India’s Public Sector in 67 Years of Independence
‘Commanding Heights’. That was the phrase which India’s first prime minister, Mr. Jawaharlal Nehru used to describe the role of the government in shaping India’s economy. For well over 50 years this was true in India, nourished by substantial investments, broadened in scope and size, encompassing financial services, healthcare, education, mining, manufacturing, food production, services, manufacturing, research, transportation, hospitality and tourism, this philosophy was followed assiduously by each succeeding government. The private sector was reined in by an elaborate system of licenses, permits, taxes, inter-state levies, joint-sector (public-private partnership) agreements and other devices that kept checks on profits and investments. In the early nineties, following a well-publicized liquidity crisis, the Indian government began a long process of policy change, involving overseas loans, currency deregulation, divestment from many public undertakings, encouraging foreign investment by institutions into its financial markets as well as direct investment into its industries, the movement of currencies across India’s borders, and other reforms.
Early on India’s creditors- the International Monetary Fund, the World Bank and other overseas lenders and investors insisted that the divestment take place fast and decisively. There has been foot-dragging on this which has persisted to this day, some bolstered by arguments which had merit, others simply due to political, bureaucratic and populist inertia which has often proved counter-productive. Often the divestment initiative has overlooked some large industries which are profitable and has remained within government ownership and control, some others which are unprofitable have been spared the ‘fire sale’ due to large numbers of people employed in such industries, who would face the prospect of mass layoffs under private ownership.
Public Sector- both a Mogul and a Pauper
In retrospect, it may have been a good thing that India began this process slowly- first allowing for less than 50 percent private ownership in key businesses. Reviewing the history of hasty divestment in Russia following the collapse of the Soviet Union and the resultant oligarchies and the flight of capital and cash across their borders, India as a fledgling free-market economy did well in restraining the process as it did. However, the process itself has been devoid of a clear policy as far as the responsibilities of the government in the economy and society are concerned. And thus, the government retained control of several large businesses in manufacturing, mining and services, while neglecting sectors that desperately need their increased and aggressive investment such as public healthcare or law and order.
Even a cursory review of the so-called ‘general hospitals’ in India’s public health reveal to the observer that the number of physicians, nurses and support staff is hardly sufficient to serve the number of patients, not to speak of the infrastructure required for prevention and care. In addition, as is the case with every developing country, infectious diseases, especially ones that strike the tropics seasonally, such as dengue and chikungunya, not to speak of virulent diseases such as cholera, lay waste to thousands of people who could otherwise receive life-saving care and restoration relatively quickly and easily. This reveals other areas in which such investment in sorely needed- sanitation and the availability of clean water across the country, for instance- the prevalence of cholera, especially in the Central Indian states of Maharashtra, Orissa and West Bengal. There is strong evidence that cholera is often underreported in the country as well. States which have severe sanitation problems in the northern regions of the country have not reported cases as frequently as have states such as Kerala, where sanitation is far less of a challenge. Trust in public institutions is low, and for good reason.
Law and order in India has received much less investment. The current framework, built by the British, has creaked and groaned under the severe load of cases, which has resulted in untold numbers of people waiting to get justice in criminal and civil cases, some languishing in prisons waiting for arraignment for decades together, others incarcerated without proper procedure or just outright bullying by the police. Corruption festers in the environment. Low pay, a severe lack of resources, improper knowledge or training in police process or forensic analysis, judicial incompetence or corruption, methods of prosecution or defense which border on manipulation of the law in subversive, often illegal ways, and a myriad of other ills have plagued this system.
Needless to say, these pathologies- as is always the case in every developing or underdeveloped country- affect everyone, but they affect the poor with particular violence. The middle classes, the upper middle classes and the upper classes try to circumvent such challenges using the private sector- and thus the prevalence of large, well-equipped private hospitals, medical schools and private security businesses. The poor by necessity have to depend on century-old systems which are funded poorly by public finances.
It is easy to say that Indians have become apathetic to the conditions of the poor, and there is truth to this. Clearly due to lack of space, homes of the wealthy exist cheek by jowl with the shanties of the poor in India’s large cities. I’ve heard the rich whine about the fact that they are forced to endure such sights, but few have talked about the problems of the poor. But this fact, while significant, may hide the reality that there is only one entity that has accountability and the mandate to ensure that basic services are accessible and affordable to every citizen- the public sector.
