Efficiency in waste collection markets: Changing relationships between firms,informal workers,and the state in urban India

Introduction

While the legal responsibility for waste collection typically lies with the local state, in many developing countries such as India, self-employed informal workers have historically delivered parts of this service. The current landscape of waste collection services in urban India is complex, patchy, and heterogeneous. At its extremes, however, it can broadly be divided into two distinct private systems of service delivery—an older one composed of self-employed, informal actors, and a newer one that involves firms in the formal, corporate sector. For the time being, these two systems sit uncomfortably alongside each other even as the newer system displaces (or at least continually threatens to displace) the older one (Chaturvedi and Gidwani, 2011; Schindler et al., 2012). Formal privatization of waste management services in India gathered momentum after the first national set of rules governing municipal solid waste were issued in 2000 (hereafter referred to as the 2000 Rules) (MoEF, 2000). By 2005, over 50 cities across the country had already outsourced waste collection services to private firms (MoUD, 2005: 56–57). A revised version of these rules (hereafter referred to as the 2016 Rules) was issued in 2016, further expanding municipal waste management responsibilities (Luthra, 2018).

The idea that profit-driven private enterprises can deliver services more cheaply, hence more efficiently, has dominated prescriptive public sector reform policy and practice since the neoliberal turn (Eggerth, 2005; Lee, 1997; Spronk, 2010). In this sense, privatization of urban waste management services in India is hardly an exception. Yet, in many developing countries such as India, waste management services differ crucially from other public services. While policy prescriptions that rely on economic theory for justifying formal privatization of public services assume a-priori public ownership, workers in the urban informal economy have long held de facto rights to waste, access to which has been crucial to sustaining their livelihoods (Luthra, 2018). Formal privatization of waste collection thus is not so much about transfer of ownership from the public to the private sector as it is about the reallocation of resources from the informal to the formal private sector.

The recent history of the changing landscape of waste management services in urban India raises two questions. First, what policy models guided waste management service privatization strategies of Indian cities? Second, because efficiency has been the guiding principle of privatization, how efficient is the informal system in comparison to the formal one? Although several scholars have provided rich and nuanced accounts of the recent history of waste management privatization (for instance, see Demaria and Schindler (2016) and Gidwani (2015)), they have not examined why specific policy models were chosen. Exploring these questions develops a hitherto unexplored genealogy of urban Indian waste management policy and provides support for informal workers’ claims as legitimate market participants, given persistent threats of their displacement and dispossession. In this article, I show how and why a discourse of efficiency gains from privatization of waste collection markets found its way into contemporary Indian waste management policy by tracing the flow of these ideas from academic research conducted by E.S. Savas, a prominent American economist who first provided empirical evidence justifying privatization in the 1970s and 1980s, to international development institutions’ technical guidance documents that have acted as intermediaries translating academic research into policy practice, and finally to contemporary Indian waste management policies that have selectively appropriated these ideas in response to their own fiscal priorities.

The idea for this article emerged during the course of the author’s dissertation fieldwork conducted between September 2012 and December 2013. Over the course of the fieldwork, the author worked closely with Chintan Environmental Research and Action Group, a Delhi-based NGO that advocates for the livelihoods of workers in the informal economy of waste and also runs programs in partnership with municipalities, which provide primary waste collection services through organizations of informal workers. The threat of loss of informal workers’ livelihoods as municipalities contemplated privatization of waste management systems by hiring waste management firms provided impetus for research on the origins of the idea of efficiency gains from privatization. Research for this paper relies on a content analysis of various documents related to the management of municipal solid wastes published by international development institutions such as the World Bank and the UN, and Indian government agencies at the national and municipal levels. Although recommendations for engaging the private sector in waste collection can be traced at least as far back as the economic reforms of the early 1990s, clear guidance from the Government of India on formally privatizing solid waste collection markets did not emerge until after the issuance of the 2000 Rules. Documents reviewed here include rules, guidelines, and toolkits published by various Indian government agencies at the national level (GoI, 2004, 2011; Lok Sabha Secretariat, 2008; MoEF, 2000; MoEFCC, 2016; MoF, 2009; Mohanty et al., 2007; MoHUA, 2017; MoUD, 2005, 2010, 2013); reports and guidance documents published by UN agencies (UNEP, 2005; UN-HABITAT, 2010) and the World Bank on solid waste management in general (Bartone et al., 1990; Cointreau-Levine, 1994; Cointreau-Levine and Coad, 2000; World Bank, 1994) and in India more specifically (Hanrahan et al., 2006; World Bank, 2006; Zhu et al., 2008); government publications developed with support from international development institutions such as the Asian Development Bank (ADB), Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ), and the World Bank (GoI-ADB, 2009; MoUD, 2016); government contractual and planning documents (Government of Haryana et al., 2017; MCD, 2004, 2008; PMC and SWaCH, 2016); and various reports of national solid waste management experts (Asnani, 2006; Mehta and Dasgupta, 2006; Mehta and Mehta, 1994; Mehta and Pathak, 1998). An analysis of these documents that traces the idea of efficiency gains through privatization helps us see how documents are more than mere representations and instruments of bureaucracies (Hull, 2012; Riles, 2006). In treating the idea of efficiency gains as a self-evident fact, documents mobilize other documents in enabling new practices and producing new economic realities.

This paper first summarizes the key gaps in scholarly accounts of waste management privatization. Next, it highlights how and why cost efficiency became the guiding principle for restructuring waste management services in Indian policy. Subsequently, this paper traces the intellectual genealogy of the idea of efficiency gains from its origins in American economic research to international development institutions and finally to Indian government policy, along with an analysis of the extent to which the informal sector conforms to tenets of economic theory. The concluding section signals the potential of politically strategic use of a rhetoric of cost efficiency by informal workers to stake their claims to the market.

