Extract from 13th Report, "Organisational Structure of Government of India", pgs 8-11.
NPM is one of the three models of structural reform in government noted in the 13th Report of ARC II , on the ‘Organisational Structure of GoI”. The other two being ‘reinventing government’ and ‘re-engineering’.
New Public Management (NPM) is “shorthand for a group of administrative doctrines” in the reform agenda of several OECD countries starting in the 1970s.According to the OECD (Kickert, 1997: 733), “a new paradigm for public management” had emerged, with eight characteristic “trends” (listed below in modified order, to range from internal to external concerns):
(1) strengthening steering functions at the center;
(2) devolving authority, providing flexibility;
(3) ensuring performance, control, accountability;
(4) improving the management of human resources;
(5) optimizing information technology;
(6) developing competition and choice;
(7) improving the quality of regulation; and
(8) providing responsive service.
Origins of NPM
2.3.1 New Public Management (NPM) – has also been called market-based public administration, managerialism, reinventing government, and post-bureaucratic model. It evolved in Britain and the US, and later spread to most of the affluent liberal Western countries and also to several developing countries like Ghana, Malaysia, Thailand, and Bangladesh. Its initial growth can be traced to the relatively minimalist, non-interventionist state ideology of the late 1970s and early 1980s, but the basic approach of NPM was later adopted by a number of countries that did not necessarily share this ideology.
NPM sought to bring management professionalism to the public sector without necessarily discarding the active role and welfare goals of the state. NPM also offered the possibility of a more cost-effective and citizen-friendly state, and the possibility of substantially enhancing the governance capacity of the state for tackling the highly complex challenges of our times.
Ambit of NPM
184.108.40.206 Sarker has enumerated the salient features of NPM (Sarker, 2006, p. 182; op. cit.,Khandwalla) as follows:
A shift from focus on inputs and procedures alone to include outputs and outcomes.
Shift towards greater measurement in terms of standards, performance indicators etc.
Preference for ‘lean’, flat’ specialised and autonomous organizational forms such as executive agencies.
Widespread substitution of hierarchical relations by contractual relations both inside government organizations and between government bodies and outside entities.
Much greater use of market or market-like mechanisms for delivering public services, such as through partial or full privatization, outsourcing, and the development of internal markets.
Much greater public sector-private sector/civil society partnerships and the use of hybrid organizations.
Much stronger emphasis on efficiency and individual initiative.
Greater ability to discharge government functions effectively (in terms of public policies) and equitably.
220.127.116.11 Siddiquee has added the following additional features (siddiquee, 2006, pp. 340-1;
op. cit., Khandwalla):
“…decentralization of authority with a wide variety of alternative service delivery mechanisms including contracting out and quasi-privatization;
downsizing…, deregulation, and employee empowerment in the public sector;
private sector-style management and flexibility;
cost recovery, entrepreneurship by allowing employees/teams to pursue program delivery outside established mechanisms, competition between public and private agencies for the contract to deliver services;
improving quality of regulation and the management of human resources; and
a management culture that emphasizes the centrality of citizens/customers and accountability for results.”
Evolution of NPM
18.104.22.168 States opting for NPM have not necessarily incorporated all these elements of NPM. Most countries have been selective in incorporating those elements of NPM that they felt were best suited to their individual administrative milieu, economic and social condition, and governance culture. NPM has also been an evolving concept with statesexperimenting with approaches and mechanisms noted earlier. These include policy guidance to the government through stakeholders’ councils (the ‘deliberations councils’ of Japan) for the management of sectors, industries, issues etc., departmental boards as in Britain, policy analysis and evaluation cells as in Japan and other countries, the minister’s ability to reach beyond the senior bureaucrats to ‘buy’ policy advice, and corporatization of government functions, as in New Zealand, e-governance, as in Britain, Malaysia, China, and several Indian states, and a whole host of management tools and techniques like Total Quality Management (TQM), operations research, HRD, market research, etc.
22.214.171.124 A welfare state is expensive. The average percentage of state expenditure to GDP in the West is around 40%. To prevent negative externalities like pollution by industries or drug abuse or such abuses as child labour, the liberal state has had to set up many surveillance departments; similarly, to provide welfare measures to the citizens, such as medical care and unemployment and old age benefits, the state has had to enlarge its bureaucracy.
126.96.36.199 In the 1970s and 1980s, this enlargement of the state led to cries of inefficiency, red tape, excessive regulation, high tax burden and high national debt in the U.S. and Britain, and in turn incited their politicians to seek votes by claiming to be able to ‘roll back the state’. Some of these politicians indeed attained power, most notably in the US (President Reagan) and the UK (Prime Minister Thatcher). Britain and the US initiated major attempts to reform the government and enhance its governance capacity in response to
the public perception that their bloated bureaucracies were not cost effective in terms of the services rendered to citizens. These changes were adopted by many countries, and fructified into a new paradigm of public administration called New Public Management (NPM).