provides direct support to distributors and
dealers by giving discounts and incentives depending on the volume of sales. The
company likewise spends for all promotional reading materials and
Figure 14.3 shows the distribution channel and the support given by the company
to distributors and dealers. The distribution channel for corn seed is well established
as dealers are available in major towns of the country. Dealers sell corn seeds as well
as fertilizers, pesticides, feeds and animal health products, farm tools, and imple-
ments depending on the scale of operations. Dealers can be found near major market
centers and serve as the direct link to the farmers either as source of products or as
creditor. There are also cooperatives who operate as dealers of selected products.



Stacked trait
400.00 (ST)
300.00 tolerant (HT)
Bt corn

100.00 Conventional
hybrid yellow
Isabela Cagayan Quirino N. Bukidnon Tarlac

Fig. 14.2 Average price (PhP) per kg of corn seed, by variety and study area (Peñalba et al. 2013)

222 R. dela Torre Baconguis et al.

Fig. 14.3 Distribution channels and company support system for corn seed

Peos per kilogram

14 Isabela
12 Tarlac


Fig. 14.4 Monthly farmgate prices of corngrain [maize] yellow, matured, Philippines and Study
Sites, January 2005 to December 2012 (Peñalba et al. 2013)

Dealers get their products from distributors who are supplied by companies.
Distributors may also be creditors to dealers and maintain a set of salesmen. Some
dealers also have outlets, so they also directly sell to farmers.

14.3.2 Average Price of Corncobs

Between 2005 and 2012, the farmgate prices of yellow corn (in cobs) have exhibited
a fluctuating trend in the study areas, following the national trend. Their prices are
the lowest in October and highest in January (Fig. 14.4).

14 The Role of Agricultural Public Extension in a Private-Led Technological Innovation 223

GE corn is not segregated from conventional hybrid in the market indicating no

price differences between GE and non-GE corn. Traders buy corn at a price ranging
from PhP9 to PhP14/kg depending on the quality of corncobs. Price for corn is the
lowest when it is not dried.

14.3.3 Post-commercialization Monitoring of GE Corn

Insect resistance management (IRM) is periodically conducted for Bt corn by BPI

in eight selected sites in Isabela, Pangasinan, Nueva Ecija, Bukidnon, and South
Cotabato in collaboration with the Regional Crop Protection Center (RCPC) with
financial assistance from the seed company. Seed companies conduct baseline sus-
ceptibility and monitoring to detect the development of resistance in the product.
Herbicide Resistance Management (HRM) (for glyphosate tolerance) is conducted
for HT corn in five different designated sites in the country. Monitoring and report-
ing of these data are highly dependent on the private sector as the government does
not have the funds for this task.

14.3.4 Socio-demographic Characteristics of Corn Farmers

The GE corn farmers are almost homogeneous with respect to demographic charac-
teristics. More than 90 % are male, aged around 50 years, have completed some
secondary years of education, about 90 % are married, and belong to a family size
of around five (Table 14.2).
Among the corn farmers, the age difference is less than 5 years with the Bt corn
farmers being the oldest with a mean age of 50 years while the youngest are the HT
corn farmers with a mean age of 45.7 years. On average, a corn farmer is 11 years
younger than the average Filipino farmer who is 57 years old (Cariño 2013).

Table 14.2 Selected socio-demographic characteristics of corn farmers, by corn variety, 2010
Bt corn HT corn ST corn
Characteristics farmer farmer farmer All GE Non-GE
Percent male 92.81 96.61 95.10 94.84 94.27
Age (mean years) 49.99 45.68 47.96 47.88 45.86
Education (mean years) 7.91 9.19 8.02 8.37 8.40
Percent married 87.77 89.83 90.20 89.27 91.15
Age of spouse (mean years) 46.11 43.58 44.66 44.78 42.91
Education of spouse 8.71 9.45 8.67 8.94 9.26
(mean years)
Percent nuclear 60.32 86.21 76.12 74.22 75.96
Household size 5.21 4.97 5.04 5.07 4.86
Dependency ratio (%) 102 100 112 109 122

224 R. dela Torre Baconguis et al.

The difference in education among the respondents is even less at 1.2 years of
formal education with the HT corn farmers having the highest average at 9.19 years
compared to Bt corn farmers averaging 7.91 years. The HT corn farmers have the
highest percentage (27 %) of those who have either reached or completed tertiary
education. On average, a corn farmer belongs to a family with five members. This is
slightly higher than the Philippine average of 4.8 household members in 2007. The
ST corn farmers reported the largest household size of 14 and the lowest percentage
of nuclear type of family structure. HT corn farmer, by contrast, has the highest
percentage of nuclear type of family structure. Fifteen of the total corn farmers
belong to a single household.
Among the GE farmers, the burden of supporting the young (0–14 years old) and
old (65+) is heaviest among the ST farmers with a dependency ratio of 112. This
means that a working member of the household is supporting more than one depen-
dent. On the other hand, a working member of the Bt corn and HT farmers is sup-
porting one dependent given the dependency ratios of 102 and 100, respectively.

14.4 Farmer Innovation Characteristics, Product

Knowledge, and Sources of Knowledge

Farmer innovation characteristics. In adoption studies, farmers were classified as

innovators, early adopters, majority, late majority, and laggards depending on earliness
or lateness of adoption. Table 14.3 provides a picture of how farmers view themselves
in terms of adoption behavior as affected by their perceived attitude and capacity to
invest in a technology. Farmers were asked to rate themselves on a 1–5 scale with 1 as
strongly agree, 3 as undecided and 5 as strongly disagree in terms of earliness of adop-
tion, eagerness to try out technologies, investment behavior, and efficiency of farm.
Comparing the GE and the non-GE corn variety users, the latter group are found
to have higher mean rating in almost all areas of comparison except in the capacity

Table 14.3 Farmer innovation characteristics

Characteristics GE Bt variety HT variety ST variety Non-GE Total
First to adopt corn variety
N 1014 139 59 816 192 1206
Mean 2.7 2.8 2.8 2.7 3.2 2.8
Eagerness to try new technologies
N 1014 139 59 816 192 1206
Mean 2.5 2.6 2.4 2.5 2.6 2.5
Capacity to invest in untried technologies
N 1014 139 59 816 192 1206
Mean 2.9 3.1 2.7 2.9 2.9 2.9
Efficiency of farms in relation to others
N 1014 139 59 816 192 1206
Mean 2.6 2.6 2.5 2.7 2.8 2.7

14 The Role of Agricultural Public Extension in a Private-Led Technological Innovation 225

to invest where the two groups have the same rating (Table 14.3). The two groups
significantly differ in the perception on whether they are the first to adopt a technol-
ogy and on efficiency of farm production. Based on the perception of the respon-
dents, both groups could not be classified as innovators or early adopters but nearer
toward the majority group.

14.4.1 Communication Patterns

Communication pattern is one of the areas studied in diffusion adoption research.

Survey results show that co-farmers are identified as the first source of information
by all respondents, for all the varieties under study. Agricultural technicians and
private companies also figure prominently. The rest are cooperatives, barangay offi-
cials, relatives, and suppliers.
Comparing GE and non-GE corn variety users, the ranking in the sources of
information does not differ (Table 3.4). Sources of information for both groups are
significantly their co-farmers, with the former having more relationship with the
private sector than the non-GE users. Most farmers adopt a new variety as a result
of observing the practices of other farmers based on the adage that “to see is to
believe”. While access to extension such as home visits are widely documented to
influence the adoption and sustained use of adopted technology (Tura et al. 2010),
this approach alone will not lead to adoption as farmers appear to assess yield per-
formance based on actual farm performance. This has its pros and cons in terms of
promoting adoption. The positive side of it is that adoption tends to be faster once
the performance of a crop is proven beneficial by a co-farmer. The negative side, as
far as adoption is concerned, refers to the challenge of convincing farmers per
barangay to adopt a particular technology and provide all the necessary support to
ensure that diffusion will follow. It appears that technical briefing alone will not
convince farmers (second in rank for non-GE and third in rank for GE), neither will
home visits nor attendance to short training immediately convince farmers.
For Bt variety users, first sources of information are the co-farmers, followed by
the government technicians, except for stacked variety users where the private sec-
tor came in second after co-farmers as first source of information. The trend where
co-farmers and government technicians are primary sources of information is true
for all other set of corn variety users. It is worth noting that non-GE corn users relied
more on co-farmers as first sources of information as evidenced by the higher fre-
quencies for co-farmers compared to other sources of information.
This has profound implications to influencing diffusion of products. Despite the
very active product promotion of private companies (field trials, technical meetings,
distribution of shirts and brochures), majority of farmers actually get their informa-
tion through co-farmers. In the key informant interview, private companies put up
demo farms in all the provinces. These demo farms were done in partnership with
selected influential farmers whose farm lots are along the main highway or visible
to other corn producers. At harvest time, a field day is conducted where 20–30 farm-
ers are invited to attend the presentation of farmer partners with some companies

226 R. dela Torre Baconguis et al.

providing additional incentives like Lakbay Aral (Educational Tour) and other
incentives to those whose production are comparably higher than the other farmers.
In different sites, most private companies conducted the activities without coor-
dination with the local government unit, except in Concepcion, Tarlac where the
private company paid a courtesy call with the Municipal Agriculture Office. Despite
the fact that the private sector (seed companies and traders) is at the forefront of
product promotion, their criterion selection of farmer partners – such as big land-
owners – limits their potential to be a major source of information for the rest of the
corn populace. This is likewise true for cooperatives as their reach is limited to
membership. This is why the farmers and the government sector remain as the major
source of information for majority of the corn farmer populace.
Moreover, key informant interviews revealed that most local government units
no longer have corn programs except during calamities when they subsidize tradi-
tional hybrid corn seeds. Furthermore, some traders in Isabela and Quirino prov-
inces were active in pushing for GE corn varieties through loan packages while
private dealers in Cauayan, Isabela, and Carmen, North Cotabato gave reward points
to GE corn variety users.
The challenge therefore is how to ensure that farmers get accurate information
about corn varieties such that they may be able to pass on appropriate information
to other farmers. Based on the survey, it appears that government extension workers
have a major role in information dissemination despite the presence of a plurality of
actors. However, during the pretesting of the questionnaire in Pampanga and a train-
ing in Nueva Vizcaya conducted by the team, the extension workers admit they do
not have enough knowledge of GE corn varieties. There is, therefore, a need to
ensure that government extension workers are given basic information about new
technologies and should have at least basic IEC materials regarding different seed
varieties. Studies show that regarding the conduct of rice training programs, the
priority commodity program of the government, it would take 89.29 years for the
government to provide training programs for all rice farmers and 64.55 years to
provide a brochure to all rice farmers at the rate the government is financing such
activities. This means that relying on government funds for training and production
of brochure might not be realistic given that even the priority commodity lags
behind the target of reaching farmer producers (Table 14.4).