Unflattening the waste management policy landscape

Several recent accounts of waste management privatization in India have explored how municipal, state, and national decision-makers had multiple paths available to them and yet chose capital-intensive formal privatization in order to improve service delivery (Chaturvedi and Gidwani, 2011; Demaria and Schindler, 2016; Gidwani 2015; Gidwani and Reddy, 2011; Schindler et al., 2012; Schindler and Kanai, 2018). For instance, Gidwani (2015: 587) notes that in planning for privatization, even though a Supreme Court appointed committee “foresaw a role for private companies as well as NGOs acting in concert with ‘private’ actors in the informal sector,” urban policy-makers “saw the technological upgrading of existing municipal waste systems as the quickest route to success, and corporate private-sector participation as the quickest way to ensure this.” Similarly, Demaria and Schindler (2016: 301) suggest that “authorities embraced techno-managerial solutions” even though “numerous policy options … could have been complemented by institutionalizing the linkages between the informal and formal value chains.” While these scholars have rightly noted that corporate privatization and techno-managerial solutions have been privileged by decision-makers, their explanations raise some issues that need further examination.

First, although scholars have noted that the policy models guiding waste management privatization in India were imported from the West, we do not have a clear sense of what these models are, how and by whom they were developed, and how they ultimately made their way into Indian policy and practice. Chaturvedi and Gidwani (2011: 140) have argued that corporate privatization of waste management appealed to municipal decision-makers in India because doing so “followed dominant practice in Western countries and promised to deliver efficiencies from scale economies.” In another paper, Gidwani (2015: 587) suggests that corporate privatization was “pushed as an article of faith”; the decision was informed by the “wisdom,” the “ascendant paradigm” based on a “series of assumed truisms” that allowed for “syllogistic reasoning” that conflated privatization with “improvements in cost effectiveness, operational efficiency and technological upgrading.” Many scholars have pointed out the importance of interrogating the crucial role of agents (individuals and institutions) in policy transfer, adoption, and adaptation (Dolowitz and Marsh, 1996; Larner and Laurie, 2010; McCann, 2011; McCann and Ward, 2010; Mitchell, 2007; Peck and Theodore, 2010; Prince, 2012). Although the literature on policy mobilities is large and has covered a range of different policy sectors, waste management remains underexplored (two notable exceptions include Inverardi-Ferrari [2017] and Zapata and Campos [2015]). By tracing the flow of waste management policy from academic institutions to international development organizations to national and local governments in India, this paper documents the emergence of the doctrine of economic efficiency as a neoliberal fact and its role in restructuring solid waste collection markets in contemporary urban India. The role of international development institutions as intermediaries in this process is also important because not only has the relative share of solid waste management in international development finance increased rapidly, India is the second largest recipient of these funds (ISWA, 2014).

Second, some existing accounts of waste management privatization provide a uniform, linear narrative of a transition from the informal to the corporate sector that has not taken into account contradictory developments. In their narrative of shift in urban waste management policy, Schindler and Kanai (2018: 835) note that while reliance on the unpaid labor of waste pickers had been Delhi’s initial waste management strategy, plans to “incorporate” informal workers were “abruptly revised in mid-2000s in favor of a waste management strategy geared toward the incineration of waste.” Demaria and Schindler (2016: 301) attribute the “progressive privatization” of waste management services in Delhi to the “increase in volume and metabolic density of waste, as well as a change in its composition.” Progressive privatization allowed the diversion of waste of “high enough calorific value” away from Delhi’s informal recycling system to waste-to-energy facilities owned and operated by a “small number of large-scale private enterprises” (Demaria and Schindler, 2016: 301). Yet, recent shifts in urban waste management policy and practice seem to complicate this linear, historical narrative. For instance, national-level waste management policy has become more inclusive of the informal sector. While the 2000 Rules had no mention of the informal sector, the 2016 version asked that municipal governments “establish a system to recognise organisations of waste pickers or informal waste collectors and promote and establish a system for [their] integration” in solid waste management systems (MoEFCC, 2016: §15(c)). In addition, in some cases, as I detail in the following section, there has been a return to reliance on informal workers for waste collection services. These examples complicate the recent history of urban waste management, calling for an unflattening of the “spatiality of policymaking” (Peck and Theodore, 2010: 170). Tracing the genealogy of urban waste management policy in India will enable a clearer understanding of the complex and changing relationships between the state, the formal private sector, and the informal private sector.

Third, in their explanations of privatization, some existing accounts have relied on ascribing perverse motives to state actors who act in the interests of big capital while disenfranchising the urban poor. Indeed, “opaque land deals” between the state and private firms, and the suspicious transfer of the ownership of a large waste management project from a quasi-public firm (IL&FS) to a private firm (Jindal Urban Infrastructure Limited), suggests that corruption was at play in the privatization process (Demaria and Schindler, 2016: 305; Schindler and Kanai, 2018). Because corruption reduces the expected efficiency gains from privatization, in mainstream development discourse, reducing corruption is deemed important for making privatization projects more successful (Cointreau-Levine, 1994). While there is no doubt that corruption is a complex problem that requires deeper inquiry, this paper steers away from explanations that center on “the venal [public] official” (Harriss-White, 1996: 37), focusing instead on why urban infrastructures and services would have been privatized even if the system were free of such corruption. In particular, I show that fiscal challenges faced by the local state have been crucial to decision-makers’ adoption of policy models that promise efficiency gains from privatization. Doing so draws attention to competition models of policy diffusion and urban entrepreneurialism whereby the spread of neoliberal modes of governance across cities is explained in terms of fiscal pressures faced by local governments (Harvey, 1989; Peck, 2015).

