India's economy & social justice: responding to Ngiam Tong Dow

Ngiam Tong Dow, currently Chairman of HDB Corp (the former Housing and Development Board) of Singapore, had compared China and India when speaking at the School of Humanities and Social Sciences, Nanyang Technological University (NTU) on 18 June 2005, more than a week before the historic CECA (Comprehensive Economic Cooperation Agreement) was signed between India and Singapore in New Delhi. His speech, as excerpted by The Straits Times (4 July 2005), is being referred to here. Mr Ngiam had an illustrious career in the Singapore civil service before retiring as Permanent Secretary.

His assessment of what ails India’s economy and the policy remedies he may thus prefer suggest that he may be trapped in the same stereotypical view of India’s post-independence political and economic experience as is fashionable with many in academia, the media and politics. The continuation of such a view serves well certain vested interests, both internal and external to India.

To Mr Ngiam’s credit, he starts off cautiously as follows:

“…. At the risk of being totally wrong, I would venture to suggest that
India was held back by its brilliant sons and daughters educated at the London School of Economics after World War II. They were steeped in the theories of Fabian socialism stressing social justice more than production and productivity. Though the Chinese were ideologically Communist, the Chinese state concentrated on education in science and technology……In contrast, the Indian Civil Service was staffed by men and women who received what can be broadly described as a classical education in philosophy and politics. They were trained to govern, not to administer. The Indian Institutes of Technology were established to balance the faculties of law and economies, but not on the same scale as in Chinese education. It is therefore not surprising that China, like Japan, excels in manufacturing hardware, while India specializes in services outsourcing.”

As Singapore’s engagement with India will be deepening post-CECA, it is important that perception and opinion in this country about India catches up with actual ground realities in India. For this to happen, it will be necessary to go beyond the more accessible portrayals of India’s post-independence development. The thick cloud of rhetoric and fashionable representation has to be penetrated to discern the underlying reality which, as I personally discovered, is substantially different from the understanding that any average Singaporean is likely to start with when first heading towards India.

Singapore can hold the mirror to India. But, first, Singapore’s opinion and policy makers would have to be open-minded and diligent enough to figure out the actual situation. The newly inaugurated South Asia Studies department at NTU can help bring about a more wholesome understanding of India’s socio-economic condition.

A good starting point for comprehending correctly the state of India’s economic development would be Dr Amartya Sen, the Nobel laureate who has distinguished himself in development economics (Note 1). Economic backwardness and social backwardness are not merely two categories of backwardness but also bear a cause-and-effect relationship, according to Sen. Social backwardness is more often the cause of economic backwardness, rather than the other way round. This causal relationship is one of the reasons why it is important that social opportunities should be widely available and shared. What Sen added further (quoted below) at a seminar on “Education in Kerala’s Development Towards a New Agenda” in Thiruvananthapuram, Kerala in December 2000, serves as a pointed response to the view Ngiam appears to be enunciating in his speech referred to above:

“I think the hardest, most counter-productive idea in development is the idea of sequence and it comes in many forms. For example, in the context of Singapore’s politics, economic development comes first, then democracy. Sometimes it comes in the form of saying economic growth comes first, then educational expansion. You have to do these things together, simultaneously.”

One cannot hope to start to understand India’s socio-economic condition, its past and present, in any true sense without first recognizing the paradoxes of India’s economic socialism and political democracy. We will here start with the socialism part.

