Taking big business to the trash cans

WITH more and more local bodies showing a red bottomline, some of the core urban services may soon be up for grabs, if entrepreneurs are willing to take them on. The sectors under debate include water supply, garbage collection, sewage management and solid waste disposal, sanitation treatment plants and even primary health care and urban planning.

"Private enterprise has long been involved in, say for instance, garbage collection," says K Dharmarajan, joint secretary at the ministry of urban development. The idea now is to formalise this informal sector and bring in big business as well."

While the ministry eventually wants private operators to go into retail distribution, it is also considering projects where they sell bulk services to municipalities, including the turnkey option. Contracts may also be awarded only for the operation and maintenance of existing facilities.

While this range of options may be attractive to small entrepreneurs looking for a specialised niche, it is !he bigger operators - who can raise capital from the market - who will determine the success of the scheme. To tempt them, the finance ministry is considering a rebate on corporation tax. The privatisation experiment is likely to begin with a few small, low-capital pilot projects.

Quality and price controls remain the thorniest issues of privatisation. A tariff rating committee is to be set up and some regulatory legislation is also on the cards.

"Privatisation may bring in more efficiency.- says K S R N Sarma, coordinator of the Centre for Urban Studies at the Indian Institute of Public Administration (IIPA), Delhi. "But, howsoever inefficient, state services are still trying to reach out. If the private sector moves in, slum-dwellers, who are getting a minimal share in the services now, will be deprived."

Private companies involved in the administration of services may well have to cut costs to break even. "I really can't see how an entrepreneur can break even in, say, solid waste management," says E F N Rebiero, director of the School of Planning and Architecture, Delhi. "After all, how much sullage can you sell?"

What will attract the private sector then? The ad mileage, according to a senior Delhi Development Authority (DDA) official, who explains, "If you can say that your company will be supplying water to the capital until the turn of the century, it boosts your image tremendously." And your share price, needless to say.

In fact, many specialists feel that privatisation will be a tradeoff between government and industry. Companies-will gain in stature, but if the quality of services dips later, the government will use it as a whipping boy. In the process, the party in power will get to hang on to the urban vote bank, which is proving to be increasingly important.