Ashok Khosla: Beyond Public-Private Partnerships

Ashok Khosla is President, Development Alternatives and a member of the ASIP Advisory Committee.

This editorial was originally published in the July 2001 edition of the newsletter of Development Alternatives, a non-profit development organization established in 1983 to promote sustainable development in India. 

If the twenty-year journey of Development Alternatives in search of a more equitable and sustainable world has clearly demonstrated anything, it is that the technologies, institutions and resource management methods of today need to be replaced by very different ones. For the world to be a livable place for the 10 billion or so human beings expected to inhabit it in this Century, our consumption patterns and production systems will have to be totally transformed - and this means that the way we innovate and deliver the products and services people need will have to be changed radically. Such a view is common in civil society and some academic circles.

Mainstream, conventional thinking does not feel the need for such radical or structural change. Most thinkers and policy makers today feel that, with a little tinkering here and fine-tuning there, business as usual should be adequate to bring about an acceptable world. However, even in the international community, national governments and business, some policy makers are beginning to notice the dangers of the present direction in which society is headed and the need for change - hence the growing legitimacy of such uncomfortable ideas as gender equality, empowerment and participative decision making. The concept that most vividly expresses this change is embedded in the talk of "public-private partnerships".

Wherever the public systems break down and the government finds itself incapable of delivering the services it has taken responsibility for, it seeks to devolve this responsibility to private or independent organizations, in some cases by paying for the services from the public exchequer but mostly by privatizing the service altogether. This is happening in India in a whole range of services that were in the public domain — housing, water, energy, transportation, and communication. From an "efficiency" point of view, this is all to the good. But from an environmental or social equity point of view, it can be disastrous. Even the most die-hard neo-classical economists who seem to have a monopoly on advising governments recognize this: and so we have the concept of public-private partnerships. Such partnerships are, indeed, crucial and necessary to bring about the separation of responsibilities among the different sectors of society and, therefore, generally desirable. But without care they can become another means for the private sector to internalize the benefits and externalize the costs.

What we really need is a totally new sector, which could perhaps be termed the "Independent Sector" which combines public sector objectives with private sector strategies.

To reorient the economy’s path to sustainability, we need to accelerate the processes of innovation and scaling up, both of which require the incentives and motivations that make the private sector so successful. To ensure that public goods are delivered on a large scale, we need to internalize the public good as the overall goal of development.

Unfortunately, the legal frameworks and practical institutional frameworks that exist today do not encourage such integration, which goes well beyond the concept of "partnership".

Development Alternatives has tried to achieve such integration through the establishment of Technology and Action for Rural Advancement (TARA) and its subsidiaries, DESI Power Pvt Ltd to generate and deliver power, TARA Nirman Kendra (TNK) to deliver cost-effective building systems, TARA BKF Pvt. Ltd. to support franchises, and most recently TARAhaat to provide communities with the information they need through the Internet.

TARAhaat is a business entity. It sells its services on a commercial basis. However, it is a business with a heart. Where it has services to offer that are in the nature of public goods from which clients, communities or society as a whole stand to benefit but for which they are not willing or able to pay, TARAhaat mobilizes financing from donors or other sources that wish to see these services provided. Occasionally, particularly where other business objectives are also met, for example, by enlarging the customer base, TARAhaat is also prepared to cross-subsidize its products and work in alliance with partners who stand to benefit from supplying their own services to the same customers.

To ensure this, more than 50% of the equity of TARAhaat is owned by not-for-profit, philanthropic shareholders, primarily within the Development Alternatives Group.