One would expect that any government with socialist pretension and of a nation that still lived largely in its villages (as Mahatma Gandhi had aptly described) would move aggressively to build up such basic sectors as health care, education, housing, and agriculture. Instead, these sectors were allowed to suffer from varying degrees of neglect by successive governments, right from independence. What then were the governments of socialist India particularly busy with? In between elections and border wars, fortifying the ’Licence Raj’, i.e. building and maintaining ever more elaborate legislative, legal and regulatory structures to decide and control who would be allowed to produce/ transact what, where, how and in what volumes / quantities (quality, if it mattered, was often of secondary consideration). This served the interests of a collusive medley of big businesses, entrenched elites, politicians and bureaucrats, but badly shortchanged the ordinary and voiceless masses of India who, however, admirably kept their faith with the ballot box – the single most potent instrument bequeathed to them by a constitutional democracy - which they hoped will at least give vent to their collective voice. On the other hand, the government also did some things all by itself, directly and exclusively, though not always creditably. For instance, the government relished its monopoly in such areas as telecommunications and power, but kept even those who could afford them waiting for years for their connections and, thereafter, anxious about the next service interruption. Whilst there was any number of schools and hospitals waiting to be built and run, the government strayed into such businesses as airlines and hotels. In the case of airlines, the government took over Air India from the Tatas only to thoroughly mess up what was once (in the 1950s and 1960s) one of the world’s best airlines. Overall, the politics and economy of planned scarcity helped build and sustain an elaborate chain of ‘favour dispensation’ and a climate of fear of selective deprivation, leading to endemic corruption.

Let’s cross over to post-1991, i.e. the years after the C V Narasimha Rao – Manmohan Singh ‘Reform Budget’ (1991), hailed as signifying India’s economic liberalization well after its attaining political liberty from the British in 1947. It has been a period of many policy changes, some of which kept both the legislature and judiciary well engaged. I for one had initially found it difficult to reconcile the rage and intensity that attended the public debate over the liberalization and privatization of such sectors as telecom, power, etc. with the relative ease with which the creeping privatization of such fundamental sectors as education and health care had apparently progressed (stealthily) over many supposedly socialist years in the past.

Yes, it’s true. Socialist India had indeed – without much fanfare - allowed private enterprise into such fundamental sectors of the economy as health care and education long before post-1991 India would be forced into opening up such infrastructure sectors as telecom, and service sectors as airlines to private equity participation. The entry of private enterprise into the fundamental sectors was essentially the effort of the elites to provide for themselves, leaving the masses to contend with the under-funded or badly managed public sector. Without recognizing such paradoxes one cannot hope to discern the true character of India’s socialism and democracy of the post-independence years till 1991, nor make a correct assessment of what went wrong AND could still go wrong with India’s economic development.

‘Education Holocaust’

In talking about the “education holocaust” in South Asia, Mahbub-ul-Haq (a former Pakistani Finance minister who was then heading the Islamabad-based Human Development Center, an independently funded research organization) (Note 2), defended his use of such an alarming description:

“If anything, it’s an understatement. South Asia has emerged as the most illiterate region in the world. Half the adults are illiterate and a third of the children don’t attend school at all. This is a nightmare.

Poverty is not an excuse for failing to invest in our children’s future. Many countries poorer than India, like Kenya, Vietnam and Kazhakhstan, have literacy rates of between 80 percent and 90 percent, while India’s is 52 percent. ….. And you can’t blame colonialism 50 years after independence. No, the cause is basic lack of political commitment.” Newsweek (20 April 1998)

Haq accuses the governments of getting their priorities wrong:

“…. India confused its priorities. Instead of investing in education
early on, it spent enormous sums of money setting up state-owned banks, airlines, heavy industries, telecommunications. It allowed itself to be diverted from the real business of government, which is providing health, education and nutrition for its citizens……The rich are having a great time, but the whole thing is going to go down…...... First, they (governments) should get all children into primary schools in the next five years…. Zimbabwe, which had low black literacy at the end of white rule, had all children in primary school in three years…… In South Asia there’s been too much neglect of primary education for the many, and too much money spent on universities for the few.”

But a socialist India that could not send large number of its kids to school, however, prided over its premier IITs (Indian Institutes of Technology), heavily subsidizing them (without any means-testing of students) to produce top-notch engineering graduates knowing fully well that more than 95% of them were destined for careers in the capitalist United States or the West. (Note 3)

Crossing over to post-1991, when Amartya Sen (after becoming a Nobel laureate) chastised the Indian politicians for neglecting basic education for so long, I recall that some Indian parliamentarians protested that India might not be able to afford to educate all its people – and there was little perceptible shame or remorse in their confessing such inability and failure. The question about mass education in India is also about quality. It is not unusual for students to learn more from coaching classes (or Chate classes, as they are famously called in Maharashtra) than in the classrooms of government schools in which they are nominally registered as students. Even poor villagers are driven to sending their children to private schools, which they can hardly afford, because of the pathetic state of government schools. Leading private schools are known to call in the parents, as part of their pre-admission procedure, to establish the education status and other means of these parents before admitting their children. Educated parents are expected to be able to guide their children at home, more so than lesser educated or uneducated parents. Such are the structural barriers / hurdles faced by an ordinary Indian child when seeking education.