A look at the so-called ‘Navratnas’ in the public sector (http://en.wikipedia.org/wiki/Navratna) reveals a myriad of business owned by the government- nearly all of them capital intensive and in fields where the government shouldn’t be operating- engineering consultancies, hospitality, airlines, manufacturing, insurance, mining and other sectors. A case could be made that part of such businesses- such as insurance and banking- which serve the underserved need to be controlled by the government. But clearly the underserved are not the only people such institutions serve. A large number of staffers is another reason to withhold privatization, but this is not an insurmountable challenge- the public sector businesses have been offering early retirement packages to employees for years; and non-controlling private ownership in these industries could release capital into basic services that Indians sorely need.
It is important to understand who we mean by the ‘poor’. As a child, I saw many ostentatious acts of charity which made it clear that such acts were given magnanimously by the rich to the poor. A relative created a clinic and named it the ‘St. Joseph’s Poor Dispensary”. My father found this offensive, and I shared this distaste. He often remarked that using the word ‘poor’ is in fact a reminder to both ourselves and those about whom it is used, that they are inferior in some sense. He tended to interpret in unorthodox ways Judas’ comment in the passage found in Matthew 26: 7-13 about using the perfume from the woman’s alabaster jar for the poor, rather than wasting it on Jesus. Jesus responded to this statement from Judas this way: “The poor you will always have with you, but you will not always have me.” My father’s explanation of this was that Jesus was being sarcastic towards Judas; that he kept talking about the poor all the time, and not at all about Jesus himself.
While I understand this line of reasoning, there is another point of view which presents itself. In his book ‘Infections and Inequalities’, Dr. Paul Farmer writes:
The objectification of the poor is, of course, a risk run by anyone who employs some sort of class analysis… At the same time, I’m not skittish about using the term: striving to understand a commonality of constraint is hardly tantamount to denying the salience of personal experience. I’ve been impressed, in my work in Haiti and Peru, at how often people use the label “the poor” to describe themselves. These people do not share nationality or gender or language or culture; they share only their relative social positioning at the bottom of the ladder.
I too have seen often that the poor use the term to describe themselves. In my father’s understanding, this could be the result of systematic and consistent tagging of such people by others, and they have now internalized such tags, bringing with them the idea that they are lazy, filthy, uneducated, incompetent, and incapable of real accomplishment or emancipation. In Farmer’s view, their usage of the term denotes an accurate understanding of their social situation, which can help them relate to the world correctly and seek solutions intelligently. In my mind, both these points of view have merit, but I believe Farmer’s view can lead the way to hopeful solutions. Emancipation or liberation begins with understanding one’s condition, and addressing it bluntly.
So, who are the poor really? Objective measures to define poverty abound, and can be used to approximate the level of poverty experience by a population. I will not debate the actual measure used, although this too has been a contentious issue, especially in recent years in India. I will however point out what symptoms accompany the poor.
If one’s income, assets, social standing, geographical location or available infrastructure- both public and private- cannot assure a basket of goods and services that must be deemed basic needs (although this basket will necessarily need to accommodate qualitatively more, not less, such goods and services as time goes on and human development takes new definitions), then they must be understood to be poor.
For instance, if a patient cannot receive preventive care for infectious diseases already mentioned, via preventive medicine, routine checks, sanitation, nutrition, protection from the elements and other safeguards, she must be understood to be poor. If a child cannot receive good quality primary education (K through 12) that prepares him for employment opportunities, the child must be understood to be poor. Granted, this often depends on several factors, such as teachers, differences in quality among schools and so on; but having a common set of high standards to which to adhere across the country is only reasonable to expect in any country. If a person needs to spend an unaffordable sum of money to get a good lawyer to defend herself against allegations of civil or criminal misconduct, she must be understood to be poor. If people are typically denied their Miranda rights, or have their premises searched without a warrant, or spend inordinate amounts of time in incarceration while awaiting their arraignment, they must be understood to be poor. If a population suffers from cholera because their neighborhood adjoins railroad tracks along which they relieve themselves, they must be understood to be poor. In short, people who are indeed at the bottom of the social ladder know that they are poor and have no qualms about describing themselves that way, because they see it only too clearly. It is upto the economist to strive to define basic needs- and this definition must vary slightly on the basis of circumstances.
