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COVID-19 and India’s obsession with the state

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COVID 19 has wrecked havoc around the world and India is no exception to it. Much has been said about the virus, strategies to handle it, the performance of the government and its broader societal consequences. The pandemic has given us a chance to ask some tough questions that we should have asked ourselves before. The world, including India was caught off-guard as our health systems were just not capable enough to handle a crisis of this magnitude. As we put the worst part of the health crisis behind us, it is important to ponder upon a few issues that didn’t receive any attention barring a few criticisms on social media. Following are some issues that caught my eye.

  1. The government arbitrarily decided to cap the prices of the oxygen cylinders.
  2. The government’s decision to take over private hospitals
  3. The government did not allow private testing labs to conduct tests for a very long time

There is a common strand that knits these cases together. All these cases reek of the chronic condition of utter distrust of the Indian private sector. Independent India has been in the vice of a pernicious psychological monster which somehow compels us to turn to the government and the public sector whenever there is a crisis. The reason why this seems so strange to me is because of the abysmal record of the government handling of the problems that India has faced and the disastrous levels of inefficiency of the public sector undertakings.

India is a nation of many nations. This is the first time in the history of the subcontinent that our civilisational and cultural oneness has been legitimized by the existence of a relatively strong state that gives us clearly defined national and co-incidentally, civilizational boundaries. Thus, post independence, when we had a choice of selecting a path of prosperity, our ancestors chose a state led model for prosperity. It decided that the state would have to take the responsibility to industrialize India. Thus it decided that it had to run mines, factories, hotels, banks, etc all by itself by literally crowding out the private sector. However disastrous it might seem today, in the past context, the state led model had legitimacy. Thus India began its journey to modernize itself and to give itself the prosperity that it always deserved. Alas, it still remains a dream of many a people to even get access to basic amenities is still a pipe dream. Governments have been pouring money at the problems we face but to no avail.

Most of the government programs are riddled with corruption and inefficiencies and the PSUs, as Shankkat Aiyyar puts it, are a zombieland of the taxpayers’ money. That doesn’t mean that the public sector has been just a disaster. There are a few bright spots that we as a nation celebrate. Take the example of ISRO. It makes us immensely proud to thump our chests and say that we launched a moon mission with a budget less than the movie Gravity. When the boosters fire up at the launch site at Sriharikota, the whole country shakes with it. Unfortunately, such examples are rare. Back on the ground, governments after governments have failed to provide even the basic amenities that people need viz, water, sanitation, electricity, and so on. Yet somehow our governments seem to think that the public sector still has answers to our problems. This just sheds light on the utter distrust that the government has towards the private sector. 

The Vibrancy of India’s private sector –

Our attitude towards the private industry isnt a new thing. Since we are in a public health crisis, lets put India’s healthcare in context. The poor state of health infrastructure has been on the minds of the government officials for decades. Shankkar Aiyer has put up a concise picture of the history of healthcare in India in his book, The Gated Republic. There have been committees, five year plans, allocation of funds for various programs for seventy years that have paid homage for the need of healthcare in India. Despite these efforts, owing to a vastly inefficient and corrupt state, much of the government infra remains in a very poor state. Some states have public healthcare that can be compared with sub-saharan Africa. 

Contrast that with the private sector healthcare. Dr. Prathap Reddy was a successful doctor living in the US. But upon seeing the deleterious condition of public healthcare in India, he decided to take upon himself the responsibility to start solving the problems with innovation and technology. What came next was a journey through the labyrinth of Indian bureaucracy to get the required permissions. The final result took the shape of Apollo Hospitals, a chain which boasts some of the best healthcare infra in the world.

Another example which many are familiar with is of Arvind Eyecare. By recreating an assembly line operation for surgery, AE has dramatically reduced costs making cataract surgery available to some of the poorest sections of the society. 

