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
2.3.2.1 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.
2.3.2.2 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
2.3.3.1 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.
2.3.3.2 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.
2.3.3.3 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).
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