In addition, lack of adequate regulatory capacity means that it is very likely, as has been the case in real markets, for example, agriculture, left to market forces without adequate level of governance, instead of multiple sellers competing for greater market share at the back of improved quality goods/services, a collusive behaviour is adopted where at least majority of sellers agree on same, or very similar prices, which works in favour of profit maximization, taking the prices all the more away from optimal, or true price discovery.

Unfortunately, both the neoliberal-minded Extended Fund Facility (EFF) programme, and similar policy stance by public policy in general over the years – at the back of most policy makers having similar neoliberal policy stance, given their orientation in tradition of ‘Chicago boys’-styled economic thinking – has meant that the misgivings of privatization, especially in the context of poor regulatory capacity of public sector, and weak economic institutional, organizational, and market conditions.

Policy issues in EFF programme — I

Weak public sector capacity to both run itself in the first place, and then to regulate has, in addition to traditionally low investments in education, and better approach to public service, also is due to rampant recourse to outsourcing. This is all the more dangerous for the public sector, because both protecting the demos from profit-maximizing approach of the private sector, and for having the policy and implementation ability – including that of appropriately regulating markets, and privatized affairs – to deal with crisis situations like the fast-unfolding climate change crisis, and the Covid pandemic for instance, requires taking risks, and learning-while-doing approach, and outsourcing has not allowed public sector to walk that learning curve.

Economic experience, both globally and domestically, has indicated that companies that do the outsourced work, and those that provide third-party validation of their performance – since as discussed governments in general in developing countries do not have the capacity to regulate, and lack of transparency in accepting this reality, especially in terms of past below appropriate level performances also lowering trust in government’s declared capacity – have shown strong signals of collusive behaviour to support each other in terms of continuing to get such work from governments; an issue which is of global nature, and all the more in developing countries that they have suffered in the wake of the neoliberal assault of the last four decades or so.

World renowned economist, Mariana Mazzucato, in her noted 2023 published book ‘The big con: how the consulting industry weakens our businesses, infantilizes our governments and warps our economies’ that she co-authored with Rosie Collington pointed out misgivings of an over-board outsourcing policy. In doing so the government unjustifiably reins in its footprint in terms of important functions for governance, incentivization, and market creation/regulation for adequate pricing, and by over-engaging the otherwise highly collusive in general, and otherwise much more technically sound consulting industry to allow government to call out their con, which in turn allows perpetuation of their so-called relevance for greater good of the economy; with the internal moral hazard that government’s capacity diminishes over time to see through these nefarious designs – an outcome which the........

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