Table 14.4 First source of information on knowledge of GE and non-GE corn varieties, by
category of respondent

First source GE Bt variety HT variety ST variety Non-GE

of information No. % No. % No. % No. % No. %
Co-farmers, 426 57.6 60 56.6 23 39 343 59.8 131 73.2
DA/LGU 132 17.9 22 20.8 14 23.7 96 16.7 29 16.2
Private seed 130 17.6 10 9.4 17 28.8 103 17.9 16 8.9
Others 51 6.9 14 13.2 5 8.5 32 5.6 3 1.7
Total 739 100 106 100 59 100 574 100 179 100

14 The Role of Agricultural Public Extension in a Private-Led Technological Innovation 227

Table 14.5 Distribution of corn farmers who knew of other farmers using the same seed variety
GE Bt variety HT variety ST variety Non-GE
Responses No. % No. % No. % No. % No. %
Yes 987 97.3 133 95.7 59 100.0 795 97.4 186 96.9
No 27 2.7 6 4.3 0 0.0 21 2.6 6 3.1
Total 1,014 100.0 139 100.0 59 100.0 816 100.0 192 100.0

14.4.2 Contact with Other Farmers

It is generally believed that adoption of technologies is influenced by other farmers.

Respondents were asked if they knew of other farmers using the same technology
they are using and if they have contact with them, the frequency of contact and
nature of exchange among them. Table 14.5 shows that an overwhelming majority
of the respondents, whether GE or non-GE users, knew other farmers who use the
same variety that they are using, with some exceptions from Bt variety users (4.3 %)
all of whom are from Isabela, stacked variety users (2.6 %), more than half of whom
are from Isabela and conventional hybrid users (3.1 %). All respondents of HT vari-
ety users know other farmers using the same variety.
Key informant interviews from GE and non-GE users acknowledge that yield
increase and savings on labor costs are the primary reasons for adopting a particular
variety. Chimmiri et al. (cited in Mushunje et al. 2011) state that easier crop man-
agement of transgenic crops and time saving might have influenced the adoption of
GE corn varieties in the USA.
To determine whether respondents communicate with other farmers, they were
asked if they meet or they make an effort to contact other farmers, how often they
do this and for what reasons. Almost all farmers, whether GE or non-GE users (with
lowest percentage at 98.3 % for herbicide-tolerant respondents and highest of 100 %
for Bt respondents) actually meet with other farmers (Table 14.6).
Majority of the farmers (lowest 63.2 % for Bt and highest 77.8 % for non-GE
corn variety users) said that they always meet up with other farmers considering that
they are neighbors and as a consequence, always talk with each other. On the
average, 71.7 % of the farmers concede that they always meet up and discuss farm
and non-farm related issues (Table 14.7).
Farm planning appears to be the major reason for meeting up with other farmers,
whether GE or non-GE. Farm planning refers to topics with regards to all aspects in
the production of corn. This is true for all kinds of varieties and all provinces fol-
lowed by labor assistance, especially for ST variety users which had more farmers
discussing labor assistance. The ST variety users mostly come from Isabela prov-
ince where farm labor during planting and harvesting season is normally wanting.
Technical assistance comes in third, implying that farmers rely among themselves
more in tackling farm issues rather than seek guidance from public or private exten-
sion workers.


Table 14.6 Contacts with other farmers using same variety as his, by category of respondent, 2010
GE Bt variety HT variety ST variety Non-GE All
Responses No. % No. % No. % No. % No. % No. %
Yes 985 99.8 133 100.0 58 98.3 794 99.9 185 99.5 1,170 99.7
No 2 0.2 0 0.0 1 1.7 1 0.1 1 0.5 3 0.3
Total 987 100.0 133 100.0 59 100.0 795 100.0 186 100.0 1,173 100.0

R. dela Torre Baconguis et al.
14 The Role of Agricultural Public Extension in a Private-Led Technological Innovation 229

Table 14.7 Frequency of contacts with other farmers using same variety as his, by category of
respondent, 2010
GE Bt variety HT variety ST variety Non-GE
Frequency of contact No. % No. % No. % No. % No. %
Always 695 70.6 84 63.2 38 65.5 573 72.2 144 77.8
Once a week 114 11.6 17 12.8 9 15.5 88 11.1 16 8.6
Once a month 47 4.8 8 6.0 2 3.4 37 4.7 5 2.7
During planting 120 12.2 22 16.5 9 15.5 89 11.2 18 9.7
After harvest 9 0.9 2 1.5 0 0.0 7 0.9 0 0.0
Once a month and 0 0.0 0 0.0 0 0.0 0 0.0 1 0.5
during planting season
During planting 0 0.0 0 0.0 0 0.0 0 0.0 1 0.5
season and after
Total 985 100.0 133 100.0 58 100.0 794 100.0 185 100.0

Table 14.8 Number of GE corn adopters 2003–2011

Bt variety HT variety ST variety
Year No. % No. % No. %
2003 3 5.26 – – – –
2004 5 8.77 – – – –
2005 6 10.53 – – – –
2006 3 5.26 6 17.65 76 11.57
2007 6 10.53 7 20.59 126 19.18
2008 6 10.53 7 20.59 139 21.16
2009 13 22.81 7 20.59 126 19.18
2010 15 26.32 6 17.65 187 28.46
2011 0 0.00 1 2.94 3 0.46
Total 57 100.00 34 100.00 657 100.00

14.4.3 Adoption Patterns

This section investigates adoption patterns of GE corn varieties over the years.
Farmers were asked when they first used the variety they are currently using. Due to
difficulty in recall of the first year of usage, the number of the respondents was
reduced. Of the 139 Bt farmers, only 57 remained; of the 59 HT farmers, only 34
remained; and of the 816 ST farmers, only 657 remained. For Bt corn farmers, only
a few adopted during the introduction of the variety or even 4 years after its intro-
duction. However, after 7 years, adoption for Bt corn dramatically increased. In this
sense, most of the Bt corn users cannot be called innovators insofar as Rogers clas-
sification is concerned. For HT users, there is already a sizable number of adopters
in the first year of product introduction but adoption for this product did not pick up
over the years. Meanwhile, adoption for HT users quickly picked up over the years
(Table 14.8).

230 R. dela Torre Baconguis et al.

GE corn users were also asked to recall the different varieties they used over the
years. Again, due to difficulty in farmers’ recall, the number of responses was
reduced to 494. The reckoning year is the year 2000 to establish what farmers were
using prior to the introduction of GE corn varieties. Of the total samples, there are
84 adoption patterns. The common adoption patterns were conventional hybrid to
ST followed by new corn farmers who immediately chose to plant the ST variety.
The highest number of conversion over the span of 10 years is four times, at
times shifting from one conventional hybrid to another before adopting GE corn
variety. There are also cases where farmers start with conventional hybrid and adopt
GE corn variety and move back to conventional hybrid or start with GE corn and use
conventional hybrid and back again to GE corn or start with GE corn but convert to
conventional corn.
There are farmers who are loyal to only one variety or stick to one GE classifica-
tion. Others shift from one variety to another or shift from one GE classification to
another. There are also patterns that switch from being an OPV user to GE adopter,
or start with GE and adopt OPV, or from OPV to conventional hybrid to GE varieties,
or from OPV to GE to conventional hybrid.
Based on the adoption patterns, most farmers shift from one variety to another or
from one corn classification to another. This may reflect farmers’ flexibility as they
try to analyze which variety or product works best for them given their agronomic
and economic conditions or even philosophical and cultural systems. Alternatively,
this shifting may also be the result of trader influence as he convinces farmers what
variety to buy depending on stocks inventory or may even provide financing.

14.4.4 Product Safety Evaluation of Variety Used

One of the major issues against genetically modified varieties is their alleged pos-
sibly negative effect on human health, crops, and general environment. DFID (2004)
summarizes the concerns about biotechnology into four categories: environmental,
food safety, relevance to poor farmers, and ownership and control of technology.
Smalle and De Groote (2003) enumerate the possible risk such us flow of trans-
genes, resistance evolution of targeted pest population, plant escape, and establish-
ment of self-producing population. The authors further state that maize has a high
risk of gene flow through cross-pollination in conditions when landholdings are
fragmented, varieties are planted in contiguous land area, and when farmers
exchange seeds. In particular, NGOs in the Philippines like Greenpeace engaged in
debates and other forms of advocacy and protests against genetically modified
crops, especially during the introduction of Bt corn. During the introduction of Bt
corn in the country, the church was likewise very active in calling for a ban on
genetically modified crops. While the heated debates may have subsided, provinces
like Negros have steered clear from the use of Genetically Modified Organisms
(GMOs) as it has totally banned its use and distribution in the whole province.
Because of these issues, there is a stringent biosafety regulatory system in the
Philippines to ensure human and animal health and environmental safety.

14 The Role of Agricultural Public Extension in a Private-Led Technological Innovation 231

As such, it is interesting to know how farmers evaluate the safety of corn variety
to humans, animals, environment, and other crops. In general, majority of the
respondents consider their preferred GE corn seed variety safe. Farmers consider Bt
variety and ST variety safer in all areas under consideration compared to the conven-
tional hybrid corn which was rated a little bit safer only compared to herbicide-
tolerant variety. An overwhelming majority (94 %) of Bt users in Isabela, which had
the most number of Bt respondents, rated the variety as safe (Table 14.9). A cursory
review of the educational materials distributed by private companies highlight
mainly the saving on the use of inputs such as pesticides and labor, increased yield
with better corncob quality. Based on interviews with government extension work-
ers, they do not know the details about GE corn varieties and believed that this is a
matter that the private technicians of the companies should explain to the farmers.

