How big a role should the private sector play in an economy? A chastened developed world is gradually beginning to understand the limits of unfettered private sector activity. No such doubts assail India yet, in part because the public sector continues to dominate significant sections of the economy (oil, power, roads and so on) but also because the cash-strapped government needs to rely on it for future investments.
Given the way India’s public sector companies are forced to function by their major shareholder, the government, it may appear sensible to leave larger parts of the economy to private sector investment. This broad philosophy has certainly worked in telecom where, despite the many regulatory absurdities and political venality, private investment has driven growth. The same goes for the information technology industry. In infrastructure, the vaunted public-private partnerships have stalled only for want of policy certainty and, more recently, lenders. But the new airports in Bangalore and Hyderabad amply demonstrate the virtuous impact of private participation.
Privatised physical infrastructure is one thing. Growing private involvement in social infrastructure is quite another, and governments certainly need to worry when the private sector starts filling in the spaces left by public investment in education, healthcare and so on. One consequence of inadequate state-provided, secular education was starkly demonstrated in Khandmal, Orissa this year in the clashes between Hindu and Christian organisations over alleged forcible conversions. In the near-absence of efficient public delivery of education services, organisations from both religions have been active in setting up educational institutions in the area in a kind of competitive bid for the salvation of souls, which eventually spilled over into violent confrontation.
More worrying, perhaps, is the aggressive expansion of the private sector in the healthcare space as demonstrated by the rise of corporate hospital chains such as Apollo, Fortis, Wockhardt and scores of others. This development in itself cannot be censured. Despite an avowed objective of “health for all” the provision of quality public healthcare has been abysmal in India, so what is wrong if private investors set up hospitals that offer world-class treatment and a reasonable degree of hygiene?
The big problem is that the benefits of this development are largely exclusionary. It is no coincidence that the rise of the big hospital chains has been concurrent with rising incomes of India’s middle class and rich. It is true that all of these hospitals chains — many of which are now listed on the stockmarkets — are required to reserve a number of beds for “economically weaker sections” in return for concessional land and tax breaks from state governments. But it is an open secret that the stipulation has many escape clauses.
As a result, in India we have the ability to deliver such cost-effective, world-class medical knowhow that patients from developed economies now visit this country for treatment (an episode from the legal series Boston Public was even centred on this trend). Yet the majority of India’s population remains excluded from these huge leaps in medical knowhow and delivery systems. Despite state and central governments’ attempts to attract private investment in healthcare, India has just nine beds and seven physicians per 10,000 people. In other words, rising private investment in healthcare is not making India healthier.
These anomalies were highlighted in a perceptive essay “The Indian Corporate Hospitals: Touching Middle Class Lives” by Bertrand Lefebvre in which he argues that, “the corporate hospital can be read as an enacted utopia for the Indian middle class, as a monument dedicated to consumerism in the realm of healthcare”. Lefebvre shows how these hospitals are basically a business like any other — from the way they are promoted (slick brochures and ad copy) to their location and the corporate culture within. Certainly, the overtly five-star environment in these hospitals, from the décor to staff attitude, is sufficiently intimidating for “economically weaker” people to even consider approaching.
Ironically, healthcare remains a robust business even in the downturn. As a report in Business Standard showed, realtors and manufacturers are slashing investment but corporate hospital chains are collectively investing over Rs 2,500 crore in expansion plans, mainly driven, several chief executives said, by rising demand and easier availability of medical insurance (again from the private sector). To be fair, the problem of inadequate healthcare does not lie with these hospitals themselves but in the manner in which they have been allowed to function by the government. If India needs a sustainable “bailout”, it’s not in fussy excise cuts or “packages” for certain sectors of the economy or even in an expensive employment guarantee scheme but in more efficient healthcare delivery in which the profit motive is dovetailed with public good.