Unlike heterodox economists and critical social scientists who have argued for expanding the definition of efficiency to account for broader societal goals (Lefeber and Vietorisz, 2007; Spronk, 2010; Tverdek, 2004; Wolff, 2002), in line with mainstream economic theory from which policy models are often drawn, I restrict the definition of efficiency narrowly to cost. On the one hand, doing so enables me to follow the work that the discipline of economics does in arranging the sociotechnical worlds we inhabit: It illuminates the relationship between the academic discipline of economics and the object it studies—that is, the economy (Mitchell, 2005). In other words, this permits an exploration of how the application of economic theories of efficiencies of certain market structures actually enables the restructuring of those markets. On the other hand, this also allows a consideration of the potentially subversive uses of the tools of neoliberalism. Bakker (2007: 448), for instance, has urged that we see how neoliberalism “creates political opportunities that may be progressive.” Ferguson (2010) has argued that neoliberal policies may be in the process of being put to work in very different political projects that undermine the ideological foundations of the neoliberal project itself. Similarly, Roy (2005: 155) interrogates the subversive potential of “working through rather than against institutions of power.” Rosaldo (2016) has shown how the rise of neoliberalism in Colombia opened up possibilities that increased informal recyclers’ capacity to organize and eventually allowed them to protect and even improve their livelihoods. While a logic of efficiency has been used as a neoliberal tool for the privatization of waste collection markets, could it not also be used by informal workers to stake their own claims to those markets? If the informal system is just as efficient as—if not more efficient than—the formal system in terms of the criteria used in mainstream economic theory, then this should provide enough evidentiary support for legitimizing the latter’s right to participate in the market in the eyes of policy-makers who presumably are infatuated by neoliberalism’s promises. In the following section, I first examine how and why cost (or efficiency) of service delivery became a crucial concern for Indian policy-makers and bureaucrats.

Rising fiscal concerns of the local state

A historical conjuncture of events and circumstances—economic liberalization, fiscal and political decentralization, and an urban public health crisis—resulted in a national policy response of privatization of urban waste management services. Although this history has been recounted by many scholars (for instance, see Gidwani (2015)), they have not paid adequate attention to the crucial role that decentralization—the devolution of administrative and fiscal powers to municipalities through the 74th Constitutional Amendment Act (74th CAA)—played in generating a municipal fiscal deficit that privatization policies and programs were then designed to address. The 74th CAA increased the functions and responsibilities of local governments without a “commensurate enhancement of their resource base” (Mohanty et al., 2007: i; see also Mehta and Mehta, 1994; Mehta and Pathak, 1998; MoF, 2009). For example, the Reserve Bank of India predicted a best-case scenario of a total annual municipal budgetary shortfall of INR 100 billion (about one-third of the total requirement) for basic urban civic amenities (Mohanty et al., 2007: vii). Consequently, in the two decades following liberalization and decentralization, the national government embarked on a series of efforts to find the best ways to improve urban infrastructures and foster economic growth. The Jawaharlal Nehru National Urban Renewal Mission (JnNURM)—the largest urban modernization program in India history—that encouraged local governments to provide urban infrastructures and services through privatization, was a part of these efforts.

Relatedly, the events that led to the issuance of the first set of national rules governing waste—the outbreak of the plague in Surat, the filing of public interest litigation, a series of government-led investigations on the state of waste management—have also already been recounted in the existing literature by scholars such as Chaturvedi and Gidwani (2011). Municipalities, unable to conform to these new rules, and encouraged by a policy environment that was enabling infrastructure privatization, started to outsource waste management services to private firms in the early 2000s. Central government programs such as JnNURM provided substantial support for this purpose (MoF, 2009). For example, even though the estimated relative share of required investment for solid waste management was only 1.6% of the total, JnNURM spending on solid waste management was 3% of the total (GoI, 2011). In addition, over the 2005–2010 five-year planning period, 50% of central grants to state governments were earmarked for public–private partnerships for municipal solid waste management so that municipalities would be able to meet the requirements of the 2000 Rules (GoI, 2004). Thus, while liberalization and decentralization together had already paved the way for the privatization of urban services in general, changes in the regulatory environment governing waste provided additional impetus for the privatization of waste management services more specifically.

As a municipal service, waste management happens to be particularly costly. In most developing countries, 20–50% of operating municipal budget is spent on solid waste management (Bartone et al., 1990; Hanrahan et al., 2006). Of the funds spent on municipal solid waste management in India, about 60–70% is spent on waste collection and 20–30% on transportation (Lok Sabha Secretariat, 2008; UN-HABITAT, 2010). A total of 30–50% of municipal staff is engaged in solid waste management functions, and salaries and wages of personnel involved in waste collection and transportation constitutes as much as 85% of total waste management expenditure in large cities (MoUD, 2013: 26). Specifically, spending on wages of frontline sanitation workers eats up most of the waste management municipal budget. Based on public expenditure comparisons in 25 cities across the world, 0.5% of GDP per capita is assumed to be the “upper tolerable limit” of expenditure in waste management (MCD, 2004: 16). In 2004, cities such as Delhi were already spending more than this benchmark. Yet, despite such high spending levels, the quality of waste management services has been inadequate (Cointreau-Levine, 1994; UN-HABITAT, 2010). Many governmental and international development institutions suggest that municipal organizations are “over-staffed” with a “large, but idle workforce” (GoI, 2004: 141); that they are “bulging with extra employees, many who are scarcely productive and others who do not produce at all” (Cointreau-Levine, 1994: 12); and that municipal sanitation workers are “inflicted with widespread and endemic laziness” (UN-HABITAT, 2010: 137). Efficiency gains from privatization result primarily from the disparities in the degree of labor exploitation, such as differences in wages and intensity of work in the public versus the private sector (Cointreau-Levine, 1994; Hirsch, 1995; Savas, 1977a). Thus, low productivity of municipal workers opens up an opportunity for local governments to achieve efficiency gains from privatization (Asnani, 2006).

