Privatisation of social sector: what it means in Third World context

By Zubeida Mustafa

Is the State responsible for educating its citizens and providing them health care? According to Adam Smith, who believed in the supremacy of the marketplace, education should be “self-sustaining and supported by those who use it”. Karl Marx displayed greater humanitarian concerns though today he stands discredited owing to the happenings in Eastern Europe. He advocated “free education for all children in public schools”.

Which of these principles should apply in Pakistan, a Third World country where 35 per cent of the people live below the poverty line (UNDP’s estimate)? The dictates of social justice should not permit a State to leave the responsibility of providing education and health care entirely to the vicissitudes of the marketplace.


And yet a glance at the federal and provincial budgets for the incoming year shows that the present government is applying to the social sectors the Smithsonian principle under pressure from the Western-dominated financial institutions. As such very little money has been set aside in the public sector for the human resources development of the people of Pakistan.


After the nation’s experiment with the nationalisation of education in the seventies, the pendulum has now swung to the other end. The government wants the private sector to shoulder the responsibility of meeting the people’s health and education needs. Hence the relentless drive to get the private sector to open schools, colleges, clinics and even universities.

This has serious implications for the people. Since the main impulse behind the private sector’s participation in any venture is its quest for profits, it recovers the full cost plus more for any services it might be called upon to provide. The State on the other hand can offer the same services at lower rates by subsidising them.In the process of shifting the responsibility for the social sectors to the marketplace by facilitating the opening of private education and health institutions and denationalising those that were taken over, the government is also attempting to shed its own load. This trend which began in the days of President Ziaul Haq has now been stepped up.

57-02-07-1991bThis is patently confirmed by the federal and four provincial budgets. The government’s spending on education this year will be Rs 25 billion. This is an increase of nine per cent over 1990-91. But this modest rise will be absorbed by the spiralling inflation which is now officially admitted to be 13 per cent.

Similarly the health sector’s spending of Rs 8.9 billion will show a measly rise of 0.3 per cent. In other words, in real terms the government will actually spend less on education and health in 1991 -92.

What is more, 85 per cent of the education budget and 65 per cent of the health budget will go towards financing the recurring expenditure which accounts for the cost of maintenance of facilities already established and the salaries of the staff employed. It does not provide for the expansion of the education and health infrastructure which is grossly inadequate for the country’s growing population.

57-02-07-1991cIt is the development budget which is an accurate measure of a government’s commitment to progress in the social sector. Its size is proportionate to the pace of expansion that is planned. The allocations for education and health in the ADPs for 1991 -92 are a dismal reflection on the government’s scheme of priorities. The development spending on education will fall by 15 per cent, while that of health by 21 per cent. After accounting for inflation this fall will be greater.

Another significant aspect of this official deemphasis on the social sectors and the corresponding emphasis on the privatisation of health and education is the avenues for corruption that have been opened up in the process. Since 1985, the government has collected Rs 31 billion as Iqra surcharge which was to be used for giving additional grants to the education sector. This sum remains unaccounted for. The increase in the education budget was barely Rs 13 billion in this period. In other words, the increase in educational spending was not even half the amount collected as Iqra surcharge. According to reports, quite a bit of this sum was distributed among MNAs and MPAs ostensibly to finance development projects — not necessarily schools — in their constituencies.

57-02-07-1991cAnd now the private sector is being invited to share the booty. The official strategy is not simply to permit private entrepreneurs to set up schools, colleges and clinics but to actually finance them in their venture. Health and education foundations are to be set up with sizable chunks of the health and education budgets. They will provide matching grants to those who wish to set up private institutions in the social sector. Given the working of the government when it comes to handing out funds to individuals and NGOs, these foundations can be expected to become a source of political patronage. Political affiliations rather than professional standards will serve as selection criteria. The scope for misappropriation of funds is immense as the experience of banks in politically motivated lending operations clearly demonstrate. The foundations could end up enriching a small class which would not invest a penny from its pocket.

