A recent report issued by the UN Special Rapporteur on Extreme Poverty and Human Rights has sounded the alarm about prevalent privatization of public assets around the world and how it impacts human rights. Privatization, the process where private enterprises become increasingly involved in duties traditionally undertaken by governments—specifically those designed to uphold human rights—is being scrutinized.
The Implications of Privatization on Human Rights
The private sector’s perceived efficacy, superior financial mobilization, innovation, and capacity to capitalize on economies of scale (delivering more goods or services at reduced input costs) and lower operating costs are key reasons supporting privatization. Nevertheless, a study by the United Kingdom’s National Audit Office found that the private finance initiative model was less efficient and more costly than public financing for providing public infrastructure such as schools and hospitals.
The fundamental principles of privatization clash substantially with the principles of human rights, such as dignity and equality. Profit maximization is prioritized, while other factors such as equality and non-discrimination often take a backseat. Privatization structures rarely favor human rights, adversely affecting those living in poverty or earning low income.
Privatization of criminal justice systems imposes an array of fees and penalties that significantly impact the poor who then have to either borrow money to pay them or face default. This reduces the quality of affordable services and their chances of obtaining justice. Additionally, privatization of social protection often leads to a poorer and underfunded public sector. The standard practice of training social workers to identify specific social, psychological, and economic challenges faced by individuals is replaced by a model driven by economic efficiency concerns.
Effects of Infrastructure Privatization
Private providers are more inclined towards infrastructure projects where considerable user fees can be charged and construction costs are relatively low. Consequently, lower-income individuals are unable to afford many services such as water, sanitation, electricity, roads, transport, education, healthcare, social services, and financial services.
The ongoing privatization of social security systems is resulting in the outsourcing of services, marketization of social insurance, commercialization of administrative discretion, and results-based payment structures. These changes let private for-profit entities make decisions about people’s needs and capacities within a corporate framework, incentivizing cost-cutting over positive human outcomes.
| Effects of Privatization | Consequences |
|---|---|
| Privatization of criminal justice systems | Imposes higher charges and penalties on the poor |
| Privatization of social protection | Results in a more underfunded public sector |
| Infrastructure privatization | Low-income individuals unable to afford essential services |
| Privatization of social security systems | Leads to service outsourcing, incentivizing cost-cutting over positive human outcomes |
Recommendations and Application in Indian Context
While the report contends that privatization is not inherently good or bad, it calls for detailed scrutiny of the way it has been implemented over recent decades. This involves insisting on setting appropriate standards by public and private entities involved with privatization to ensure that data on human rights impacts are collected and published. It also calls for studies of privatization’s impact on human rights in specific areas and on impoverished and marginalized communities to be carried out systematically.
In addition, the report recommends insisting that privatization arrangements for public goods explicitly address human rights implications. New methods for treaty bodies, special procedures, regional mechanisms, and national institutions to hold states and private actors accountable in privatization contexts should be explored.
In India, many government projects operate on a Public-Private Partnership (PPP) basis. Recently, the National Institution for Transforming India (NITI) Aayog released Guidelines for PPPs aimed at tackling Non-Communicable Diseases (NCDs) in government-run district hospitals. The UN’s report can offer NITI Aayog valuable insights for reconsidering its guidelines.