14.4.5 Role of Local Government Units

Formulation of local policies and programs as well as implementation of national

policies and programs on corn depends on Local Government Units’ (LGUs) initia-
tive. In all the study areas, the main program of LGUs is the distribution of corn

Table 14.9 Corn farmers’ evaluation of the effects of GE corn, by category of respondent, 2010
GE Bt variety HT variety ST variety Non-GE
Effects No. % No. % No. % No. % No. %
Effect on human health
Safe 818 80.7 113 81.3 37 62.7 668 81.9 134 69.8
Harmful 151 14.9 21 15.1 15 25.4 115 14.1 20 10.4
Don’t know 45 4.4 5 3.6 7 11.9 33 4.0 38 19.8
Total 1,014 100.0 139 100.0 59 100.0 816 100.0 192 100.0
Effect on animal health
Safe 849 83.7 120 86.3 39 66.1 690 84.6 137 71.4
Harmful 112 11.0 14 10.1 12 20.3 86 10.5 17 8.9
Don’t know 53 5.2 5 3.6 8 13.6 40 4.9 38 19.8
Total 1,014 100.0 139 100.0 59 100.0 816 100.0 192 100.0
Effect on environment
Safe 838 82.6 120 86.3 39 66.1 679 83.2 134 69.8
Harmful 63 6.2 10 7.2 4 6.8 49 6.0 12 6.3
Don’t know 113 11.1 9 6.5 16 27.1 88 10.8 46 24.0
Total 1,014 100.0 139 100.0 59 100.0 816 100.0 192 100.0
Effect on other crops
Safe 778 76.8 117 84.2 28 47.5 633 77.7 116 60.4
Harmful 67 6.6 12 8.6 5 8.5 50 6.1 10 5.2
Don’t know 168 16.6 10 7.2 26 44.1 132 16.2 66 34.4
Total 1,013 100.0 139 100.0 59 100.0 815 100.0 192 100.0

232 R. dela Torre Baconguis et al.

seed varieties for rehabilitation after extreme climate events such as typhoon and
provision of farm equipment, particularly corn sheller and drier. In Nagtipunan,
Quirino, seed subsidy has been a regular program of the LGU.
At times, extension workers assist the seed company by identifying barangays
where they could organize farmer activities. For example, in 2002, Syngenta got a
permit from the Office of the Mayor of Alcala, Cagayan, to conduct farmers’ field
school and introduce Bt, giving away free seeds. However, this is not always the
case. In Bukidnon, for example, private companies set up techno-demo sites without
coordinating with the Municipal Agricultural Office.
There is limited monitoring by LGUs on corn variety adoption and yield perfor-
mance of GE and non-GE corn. Nagtipunan, Quirino, keeps records of comparative
yield performance of GE and non-GE corn but in other study areas, available data
includes only costs and returns for yellow and white corn. Yellow corn is generally
referred to as hybrid (whether GE or non-GE); white corn is usually referred to as
an OPV. With hybrid white corn already in the market, the data on white corn may
no longer refer only to OPV. Socioeconomic impact assessment, such as cost–ben-
efit analysis at the farm level, is also limited. This is usually done by social science
researchers through commissioned research.

14.5 Conclusions and Recommendations

Biotechnology will continue to play a significant role in agriculture in the forthcom-

ing years. In the Philippines, adoption of the technology has been widespread in
major corn-producing areas. Results show that this is primarily driven by economic
factors such as the promise of increased yield as highlighted in the choice of variety
to be used and desire to save on labor cost, a significant production cost in the coun-
try. The major player which facilitated the widespread adoption is the private com-
panies who aggressively promote their products through various extension
methodologies. However, there are research and policy issues which need to be
addressed by the extension system.
1. Research on access neutrality – The corn seed industry is actively promoted by
the private sector which highlights increased yield and income as major benefits
of these new seed technologies. These factors are what farmers consider impor-
tant as farming is a source of income. However, farmers’ results show that farm-
ers are influenced also by traders who supply seeds to farmers. Hence, GE corn
varieties may not be as accessible to many farmers who do not have open line
with traders nor have access to credit.
2. Research on impact neutrality – Given that GE corn research, development, and
extension are dominated by the private sector, there is a need to study whether
the technology is impact neutral to ensure that farmers know the conditions when
the technology may produce optimum result and thus, lessen the risk of invest-
ment. Wale (2012), in his review of various impact of Bt corn, says that yield

14 The Role of Agricultural Public Extension in a Private-Led Technological Innovation 233

performance is highly variable and calls for more studies on benefits accruing to
small holder corn farmers. In this study, key informants farmers share that they
shift varietal use and/or discontinue usage of particular technologies for reasons
that range from dissatisfaction in terms of yield and income performance result-
ing in inability to finance the next year’s cropping using the same technology.
Hence, there is a need to determine conditions where there is optimal returns for
use of GE corn varieties.
3. Education of extension workers – There is a need to ensure the provision of data
regarding the technology as it is the government extension workers who serve as
link of the farmers to government programs and other agricultural information.
Moreover, while they may not have full knowledge of new technologies, farmers
still seek out other farmers and government extension workers. Presently, it is the
private sector which is the major source of information regarding GE corn prod-
ucts but the private sector’s reach is limited to selected farmers. The role of
educating farmers rests on government extension workers who currently have
limited knowledge of GE corn varieties. Moreover, farmers may experience
problems which may not be immediately addressed by the private sector repre-
sentatives nor by the co-farmers. Private companies should provide forums to
educate the extension workers about their products and coordinate with them
regarding technical meetings and field days with farmers.
4. Monitoring and evaluation of the use of GE corn varieties – The National
Biosafety Framework (NBF) adopts the principle of subsidiarity wherein all lev-
els of government including LGUs shall participate in implementing NBF. Local
government units are tasked primarily with modernization of the agricultural
sector. However, without proper knowledge nor data about particular crops,
planning for the agricultural sector may not be properly conducted. To have an
empirical-based planning, local government units should monitor the use of GE
varieties, something that local governments are not doing for various reasons
such as lack of capacity and lack of funds. Reporting system of corn is only
white and hybrid corn, without differentiating GE corn from other hybrid corns.
There should be coordination between the LGU and BAS, the official source of
agricultural data, in data gathering and reporting.


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and poverty reduction working paper 4, DFID London. http://dfid-agriculture-consultation.nri.
org/process.htm. Accessed 15 June 2012
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cations for future research. Afr J Biotechnol 11(36):8774–8783

Chapter 15
Implementing a Cash Grant Program
for the Homeless in Metro Manila,
The Philippines

Ada Colico-Aquino and Jungbu Kim

15.1 Introduction

Poverty is a global menace affecting not only developing countries but also affluent
countries. In the Philippines, a face of recalcitrant poverty is the proliferating home-
less families in the streets of Metro Manila. According to an estimate (Lamberte
2002), approximately 3 % (246,000) of children under 17 years of age are homeless
(“highly visible on the streets”) in the Philippines. For only urban areas, the percent-
age of homeless children is believed as high as 20 %. The cities of Metro Manila
posted the highest number of homeless children at 11,346, while the urban home-
less children nationwide are estimated between 45,000 and 50,000. While various
programs from the local and national governments have been tried, they are limited
mainly to rescue operations and thus regarded as ineffective in curtailing the prob-
lem (Nugroho et al. 2008; Scerri 2009). However, with the global advocacy for
human rights and inclusive growth embracing the marginalized poor, the govern-
ment is challenged to develop programs responsive to this plight. Homelessness is a
“wicked problem” which requires multiple and coordinated governmental responses
in order to offer a resolution (Rittel and Webber 1973). Can the government effec-
tively respond to the adversities of homeless families so that they can help them-
selves to become contributing citizens of the country? How have the programs of
the Philippine government stacked against this ultimate goal?
As recently as July 2012, the Philippine government took this challenge and
applied a “social technology design” to reach the hard-core poor, with a program
named Modified Conditional Cash Transfer (MCCT). This is an extension of the

A. Colico-Aquino
Department of Social Welfare and Development – National Capital Region,
Manila, The Republic of the Philippines
J. Kim (*)
Department of Public Administration, KyungHee University, Seoul, The Republic of Korea
e-mail: jungbu.kim@gmail.com

© Springer India 2015 235

A. Gurtoo, C. Williams (eds.), Developing Country Perspectives on Public
Service Delivery, DOI 10.1007/978-81-322-2160-9_15

236 A. Colico-Aquino and J. Kim

preexisting conditional cash transfer (CCT) program designed to provide social

assistance in the forms of cash transfers for health and education services, which are
conditional upon the compliance of the beneficiaries. MCCT targets homeless street
families (HSFs) with children under 14 years of age and aims to provide a complete
package of assistance including not only education and health but also shelter assis-
tance with a view to improving their accessibility to other social services and eco-
nomic opportunities and to eventually mainstreaming them to the regular CCT
program (Department of Social Welfare and Development (DSWD) 2013a).
How is this program being implemented? Could this be a solution to the iterant and
persistent problem of homelessness in the Philippines? Are there any lessons to be
learned for improving the current program? Can this be replicated in other cities and
countries with similar problems? This chapter will examine these questions by look-
ing at the policy process of the program, with particular attention to the particulars of
the program design, key actors (politicians, public officials/department bureaucrats,
nongovernmental organizations, and the homeless) and collaboration among them,
and their respective resources including expertise of the collaboration participants.
The policy process approach is a heuristic for simplifying and understanding the com-
plex world of numerous policies (Anderson 1974; Jones 1977; Lasswell 1971; Smith
and Larimer 2013). While the approach is criticized as lacking rigor and theoretical
basis (DeLeon 1999), it helps us identify key features of the policy world in a way that
provides an intuitive understanding of it. Most of all, the policy process approach
provides a conceptual distinction across problem definition, agenda-setting, policy
formulation, decision making, implementation, evaluations, and policy learning, and
directs our attention to the dynamic interactions of policy actors in specific stages of
the process. In describing how the Philippine government is implementing the MCCT
program, it will draw upon the multiple theories of the policy process that since the
1970s have been developed and applied in explaining the complex policy world.