Had the policy of privatisation of health ..and education been adopted to supplement the government’s own efforts in the field one would have appreciated it. In fact, a supportive role by the private sector can accelerate the pace of expansion if the government plays the key role in providing the thrust towards growth.

57-02-07-1991eOn the contrary, what we have is a government that is divesting itself of its responsibilities in the health and the education sectors. How else would one interpret the fall in the government’s expenditure on education and health in terms of percentage of GNP. It was 2.4 per cent in 1988-89 for education but fell to 2.2 per cent this year. UNESCO suggests that Third World countries spend at least four per cent of their GNP on education.


Pakistan’s health spending in terms of percentage of GNP has also declined from 0.97 in 1986-87 to 0.85 this year. WHO says it should be at least five per cent. A telling yardstick of our priorities is our defence spending which constituted six per cent of our GNP in 1990-91. Pakistan has more soldiers than teachers and doctors put together.

As the balance shifts towards the private sector, health and education will become more and more costly and therefore unaffordable for the common man. It is patent that the market place is governed by the laws of supply and demand, profit and loss. When the insatiable cupidity of our private entreprenuers is added to the operation of the market forces, we will have a situation which works against the indigent classes who constitute more than a third of the population. Privatisation will also work against the interest of the rural areas which are already badly neglected. They have 72 per cent of the population but only 18 per cent of the hospital beds. The private sector will never be interested in opening schools and clinics in the impoverished countryside where the returns will be low, if at all.

57-02-07-1991fWhat will be the impact of the government’s privatisation policy on the people? The gap between the haves and haves not in our society will be widened. Already two parallel systems of education and health care have emerged in Pakistan.

On the one hand are the elitist institutions which provide high quality education and excellent health care to a small affluent, minority which can pay their exorbitant charges. On the other hand are the government schools and hospitals which are starved of funds though they need resources most, designed as they are to meet the heeds of the masses.

As the government disengages itself from the social sectors, the officially managed health and education institutions will come under increasing pressure and the quality of professional services they offer will decline. The high population growth rate, rampant poverty and spiralling inflation will keep the majority of the population away from the private institutions. In the last ten years Pakistan’s literacy ratio has grown by a nominal five per cent (India’s went up by 15 per cent). Given the elitist policy in the education sector, we can hardly hope to wipe out the backlog of illiteracy which is like a blot on the national conscience. Experience has shown that a key factor in motivating people to educate their children is the availability of low-cost education. In the heyday of nationalisation in the seventies, the number of primary schools opened registered an insignificant growth of seven per cent in the five years from 1972 to 1976, owing to the government’s inability to invest in the expansion of primary education. Nationalisation of educational institutions had given the Education Departments a bigger bite of the cake than they could swallow.


And yet, because education was made free, enrolment at the primary level increased by a record 26 per cent in the same period.


In the last five years when private schools have been allowed to mushroom and students in government schools are expected to pay a fee in keeping with the concept of user’s charge, primary,school enrolment has been growing by only 15 per cent in 1986-1990.


It is evident that privatisation of health and education will promote the interest of a small elite class which can afford to pay. This class will receive better health care and schooling that will allow it to grab the best jobs and perpetuate its hold on power.


What will be the implications of a policy which deprives the masses of a good education which should train them to make judgments, weigh evidence, choose between alternatives and communicate their viewpoint (as Harold Laski believes is the function of mass education)?


Our democracy will be a farce, with a handful of educated people manipulating the system and exploiting the poor. Small wonder then that the rulers, whose children go abroad for their education and who get their medical checkups at Harley Street, would not want education to grow in Pakistan.

Laski was right when he wrote that a state that fails to offer an equal level of educational opportunities to its citizens is penalising the poor for the benefit of the rich. “There cannot be a responsible state until there is an educated electorate,” he rightly observed.

Source: Dawn 02-07-1991