The crisis in education was envisaged by the Kothari Education Commission (1964 – 66) which had recommended the Common School System for all children of India. According to Anil Sadgopal (Head and Dean of the Department of Education, University of Delhi), the most important feature of the Common School System is its equitable (not uniform) quality of education for all types of school – private, private-aided or government. Sadgopal elaborates on the reception the Commission’s recommendation met with:

“Our Parliament has expressed its unambiguous commitment to the Common School System three times in its resolutions on the National Policy on Education in 1968, 1986 and 1992. Yet, the concept could not be translated into practice because the political leadership and bureaucracy, along with the intelligentsia, found an escape route for their own children through the private school system. The present
policy support to privatization and commercialization of education amounted to legitimization of disparity, discontent and disempowerment ……

The elite in India have always been dismissive of the concept of Common School System by mocking at it as being politically too
radical and, therefore, unviable. In contrast, the poor and the lower-middle class have for long internalized the concept as the only means for their empowerment and social justice. It is an irony that such
an equitable public school system has been prevalent in several European countries, the US and Canada. Indeed, this is the only historical option left for India for building a secular and just society.” Outlook (11 Dec 2000) (Note 4)

This is a case of the elite seceding from the rest of society even when socialism was supposedly ruling the Indian economy. This tendency can only intensify post-1991, with the ‘market’ openly displacing whatever may have hitherto gone by the name of socialism in India. The elite could even more easily disengage itself from the masses thanks to the increasing mobility of capital and talent across national borders – borders that ‘globalization’ has all but swept away to facilitate freer flow of such capital and talent internationally (Note 4a). Therein may lie the explanation as to why “Indian government policies run counter to every major public policy priority that Sen has passionately argued for, including heavy investment in health, education and social security”, as Praful Bidwai has observed.

Amartya Sen had deplored (in Dec 1998) the fact that even after 50 years of independence, half the adult population and two-thirds of the women in India are illiterate. Comparing India with China, he said: "In China, they have many things to be proud of. Every person gets basic education. The tendency to obtain higher education in India is five times more than in China, but none can find neglect of basic education in China. The time has come when in our country total emphasis should be laid on basic education." Sen also urged: "Basic education should be a fundamental right and it should be demanded with a strong voice. Expenses on basic education are within our country's reach. If India cannot do it, it will not only reveal economic bankruptcy but political bankruptcy." The ancient Tamil sage Thiruvalluvar would have wholeheartedly approved. It goes to show how much Indian society has departed from the enlightened path of its own ancient tradition as best represented by the venerated Thirukkural.

Dipankar Das rated India’s achievement in education as follows: “Overall, if one is forced to take stock of Indian education and weigh the scales then it has been a dismal failure. A few geniuses cannot justify a literacy rate of about 55 per cent, in short, a nation mired in ignorance.”

Health Care and Nutrition

It took some rounds of investigation by the Pratichi Trust that he had set up in 1999 using his Nobel Prize money for Amartya Sen to openly admit that “the terrible state of public health care in India is even more obvious to me than it was earlier”. In an exclusive interview with The Hindu (9 Jan 2005) – “India’s poor need a radical package” – Prof Amartya Sen called for a radical change in the way health care is delivered by India’s public sector. He added:

“India spends a lower percentage of GDP on public health than almost any other country, including those of similar income levels. The neglect here is massive, particularly because this has led to both the substandard delivery of public health and the development of an immensely exploitative private enterprise in healthcare that survives on the deficiencies — and sometimes absence — of public health attention.”

Sen enumerated three deficiencies of public health care in India:

“First, there is an awfully inadequate amount of investment, so that the amount of public resources going in to providing healthcare for all is extraordinarily little.