15.2 Key Actors in the Policy Process

Understanding the complex policy world in terms of processes is useful especially for
identifying key dynamics of interactions among official and unofficial actors in the
context of democratic political system. Of scholarly efforts to develop theories of
the policy process, the advocacy coalition framework (Sabatier 1988; Sabatier and
Jenkins-Smith 1999; Sabatier and Weible 2007) captures how actors of distinct belief
systems get together to translate their beliefs and interests into policies. ACF deals with
the multiplicity of actors in a policy subsystem as aggregated into multiple advocacy
coalitions, where the coalition members share the same policy-core beliefs and together
hold a set of coalition resources, which in turn influence public policy outcomes.
The policy of addressing the problem of homelessness exemplifies how the different
salient features of ACF can be applicable in the context of the Philippines. Particularly,
MCCT was initiated through the networked collaboration of governmental agencies
and societal actors at the subnational, national, and international levels that share
responsibilities and concerns about street children and families.

15 Implementing a Cash Grant Program for the Homeless in Metro Manila… 237

There are two broad categories of participants in the policy process: official
actors and unofficial actors. Official actors are those who belong to the govern-
ment and are sanctioned by the laws. They have the power to make and enforce
policies. Unofficial actors are involved without any explicit legal authority or duty
to participate (Birkland 2011). Official actors related to MCCT are national and
local agencies such as the Department of Social Welfare and Development
(DSWD), Metro Manila Development Authority, Department of Health,
Department of Interior and Local Government (DILG), Philippine National Police,
Philippine Drug Enforcement Agency, and local social welfare offices. On the
other hand, unofficial actors are civil society organizations (CSOs), the media, and
international organizations participating in the process. As for the MCCT pro-
gram, such non-state actors are involved as Virlanie Foundation, Child Hope Asia
Philippines (CHAP), Center for Family Ministry, Christian Family Movement,
and the like. These actors have convened in a series of meetings to discuss the
problem and craft programs. Other governmental agencies are also engaged in this
program acting as oversight agencies, which are the Department of Budget and
Management (DBM), National Anti-Poverty Commission (NAPC), National
Economic Development Authority, National Council for the Welfare of Children
(NCWC), Philippine Commission on Women (PCW), Commission on Population,
National Council for Disability Affairs (NDA), and National Council for the
Indigenous People (DSWD 2013c).
As will be illustrated below, they have shaped the dynamics of the problem defi-
nition and agenda-setting processes, whereas a diversity of understanding about the
nature of the problem has existed among those participants. This also provides an
impetus for those who share common beliefs to form coalitions to better translate
them into specific policy design. Leading the coalition are the specialists who advo-
cate and advance their specifically defined issue toward the status of decision agenda
for policy action, which also strengthens the coalition with their expertise on the
field of urban homelessness.
The policy process models take into account the effect of external factors that
affect the behavior of policy participants as they are important in establishing the
resources and constraints within which the subsystem actors must operate (Sabatier
and Weible 2007). The officials at DSWD believe that the government alone cannot
respond sufficiently to the problem of homelessness, and that collaborating with the
other members of the coalition such as CSOs and international organizations is an
imperative in tackling the problem since the problem itself is wicked in the sense of
defying value-free definition, being malignant, persistent, and proof to a one-shot
solution, and being connected to other problems such as low income and crime.
The policy process for MCCT is also characterized by a bottom-up perspective,
where different beliefs and perspectives of the key policy actors at the lower level
have significant impacts on what has been actually implemented and on the out-
comes that have been achieved. From the identification of homelessness as a policy
problem, different policy actors initiated to coalesce and provide resources and
expertise in developing the agenda. Such an initiative has at a later stage materialized
into MCCT that is being implemented as shaped by the policy actors from the bottom
including CSOs and local government units (LGUs).

238 A. Colico-Aquino and J. Kim

15.2.1 The Problem: Defining and Identifying the Homeless

There are different ways of looking at the social problem: by severity and incidence,
describing the problem with frequency and prevalence; by causality, the origins of
the problem; by the scope of problem populations; and by potential solutions
explored (Rochefort and Cobb 1994). Different definitions of homelessness have
been proposed and thus influenced how policy actors define and ratiocinate policy
responses to the homeless problem. Homelessness as incorporated in this MCCT
policy is identified as street families without permanent abode (DSWD 2013a).
First, they are families who live in the streets with poor housing conditions and sleep
in pavement or subways, deprived of basic needs with no access to safe water, sani-
tation, and personal needs. These families occupy any vacant space to build their
makeshift shelter like mobile wooden pushcarts. Second, they are displaced fami-
lies with no permanent abode, rendered homeless due to natural and man-made
disasters or because they are reluctant to sleep in public buildings or facilities.
Third, they are itinerant families of indigenous descent “who may have been dis-
placed from their traditional domains or who may have resettled outside their ances-
tral domains” under Section 3 of RA 8371.1
According to Klaus Toepfer, acting executive director of United Nation’s Center for
Human Settlements, “the best way to combat homelessness is to avoid people becom-
ing homeless in the first place.” Homelessness is seen here as a problem that will not
occur when there are no homeless people. He further argued that unemployment is one
of the most important reasons why people become homeless, and that national policies
toward the goal of full employment and of establishing/strengthening safety nets are
major components in combating homelessness. Hence, in order to be successful, strate-
gies to combat homelessness need to be based on a public policy framework that incor-
porates employment policy and housing policy as well as social safety nets and housing
allowances (United Nations Center for Human Settlements 2000).
The Philippine civil society organizations have diverse views of the problem, and
accordingly they differ in their approaches and programs in responding to this concern.
For example, CHAP is focused more on street children who spend a considerable
time living and/or working on the streets. CHAP also adopts two general categories
of homeless children: children living and working in the street and those working on
the streets who maintain regular contacts with their families. It advocates for the
causes of street children and provides direct services for them through street education
(CHAP 2013). Gawad Kalinga, one of the active CSOs in the Philippines argues
that “Poverty is not lack of resources, but lack of caring and sharing. The painful
lack of caring and sharing in our society is the root cause of poverty” (Gawad
Kalinga 2011). It also believes that poverty affects everyone: “poverty puts every-
one at risk; poverty makes people resort to criminal …; poverty causes a sense of
hopelessness; and poverty contributes greatly to environmental degradation”

RA 8371is “An Act to Recognize, Protect and Promote the Rights of Indigenous Cultural
Communities/Indigenous People, Creating a National Commission of Indigenous People,
Establishing Implementing Mechanisms, Appropriating Funds Therefor, and for Other Purposes.”

15 Implementing a Cash Grant Program for the Homeless in Metro Manila… 239

(Gawad Kalinga 2011). Gawad Kalinga focuses their programs and services on pro-
viding housing for the homeless and community development.
The Philippine DSWD, as the lead agency in promoting social protection of citi-
zens, initiated in 2010 a rapid appraisal of the homeless to determine the veracity of
homelessness, since official statistics to account for the HSF cases were severely
limited primarily due to their high mobility. Through the partnership among DSWD,
NCWC, and LGUs, the assessment apprised stakeholders of the prevalence and
actual needs of the homeless. This initiative documented about 657 HSFs that are
composed of 2,014 adults and 3,072 children and infants. Based on the focused
group discussions, it is found that HSFs have moved to the streets because mainly
of poverty-related adversities (DSWD 2012).
To further explore the problem, in 2012, DSWD conducted a situation analysis
on HSFs to better explicate their family well-being and found that most of them are
merely surviving at high-risk levels regarding violence and health. Their patterns of
socioeconomic debility range from self-sufficiency to subsistence with highly irreg-
ular income streams of $2.24 or lower per day, well below the level required for
meeting the family’s quotidian needs. In corollary, homeless families are experienc-
ing malnutrition or even starvation, inferior housing/shelter and unemployment, and
vulnerable to the hazards of the streets (DSWD 2012).
Government agencies and child advocates have further tried to see the magnitude
of the problem, which would frame policy responses. In June 2012, DSWD launched
an enumeration effort of HSFs which produced detailed information and mapping
of these families. Household assessment forms were designed to determine their
demographic and socioeconomic profiles and present living conditions and identi-
fied 892 HSFs in the Metro Manila region.2 Figures 15.1 and 15.2 describe the dis-
tributions of their age, gender, and education. Figure 15.1 shows that there are more

Sex disaggregation of HSF Age distribution of HSF

18 and
Female Male
19- 30
54% 46%
36% 31-40

Fig. 15.1 Age and gender distribution of homeless street families in Metro Manila (Source:
DSWD 2013b)

There are substantial overlapping cases between the lists identified in 2010 and 2012.

240 A. Colico-Aquino and J. Kim

15% 13.0% 11.2%
Kinder/ No Elementary Elementary High High College College
Grade Level Graduate School School Level Graduate
Level Level Graduate

Fig. 15.2 Homeless street families’ education levels (Source: DSWD 2013b)

30% 27.8%
20% 16.4%
13.2% 13.1% 13.3%
3.7% 3.9% 4.5%
5% 1.2% 1.9%

Fig. 15.3 Homeless street families’ sources of income (Source: DSWD 2013b)

female homeless individuals than males: Out of 1,809 homeless individuals, about
54 % are females. As for the age distribution, the biggest group is the 19–30 year
age group with 653 individuals or 36 %, followed by those aged 31–40 with 448
individuals or 25 %. Those aged 51 and above make up 7 % with 121 individuals.
As for education, about 36.5 % of homeless individuals had initially enrolled for
primary education, but did not continue study toward graduation. Accordingly,
almost half of the homeless individuals did not graduate from elementary school.
Figure 15.3 provides a rough breakdown of income sources of the homeless families.

