This is why
it is so widely found that the poor in any country are inevitably much
worse off after a public service is privatised. As a recent literature
review sums up : 'The effects of privatisation bear most radically on
the poorest in the community; there is widespread evidence of more
cut-offs in service and generally a harsher attitude towards low-income
"customers." Water in Britain is a case in point. Water and sewerage
bills increased by an average of 67 percent between 1989/90 and 1994/95,
and during roughly the same period the rate of disconnections due to
non-payment by 177 percent. The inflexibility and hostility which often
characterised public utilities attitude towards non-payment has, over
the same period, been replaced by an emphasis on pre-payment meters and
"self-disconnection" as public goods have been commodified.' [Hemson,
1997, quoted in Patrick Bond, "Privatisation, participation and protest
in the restructuring of municipal services", 2001]
It is not only the
poor who are worse off. It is now increasingly evident that private
companies are less likely to observe safety norms, regulate production
and distribution in socially desirable ways, and also that they tend to
behave in monopolistic ways whenever they get the opportunity.
Of course, it
is not hard to understand why there is such a strong private lobby for
such privatisation within South Africa, coming from multinational
companies. Privatised South African infrastructure is potentially highly
profitable, with Internal Rates of Return approaching 30 percent. In
South Africa such pressure was reinforced by systematic pressure form
the World Bank and its sister organisation the International Finance
Corporation, which have been systematically promoting what they call
"public-private partnerships".
It is well known now
that these are usually a combination of public risk bearing and private
profit, but the World Bank has been plugging these as the only solution
to the regions severe infrastructure inadequacy. The IMF also has been
aggressively promoting these : a recent random review of 40 IMF loans
issued in 2000, it was found that at least 12 of these loans (mainly to
poor Sub-Saharan African countries) the IMF conditionalities required
either the full privatisation of water supply or policies ensuring full
cost recovery.
But soon, the World
Bank may not be the only source of such pressure. There are strong
indications that the United States and some other developed countries
wish to incorporate public services into the ongoing negotiations of the
General Agreement on Trade in Services (GATS). The potential for opening
up in this area is immense, once all public services are targeted. It
means that health, water supply, sanitation, education, social security,
transport, postal services, general municipal, can all be opened up not
only to private participation but also to free trade.
It is obvious that the
potential for profits is immense. One estimate of the current size of
the global health market is more than $3.5 trillion a year, which is
more that the total value of exports from all OECD countries. Similarly,
global expenditure on education is estimated to be 42 trillion, and even
on water, as much as $2 trillion.
This is not a market
that major multinational companies can afford to ignore, especially as
the slowdown in a range of other sectors becomes more pronounced. We can
thus expect to see such pressure mounting across the developing world,
and of course in India as well.
The sad
reality is that many of our policy makers do not even require much
external pressure to go in for such privatisation. Thus, in the state of
Andhra Pradesh whose government has already become the most eager beaver
of privatisers, the Hyderabad Metropolitan Water Supply and Sewerage
Board is considering privatising the operation, maintenance and
functioning of water supply in Kukatpally as a pilot project for one
year.
We have been seeing
dismal pictures of farmers and weavers in Andhra Pradesh committing
suicide because of the material stress which has been exacerbated by
government policies. Perhaps, in the not so distant future, we will have
to witness more instances of human misery stemming from deprivation of
the most basic of human needs – water.
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