Bureaucrats in Business: State Trading in Foodgrains in Karnataka and Kerala

Abstract. In the light of the World Bank's critical analysis of state owned enterprises, this paper discusses the functioning of two such organisations: the Karnataka Food and Civil Supplies Corporation and the Kerala State Civil Supplies Corporation. Both are state trading corporations dealing primarily in foodgrains, but operating in different ways. The paper shows that both corporations face difficulties and operational dilemmas but that there are also positive things to tell about them, in the sense that activities are undertaken by politicians, management or operation-level staff to improve performance. In this way, the paper challenges the behaviourial assumptions underlying the World Bank's analysis, namely that people mainly pursue their own self-interests. The point of the paper is not that this 'rational actor' perspective is wrong, but that all behaviour, whether informed by self-interest or by wider social commitments, is not natural but needs to be contextualised. Proposals to reform the public sector should also start from such contextualised understanding.