There are numerous such examples. But the point these examples underscore is that Indian quality healthcare is standing on the pillars of Indian private sector efforts. Yet when times are tough, the private sector is the one which gets the pointy end of the stick. The attitude can be surmised in an anecdote where Verghese Kurien, the father of Amul, wanted to recreate the Anand model in Maharashtra but faced tremendous resistance from the bureaucracy because the Amul model had ‘capitalist tendencies’. 


Why this apathy though? As we have seen from the above examples that Indian industry is able to take challenges head on if provided a valuable helping hand. To understand this, we have to understand the history of economic thought and development in India post independence. India was under abject poverty when the British left the subcontinent. There was utter hopelessness as India did not have the required resources to even feed its people. The repercussions of the decision of our leaders about the economic path of independent India were going to be massive and far reaching. Ignoring the stalwarts like C. Rajagopalachari and Sardar Patel, who were in favour of a free market system and a mixed system of public and private industry respectively, Nehru decided to adopt the socialist model of development which was heavily influenced by the Soviet Union. Thus a Planning commission was set up which devised 5 year plans as a way to industrialize India. The 2nd 5 year plan would prove to be a death blow to the Indian industry. Many economists warned the leaders that the plan to industrialize India through heavy industry would lead to chaos. But the die was cast and the era ushered in the stringent license permit raj which eventually stifled the industry and ironically de-industrialized India. 

The result of the proto Marxist economic policies was that ‘profit’ was made into an effective taboo. ‘Don’t talk about profit with me. Profit is a dirty word’, were the words of Pt. Nehru to JRD Tata, an icon of India industry. This incident is a testament to the attitude that the Indian government had towards Industry.

The governments work on the political necessities of the day. But what about the civil society? Were they any kind to the Indian business? 

If we take a look at the kind of stories that were being put out during the golden age of socialism in India, we would get a clear picture of our attitude towards our businesses. It seemed as if honesty was a prerogative of only those who were bureaucrats, policemen or people in some kind of a public capacity. Those with wealth were either the bad guys or were portrayed as immoral people. The only way to earn money was through illegitimate means. All this created a generation of people who aspired for nothing more than a government job. Those with higher ambitions did not stay in India as our system was not capable enough to power their ambitions. The most damaging result of these circumstances was a sheer apathy and indifference towards honest wealth creation. The enormity of the disaster starts to seem apparent when we realise that these years have been an aberration. Indians have been one of the most enterprising people in the world. Ancient India was prosperous because we encouraged wealth creation through innovation and trade and had implicit trust in our wealth creators. In the quest of modernizing India on the model of western democracies, we forgot the learning of our own ancestors. Kautilyan school of economics has professed that ‘labh’ or profit is a legitimate return for the risk the business person takes. What was not warranted was ‘lobh’ or greed. Unfortunately, post independent India conflated the two to its own detriment. 


Take the example of problems that are mentioned above. Some of the issues could have been dealt with clean efficiency of the private enterprise would have been seen as a partner and not a profit seeking impediment. 

  1. Hadn’t the govt arbitrarily capped the prices of oxygen cylinders, private hospitals would not have had to increase prices elsewhere to recover the cost of the infra they had built
  2. If the government would have taken the private hospitals in the loop, they could have brought their resources and expertise in increasing the capacity which would not have led to the need of govts simply taking over private hospitals, rendering other medical procedures absolutely inactive.
  3. If the govts had taken private testing centers in the loop earlier, many people would have taken voluntary tests by paying for themselves which would have helped ramp up testing numbers rapidly. 

There are many experts who have prescribed some great policy measures which would work in favour of entrepreneurs and business persons enabling them to create wealth without having the shadow of the big state lurking over them. But of all the solutions the most important is having a positive public opinions towards wealth and wealth creators. We need to encourage and celebrate people who take endeavors that would enable them to create wealth through ideas and innovation.  We need to get out of the poverterian mindset and look at wealth as a sign of empowerment. We need to remind ourselves that we are a culture that celebrates and worships ‘Lakshmi’. It is time for us to unshackle our minds from the constraints of the past and engage ourselves in a responsible wealth creation.

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