A few days ago, at a CII event, Union Commerce Minister Piyush Goyal castigated the private sector
for having failed to fulfil their promises on Covid vaccination.
He is reported to have said, “You all (in the private sector) demanded and I remember how you all fought with me and sought that vaccination
be opened up for the private sector.
Today, you are not even buying those 25 per cent vaccines allotted to you.”
He talked about the lofty promises made by corporate chieftains. He said, “I remember one industry group said, ‘I will do one crore vaccinations’ and another said, ‘We will go to remote areas and do it’. Nobody has gone to Bihar, Northeast, Jharkhand and Chhattisgarh to run campaigns to remove vaccine hesitancy and use up that 25 per cent quota.”
The minister’s ire seems justified. An article in the Hindu Businessline, published on July 22, says that in Andhra Pradesh, out of 3.5 million doses of vaccine allotted to the private sector, only 403,000 have been utilised, while in Tamil Nadu, out of 18.5 million doses administered, the share of private sector
was only 5 per cent. This was apprehended by the Supreme Court a couple of months ago. A two-judge bench, responding to a suo motu writ petition on the liberalised vaccination
policy announced by the government, said of private hospitals
in their order of May 31 that “there is a simple issue at the core of their existence: that while they provide a public health service, they still remain private, for-profit entities”. Profit making by private entities is, of course, justified. They have no access to taxpayers’ money and they have to manage on their own. They are responsible to their owners, the shareholders, not to the public at large like government hospitals. They have to pay dividends to their shareholders and they have to ensure that share value remains high. However, this brings us to the larger question of the role of the public sector in governance.
My memory goes back to 2008-09. Relaxed monetary policies followed by the US Fed led to the sub-prime mortgage crisis when unsustainable home loans ballooned into an enormous debt crisis that engulfed not merely the financial sector in the US, but swept across the world, bringing country after country to its knees. India was as much a victim of this crisis as other countries. The government responded quickly and effectively with fiscal measures to stimulate demand as well as strong monetary action by the Reserve Bank of India (RBI) to infuse liquidity into the system. The combination of fiscal and monetary measures worked, demand perked up, confidence amongst producers soared, investment came back to normal levels and the economy was back on its feet.
For monetary measures to work, excess liquidity in the market had to be channelled into credit both to producers and consumers. This involved working with the banks and, as Cabinet Secretary of the time, it was one of my responsibilities to ensure that financial liquidity was converted into productive credit that would bail the economy out. I held meetings with banks together with a deputy governor of the RBI. I found that banks were parking cash in the RBI far in excess of the stipulated statutory liquidity ratio. I had to persuade banks to release more money into the open economy. I found that public sector banks were far more responsive to the government than private banks. Not that I blame private banks. They, too, had a responsibility towards their investors and their depositors. The point I am making is only that when we are confronted with a crisis, we have to fall back on government institutions to work our way out of it.
I remember reading an interesting exchange between Bharat Bhushan and Anbumani Ramadoss in the Business Standard a few days ago on the vaccine issue. Bharat Bhushan had written that the Union health ministry, then under the care of Ramadoss, had closed down three public sector units, which could have added to vaccine production capacity at this crucial time. Ramadoss, in a rejoinder, said that vaccine production in the central public sector units were closed down because their products did not conform to WHO standards. He also said that he had started work on a big vaccine production unit at Chengalpattu near Chennai. Construction work was complete in 2017 and another investment of Rs 300 crore would have made it operational. It could have produced, he said, 20 million doses and, in another six months, a billion doses. I do not know the rights and wrongs of what he said, but the fact remains that had the public sector been active, the government would have had both fallback support and an additionality.
The other option would have been to trust the private sector completely. The US, for example, under their Operation Warp Speed, liberally financed R&D efforts of private entities and placed huge advance purchase orders, thus making private research and manufacturing activity virtually fully financed and risk free. The National Accountability Office of the US had recommended such action, but would our counterpart organisation, the Comptroller and Auditor General (CAG), have adopted a similar approach? Besides, would we have the courage and the resources to provide big money to private entities in a potentially risky operation?
The fact is that the public sector and the private sector both have a role in the early stages of development. When Nehru talked of the commanding heights of the economy being occupied by the public sector, the fact was that only the State could have invested the huge amounts required at that time to set up the infrastructure industry.
The transition from the public to the private sector in large sectors of the economy has to be carefully calibrated. Privatisation must not become a dogma but a facilitator.
The writer is a former Cabinet Secretary
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