The price of controls

Price caps on sanitary products and hand washes are counterproductive

The National List of Essential Medicines (NELM) committee would be ill-advised to bring sanitary products, adult diapers and hand washes under price controls. As with the caps imposed on essential medicines and consumables, the NELM committee is probably motivated by the praiseworthy objective of making these products more accessible to poorer households. On the face of it, this move makes sense: The National Family Health Survey (NHFS) of 2015-16 shows that about only 57.6 per cent of Indian women of reproductive age use sanitary products (48.5 per cent in rural India and 77.5 in urban India). As for hand washes, other surveys have shown that about a fifth of sample sizes cite lack of soap as a reason for not washing their hands after defecation or outdoor manual work. These numbers are unquestionably high, and the societal and health consequences of non-usage of sanitary products and soap are serious. The question is whether price control alone is the optimum approach to these problems. From the supplier point of view, price controls on a range of products from safety blades, milk and life-saving medicines to cement and tyres remain a testimony to the chronic shortage economy that characterised India in the long decades of planning. Indeed, a 2013 decision to put prophylactics under price controls saw a sharp drop-off in sales. The decision was struck down by the court later, and caused the National Pharmaceutical Pricing Authority to extend price controls by making an absurd differentiation between ordinary condoms and those with “special features”. Either way, family planning objectives are unlikely to be met.  

In both sanitary products and hand washes, the lifting of licensing controls saw an explosion of choice and, in the case of the former, innovations for women, especially in the workplace. It is nobody’s case that more Indians should be blocked from access to such products. The issue is whether affordability is the sole factor hampering wider usage. In the case of soap, NGO surveys suggest that ignorance and access to washing facilities (such as a toilet) play as big a role in usage as affordability. In sanitary products, availability could be an additional hurdle rather than affordability alone — the NFHS shows that rates of school or work absenteeism owing to menstruation is roughly the same as the rates in Singapore and Australia. Fixing these problems may demand imagination rather than the hatchet of price controls. Education on basic hygiene is the most important of them. Enhancing distribution is another. In an earlier era, the government leveraged the vast reach of FMCG companies such as ITC, Brooke Bond, Lipton and Hindustan Lever (the later now part of the Hindustan Unilever stable) to distribute its “Nirodh” brand of condoms to meet family planning objectives. There is no reason it cannot encourage similar distribution tie-ups for private sector manufacturers. Including such objectives under the CSR mandate would be one way of putting a flawed law to good use.

Simple economics suggests that greater distribution and usage will automatically lower prices. Then again, NGOs such as Goonj, started by Ramon Magsaysay award winner Anshu Gupta, pioneered a low-cost, reusable, environmentally friendly sanitary product made from waste cloth that is uniquely suited to the needs of low-income working women. Replicating models using such age-old methods would be the best advertisement of India’s indigenous capabilities for innovation.