NGOs and the Public Sector
In several recent publications by different authors such as Linda Polman and others, a growing consensus around the role of NGOs has arisen. This consensus claims to not know the solution, but unanimously castigates humanitarian organizations for prolonging the very misery they hope to avoid in places of conflict or disaster. There are authors who posit various solutions, but none of them satisfy- precisely because they add the disclaimer that such ideas only address the challenges faced by NGOs, and do not guarantee their own standing as real world solutions to real world problems.
Dr. Farmer in ‘Haiti after the Earthquake’ approaches this differently. Throughout his narrative of Haiti’s earthquake and its immediate aftermath, he records the bitter debate between those who advocate prevention alone and those who call for immediate care. Farmer, along with experts in the fields of disaster relief and infectious disease, call for aggressive initiatives in both. He describes how poorly equipped the ‘general hospital’ in Port-au-Prince was to deal with the aftermath of earthquake. Prior to the event, it was poorly equipped. Hospitals such as Zanmi Lasante, which Farmer himself had helped create, and the venerable Albert Schweitzer hospital, did provide good care- but the one organization that had the mandate and the only one with the accountability to serve the people of Haiti was stretched and overworked beyond its capability to serve the injured and the dying, who numbered over in the hundreds of thousands. Due to this, several overseas aid organizations and professionals came to help, and they lived alongside the afflicted in tents, which gave the city the name ‘Tent City’. Over a quarter million were dead under the buildings and several more injured, and each tent clinic was like a mini-republic, following its own processes. Some stayed on after the worst effects had abated, and some moved on. Farmer commends the life-saving work they did by pointing to specific successes and how such feats altered the lives of the patients, and it is tough to see how any of it could be a bad thing. But he also laments the fact that humanitarian aid groups bypassed the public sector instead of strengthening it. The general hospital had been crying itself hoarse for support which Haiti’s dilapidated public finances could not supply, and the NGOs, church groups and private clinics provided care far more than building capacity internally. The organization that needed strength was clearly the one that had the mandate and the accountability to serve the poor- and unfortunately it did not get it.
In India, this has worked itself in different ways. Several private health systems such as the Christian Medical College (CMC), still a charity registered in New York, have now become local in operations and leadership. They have carried out work on behalf of the poor and taught and equipped medical professionals with training and resources that are world-class. They have also worked alongside the public sector in service to the poor. While CMC remains an organization where the poor can receive quality care, the number of such facilities has not kept pace with the number of people who need them, and the public sector, as mentioned earlier, remains underfunded and overworked. It is a common sight to see thousands of people waiting in line to see a doctor at the General Hospital in Cochin. All but those cannot scrape together even the most meager fees to pay depend on this facility. Others use private hospitals of differing quality, some affiliated to churches, others created by investors to optimize profits. Some of these private hospitals offer care comparable to the general hospital, but with less waiting time and slightly higher, albeit subsidized rates. Others have multi-million dollar helicopter landing pads on their rooftops, cafeterias offering a variety of cuisines, a fleet of rapid response emergency vehicles, professionals on call and facilities for exercise and entertainment. These newer organizations rarely, if ever, lend a hand to those waiting at the General Hospital.
This gives clarity to the central idea that the government is the one organization that has been given the mandate by the people to offer quality preventive and curative care to the people. Similarly it is the one organization to which we give the “monopoly on the legitimate use of coercive force through law enforcement”, as Gary Haugen puts it in his book ‘The Locust Effect’. While private security abounds in all third world countries, India being no exception, the police force is underfunded, overworked, ill-trained and rife with corruption.
The capital freed from releasing all or part of the ownership of large public sector industries could be used as investment and for the immediate relief of several urgent needs which are basic, and must be provided to everyone.
What of Missions?
Given that it is the role of a country’s own government to provide both preventive and curative care to its citizens; private mission organizations need to work alongside the public sector to the extent possible. This does not preclude providing direct care, especially in medicine- but it does mean that the public sector must be a partner in the process. This could be accomplished in multiple ways. Thinking long-term into medical missions, figuring out ways to keep track of personal medical histories, implementing EMR to assist in the process, teaching medical students to build local capacity, sharing date with the public sector about demography, disease and prevention, are all part of the package.