Perhaps ironically, however, even though government agencies and international development institutions acknowledge the high cost of waste management service provision, they also suggest that a major “stumbling block” on the path toward privatization is the following notion entrenched among Indian public officials: Because there is economic value in waste material, waste management service should pay for itself (MoF, 2009: 32). This economic value derives from the presence of recyclable materials in waste. For example, a World Bank report notes: “Early entrepreneurial efforts by the private sector to generate revenue from waste included the payment of a fee to the municipality for the right to collect waste from certain parts of a municipality. This fact, together with a belief that the private sector could make money from waste, resulted in an attitude in some municipal managers and elected officials that the private sector should pay to take waste” (Hanrahan et al., 2006: 36). Even recently, a government report was celebrating the fact that municipal authorities in two cities were “not paying anything” to waste management service providers (Lok Sabha Secretariat, 2008: 20). In fact, not only is the idea of paying for service through instruments such as tipping fees “alien” to local governments, waste management firms seem to promise “royalty” payments to governments in order to secure contracts (MoF, 2009: 32).

As mentioned earlier, existing narratives of the history of waste management have somewhat linearly described the progressive expansion of the formal private sector and a concomitant dispossession of the informal sector from waste collection systems (see, for instance, Demaria and Schinder [2016] and Gidwani [2015]). Yet, neither has this history been so linear, nor have existing accounts adequately explained the reasons behind the shifts in governmental choices. In what follows, centering cost (and therefore efficiency) as the main governmental concern, I explain the shift from reliance on informal workers to a dispossession of those workers to a return to a reliance on those workers.

High cost of waste management service, particularly waste collection, combined with a general governmental unwillingness to pay for waste management services and legal issues related to contracting help to explain the initial strategy of local government reliance on informal workers who “contribute a great deal” by saving municipalities “the cost and time of collecting, segregating and transporting garbage” (Lok Sabha Secretariat, 2008: 31). For instance, P.U. Asnani (2006: 171), a leading national waste management expert who served on the influential Supreme Court Committee whose 1999 report eventually led to the issuance of the 2000 Rules, noted the “enormous potential to involve RWAs, NGOs and CBOs in SWM services in a cost-effective manner without getting into contracts.” In his proposed model, “there is no contractual relationship between the ULBs and RWAs/NGOs” as the latter “only get grants to support their activity … and grants can be discontinued if purpose is not served” (Asnani, 2006: 171). Cities’ initial reliance on informal workers can be explained through this logic. According to Rakesh Mehta, the architect of Delhi’s waste management privatization, the provision of primary collection services by the local government would have required an “unviable” increase in its budget (Mehta and Dasgupta, 2006: 5). In preparation for privatization, municipal administrators evaluated available options and decided that “large private transport contractors working in tandem with resident welfare association engaged NGOs or small-scale service providers” would be ‘most desirable’ for providing waste collection and transportation services (Mehta and Dasgupta, 2006: 9). This explains why initial waste management service contracts “did not start at the doorstep of the waste generator” such that “this space was left open for informal players in the value chain” (GoI-ADB, 2009: 15). As I have argued elsewhere, the 2000 Rules had deliberately left this space open (Luthra, 2018). While these rules held municipalities responsible for waste collection, by not mandating that municipalities collect waste from the doorstep of waste generators (primary waste collection), the older informal system could, and indeed in many cases did, continue to provide those services.

So why did cities such as Delhi start moving toward privatizing primary collection that would replace informal collectors? The solicitation documents for an integrated waste management contract in Delhi justified such an expansion because the system’s reliance on informal workers for primary collection had created “multifold problems in providing timely, quality, aesthetic and hygienic services” (MCD, 2008: 3). Not only was the “present system” deemed ‘not compliant’ with the 2000 Rules, because the municipality was not providing door-to-door collection and instead relying on informal workers, the system could also not be adequately monitored or compliance enforced (MCD, 2008: 3). Thus, it recommended that “collection service has to start from door of the [waste] producer i.e. source” (MCD, 2008: 4). Another government report similarly suggested that “waste is piled on to the roadside” as a result of primary collection systems being outside the purview of the local state, and therefore “we must move from roadside dumping to direct house collection” (Lok Sabha Secretariat, 2008: 21). Indeed, the provision of primary waste collection services later became enshrined in the 2016 Rules, which unlike the 2000 Rules mandated that municipalities collect waste from the doorstep of all waste generators (Luthra, 2018). The shift toward primary collection requires an explanation of how these expanded services might be funded, especially in light of the persistent lack of municipal funds and the high costs associated with delivering these services. In contrast to Schindler and Kanai (2018: 833), who have suggested that this is a result of “large-scale formal-sector waste-management enterprises” seeking to “gain control over flows of municipal solid waste,” I want to suggest that the state’s reassignment of control over waste is the state’s strategy to reduce costs while expanding public services in light of increasing demands and a more stringent regulatory environment. Rights to waste at the doorstep ensures higher-quality waste that offers an additional source of revenue: recyclable materials that can be sold for a profit (Luthra, 2018). This additional source of revenue is what has allowed the cost of service delivery for municipalities to be lower than it would have been, had the state not assigned the rights to waste materials to private firms. Indeed, this logic of harnessing the value in waste to lower costs is aligned with the aforementioned expectation of “royalty payments” that government agencies and international development institutions identified as a “stumbling block” in the path to privatization (MoF, 2009: 2, 32).

