Speak to the people

Published: The Economic Times, April 14, 2007

By Pradeep S Mehta

The uproar on SEZs and the like is inter alia, most likely the result of a massive communication failure. Both the government and the investors do not have any strategy to address the information asymmetries, which only compound the problem and thus affect progress.

Here let me share a personal experience. On February 1, 2006, I landed at a rather tense airport in Delhi amidst agitations against the handing over of the airport to a private party. Getting into a taxi, I asked the driver why everyone was protesting against something that might be good for all.

“The sarkar is selling sarkari property to a businessman” was the prompt response. Adding, that soon many will be thrown out of their jobs and that he too may not be able to run his taxi on this lucrative route any longer as the new company will run its own taxi service!

The GMR Group that had won the bid for running the Delhi airport in a public-private partnership would build and operate the new airport with a guaranteed revenue share to the government, I tried explaining to the driver. The property will revert to the state after 30 years. The ownership of the airport will remain that of the nation, i.e. of yours and mine, I added. But he was not too convinced!

Over the past few years, several private airlines flying the Indian skies have led to a phenomenal growth in traffic and cargo. But, the existing infrastructure at our airports is not capable of handling the resulting congestion and saturation.

With an expanded and modern airport at least in Delhi, passengers will be able to move in and out smoothly. This will mean a faster turnaround not only for the industry but also for people like the taxi diver. Apparently, neither the government nor the private developer speak to people about the process. Thus confusion reigns.

A cursory look across, would suggest that weak communication and a lack of public understanding and consensus about reforms have been the key impediments to successful economic reforms in many countries. Major reform failures have resulted from closing eyes to the political, social and cultural context within which the reforms take place and not from a failure to put in place the right policy environment.

The privatisation programme of Senegal came to a halt because of a complete absence of consensus in favour of the reforms. Even industrialised countries are not immune to the negative impact of poor communication strategies. New Zealand’s disaffection with privatisation is a revealing case in point in this context.

Back home, the multi-purpose Narmada Valley project highlights how lack of proper attention, resources, and seriousness to public communication about the benefits significantly impair a reform process. The Narmada dam, which has remained a subject of controversy and protest since the late 1980s, is a good example in this context.

Had the authorities recognised the importance of engaging the affected stakeholders, early in the process, the situation would have been entirely different today.

In the midst of this gloom, the contribution communication can make to reform programmes, brings in the much required ray of hope. The reform process in the telecommunications sector of Malawi is a case in point, where the agitating workers were educated about the objectives and rationale of the reform.

Through concerted efforts to institutionalise dissemination of information and systematic stakeholder consultations, it was ensured that the employees acquired a stake in the process. This led to the success of the telecommunications reform in the country. Labour unrest has often resulted due to workers not being involved in the reform process.

The Delhi airport story is one such illustration. The new company running its own taxi service, existing staff being thrown out of their jobs etc., is the resulting baloney of this opacity and silence.

Another good model followed in ‘speaking to people’ in the reform process comes from the water sector reforms implemented in Zambia. From the beginning of reforms, particular emphasis was put by the government on stakeholder participation to make them aware of reforms and its principles.

Considerable consultation at all levels to sensitise the public on the new legal and institutional framework and the new water management approach led to the success of water sector reforms in the country.

Coming back to the Indian context, of late everyone in the policy matrix is speaking about the need of raising $350 billion or so to finance infrastructure projects to meet with the targets set in the 11th Five Year Plan. Substantial amount of this money will have to come from the private sector, whether as a sole investor or in PPPs mode.

As in the Delhi airport case, PPPs are certainly one way forward to garner scarce capital, but are people properly aware of what this entails? They are not. In any event, people are unable to distinguish between private capital coming in as the sole investor or as a partner.

The Singur agitation over the Tata Motors setting up a factory in West Bengal is a good example. The same goes for SEZs. Rather than speaking to people and ensuring that they get a fair compensation for their acquired land and a long-term return, politicos are more bothered about their vote banks.

Effective communication is crucial and is indeed the missing link in all forms of reform programmes, be it pension reforms, privatisation of a large state-owned enterprise, government decision to do away with subsidies, or introduction of a new tax regime (such as VAT).

By informing the public about the proposed reform, its effects on their lives, on the country’s economy, advance awareness campaigns help build confidence in the proposed measures and create a positive environment so that the reform succeeds.

A closed and secretive process to reform is counter-productive. The key to success is realising the importance of right flow of information and listening to people. In a nutshell, irrespective of the canvas of a reform and its importance to a country’s economy, what is crucial is to: speak to the people!

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