15 Implementing a Cash Grant Program for the Homeless in Metro Manila… 241

The most obvious observation is that 28 % of the homeless just do not have any
sources of income and thus are left with no choice but to stay on the streets. These
data have become the basis of the department’s designing MCCT to respond to the
urgent needs of the homeless.
A policy problem is most likely strategically defined and framed in the policy
process. Agenda is “the list of subjects or problems to which governmental officials,
and people outside of government closely associated with those officials, are paying
some serious attention at any given time” (Kingdon 2003). Through the agenda-
setting process, the potential items for serious attention by key policy actors narrow
down to agenda where only a small set of problems are placed. Thus, agenda-setting
is the “process by which problems and alternative solutions gain or lose public and
elite attention, or the activities of various actors and groups that cause issues to gain
greater attention or prevent them from gaining attention” (Birkland 2011). Although
the issue of homelessness affects a minority of the population, they are the disad-
vantaged segment of the community and the issue is brought to the attention of
policy makers primarily by the non-state actors (Wu et al. 2010). The homelessness
issues in the Philippines have been vividly covered by the local media, which alerted
individuals from the affected areas and the CSOs that are helping the homeless
(Street Children Development Center 2003).
The homeless problem is framed based on the human rights perspective, particu-
larly the needs of children and women who are exposed to the risks of the streets
(DSWD 2012). It is attached to the United Nation’s social protection system that
covers the civil, political, economic, social, and cultural rights of the children and to
the measures for promoting their best interest including protection from violence,
injuries, and maltreatment. Dealing with the homeless issue is also closely related
with providing essential services for them such as nutrition, clothing, housing,
health care, and education.
The way the problem was framed with a focus on the rights of vulnerable chil-
dren and international commitment to them has helped those who pushed the issue
toward institutional agenda. The use of symbolic icons by advocates of the chil-
dren’s rights from the private sector such as celebrity ambassadors from CSOs
including World Vision, Child Hope Asia, and the UNICEF, among others, fostered
awareness among not only the general public but also the government officials and
aided in advancing the homeless issue to the decision agenda. The active coverage
of the issue by the media has also played a very influential role in expanding the
issue to the greater public and pushing the government toward seriously consider-
ing solutions to the problem. In addition, influential people from the elite group or
the upper strata of the society, such as politicians, businessmen, and philanthro-
pists, whose residences are most likely in exclusive subdivisions (where homeless
people gather for alms) have applied pressures on the agencies concerned to take
action on the homeless in their neighborhoods. Phone calls, short messaging ser-
vice (SMS), e-mails, and other means of communication were their modes to
report these cases. As they are influential to the bureaucracy by virtue of their
resources and authority, their concerns are given preferential consideration when
they seek attention.

242 A. Colico-Aquino and J. Kim

15.2.2 Program Formulation

Policy formulation refers to the “process of generating a set of plausible policy

choices for addressing problems” (Wu et al. 2010). During the formulation stage,
policy goals are clarified given the specifically defined problems, target population
of the policy is socially constructed and reconstructed, and policy tools are consid-
ered and selected with the causal theories between tools and desired outcomes
(Birkland 2011; Schneider and Ingram 1997; Stone 2012). In addressing the home-
lessness problem, DSWD has taken the helm in crafting the policy measures. It
started with organizing a regional interagency committee composed of policy actors
from other concerned national agencies, LGUs, and CSOs working for the children
and family sector (DSWD 2012). The main goal of the policy measure is first to
reduce the number of HSFs living, working, and/or at-risk in the streets, by provid-
ing them with an intensive case management and interventions. The policy as
designed is based on key principles of equity, access to basic social services, respect
for human rights, collaboration and social accountabilities of stakeholders (not lim-
ited to LGUs), gender mainstreaming, and cultural sensitivity.
Incorporating these principles, the DSWD Circular 2013 articulates the objec-
tives to achieve as follows: (a) to provide an intensive family case management and
comprehensive programs/services; (b) to connect the HSFs to formal programs/
institutions necessary for social transition, with alternative living arrangements that
will bring structured family or group living in homelike atmosphere or community
environments; (c) to implement requirements that will positively help all the HSFs/
family heads to perform their family roles and responsibilities and to realize unmet
family needs or aspirations with the help of collaborating partner agencies; and (d)
to help HSFs’ return to their local communities for inclusion in the regular program,
thereby strengthening the coverage of Pantawid Pamilya (CCT) on HSFs.
Target population of a policy is defined as “people or organizations whose behav-
ior the policy seeks to alter” (Birkland 2011). As for the HSFs, they are technically
identified to meet the specific conditions. Specifically, based on the 2012 enumera-
tion, those 892 families living on the streets of 13 cities in the National Capital
Region with high incidence of homelessness are defined as the target population.
They are street children and families including the indigenous people “Sama
Bajaus”.3 The target indigent families are in need of special protection with children
under 14 years of age and/or pregnant women who were not enumerated by the
National Household Targeting System for Poverty Reduction (NHTSPR) for the
program. HSFs who meet one or more of key requirements are eligible for the pro-
gram: families with children 14 years old and below; families with income below
the provincial poverty threshold; families who are not active beneficiaries of any
cash grant or similar CCT program from any stakeholders; and single parent with
children 14 years old and below.

Sama Bajaus are an ethnic group from Jolo Sulu, Mindanao, who are also known as the sea gyp-
sies of the Philippines.

15 Implementing a Cash Grant Program for the Homeless in Metro Manila… 243

For the MCCT program, the tools employed are direct provision of services and
grants attached to conditionalities. To manage the cases of HSF, a variety of officials
including social workers are employed to pool together resources to resolve the
problems of family members, achieve family needs, and bring them to a level of
self-sufficiency. Services to be provided to the family are dependent on the case
workers’ assessment on family’s needs except for the cash grants which are trans-
ferred upon the client’s compliance to conditionalities. Program Package, Conditionalities, and Exit Rules

The program package and types of assistance for the beneficiaries are summarized
in Table 15.1. The program package is patterned after the original CCT mode which
provides cash grants with 100 % compliance by beneficiaries. The basic package of
services is the education and health grant. A family is entitled to receive a maximum
of $29 or Php 1,400 per month, depending on the number of eligible family mem-
bers. Of those in the MCCT program, the families qualified for livelihood assistance
as well are referred to it where basic business management training (BBMT) tai-
lored to their interest and present skills is provided. Limited financial assistance will
also be provided for the MCCT-covered families per case workers’ assessment.

Table 15.1 Types of assistance from the program

Types of assistance Amount involveda
Education grant $6.00/child/month (maximum of 3 children)
Health grant $11.00/family/month
Sustainable livelihood (with skills training) Livelihood – $224.00/family skills
training – $112.00/family
Limited financial assistance Maximum of $112.00/family (based
Transportation assistance on assessment of the city/municipal links)
Transition allowance
Medical assistance
Cash for work $6.00/day for 90 days
House rental subsidy 67.00–$100.00/month (a maximum
of 12 months)
Subsidy for the establishment of family homes $448.00/month (maximum of 12 months)
(5–6 families per home)
Support services for older street children (15 years $224.00/family (based on the assessment
old and above and below 18 years old): of City Links)
Regular educational assistance
Referral to alternative learning system or
acceleration program
Skills training and other forms of assistance
Source: DSWD (2013c)
Exchange rate used here is Php 44.71 to US$1.00

244 A. Colico-Aquino and J. Kim

Transition allowance will be provided to families staying outside the shelter/center

and seeking employment or those who have already found employment but not yet
received salary. Medical assistance will be provided for HSFs who need immediate
medical attention and the referral to government hospital partners will be arranged.
A maximum of $112 per family will be provided for the financial assistance depend-
ing on case workers’ assessment.
House rental subsidy is also provided to HSFs who lease a house provided that it
will be contracted by DSWD. An amount of $67–$100 per month is provided for a
maximum of 12 months to assist them settle down to a safe abode. In cases that
families are not able to find house for lease, they are referred to family homes as
alternative venues such as temporary group homes. Family homes are supervised by
assigned social workers and guided by house rules for the families living together.
Families will be taught on the house chores, proper nutrition, and parent effective-
ness modules by DSWD.
On the other hand, older street children not covered by the program will be eli-
gible to receive services such as educational assistance for schooling, referral to
alternative learning systems, skills training, and other relevant assistance as recom-
mended by the social worker to prevent them from going back to streets. Cash for
work schemes will also be employed as a short-term intervention to provide tempo-
rary employment to families. Activities may include disaster preparedness, mitiga-
tion, relief, rehabilitation, and/or risk reduction projects in their communities. In
exchange, they will be paid with $6 per day for 90 days. Releases of cash grants are
directly made to beneficiaries through Philippine Post.
To receive these cash transfers, the program participants are required to comply
with four types of conditionalities. First, they need to attend various family develop-
ment sessions (FDSs) such as weekly FDSs for the first 2 months, biweekly coun-
seling sessions for next 2 months, and monthly counseling sessions for the remaining
period of the program. The parents are expected to develop/enhance their parenting
skills through the sessions. Likewise, participants are expected to improve the rela-
tionship among family members by participating in those sessions.
Second, the participating HSFs are required to get their child(ren) education.
Children aged 3–5 years must attend day care or preschool classes at least 85 % of
the monthly school days. Similarly, those aged 6–14 years are required to enroll in
elementary or high school and attend at least 85 % of the monthly school days.
Third, the cash transfer is also conditional on whether the families comply with
health services requirements. Pregnant woman in the family must receive pre- and
postnatal care and be attended by a skilled health professional during childbirth.
Children aged 5 or below must get regular preventive health checkups and vaccina-
tions. Those aged 14 or below must take deworming pills twice a year. Lastly, the
families are required to live in apartments/facilities either approved or rented by the
DSWD field offices through the LGUs. These homes are provided before the places
for resettlement are prepared.

15 Implementing a Cash Grant Program for the Homeless in Metro Manila… 245

Along with these conditionalities, the program also implements exit rules. Since
it covers only homeless families with children aged 14 or below, when the covered
child reaches 15 years, the family is no longer qualified for receiving cash transfer
unless it has another child(ren) of qualified age. Second, cash transfers should be
spent for their education and health needs. If the money is found misused, the par-
ticipants are subject to the grievance redress system whose consequences can lead
to delisting from the program. The participants can also voluntarily exit the program
when they deem it necessary. Of course, the beneficiary may be mainstreamed into
the regular CCT of the department based on the assessment of the case worker. In
such a case, it should be demonstrated that their social welfare indicators have been
clearly improved, the family has a permanent home, children are regularly attending
school and health checkups, and grantees are regularly attending FDSs. Basically, if
the participant families consistently comply with the MCCT requirements, they can
essentially graduate from the program.
The exit rules assume a properly working monitoring system. The monitoring of
the program is performed on the main activities that correspond to each step from
targeting, registration, compliance with conditionalities, release of cash grants and
other interventions, and budget execution. The monitoring is to be conducted by the
National Program Management Office together with the participating LGUs and
CSOs based upon the activity reports presented by the DSWD field offices.