Secondly, the monitoring of the performance of public health centres is often totally absent or thoroughly defective. Thus, the absenteeism of doctors is quite high and the incidence of doctors trying to recommend that patients go and see them in their capacity as private practitioners is distressingly high.

Third, there is no way the Government helps patients diagnose who is a quack and who is not. That requires a monitoring not just of the public health service but of medical services as a whole.

All three things act together to ruin the rural poor who, from their
meagre resources, must spend whatever they can to deal with that which is of greatest importance to them — namely their health. And they get hit both by the continuation of illness and economic ruination. Corruption is there in the sense that a doctor in a public health service asks patients to go to himself or a friend in private care, instead of providing treatment.

Accepting a salary and not being at the job is also a type of corruption. But to see the problem primarily as a penalty of corruption would be to lose the precise story in the health sector deficiency in a more general story of corruption.

We ought to clearly point out the defect of under-investment in public health care, the under-monitoring of public health delivery, and the lack of diagnosing of medically trained personnel compared with quacks. These three things together produce the dreadful situation in which we are.” (Note 5a)

In a speech delivered at the National Seminar on “Development as Freedom – An Indian Perspective” (31 July 2003, New Delhi), Amartya Sen had compared the achievements of China and India in terms of life expectancy:

“In the middle of the twentieth century, post-revolution China and newly independent India had about the same life expectancy at birth, around 45 years or so. The Chinese leaders were immediately more successful in rapidly expanding health care and life expectancy than their Indian counterparts were, and in these fields (leaving out the temporary interruptions in famines), China clearly ot more from the egalitarian commitment of its authoritarian leadership than India did from its democratic system. When the economic reforms were introduced in China in 1979, China had a lead of 14 years or more over India, with the Chinese life expectancy at 68 years while India's was less than 54 years.

The speed and composition of Chinese economic growth were, however, in many ways in great need of improvement in the pre-reform period. Radical economic reforms, which were introduced in 1979, ushered in a period of extraordinary growth in China over the last two decades. We run, however, into an odd conundrum as far as life expectancy is concerned. China's life expectancy, which is now just about 70 years, compares with India's figure of 63 years or more, and the life-expectancy gap in favour of China, which was 14 years before the Chinese reforms, has been halved to almost 7 years now………

…….. Chinese health care system has abandoned its earlier commitment to social insurance for all, in favour of privatized insurances which people have to buy (unless they are lucky enough to have employers who buy it for them)….. The abandonment of the general entitlement to health care in China, which was carried out very smoothly through compliant politics, would have almost certainly received far greater resistance in more plural political systems. China's spectacular achievement in health entitlement and egalitarian distribution in the pre-reform period may have been largely the result of visionary political commitment, but the preservation of those gains and their further expansion would certainly have been helped by wider political engagement and more democratic participation. (Note 5b)

Indeed, if we look at Kerala, which has had a long history of egalitarian politics not altogether dissimilar to the kind that China had in its early period, but also has the benefit of democracy and oppositional politics, we find a life expectancy of about 74 years, which is significantly ahead of China's 70 years. The contrast is even sharper if we look at specific points of vulnerability, such as infant mortality rate, in which Kerala's figure now is less than half of China's.”

On the matter of nutrition, Sen said as follows in his interview with The Hindu (9 Jan 2005):

“First, India has a higher level of under-nourishment than almost any other part of the world with the possible exception of our neighbours in South Asia. It's not often recognised that the regular level of under-nourishment in India is higher than that of sub-Saharan Africa, where about 20-40 per cent of children are chronically undernourished in terms of criteria like weight for age and other anthropometric criteria. In India, the figure is 40-60 per cent, a very high proportion indeed. Our level of anaemia is much higher, our level of maternal under-nourishment is much higher. Providing meals in schools is one good means of dealing with this vast problem of chronic under-nourishment.

Second, it increases the attractiveness of schools, from the point of view of attendance, because of the fact that while we often have much higher enrolment ratios than before, the attendance levels have remained systematically lower because of a lot of dropouts. So you can achieve higher attendance and lower dropouts by making it attractive for the kids to come to school.