Recently there have been cases in which informal workers are reallocated the rights to provide doorstep collection services. Take the case of Ecogreen, a waste management firm that was awarded a contract to collect, treat, and dispose of waste in Gurugram and Faridabad, two of Delhi’s suburbs (Ecogreen, 2018). Less than a year into its 22-year contract, in May 2018, the municipality of Gurugram withheld payment to Ecogreen, alleging that the firm had failed to provide adequate waste collection services (Pant, 2018a). As a result of the firm’s poor performance, in July all 35 of Gurugram’s city councilors demanded that the city terminate its contract with the firm (Pant, 2018b). In September, frustrated residents threatened a hunger strike if Gurugram did not cancel its contract with Ecogreen (Hindustan Times, 2018). Perhaps on account of these several problems, the top management of the firm resigned in November 2018 (Singh, 2018). By the end of 2018, the firm decided to enlist the help of informal collectors, who they had initially displaced, as a way to meet its waste collection service delivery goals (Hindustan Times, 2018). Although informal collectors are not being paid by Ecogreen to provide primary waste collection services, they are allowed to extract and sell recyclables. In essence, the municipality first allocated rights to waste to Ecogreen, which then reallocated those rights to informal waste collectors. Informal collectors are essentially doing what they had always done, except now their access to waste is mediated by the private firm.

Ecogreen may have underbid in order to gain the contract, realized that it was too expensive to deliver collection services, and thus enrolled the services of informal workers. Government agencies have noted that such underbidding practices and subsequent failures in service delivery are a common problem with waste management service contractors (MoF, 2009). Ecogreen is not the only case where such a “partnership” with informal workers has developed. Even as early as 2011, Ramky, one of the largest players in the waste management services market in India, decided to enroll Safai Sena, an association of informal workers in the Delhi metropolitan area, in the provision of doorstep waste collection services in Faridabad (Luthra, 2018). Much like Ecogreen, Ramky did not pay informal workers for providing that service. However, since there are many instances in which waste management firms are not engaging in such kinds of “partnerships” with the informal sector, these remain anomalous for the time being. But this could very well change in the future. The impetus for a potential generalization of such a mode of informal sector “inclusion” derives partly from the stipulations of the 2016 Rules, which on the one hand have expanded municipal responsibility for waste collection, and on the other have called for the involvement of the informal sector in the provision of those services (Luthra, 2018). Thus, such “partnerships” not only serve the interests of firms such as Ecogreen and Ramky, who can cut costs of service provision by harnessing the free labor of informal workers, they also allow the local state to claim compliance with the 2016 Rules that ask for their inclusion.

The shifting relationship arrangements between the state, the informal sector, and the corporate sector in the delivery of waste collection services over the past two decades can be explained in fiscal terms. Minimizing the cost of service provision—or increasing efficiency—has been a central concern of the local state that has been struggling to meet increasing demand for urban public services without a concomitant increase in available resources to do so. The following section examines the origins of the idea of efficiency gains from privatization of waste collection services.

A policy genealogy of efficiency in waste collection

Prevailing justifications of waste management privatization on cost efficiency grounds can be traced back to the work of an influential American economist, E.S. Savas, the bearer of many illustrious titles, such as privatization’s “academic voice,” the “godfather” and “captain” of privatization, the “author of the privatization bible,” and a “quintessential prophet without honor” (Crooks, 1993: 13; Manhattan Institute, 2017; Tierney, 1995). Much of Savas’ research on waste collection was conducted in neoliberalism’s heyday between the late 1970s and early 1980s, when Savas even briefly served as the assistant secretary of the US Department of Housing and Urban Development under President Reagan (NARA, n.d.). Credited with writing over 130 articles and 15 books that have been published in 23 foreign editions, Savas has advocated for the privatization of local government services for almost four decades (Baruch College, 2014). To spread the “gospel” of privatization, Savas has delivered lectures in over 55 countries across the world, invited to do so by the United Nations, the US Agency for International Development, academic and professional societies, and several national and local governments (Baruch College, 2014; Manhattan Institute, 2017; Tierney, 1995). Much of his research during the mid-to-late 1970s focused on solid waste collection markets (Savas, 1976, 1977a, 1977b, 1979; Savas and Niemczewski, 1977; Savas and Stevens, 1977, 1979; Savas et al., 1978). In fact, his arguments for privatization of public services in general drew mostly upon his research in solid waste collection markets (Savas, 1982, 1987, 2000, 2005).

Three main findings that emerged from the work of Savas and his colleagues have made their way into the policy prescriptions of international development institutions and Indian government agencies responsible for issuing policy guidelines for waste management programs. First, based on an analysis of cost data from 1378 US cities that compared the four most common market structures of waste collection services (public monopoly, contracts, franchises, and pure competition), Savas (1977a) concluded that a contract system with periodic competition allowed for the optimal realization of scale economies and avoided the inefficiencies associated with publicly owned and operated utilities. Second, drawing upon the econometric models developed by one of his colleagues (Stevens, 1978), Savas (1977a) noted that jurisdiction (or population) size plays an important role in the realization of scale economies. He thus recommended that cities with fewer than 20,000 inhabitants should consider consolidating with other cities to form larger markets of up to 50,000, and cities larger than 100,000 should consider breaking up the market into districts of 50,000 each. Third, he recommended that in cities of over 100,000, at least one of the districts should have municipal service so that the city can “retain some option in service delivery and some standard for measuring and comparing performance” (Savas, 1977a: 74). By doing so, a large city will be able to “assure a continued competitive environment,” “protect itself against possible collusion by its contractors or coercion by its employees,” and “reduce the city’s risk of service disruptions due to strikes or business failures” (Savas, 1977a: 74).