15.3 Program Implementation

The MCCT program is a “rights-based program of the regular CCT” aimed to

uphold social protection among homeless families through psychosocial interven-
tions to develop resiliency for improved quality of life (DSWD 2013c). It is com-
posed of three key principles in pursuing its policy goals. First of all, the program is
implemented through a collaborative process of assessment, planning, facilitation,
and advocacy for services to meet the needs of every family, where all members of
the family are able to access social services using the available resources.
Accordingly, collaboration/partnership among national agencies, CSOs, and LGUs
in the implementation of the program is deemed essential. From the identification of
beneficiaries to monitoring and evaluation of the program, each has its own respec-
tive tasks. Second, the implementation of the program is systematized by a database
Client Administration Data Solution (CLADS) to gather, validate, report, and record
changes that have occurred on the status or condition of any member of the partici-
pating family while in the program. This tool is a basis in monitoring compliance of
beneficiaries (system building). Third, through various interventions such as family
camp and FDSs, participant families are capacitated to inculcate family values and
strengthen family ties and relationship (capacity building).

246 A. Colico-Aquino and J. Kim

15.3.1 Delivery Mechanism

The MCCT for the homeless has two modes of delivery mechanism, both in
partnership with CSOs that have the capacity to manage the program and have
existing programs of their own for the homeless (DSWD 2013c). In the CSO-
managed mode, the whole process of intervention is to be implemented by the
CSOs from the identification of beneficiaries to the delivery of support services.
The selection of the families and transfer of funds are, however, guided by exist-
ing regulations consistent with laws regarding the Commission on Audit (COA).4
Alternatively, DSWD also manages the programs where the involvement of
CSOs is limited to the hiring of temporary contract workers on an activity basis
(Fig. 15.4).

15.3.2 Targeting/Screening System and Registration

The targeting mechanism of the homeless beneficiaries is arranged through the

National Household Targeting Office (NHTO) of DSWD with the National
Household Targeting System for Poverty Reduction (NHTSPR) project that maps
out poor households in a unified, objective, and transparent targeting system. After
homeless families are mapped out, they will undergo the selection process where
CSOs and DSWD’s community-based units and residence-based centers identify
the potential household beneficiaries using the prescreening form. The form serves
as a tool to guide implementers in gathering necessary information on potential
household participants. In order to validate the potential participants against the
eligibility requirements, a list of candidates is submitted by CSOs and LGUs to the
Regional Project Management Office (RPMO), while the latter in turn relays it to
the National Project Management Office (NPMO). After validating and cross-
checking with the DSWD database against duplication, a master list of potential
beneficiaries will be downloaded to RPMO for field validation and registration by
CSOs and LGUs.
During the field registration and validation,5 an orientation session is offered
where enrollment in MCCT is processed with the beneficiaries’ signing of the Oath
of Commitment. This is followed by family registration preparations where each
family’s information is entered into the MCCT database, a basis for compliance
monitoring and the release of cash transfers. Identification cards are also provided
with a unique family ID number.

Existing laws include COA Circular 2007-001, COA Circular 950003 dated February 15,1995,
and COA Circular 96-003 dated February 27, 1996.
Field Registration and Validation is also known as the Community Assembly.

15 Implementing a Cash Grant Program for the Homeless in Metro Manila… 247

Mapping of Areas/Family in Need of

Special Protection (FNSP) Beneficiaries

Process of Application of Civil Society

Organizations (CSOs)

Resubmission of
MOA Signing


Registration/Validation of FNSP
Case Management Process
1. Intake / Psychosocial Assessment
2. Social Case Study / Goal Setting and
Treatment Planning
Initial Payment
3. Treatment Plan Implementation
Preparation Provision of bio- psychosocial
Service innovation (access to other
available services to meet specific needs
Verification of Compliance of the client)
Family Development Sessions
Health and Education interventions
Succeeding Release of Grants (Conditionalities)
Referral (to other stakeholders/
convergence of services)
4. Progress monitoring and evaluation/ re-
Mainstreaming into Regular Pantawid 5. Transition – Termination, follow-through
Pamilyang Pilipimo Program and/or mainstreaming into regular CCT

Fig. 15.4 Process of modified conditional cash transfer program (Source: DSWD 2013c)

15.3.3 Implementation Structure

The convergence or collaborative strategy among national agencies, CSOs, and

LGUs is a significant feature that makes the program effective in its implementation.
Every participant in the collaboration has its respective roles apt to its mandates.

248 A. Colico-Aquino and J. Kim

Implementing Partner Agencies

CCT National Project
Department of Health (DOH)
Management Office (NPMO)
Department of Education (DepEd)
Central Office Department of Interior and Local Government
National Technical Working (DILG)
Group (NTWG)
Oversight Agencies:
Department of Budget, National Economic &
Development Authority, National Anti-Poverty
Commission, Council for the Welfare of
Regional Office Children, Philippine Commission on Women,
National Technical Working National Commission on Disability Affairs,
Group (NTWG) National Commission on Indigenous People,
Commission on Population

Civil Society Local Government

Organizations Units

Fig. 15.5 Implementation structure of the program (Source: DSWD 2013e)

At the national level, DSWD as the principal agency created project management
offices both at the central and regional levels dedicated to implementation of the
program interventions, while providing technical assistance and oversight.
Respective counterparts from the implementing agencies such as Department of
Health (DOH), Department of Education (DepEd), and Department of Interior and
Local Government (DILG) also have joined the interagency council together with
the oversight committees to harmonize implementation and complement services
for the HSFs. CSOs with the support from DSWD jointly implement the program with
LGUs. Meanwhile, LGUs are expected to provide fund augmentation and generate
resources for the supply-side requirements. They likewise assist in the implementa-
tion, particularly regarding identification of beneficiaries and provision of support
services. Figure 15.5 charts the overall structure of MCCT implementation.

15.3.4 Resource Allocation

The CSO engagement in the program is guided by DSWD’s Memorandum Circular

(DSWD-MC) No. 07 Series of 2012 entitled “Framework on the Engagement with
CSOs on the Implementation of the DSWD’s Social Protection Programs” and
Commission on Audit (COA) Circular 2007-001 dated October 25, 2007, entitled
“Revised Guidelines in the Granting, Utilization, Accounting and Auditing of the

15 Implementing a Cash Grant Program for the Homeless in Metro Manila… 249

$700 $648.91

2012 2013
Total budget allocation Budget utilization

Fig. 15.6 MCCT budget appropriation and execution (Source: DSWD 2013d)

Funds Released to Non-Governmental Organizations/People’s Organizations

(NGOs/POs).” These policies specify the financial procedures in handling the pro-
gram. CSOs are required to put up project equity to at least 20 % of the project cost
in the form of labor, facilities, and equipment. A fund utilization report of the pro-
gram indicates the equity expenses incurred and serves as the liquidation report. The
release of operational funds to CSOs is to be made in tranches depending on the
memorandum of agreement between DSWD and CSOs (Fig. 15.6).
DSWD allocation for operational cost covers staffing, communication cost, trav-
eling allowance, office supplies and materials, training expenses, and management
cost. For staffing requirements, five case workers/social workers are assigned to
handle 200 families each at $507 per month, five child-welfare assistants for every
200 families at $309 per month, while at the administrative side, one focal project
coordinator with a salary of $507 per month, project development officers (PDO) III
and II with salaries at $702 and $507 per month, respectively, financial analyst with
$507 per month, administrative assistants V and II with monthly salaries of $445
and $334, respectively. To date, hired for the program are 35 social workers, 41
social welfare assistants, one focal project coordinator, one PDO III, two PDOs II, one
financial analyst, two administrative assistants V, and two administrative assistants
II. As for communication cost, a social worker or a psychologist is allocated $11 per
month and a child-welfare assistant $6 per month. Traveling allowance for the social
worker and psychologist is set at a maximum of $30 per month and for a child
welfare assistant at $44 per month. For office supplies and materials, it is estimated
at $0.11 per household or $111 per month for 1,000 cases. Management cost for the
meetings and monitoring expenses is allocated at $447 per month.
The MCCT funding is lodged at the DSWD national office and part of the
General Appropriations Act (GAA). For the year 2012, a total budget of $437,000

250 A. Colico-Aquino and J. Kim

was appropriated for the program cost. Budget allocated for the operational cost is
$102,000 and cash for work is $335,000. This covered the operating/administrative
cost and the services provided to the beneficiaries. Only 52 % or $226,183 has been
spent in 2012 as the remaining appropriations would be implemented in 2013. For
the 2013 budget, $735,111 is allocated, of which 93 % or $684,911 has been exe-
cuted as of July 2013. Out of total allocation, the operational cost amounted to
$508,539 and cost for alternative family home to $226,572. With the allocated
budget, the beneficiaries were also provided support services: house rental subsidy
for 862 families amounted to $192,578 from September 2012 to June 2013; cash for
work for 732 individuals with $219,128 assistance provided; and 41 families were
also provided with skills training. As of July 2013, the total amount of cash grants
release is $50,000 for 1,355 families or 89 % of the 1,538 updated and currently
enrolled beneficiaries. Incomplete release of cash grant can be attributable to vari-
ous factors such as unavailability of their current locations, return to their home-
towns, and noncompliance.

15.3.5 Preliminary Results: Program Participation

and Compliance

The program started being implemented in July 2012 where pilot testing was
administered until December 2012. During the identification of homeless beneficia-
ries, 1,225 HSFs were chosen as potential beneficiaries of the program. However,
only 72.5 % or 888 families were able to register the program, while the remaining
337 families were not able to register due to various reasons such as high mobility,
no qualified children, return to their provinces, decline to avail the program, and
failure to attend the community assembly. After pilot implementation, in January
2013, a scale-up with additional 900 families was targeted. Although 946 families
were originally listed as additional targeting, only 77.9 % or 737 families were
Beneficiaries’ compliance with conditionalities is critical for the achievement of
program goals. Children in the program are required to attend school at least 85 %
of the monthly school days. According to the latest monitoring (June 2013) result,
only 72 % have complied, and 28 % failed to attend due to late enrollment, sick-
ness, and other family concerns. In the health conditionalities, pregnant women
who have prenatal diagnosis and children should have a monthly health check-up.
Monitoring revealed compliance rates of 49 % on pregnant women and 62 % on
children. Noncompliance may be attributable to the failure of beneficiaries to visit
health centers, unlocated beneficiaries due to high mobility and beneficiaries’
returning to original provinces. Beneficiaries are expected to attend monthly ses-
sions on family development activities. Out of the 1,538 currently registered benefi-
ciary families, 80 % have complied. Noncompliance can again be attributed to
family urgent concerns, unlocated families, and conflict with other responsibilities
in the community.

