New Public Management (NPM)

6.1 Origins and Context

NPM emerged in the 1980s in the United Kingdom under Prime Minister Margaret Thatcher and in the USA under Ronald Reagan, and simultaneously in Australia and New Zealand. The context was:

• Fiscal crisis of the welfare state — governments were spending more than they could afford
• Dissatisfaction with bureaucratic inefficiency, red tape, and poor service delivery
• Influence of neo-liberal economics — belief that market mechanisms allocate resources better than government

Christopher Hood coined the term "New Public Management" in his seminal 1991 article "A Public Management for All Seasons?" (Public Administration journal, vol. 69, 1991). He identified 7 doctrinal components of NPM.

David Osborne and Ted Gaebler: Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector (1992) — popularised NPM globally, argued government should "steer" (set direction) rather than "row" (directly provide services).

6.2 Core Principles of NPM (Hood's 7 Doctrines)

#	Doctrine	Explanation
1	Professional management	Letting managers manage; clear managerial accountability
2	Explicit standards and performance measures	Define goals; measure outputs, not just inputs
3	Emphasis on outputs	Control by results, not processes
4	Disaggregation	Break up large bureaucracies into manageable units
5	Competition	Use contracts and market mechanisms
6	Private sector management styles	Flexible pay, employment terms; adopt business tools
7	Discipline and parsimony	Cut costs; do more with less

6.3 NPM in India

India adopted NPM-inspired reforms through:

• New Economic Policy (1991): Liberalisation, privatisation, globalisation (LPG reforms) — reduced direct state role
• Pay Commission reforms: Performance-linked incentives (7th Pay Commission, 2016)
• 5th and 6th Pay Commission (1990s–2000s): Performance appraisal reforms
• CPWD and autonomous agency models: Separation of policy and operational functions
• PPP model (Public-Private Partnership): From NHAI road projects to Delhi airport

Rajasthan NPM examples: Rajasthan Rajya Vidyut Prasaran Nigam (power sector unbundling), RIICO (industrial development through autonomous corporation model), Rajasthan Urban Infrastructure Development Project (RUIDP) through Asian Development Bank PPP.

6.4 Critiques of NPM

1. Equity concern: Market mechanisms disadvantage the poor who cannot pay
2. Accountability gap: Privatised services may escape democratic oversight
3. Fragmentation: Disaggregation creates coordination problems
4. Ethics displacement: Profit motive may override public duty
5. One-size-fits-all: NPM works better in some services (utilities) than others (policing, justice)

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