In the academy, the work of Savas and his colleagues spurred a flurry of subsequent research on this subject. While some scholars have corroborated the broad conclusions of their research, others contest them. For example, research from Canada (McDavid, 1985), Italy (Antonioli and Filippini, 2002), the United Kingdom (Szymanski, 1996), and many other European countries (OECD Competition Committee, 1999) has supported the broad conclusions of research by Savas and his colleagues. While a lot of research has focused on developed countries, some scholars have found some evidence of efficiency gains from privatization in developing country contexts also (see, for instance, Fernandez [1993] and Obeng et al. [2009]). Other scholars, however, have contested the presumption of efficiency gains from privatization. For example, in a comprehensive review of econometric studies from 1970 to 2008, Bel and Warner (2008) found no systematic link between cost savings and privatization in solid waste services markets (see also Hirsch,1995; Nelson, 1997; Ohlsson, 2003). While similar research in developing countries is more limited, in contrast to Obeng et al. (2009), Awortwi (2004) found minimal increases in service quality levels, and no cost savings in two out of the three Ghanaian cities that had privatized waste collection services. From these studies, we might conclude that the empirical evidence for efficiency gains from privatization is somewhat inconclusive. Yet, as I show below, dominant policy practice assumes efficiency gains from privatization as a self-evident fact.

With the exception of a lecture at a UN-sponsored conference (Savas, 1989) and the publication of Indian editions of two of his books (Savas, 1987, 2000), there is otherwise no evidence of a direct link between Savas’ work and privatization policies in India. Yet, a closer look at specific Indian policy documents reveals that Savas’ presence looms large. In what follows, I show two things: first, how international development institutions draw directly upon the work of Savas and his colleagues to formulate their recommendations for the restructuring of waste management systems in developing countries; and second, how Indian policy-makers adopted these recommendations from international development institutions in the formulation of waste management policies and guidance. The first is easier to trace as many documents from international institutions such as the World Bank (e.g. Bartone et al., 1990; Cointreau-Levine, 1994; Cointreau-Levine and Coad, 2000) directly cite the work of Savas and his colleagues (e.g. Savas 1977a, 1982, 1987; Stevens, 1978). The second is much harder to trace. With the exception of MoUD (2005, 2016), which directly cite international development institutions, most Indian government documents do not do so. Yet, even when not directly cited, Savas’ presence is evident in the documents themselves, such as in recommendations for jurisdiction size and in-house service provision. Further, even though Indian government documents do not cite international development institutions, many documents such as MoUD (2016) and GoI-ADB (2009) were developed with direct technical and financial assistance from those institutions. In what follows, I trace how each of Savas’ three aforementioned recommendations have been translated into specific waste management policy prescriptions in India.

The following sentence appears almost verbatim in many Indian government documents: “Experience the world over has shown that private sector participation results in cost savings and improvement in efficiency and effectiveness in service delivery” (Asnani, 2006: 169; MoF, 2009: 21; MoUD, 2010: 29–30). Citing an influential World Bank document (Cointreau-Levine, 1994), a government report similarly notes, “One of the proven ways worldwide, of obtaining efficiency gains in solid waste management is through the involvement of the private sector” (MoUD, 2005: 54). This behooves the question as to what are the referents for the “proven ways worldwide” and “experience the world over.” Cointreau-Levine (1994)—described by Gidwani (2015: 588) as one of the “World Bank’s foundational documents for private-sector participation in municipal solid waste services in developing countries”—draws heavily from Savas (1982) and Donahue (1989) (who himself also relies on Savas’ work) to provide empirical evidence of cost savings from privatization experiments worldwide. In addition, referring specifically to Savas (1977a) and Stevens (1978), Cointreau-Levine (1994: 21) notes: “The two principal studies on costs in the United States … showed contracting was 10 percent to 30 percent less costly as compared with those for a public monopoly.” Other World Bank reports (Bartone et al., 1990; Cointreau-Levine and Coad, 2000) similarly also cite Savas (1987) and Stevens (1980) in arguing for efficiency gains from contracting.

Following Savas’ (1977a) recommendation on jurisdiction size, the World Bank notes, “Based on studies of costs for refuse collection in the United States, no economies of scale are thought to exist for communities greater than 50,000 people” (Cointreau-Levine, 1994: 17). Therefore, for reliable collection services, the World Bank recommends that a city be divided “into zones which enable collection economies of scale and optimize competition” and “each zone should typically include 50,000 to 100,000 residents” (Cointreau-Levine and Coad, 2000: 26–28). The World Bank’s specific recommendations to India, however, are less prescriptive, suggesting “reasonable”-sized contracts, not too large so as to avoid monopolies and not too small so as to be “unviable because of the lack of economies of scale”: “Bigger cities might split service areas into several zones and award contracts for each zone, to promote healthy competition among the contractors” (Zhu et al., 2008: 79). Nonetheless, guidance documents developed with assistance from development agencies such as the ADB and GIZ follow Savas’ (1977a) jurisdiction size prescription quite closely, recommending that “waste collection areas should not be greater than a population of 50,000 or about 10,000 households” (GoI-ADB, 2009: 59) and that in cities with more than 100,000 people, “at least two contractors may be considered for every outsourced service” (MoUD, 2016: 446). In addition, other Indian government documents also recommend that smaller cities consider forming clusters so that economies of scale can be realized (MoF, 2009: 40; MoHUA, 2017: 19).

Following Savas’ (1977a) recommendation that municipal governments retain in-house service provision responsibility in at least one part of the city, the World Bank recommends a “mix of public and private service” as the “ideal arrangement” that not only minimizes the risk of service disruptions by decreasing the government’s dependence on private providers, it also forces the government agency to become more competitive (Cointreau-Levine, 1994: 23; see also Cointreau-Levine and Coad, 2000). In accordance with this recommendation, a government report also suggested that cities ensure that “service responsibility is distributed amongst multiple firms or between private firms and ULB staff, for various city zones” (MoUD, 2005: 58). The report warned that in one city where this recommendation had not been followed, “all service providers in the city had joined hands just before an important national festival and demanded an increased fee from the corporation, who were left in a weak negotiating position,” and therefore municipalities must “safeguard themselves against such scenarios by inserting adequate provisions in the agreements or by retaining a suitable portion of corporation staff” (MoUD, 2005: 58–59).