15 Implementing a Cash Grant Program for the Homeless in Metro Manila… 251

There are many factors accounting for the success or failure of policy implementation.
Sabatier and Mazmanian (1979) identify four conditions that foster effective policy
implementation: tractability of the problem (objectives), ability of statute to struc-
ture implementation (policy decision), nonstatutory variables, and initial implemen-
tation success. The objectives of the policy can be viewed into two components:
changes in the behavior of the target group and the means by which it can be
obtained. The second condition applies to the clarity and consistency of objectives,
sufficiency of financial resources, substantial hierarchical integration within and
among implementing agencies, supportive decision rules of agencies, and ample
opportunity for interest groups and supporters to intervene in the implementation.
Nonstatutory variables also affect implementation such as socioeconomic condi-
tions and technology, media attention to the problem, public support, attitudes and
resources of constituency groups, support from sovereign, and managerial and
political skills of leaders of agencies. Accordingly, if all these conditions are met, it
is not impossible that effective policy implementation will be achieved. These vari-
ables are similarly identified by Meter and Horn (O’Toole 1986) such as policy
standards, resources, enforcement, communication, characteristics of implementing
agencies, political conditions, socioeconomic conditions, and dispositions of imple-
menters. Furthermore, contingency approach states that implementation structures
based on joint or shared decision making among formally independent organiza-
tions are needed for successful policy implementation in modern welfare states
(O’Toole 1993).
The implementation of MCCT can be assessed according to these broadly
defined conditions and determinants of successful implementation. First of all, it
seems that MCCT implementation has an implementation structure that provides a
distinct flow of communication from the NPMO down to the implementer level
(CSOs and LGUs). A detailed protocol of communication is established to identify
the levels of concerns that can be addressed at a specific level. Such is the case of
providing technical assistance on implementation to case workers at regional level.
A factor critical in implementing a public policy is the availability of human
resources regarded as the most significant resource the program needs for its imple-
mentation. Human resources include sufficient manpower, appropriate skills, and
competent staff to carry out tasks. Funds to finance the services for the beneficiaries
are also essential for the program. MCCT has relatively significant manpower
employed only for its implementation. A ratio of 1:200 families is applied in hiring
case and social workers for managing cases of homeless families. Accordingly, a
total of 85 employees are now employed for the program at the street-level. Likewise,
a substantial amount of yearly budget, given the competition among different public
programs, is appropriated to the program which covers the operation and service
cost as described above.
An appropriate bureaucratic structure also contributes to the success of policy
implementation. While the MCCT management office is part of the DSWD’s
bureaucracy, it has a specific organizational structure within the program to deter-
mine the level of accountability in a given position. Furthermore, inducing coopera-
tion among the diverse participants of network is essential for a successful

252 A. Colico-Aquino and J. Kim

implementation (Radin 2007). Given the problem’s wickedness, interorganizational

network is one of the features of the program. The MCCT implementation context
establishes mutual and interdependent relationships among its network of agencies.
This is substantiated by a memorandum circular establishing the relationships
among the national agencies and memoranda of agreement for partner CSOs
and LGUs.
Lastly, socio-political factors constitute an essential part of the policy’s external
environment. The MCCT is steadfast in its implementation that political interven-
tion from national and local politicians is not entertained. The program has been
objective and transparent in its selection of beneficiaries as well as the delivery of
services such as the cash grants that are directly provided to beneficiaries to prevent
any manipulation of local leaders to gain personal advantage. Moreover, the
Philippines is one of the UN member countries, where commitments such as the
Millennium Development Goals, Convention on the Rights of Children, and UN
Declaration of Human Rights, among others, are being upheld. In line with these
commitments, concerted efforts are made to fight this persistent problem. This is
how the government rationalizes and sustains its efforts on homelessness in the
metro Manila area in adherence to the international commitments and enforcement
of the national laws pertaining to rights-based approach.

15.3.6 Challenges Encountered During Initial Implementation

While the program is still young within its first year of implementation, there
emerge some notable challenges. First of all, it is still a daunting task to understand
the dynamics of homeless families, which affects the implementation of the pro-
gram. Homeless families, labeled as “street nomads,” are known for their high
mobility. Keeping track of homeless families is more than elusive even after they
were initially identified for the program (DSWD 2013d). During the registration
session, the majority of families who did not attend the activity were not registered
and accordingly slipped out of the program. Values previously learned by the chil-
dren of participating families are difficult to change, and education and health ser-
vices provided are usually not readily accepted by the participants. This leads to
difficulties in complying with conditionalities.
The program employs a new mode of delivery mechanism through partnering
with CSOs and LGUs coordinated by the DSWD. Accordingly, there is a need to
orient them and provide technical assistance, particularly in the accomplishment
of monitoring forms and other reports to be accomplished in the program (DSWD
2013e). Since this is developed by the DSWD, the provision of technical assis-
tance to partner organizations needs to be followed through. Furthermore, pro-
gram effectiveness and its impact on beneficiaries using the two modes of delivery
arrangement have yet to be determined. Therefore, their respective advantages and
disadvantages need to be carefully identified and weighed through evaluation of
the program.

15 Implementing a Cash Grant Program for the Homeless in Metro Manila… 253

15.4 Points of Lesson to Be Learned and Conclusion

Although the MCCT program has just started in July 2012 without any substantial
outcomes yet, the original CCT program after which it was patterned has already
proved its effectiveness not only in the Philippines but also in other developing
countries. The introduction of the MCCT to the group of homeless families is a
great challenge for the government given the nasty nature of the problem. Despite
being at an early stage of implementation, the program provides noteworthy points
of lesson to distinguish operational practices that can offer some implications for
other developing countries.
DSWD in 2009 started enumerating and mapping of poor households in the
Philippines under its Social Reform Agenda (SRA) well before introducing
MCCT. However, since this enumeration was limited only to those households that
had a permanent abode, homeless families were left out of the mapping. The MCCT
program has extended this effort and included street families as a vulnerable seg-
ment of the poor. Counting the homeless would provide advocates, service provid-
ers, citizens and the government with information necessary to effectively deal with
homelessness. Most importantly, this effort of homeless mapping revealed the ugly
faces of poverty and homelessness beyond abstract numbers.
Street-level bureaucrats or the frontline workers by virtue of their position have
significant opportunities to influence the delivery of public goods and services
(Lipsky 1980). CT program highlights the crucial roles played by the case and
social workers. Those workers need to be empowered to exert discretion according
to their professionalism and closeness to the clients to produce desired policy out-
comes. They should be capacitated in terms of technical skills, processes, and
guidelines required by the program. This not only promotes objectivity and fairness
in the implementation but also helps implementing field officials better exert discre-
tionary judgment which affects attainment of the goal.
Furthermore, the MCCT program also attests to the importance of encouraging
interorganizational cooperation. When it comes to dealing with wicked and sticky
problems, the government finds it increasingly difficult to do the job unless it is
helped by a diverse array of policy actors in and out of the government.
Implementation of government programs and policies tend to be characterized
increasingly by cooperation and collaboration of significant variety among indi-
viduals, groups, and organizations in and out of the government (Rainey 2010). The
MCCT implementation structure is considered as a “collaborarchy” rather than
hierarchy, and thus “soft guidance” rather than “hierarchical authority” is the glue
that gathers the actors around the program. For such a network of organizations, a
real measure of effectiveness should not be focused on any individual organization,
but rather on the entire network. Lastly, the implementation of MCCT suggests that
leadership is a crucial socio-political factor for the success of the program. This
refers to the capability of leaders to sail through political processes in the mobiliza-
tion of resources, select appropriate agencies and personnel to implement the pro-
gram, establish collaboration networks among political institutions and network

254 A. Colico-Aquino and J. Kim

members, and create a participative atmosphere in the implementing agencies and

collaborative network. MCCT requires strong leadership to take the helm of the
program and establish a productive network relationship to establish direction in the
achievement of its goal.
These lessons are worth replicating to other urban cities and countries with
the prevalent concern of homeless families. Although the program’s effective-
ness is yet to be determined through evaluation and impact assessment, MCCT is
a propitious endeavor as it provides innovative and long-term interventions for
homeless families.


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Chapter 16
Enhancing Credit Delivery Facilities
to Support Farmer’s Use of Technology

Linda M. Peñalba and Merlyne M. Paunlagui

16.1 Introduction

Credit plays an important role in agricultural development and is key to agricultural

modernization. Agricultural credit is extended for farmers to have access to produc-
tion inputs (Llanto 1993), to plant alternative crops (Poliquit 2006), and adopt
modern farm technologies (Nagarajan 1992). It can also help improve income by
enabling the farming households to undertake additional income generating
activities, finance more consumption, and have surplus finance available for further
investments (Poliquit 2006). It is therefore important for the agricultural credit
delivery system to effectively respond to farmers’ credit needs.
The Philippine government has adopted various policy measures to enhance the
access of small farmers to credit (Corpuz and Kraft 2005). Before the policy reforms
in 1986, the rural credit policy in the Philippines adopted the supply-led approach
with emphasis on directed credit programs (DCPs) (Llanto 2005). The key features
of this approach are: mandatory credit allocation; loan targeting; credit subsidies to
clients which include farmers, small fisher folk, and general small-scale borrowers;
retail lending; and involvement of government agencies such as the Department of
Agriculture and Department of Agrarian Reform in credit delivery. Public funds are
lent to farmers either through intermediaries like the accredited rural banks or
directly to individual farmer-borrowers.

