Democracy has many virtues. But it has several flaws as well. One of these is the tendency of governments to seek credit for all manner of things in the hope of re-election.

In several developing countries, where the competition amongst political parties to win power is severe, governments have acquired the right to provide many services to the poor.

Such services normally comprise drinking water, sanitation, health and education but other things as well.

Often, the reason given for this acquisitiveness is market failure, which is the fancy way of saying that if left to the private sector, the poor will not be provided any of these services at a low enough price.

Ergo, the government must step in. While this sounds very noble, the experience of the last half-century shows that governments have, in fact, failed to provide these services to the poor. India is a stark case in point.

So what should be done? The latest *World Development Report of the World Bank focuses on the issue. Written by a team of experts from the world over, including Junaid Ahmed, who heads the Water and Sanitation Programme for India that provides advisory services to state governments, the report tries to suggest ways and means of overcoming the problems of supplying these essential services to the poor.

"The starting point of the exercise," said Ahmed to me, "is to recognise that these services are intensely political." He doesn't mean party politics but simply that they have a direct and intense bearing on the lives of all people, not just the poor. Once this premise is granted, much of the rest falls (or should fall) into place.

This, in many senses, is the most important contribution of the report. It moves away from the mechanical approach to services provision and moves it into areas that have hitherto been left alone as being too messy. By doing so, the report gives the appearance of being a sort of general equilibrium model and therefore hard to implement.

In fact, however, its importance lies in its emphasis on contexts and, furthermore, that solutions that are imposed without paying attention to the context run a strong chance of failing.

In other words, there is no question of "one-size-fits-all". In fact, in a rare demonstration of clever writing, it says, "eight sizes fit all -- with adjustable waistbands".

The report is careful to omit the "P" word -- both privatisation and profit. Rightly so perhaps, for these always tend to be misconstrued where the political environment is highly volatile and competitive.

Nevertheless, the broad direction in which the report is pointing is unmistakable: there should be a degree of privatisation with, most importantly, a strong element of community and regulatory control. The report gives many instances where this approach has succeeded.

A central problem in services provision to the poor is of monitoring. And this, says the report, is one of the important things that distinguishes one service from another. It is hard to tell how good a teacher or a doctor is because both have a high degree of discretion.

But this is obviously not true of an electrician or a plumber. (I am tempted to add economists to the first category -- how do you tell a good economist from a bad one?)

The separation of the policymaker from the provider is critical. Ahmed quotes several examples in India where, because this separation has not been made, service provision, especially to the poor has almost wholly collapsed. In an interesting aside, the report says that history has a strong bearing on these things.

For instance, one reason why the state in the West developed a strong interest in education was that after the Enlightenment, it did not want schools to teach only or mainly religion. (In India, we are moving in the opposite direction). Thus, when education was nationalised in the 20th century, the system inherited a strong apparatus of regulatory oversight.

Overall, the report emphasises two areas: incentives and institutions. You need both in order to supply unto the poor what is rightly theirs. There is, of course, a third factor as well that has been missing.

It was pointed out forcefully by Pronab Sen of the Planning Commission recently to the World Bank: good governance, which can't be defined but which we can all recognise when we happen to encounter it.

On this, the WDR is largely silent.

*World Development Report: Making Services work for the Poor, World Bank, 2003

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