Index of Paper Presentations for the Parallel Sessions - Academy of ...

have a contract with NACO to do so. The problem lies in the method of subsidization. The GOIgives subsidies to the SMOs based on number of condoms sold, i.e. the bigger the volume themore funds the SMO gets from the government. Under this scenario, and with volume ofcondoms sold as the only incentive, SMOs make use of their already established distributionnetworks to achieve economies of scale. SMOs have thus focused on brand competition (asopposed to category expansion) and overlooked the rural areas by concentrating their efforts inthe bigger cities and village. As one representative of the international NGO puts it, ―Governmentnever told SMOs where you need to sell these condoms. Therefore if I sell this condom in Delhi, Iget one rupee [amount provided to make a point], if I sell this condom in Kanpur I get one rupee,and if I sell this condom in Meerut I get one rupee. Tell me why will I go to an E-class village[50% of villages in India are E-class] where to sell one condom I may need to spend Rs. 700[amount provided to make a point]‖.Transaction Particulars, Governance Structure, and CapabilitiesFor NACO to succeed, it needs the right solution (core transaction and being aware of thetransaction particulars); an appropriate governance structure and matching capabilities. The coretransaction that NACO seems to value the most has shifted from surveillance to condomdistribution and more recently to empowering CBOs—to do that, then, appropriate governanceand necessary capabilities need to be present. We discuss these issues in more detail.To accomplish its objective to reduce and prevent HIV/AIDS incidence, NACO adopteda centralized approach in NACP-I and moved to a more decentralized structure in NACP-II withthe participation and more responsibility assigned to government organizations at the state level.In NACP-III NACO moved further, by empowering CBOs to be the agents of change. SinceNACP-I, in a period of 20 years NACO has changed the governance structure. According to thetheory of transaction cost (Williamson, 1973, 1998), NACO moved from a pure hierarchicalsystem into a more market driven system in which several activities are carried out by SMOs,