L.M. Peñalba (*)

Institute for Governance and Rural Development, College of Public Affairs
and Development, University of the Philippines Los Baños,
Los Baños, Laguna, Philippines
e-mail: lmpenalba@gmail.com
M.M. Paunlagui
Institute for Governance and Rural Development, University of the Philippines
Los Baños, Los Baños, Philippines
e-mail: merlynep@yahoo.com

© Springer India 2015 257

A. Gurtoo, C. Williams (eds.), Developing Country Perspectives on Public
Service Delivery, DOI 10.1007/978-81-322-2160-9_16

258 L.M. Peñalba and M.M. Paunlagui

Various studies (Corpuz and Kraft 2005), however, have shown that many rural
banks that participated in the government’s subsidized credit programs collapsed
because of high arrearages and poor loan recovery. Realizing the failure of such an
approach, the government has moved away from the implementation of subsidized
DCPs to the adoption and implementation of market-based credit policies. These
policy reforms are geared toward the development of a viable and sustainable rural
and microfinance market.
The failure of the formal financial system to extend loans to poor households and
small enterprises led to the emergence of the informal money lenders (Zapata 2006).
The results of the Agricultural Credit and Policy Council (ACPC) annual survey on
small-scale farmers’ credit access show the predominance of informal sources of credit
in the Philippines. The surveys taken from 1996–1997 to 2001–2002 revealed that
more than 60 % of agricultural loans were obtained from informal money lenders.
After the policy reforms, has rural credit delivery improved significantly? How
effective are the credit policy reforms in improving corn farmers’ access to credit?
What is the role of the informal credit providers in genetically modified (GM) corn
promotion and adoption? How do the formal and informal credit delivery systems
compare in terms of meeting farmers’ credit needs? What can be done to further
improve farmers’ access to credit?

16.2 Objectives

This chapter discusses the key agricultural policy reforms instituted by the Philippine
government; presents how the informal credit providers enable the small-scale corn
farmers to use GM corn; discusses the credit delivery mechanisms of both formal
and informal credit providers in the Philippines; analyzes the effectiveness of credit
policy reforms to improve corn farmers’ access to credit; and forwards policy
recommendations to further improve rural credit delivery in the Philippines. This
chapter was based on a study entitled “Supporting Biotechnology Regulatory Policy
Processes,” but focuses only on the credit delivery aspect of the study.

16.3 Methodology

The study covered six major corn-producing provinces, namely: Cagayan, Isabela,
Quirino, North Cotabato, Bukidnon, and Tarlac. Data used for this study were
collected through key informant interviews, focus group discussion, farmer survey,
and review of secondary sources. Survey questionnaires and interview guide were
pre-tested to ensure accurate and systematic data collection.
Four types of corn growers were interviewed from among those planting Bacillus
thuringiencies (Bt) corn, Herbicide Tolerant (HT), Stacked Trait (ST), and conven-
tional hybrid non-GM corn varieties. The respondents were drawn randomly from

16 Enhancing Credit Delivery Facilities to Support Farmer’s Use of Technology 259

the list of corn farmers obtained from the Office of the Municipal Agriculturalist in
the corn growing municipalities. From the identified provinces, the top two corn
producing municipalities and the top three producing barangays (villages) in these
municipalities were selected as study sites. A total of 1,206 respondents categorized
into four types of corn growers were interviewed.

16.4 Results and Discussion

16.4.1 Key Agricultural Credit Policy Reforms

To improve credit accessibility, the Philippine credit policies underwent several

transformations. Beginning in the 1960s, the Philippine government has been
implementing the so-called DCPs to facilitate credit delivery to the rural poor (Vogel
and Llanto 2005). According to the National Agriculture and Fishery Council
(NAFC) (no date), DCP is a supply-driven and subsidized commodity-specific
approach of agricultural lending. In the mid-1980s, following the recommendations
of ACPC, this credit policy was revised. As a consequence, 20 subsidized agricul-
tural credit programs were terminated and consolidated into the Comprehensive
Agricultural Loan Fund (CALF). CALF is a loan guarantee system wherein the
government would reimburse the private lending institution up to 85 % of the
outstanding loan (principal plus interest) of the small-scale farmer, upon default. In
1989, the subsidized credit programs in the agriculture and non-agriculture sectors
were revived. As a result, in the mid-1990s, DCPs had proliferated. About 38 % of
the DCPs went to agriculture (Llanto et al. 1999). Evaluation studies, however,
showed that DCPs were ineffective and inefficient because outreach was small, cost
of implementation was high, and loan recovery rates were very low (NAFC 2012).
The Small Farmers and Fisherfolk Credit Accessibility Survey conducted by
ACPC affirmed the situation. Majority of the survey respondents indicated that
access to credit has become more difficult (ACPC 2003). The continued implemen-
tation of DCPs also resulted in waste of scarce government resources and major
fiscal costs for the government (Vogel and Llanto 2005).
Realizing the failure of the DCPs to fully address the farmers’ credit needs, the
government shifted to market-based credit policies and encouraged farmers to
obtain loans from formal credit sources. To improve credit accessibility, rural banks
and people’s organizations (POs) were tapped as credit delivery conduits. Despite
these policy reforms, however, access to credit from formal institutions has
remained low.
Castillo et al. (2012) reported that the small-scale farmers find the long list of
requirements imposed by formal credit sources, particularly, the Land Bank of the
Philippines (LBP), difficult to satisfy. Timely release of loan is very crucial in
agricultural production due to seasonality of farm activities. However, it usually
takes 30–45 days before a loan is released by the banks. The list of key policy
reforms in rural and microfinance is shown in Table 16.1.

Table 16.1 Key policy reforms in rural and microfinance (Llanto and Vogel 2005)
Policy measure Key provisions
Issuance of the National Strategy for Market orientation of interest rates
Microfinance (1997) Rationalization of subsidized directed credit programs
Enactment of the Social Reform and Defining capacity building to exclude any and all
Poverty Alleviation Act, December 11, forms of seed funding, equity infusion, and partnership
1997 funds from government to microfinance institutions
Deletion of equity funding from the list of specific
uses of the People’s Development Trust Fund
(PDTF), a trust fund created under the law aimed at
funding capability building activities for MFIs
Rationalization of directed credit and guarantee
Enactment of the Agricultural Fisheries Phase-out of directed credit programs in the
Modernization Act (AFMA), December agriculture sector over a 4-year period (i.e., ending
22, 1997 February 2002)
Rationalization of loan guarantee programs
Adoption of market-based interest rates
Non-provision of credit subsidies
Issuance of Executive Order (EO) 138 Non-participation of government nonfinancial
(August 10, 1999) directing government agencies in the implementation of credit programs
agencies implementing credit programs Government financial institutions to be the main
to adopt the National Credit Council vehicle in the implementation of government credit
(NCC) Credit Policy Guidelines programs
Adoption of market-based financial and credit policies
Increased participation of the private sector in the
delivery of financial services
Approval of the design of the No further implementation of directed credit
Agricultural Modernization Credit and programs by government nonfinancial agencies by
Financing Program (AMCFP) end of 2002
Limit lending decisions only to banks, viable
cooperatives, and microfinance non-government
Adoption of market-determined lending rates to
enable conduits to cover their costs and achieve
sustainability in the long run
Focus of the Department of Agriculture on monitoring
and evaluation of AMCFP, provision of infrastructure,
institution building, research and extension, and the
provision of an appropriate policy environment
conducive for increased private sector participation
Establishment of the necessary Formulation and adoption of the Standard Chart of
framework for a more appropriate and Accounts for credit cooperatives (December 1999)
effective regulation of deposit-taking Formulation and launching of the performance
cooperatives standards for credit cooperatives (October 2002)
Enactment of the General Banking Act Lifting of the moratorium on branching, specifically
(GBA), May 23, 2000, with provisions for microfinance banks
mandating BSP to recognize the unique Issuance of BSP Circular 272 on January 30, 2001,
nature of microfinance as it formulates implementing the microfinance provisions of the GBA
banking policies and regulations Review of the examination process to reflect the
special nature of microfinance, e.g., non-
collateralized loans

16 Enhancing Credit Delivery Facilities to Support Farmer’s Use of Technology 261

Executive Order No. 138 (s. 1999) terminated all DCPs in the non-agriculture
sector. To enhance credit delivery, after the DCPs were terminated, the AMCFP was
created under the AFMA law (RA 8435). AMCFP is multi-track, multi-commodity,
and market-driven and is designed to be the overall government credit program for
the agricultural and rural sector, particularly the smallholders. It was supposed to
replace the different subsidized DCPs of the Department of Agriculture and
consolidate credit delivery to small farmers and fisherfolk through private financial
institutions. The law mandated the phase out or termination of 39 directed DCPs in
the agriculture sector within 4 years after its enactment. It also provides for the
consolidation of all outstanding loan funds including new funds for on-lending into
the AMCFP (NAFC 2012).
However, an evaluation of the AMCFP showed a very low loan availment rate
(Castillo et al. 2012). For instance, in the Province of Oriental Mindoro, a major rice
producing province, the amount of loan availed was only 50 % of the PhP700
million allocated for the Program by the LBP in 2009. Meanwhile, in another
province, loan released by LBP in 2009 was PhP29.89 million benefitting 995 rice
farmers or 4 % of the total rice farmers (35,000) in the province. The most common
reasons cited by the respondents for the low loan availment rate were: restrictive
loan eligibility criteria by LBP, too many requirements for availing loan which they
find difficult to satisfy, and long loan processing time. Farmers who applied for
loans usually wait for 30–45 days before the loan is released.
The credit policy reforms implemented by the government prohibited the
subsidized credit and the involvement of nonfinancial government agencies in lend-
ing to farmers. Instead, government’s lending programs were coursed through
financial institutions like LBP, accredited rural banks and POs, but these policy
changes did not address the problems associated with the lending practices of these
organizations. For instance, in the areas covered by this study, rural banks charge
very high interest rate that goes up to 42 % per annum, while many POs have low
credit management capability. In many cases, they have low loan collection rate and
many PO managers mismanaged PO funds. Furthermore, only a few farmer respon-
dents of this study are members of POs and would qualify as borrowers.

16.5 The Philippine Maize (Corn) Industry

and the Corn Farmers

This section presents a brief d