Third, the imparting of education is badly affected by under-nutrition. In the context of my forthcoming book, 'The Argumentative Indian', I was looking at a discussion in the Chandogya Upanishad where Shvetaketu's father is giving him an education. At one stage Shvetaketu decides not to eat. After 15 days, when his father says, can you follow me, he says, no I cannot. And the father says that is because your intelligence doesn't work if you are starved. If you eat now, you will be able to understand what I am telling you.

This points to the elementary fact that under-nourished children don't find it easy to learn, and the attention deficit and ability to
comprehend is a serious problem. Fourthly, there is the problem of teacher absenteeism in a number of schools in India. As long as the teachers are just providing education and students go and find no teacher, they know in some sense their long-run future is being
affected……”

It’s NOT a case of too much DEMOCRACY, but too little.

India’s current Finance Minister P Chidambaram wrote a column in the Indian Express (29 July 2003) – when he was out of government and the BJP was in power, led by Prime Minister Vajpayee – aiming to answer the question whether democracy accounted for the difference in performance of the “two people’s republics, viz. China and India:

“…… China and India were more or less at the same level of per capita
income in the 1970s. Since China's population was about 300 million more, the size of its economy was larger. So was the size of its problems: China had 300 million people more to be lifted out of poverty.

China, thanks to Deng Xiao Peng, opened up its economy in 1978. That year, India was recovering from the aftermath of the Emergency and was restoring to health its Constitutional and political organs.
During that exciting period, the missing factor was a review of the
economic policies that had held sway for 30 years. After too much government under Indira Gandhi, Morarji Desai's declaration of a ''plan holiday'' turned out to be a holiday from governance………

It is during the period between 1978 and 1990 that China pulled away from India in the race towards becoming the dominant economic power in Asia……..

The excuse for India's poorer performance is that India is a democracy. We say that we consciously opted for a model of government that will exact a price - and if that price is a 2 to 3 per cent lesser growth of GDP, we say, so be it. We need to critically examine these facile assumptions. Is democracy exacting a price of 2 to 3 per cent in terms of economic growth? And if it does, is that an inevitable tax on growth?

Our notions of democracy have been shaped to a very large extent by the British and American models. Democracy means elections, an elected Parliament or legislature, an elected government, the
rule of law, an independent judiciary, a free Press and Constitutionally-guaranteed freedoms for the citizen.

India has these institutions, so India is a democracy. However, we fail to see that these are only the 'formal' institutions of a democracy and the fact that they are there does not say anything about their quality or their effectiveness. We mistake the form for the substance.

Take elections. Elections are held in India periodically, but what kind of elections? Criminals win elections, and sometimes even from behind prison bars. As I write this, there is at least one Member of
Parliament who was elected in 1999 who will ''serve'' his entire term until 2004 as a prisoner.

A rich businessman can ''buy'' a seat in the Rajya Sabha. In many States there is practically no distinction between the legislature and the government - every legislator is made a Minister or a quasi-Minister……

The rule of law is only in theory. In this aspect, we are more like China. There is rule by law, not rule of law. In rule of law, howsoever high you may be the law is above you. In rule by law, there is a set of laws and rules, but the lawmaker or the lawgiver is above the law……

While the judges will probe into the misconduct of everyone, no one may probe into the misconduct of judges. An independent judiciary that cannot punish the corrupt judges cannot boast of its independence.

Nor is a judicial system that takes 20 years to resolve a dispute of much use to society. A free Press that ''sells'' editorial space, under whatever euphemistic scheme, is not really free. And the ''freedoms'' guaranteed to citizens have no meaning at all if they do not enjoy that most precious freedom - freedom from fear.

