Karnataka's Big Brother act cripples Bengaluru

Bengaluru's parastatal problem

Bengaluru has been a start-up capital hosting many unicorns. However, another unique and perhaps a little lesser-known fact is that the city (and the state of Karnataka) also takes the pole position as a capital for many public sector enterprises.

Anyone who starts working on urban issues of Bengaluru needs to learn how to expand a host of acronyms—BBMP, BDA, BMRDA, BWSSB, BESCOM, BMRCL, BMTC, BESCOM, BCP, BenSCL, BSWML and more. It is often daunting to understand the functions and coverage areas of each such parastatal while trying to fix issues.

The emergence of New Public Management (NPM) and the need for economic efficiency in governance through partial privatisation spearheaded administrative reforms in the nineties in Karnataka. Thus, the state ended up establishing several boards, companies, and corporations for almost every service delivery the state was mandated to, through ‘special purpose vehicles (SPVs)’.

Interestingly, the economically advanced countries in the west went for the NPM model in the '70s and '80s. By the '90s, they received flak due to shortcomings and eventually phased the model out. Among the key shortcomings of the NPM pointed out during the 90s was that it can deliberately fragment service delivery systems and generate functional problems for inter-organisational coordination. Yet, Karnataka chose to ignore them.

Public sector entrepreneurship

Karnataka has experimented with setting up public sector enterprises for a while. The Karnataka State Bureau of Public Enterprises (KSBPE) set up in July 1980, was converted into a department in 2002. It was called the Department of Dis-investment and Public Enterprise Reforms (DDPER) under the Department of Personnel and Administrative Reforms (DPAR).

By 2005, this was upgraded to a full-fledged independent department—the Department of Public Enterprises (DPE). The government recently repealed the DPE and merged it with the Finance Department, citing rationalising expenses and simplifying the administration.

The DPE had the purview of 60 public sector enterprises across manufacturing, transportation, energy, agriculture, water resources and social service and community development sectors that were also under 22 different state government departments. The recent annual report of the DPE (for 2020-21) notes that of the 60 PSEs, 34 are profit-making, and 21 are under losses. It also notes that five PSEs are social sector enterprises that are not measured in terms of earnings or gains.

A key aspect to note in the creation and repeal of the DPE is that they were done through executive government orders in the absence of any legislative oversight or statutory backing.

Funding conundrum

Barring BESCOM and BMTC, all other urban-related SPVs like Karnataka Urban Infrastructure Development and Finance Corporation (KUIDFC), Bengaluru Smart City Limited, Bangalore Metro Rail Corporation Limited etc., are under the purview of the Urban Development Department.

Most of these have not happened overnight or perhaps engineered, per se. But often, these are also favoured by multilateral funding agencies. For instance, in the 1960s, the BWSSB was established, taking away the functions of water supply and wastewater collection from the urban local body—Bangalore City Corporation—and transferring it to a newly established ‘Board’ at the instance of World Bank that funded the project.

The Asian Development Bank or Japan International Cooperation Agency (JICA) are happy to provide a loan to BMRCL because it is an SPV, and the state government is signing as a guarantor. Funding agencies like the books of the projects they fund to be clean so that they can keep a tab on their spending. They don’t prefer bodies like the BBMP, whose finances are historically mired in non-transparency and corruption.

One of the first fallouts of this adaptation is the transformation of the citizen into a consumer. In particular, the state wrests the delivery of certain services like water, power, transportation, and other infrastructure with these SPVs.

One of the tenets of western NPM was to privatise service delivery where there was competition, while the state regulated it. However, in Karnataka, the state decided to create its own enterprise and ensure a monopolistic market control barring the entry of private players.

Cost of basic amenities

The moment basic amenities in a city, such as water, clean environment, easy mobility etc. end up becoming services, those with money can afford them, and the rest need to go for pilferage or buy it from elsewhere, often at a higher cost of various natures.

For example, a house with a BWSSB connection needs to pay Rs 7/1,000 litres of Cauvery water, while an unauthorised house in a slum that has no connection has to buy potable water from water ATMs by paying Rs 5/20 litres, or draw BWSSB water illegally. Similarly, while those who have legal electricity connections enjoy the benefits for a fee, the needy who can’t pay for it will end up drawing power illegally. A slum where people can’t afford to pay for garbage collection will see garbage dumps if the BSWML imposes a collection fee. In effect, no parastatal is obliged to ensure everyone can access basic necessities.

The multiplicity of organisations has also resulted in a lack of coordination at different levels. On the ground level, the digging of recently laid roads, very frequently by various utility agencies, stands as a testament to this. At a macro level, these organisations don’t talk to each other or gather feedback while planning projects, as they operate in silos. No one is responsible for problems such as flooding, sewage entering lakes or damaged cables or pipes. With this, passing the buck becomes easy.

With such a structure, it becomes difficult to get the micro-level data necessary for city planning, say at the ward level, as all these organisations have varied jurisdictions. For instance, neither BESCOM, BWSSB nor BMTC, nor the police station jurisdictions, which are usually sub-divisions, zones or limits, conform to the boundaries of the BBMP wards. Thus, aggregating data on power or water consumption or assessing mobility patterns or crime rates with the population data from the ward-level census figures becomes impossible. It is critical that all these operate at common geographical units than varied jurisdictions.

State’s dominance sans elected reps

Government-established enterprises dominate sectors of water, energy and transport. These enterprises fail to realise one of the goals of public sector enterprises: to enhance local participation.

An analysis of the composition of the boards of these SPVs reveals interesting facts. Only a couple of them have ministers or Members of the Legislative Assembly as chairpersons. While there are political appointees as chairpersons for a couple of them, there is hardly any elected representative in the ‘smart city’ companies. A majority of these enterprises have senior leadership in the bureaucracy as chairpersons and slightly junior bureaucrats as Managing Directors.

Although the audit report of parastatals is tabled in the state legislative assembly, the elected local representatives have little or no degree of influence over them. This also means that bureaucratic leadership can sidetrack the local political leadership easily.

Currently, the state government takes key decisions on the city affairs, with little or no scope for BBMP. The state capture prevails as the head of the state or the chief minister, who is not necessarily from the city or has any grounded understanding of the city’s issues, decides the fate of the city. This makes the citizens of Bengaluru pay a heavy price.

Solving this will require citizens to be more aware and engaging in all aspects of governance. The prevalent apathy of citizens in civic affairs has enabled persons in power to manoeuvre the system conveniently.

(The writer is a researcher studying multiple facets of Bengaluru. He has a PhD in urban planning from IISc)