But were these policy prescriptions actually implemented in cities? Delhi offers a case in point. Secondary collection and transportation services were first privatized in 6 of 12 city zones through a competitive bidding process in which over 40 firms participated. Other cities—Bangalore, Chennai, and Surat, for instance—also similarly divided the city into zones for outsourcing to private providers (MoF, 2009). According to Rakesh Mehta, Delhi’s erstwhile municipal commissioner and the architect of the city’s initial waste management privatization experiments, only six zones in Delhi were initially slated for privatization to “allow for benchmarking service delivery across six zones operated under a partnership with MCD verses six zones fully run by MCD” and to “bring in a level of competition into this sector and help in improving services overall” (Mehta and Dasgupta, 2006: 8). However, Delhi heeded only the spirit, and not the letter, of Savas’ policy recommendations, which were modified and adapted to the local context. For instance, if Delhi were to follow Savas’ prescription of optimal jurisdiction size, it would have needed at least 270 zones based on its population at the time. Nonetheless, although policy-makers in Delhi might not have read Savas’ recommendations directly, international and national technical experts at institutions such as the World Bank and within the Government of India had translated Savas’ academic legacy into a set of practical policy imperatives ready to be adopted in urban India. As mentioned earlier, even though empirical evidence for efficiency gains from privatization has largely been inconclusive, dominant policy practice has nonetheless assumed that such gains will be had. It is thus important to better understand how the Indian government mobilized such economic “facts” in its justification of privatizing waste management services.

To provide evidence of efficiency gains from privatization, one government report cites successes from “initial experience” in two cities—New Bombay and Rajkot—where cost savings from privatization ranged between 15% and 46% (MoUD, 2005: 54). The report also noted, however, that “the absence of adequate data and cost information” makes it “difficult to properly quantify such gains” (MoUD, 2005: 56). In essence, while the report suggested that there might be some evidence for efficiency gains from privatization of solid waste management services in India, there was not enough data to draw definitive conclusions on the matter. Yet, less than five years later, the GoI-ADB (2009: 83) toolkit ignored this caveat and suggested that the aforementioned MoUD (2005) report highlighted “the efficiency gains and reduced cost of service delivery in contracts in Navi Mumbai and Rajkot as early as the 1990s.” Efficiency gains from privatization in the two cities were no longer tentative and potentially contestable estimates; they became axiomatic, requiring no evidence to support them. Similarly, in reference to Savas’ work, Cointreau-Levine (1994: 21) argues that while those studies may have adequately demonstrated the efficiency gains from private contract-based waste collection service provision in the USA, “no comparable study has been conducted in developing countries to document whether contracting versus a public monopoly leads to lower costs in these countries.” Nonetheless, she concludes that contracting with private firms is the “greatest opportunity” and “holds the greatest promise to developing countries as a way of lowering cost” of waste collection service provision (Cointreau-Levine, 1994: 21). Other Indian government and World Bank reports provide “evidence” of efficiency gains from privatization in Bangalore, Chennai, Delhi, Surat (MoF, 2009), and six cities in Karnataka (Hanrahan et al., 2006), even as they acknowledge the lack of availability of reliable financial data.

While studies that have informed waste management policy development have relied on comparisons between the public and formal private sector in the developed world, in countries such as India, where the informal sector has historically been a crucial market participant, privatization does not simply involve outsourcing of public services. Instead, it involves a reallocation of resources from the informal to the formal private sector. Evidence of efficiency gains in the Indian context should thus emerge from a comparative analysis of costs of service provision by the formal and informal sector and not a comparison of the public and private sector, which is what has thus far guided policy prescriptions. For this reason, it is important to examine how the informal system fares in comparison to the formal one in terms of costs.

Waste collection is regarded as having one of the “highest marketability” (or privatization) potentials compared to other public services (World Bank, 1994: 115–118). The reason for this is the “absence of barriers to entry” because of “low economies of scale, technological simplicity and moderate investment costs” in this industry (Cointreau-Levine, 1994: 20). Thus, international development institutions consider it “feasible for local firms with modest financial resources to enter into the business of solid waste collection” (Cointreau-Levine, 1994: 21; UNEP, 2005: 6). Development institutions have thus recommended that developing country governments encourage the participation of medium, small, and even micro-enterprises in solid waste collection markets (Arroyo-Moreno et al., 1999; Haan et al., 1998; Ortiz and Piedrafita, 2006; Zhu et al., 2008). Indeed, informal collectors could be thought of as micro-enterprises whose conformance to the policy prescriptions of Savas and his colleagues and relative efficiency in comparison to formal and public sector service providers needs to be evaluated. Regarding the latter, the answer is simple enough. Since they provide primary waste collection services mostly for free or by directly charging households a monthly fee, the cost is essentially zero. Waste collectors rely mostly on recyclables in the waste as their source of income. Needless to say, if formal public or private organizations were to provide these services, they would cost more. Two studies corroborate this claim (Bose and Blore, 1993; Rathi, 2006). An evaluation of how well informal micro-enterprises conform to Savas’ policy prescriptions is more complicated, however.

Two of three of Savas’ policy prescriptions apply specifically to private providers, while the third has to do with the municipality’s retention of service provision in some parts of the city. Hence, we will focus on how well these informal micro-enterprises conform to the first two. First, Savas and his colleagues recommended that firms be awarded exclusive territories that each serve about 50,000 people. In the case of waste collection by informal actors in urban India, territories are exclusive (Bose and Blore, 1993; Prashad, 2000). Each waste collector serves 200–300 households, depending on the neighborhood characteristics. In the USA, where Savas’ research was based, waste is collected by large garbage trucks instead of smaller, manually operated vehicles such as the pushcarts or tricycle rickshaws that are more common in developing countries like India. While a single garbage truck can serve 7500 people (Stevens, 1978: 445), a rickshaw can only serve 1000–1500 people (MoUD, 2016: 169). Household size, type of waste collection vehicle, and per capita waste production rates change the optimum jurisdiction size within which economies of scale can be realized (Cointreau-Levine and Coad, 2000; OECD Competition Committee, 1999). To the author’s knowledge, no econometric models have been developed to estimate optimal jurisdiction size in which scalar economies can be realized in the urban Indian context.