It is easier to quote specific examples rather than prescribe a process to illustrate this point, because each need demands a different process. Organizations such as CMC, Dr. Farmer’s Zanmi Lasante and other which have invested into teaching local medical professionals have created strength in the nation’s capacity to address medical needs in their home countries. Many have worked with the public health systems in these countries to bring relief to people. But the capital necessary to create more public health facilities and ensure that the professionals are well-paid (a necessary criterion for self-sustaining models) needs to come from the government. Similarly organizations such as Freedom Firm or International Justice Mission which expose the sale and purchase of human beings always work with the law enforcement systems in home countries- an incredibly hard and thankless job- to bring justice to the poor.
Will criticisms cease if NGOs worked with the local public sector? No, but they will make far fewer mistakes. Recently two SIM missionaries, Doctor Kent Brantly and Nurse Nancy Writebol, who were infected with the Ebola virus in Liberia, were given a choice whether or not to be treated with an experimental serum which had not yet been tried on humans, but had shown good results with monkeys. They chose to take it and have been showing improvements. Many people, especially Africans, have been outraged that such a serum was not provided to Africans who needed it most. Although there is real ethical consideration behind the decision to not give the serum prior to clinical trials, given the tragic history of such experimentation in the past in Africa, such voices argue- not without merit- that Africans could have been given the same choice to accept or refuse the serum. Just today, a Nigerian nurse, who treated the first fatality in that country from Ebola just 2 weeks ago, has died from the disease. As the outbreak continues and over a thousand are on course to suffer from the virus this week, the question looms large.
Of necessity, shrill voices will do down the committed missionary, bringing demoralization in its wake. But commitment, passion and expertise are not enough to bring about success. The process of healing a country is complex and ultimately dangerous if the ability of a local population to heal itself is compromised.
Persons of Promise
I titled this article ‘Persons of Promise’ for a reason. In seeking justice, an angle from which to partner with the poor, is to invest in for-profit enterprises. Microbanking and charitable investments are often acts that go beyond the profit-motive. However an economy does not subsist on such extraordinary acts, but on investments to profit investors. Beyond basic needs, the market for goods and services must be open to private enterprise and competition- which is the basis of my argument that the Indian public sector must divest in order to invest into basic needs.
Missions should think- while providing direct care- about strengthening the private sector and enabling individuals to partner with overseas capital to create enterprises which have a business case. I work in an industry which has created 3 million direct jobs and 12 million ancillary jobs in India- all of them positions which pay very well. For an economy to get into gear, to keep producing and being pulled ahead to produce more by fiscal and monetary policies, the initial capital must prove to be a catalyst to employ, to produce, to save and invest; and not only as immediate relief. This is why for-profit businesses are the only realistic solution to capital inadequacy.
I wrote this account bearing in mind a Haitian friend who had lost his job and would be in trouble if he did not find one fast. But in a country where unemployment runs at 80%, how will he manage? I think of how several entrepreneurs have managed to employ themselves in India, and a way out of this dilemma may be for my friend to partner with an overseas investor to create a services business for export. In my line of work this often takes the form of outsourced business processes or technical services. The huge machinery in India that has been privately created to scale such operations to industrial proportions may preclude my friend from achieving such spectacular success, but at an individual level, these are small but effective steps to take.
Sara Groves talks about a group of businessmen from Minneapolis who went to a country in Africa looking for a person of promise who was educated, capable and willing to commit to service in that country. These men would then invest their resources, skills and knowledge into the person. For days they did not find anyone and were frustrated. On the penultimate day of their trip they drove into a village which had been laid waste by HIV/AIDS and contained only kids. They were led by a teenager and had nary an item of clothing among them. Groves tells us that in an instant these men became like fathers, even giving of the clothes they were themselves wearing at the time. When they returned to Minneapolis they decided that the kids they saw would be their persons of promise and they will pour their collective resources and skills into them, to create a community that could then be a catalyst for change in the country.
Just as the public sector has a mandate to serve the poor, the people who will lead a society will by necessity need to be people who are vested- local, self-sustaining, skilled, enabled and empowered. These people must be the focus of our missions.