The second policy prescription relates to periodic competition for service contracts. The informal collection system can be best described as a franchise system, which according to Savas (1977a) is less efficient than a contract system, mainly because in a franchise system the franchisee bills the customer directly and therefore these billing expenses increase the total cost of service provision. However, not only have franchise systems been more efficient than contract systems in some cases (Antonioli and Filippini, 2002), they are also recommended for developing countries (Cointreau-Levine and Coad, 2000). In any case, a hybrid contract–franchise system—in which the service provider gets paid by the municipality and is also allowed to charge user fees to service customers—is what the Indian government has been advocating for (MoEFCC, 2016; MoHUA, 2017; MoUD, 2016). What remains to be examined, however, is the issue of competition. Academics and policy experts have suggested that managing competition is more important than determining whether the private sector is more efficient than the public sector (Bel and Warner, 2008; Cointreau-Levine, 1994). Informal collection systems might be considered monopolistic because there is no periodic competition for the market. While in a system with formal contracts municipal governments break up a city into districts for periodic competition for the market, in urban India, waste collection districts are allocated based on informal negotiations between municipal workers, waste dealers, and waste collectors. Municipal workers sometimes auction rights to pick to waste dealers who then allocate these rights to waste pickers in return for a guarantee that waste collectors will sell their waste to those dealers at predetermined prices (Bose and Blore, 1993; Gill, 2010; Prashad, 2000). On the other hand, the characterization of waste management markets in developed countries such as the USA as “highly competitive” (Cointreau-Levine, 1994: 10) is an exaggeration, as collusion and other anti-competitive practices in the industry, particularly in the USA, have in fact been rather well documented (Block 2002; Crooks, 1993; Seldman, 2018). In essence, then, there is little difference between Savas and his colleagues’ policy recommendations for structuring waste collection markets, and how informal markets are actually structured in urban India. The application of Savas’ policy prescriptions could be seen as an attempt to restructure markets to mirror the market structures of Savas’ economic models.

Conclusion

Despite the existence of a relatively inclusive regulatory environment and the state’s continued reliance on informal workers, state institutions have failed to treat them as legitimate market participants. Yet, as this paper has shown, there is no theoretical basis (at least in economic theory) for not treating informal workers as legitimate market participants. The informal sector not only conforms well to mainstream economists’ policy prescriptions, it is also more cost-efficient than formal enterprises. However, unlike the public–private comparisons in which the source of efficiency gains is exploitation of workers in the private sector (Becker, 1988; Cointreau-Levine, 1994; Savas, 1977a), the source of relative efficiency of informal sector efficiency is unpaid labor—that is, they are not paid for providing municipal services by the municipality. Bearing this in mind, it seems regressive to argue for continued municipal reliance on the unpaid labor of informal workers. However, in light of alternatives that threaten to dispossess informal workers from their means of subsistence entirely, this status quo option at least secures their place as legitimate service providers, a relatively stronger economic position from which to wage a broader struggle for safe and secure livelihoods. Even in cases in which rights to waste collection have returned to informal workers, such as in the case of Ecogreen, there is reason to be concerned. Whereas historically informal collectors’ access to waste was negotiated between them, waste traders, and municipal sanitation workers, now their “inclusion” is a firm-level decision that is made based on the firm’s internal cost–benefit calculus. As before, the pursuit of efficiency remains the motive force guiding the inclusions and exclusions of informal workers from waste collection markets in urban India. Against these tactics of labor discipline, the informal sector needs to stake its claim to those markets.

Globally, there is precedence for the treatment of informal workers’ organizations as waste management service providers (Dias, 2016). In India too, Pune-based SWaCH, a cooperative of self-employed waste collectors, has provided primary waste collection services to over 600,000 households in Pune, under a contract with the municipality since 2008 (Chikarmane, 2016). Waste collectors retain their rights to waste; the municipality pays their cooperative much as they would any other private firm; and the cooperative also collects user fees from its service consumers (PMC and SWaCH, 2016). This is no doubt an ideal case and it reflects a growing tendency of political gains that organizations of workers in the informal economy have been able to make in other countries across the world (Dias, 2016; Martinez, 2010; Samson, 2016) . Indeed, even international development institutions acknowledge the need for informal sector inclusion and have in some cases even been working with informal sector organizations (Arroyo-Moreno et al., 1999; Haan et al., 1998; Medina, 2008; Ortiz and Piedrafita, 2006; Scheinberg, 2001; Zhu et al., 2008). Yet, in India SWaCH is an exception. While the success of SWaCH might signal a more ideal potential future for informal workers, current municipal struggles with costs and increasing demands for service point to the need for an “incrementalism” (Roy, 2005) that first secures informal workers’ place in the market. In the context of housing, Roy (2005: 154) argues that “mid-level rights and claims” that recognize “various stages of secure tenure without implementing the formal and absolute condition of land titling” can be important for the “poorest segments of informal settlements.” In this sense, municipalities’ recognition of informal workers as legitimate service providers, even as unpaid workers, can be powerful in guarding against their displacement from those markets. By restructuring waste collection markets, neoliberal policies are displacing or threatening to displace informal workers from those markets. In response, employing a neoliberal logic and discourse of efficiency could enable the informal sector a better chance at securing a future in the market space from which evictions otherwise appear immanent.