The next time you rue the lower rate of India's economic growth, compared to China's, please don't blame democracy. It is rather the lack of democracy, in full and substantial measure, that may be the real reason for the uneven and lacklustre record of economic growth in India. A true democracy, with all its institutions in robust health, may actually accelerate growth and take India past China.” (Note 6)

Whilst varnashramam (Hindu casteism) compartmentalized society into castes, in some cases mutually contemptuous and hostile, the new economic order atomizes society down to the individual, as the basic unit of modern capitalism is the individual and its driving force is the aggressive pursuit of self-interest. The balancing act must entail the proactive promotion of social justice, viz. basic health care, education, nutrition and security for all. It is such social justice that would enable a fuller realization of India’s enormous human capital potential, and help strengthen the social fabric.

The advancement of social justice ought to be the direct responsibility of any government, while the private sector may be drafted for the higher realms and specialized aspects. Engagement of the market to drive the economy will be even more effective to the extent that those beyond the pale of the market are appropriately empowered with the necessary income and knowledge (remember, it’s a post-industrial – informatized - knowledge era) to enter the market. The latter can only happen through a parallel effort by the government to deliver social justice.

Heed the voice of Amartya Sen. Embodying the noblest instincts of the cultures of both India and the West, Sen makes compelling sense. (Note 7)

Note 1:

Praful Bidwai, a senior Indian journalist who has had extensive conversations with Prof Amartya Sen, wrote as follows in Oct 1998 in an essay titled “India: Paying Lip Service to Amartya Sen, the Rebel” :

“Sen is not just an economist. He is one of the world's great economic
philosophers, that rare breed of thinkers who remind us that economics is not about the iron laws of supply and demand, but about the real world, about people, about choices and transactions which involve or assume values, institutions and patterns of behavior -- themselves historically determined. Sen is the economist's economist, the philosopher's philosopher. More, he is a public intellectual who brings morality into policy debates. He is a beacon of reason, sanity and humanism – values.”

Note 2:

The Human Development Report (HDR), published annually since 1990 by the United Nations Development Programme (UNDP), is the brainchild of the Pakistani economist Mahbub-ul-Haq (late).

Note 3:

As Dipankar Das observed:

“Prime Minister Nehru, wanted a technically sound India, hence the premier Indian Institutes of Technology sprouted in four-corners of the country. Soon, this was followed by four institutes to train managers. Retaining the bias for elitism in education rather than favour mass education, the governments subsidised these premier institutes almost wholly by allotting a whopping 60 per cent of the entire budget for education to them, while sparing little resources for secondary and even less on primary education.”

Note 4:

“….. Today the State is closing down the state primary schools for the poor, and they are not interested in aiding private agencies to conduct such schools, because they see it as a costly exercise in social welfare which reduces money for investment in hi-tech development aimed at economic growth. Privatization today is for conducting self-financing technical and managerial professional colleges for the rich to take advantage of the TNC’s hi-tech growth-oriented pattern, of development.”
- from a paper presented at a Seminar held on 28 Oct 1995 at Santhinilayam, Thiruvalla under the joint auspices of the Kerala Council of Churches and Mar Thoma College, Thiruvalla.

Note 4a: (filled: 10.8.2005)

Prof Saskia Sassen, an eminent sociologist with the University of Chicago and a visiting professor at the London School of Economics, said that the global network “makes possible the hypermobility of financial capital at the global scale.” In its most insidious form, global corporate capital “sucks out national wealth and leaves countries impoverished.” Citing Argentina as an example, she says extremely pro-business government policies allowed MNCs to buy up “de-nationalised” business and services. The result was that these were liquefied and the “national wealth” was able to leave the country digitally. Buenos Aires was just one of many cities around the world that had designs on going global but went broke instead. Global cities are “great for owners of capital but not so for about 70 countries around the world that have been destroyed by it.” Global finance has become very innovative and some financial instruments are weapons of mass destruction. Today, 98% of all global investment is not green-field. Most of it is just the buying of portfolio investment.
- The Business Times (10 Aug 2005)

Note 5a:

It was a Saturday afternoon in late 1998. I was leaving office together with our first local staff member. A crowd had gathered in the ground floor lobby of the building located in Nariman Point, the heart of India’s commercial city, Mumbai. Peering over the shoulders of those gathered there, I could see a middle-aged man collapsed on the floor and another person straining to resuscitate him by alternately beating his chest and blowing into his mouth. The man was said to have collapsed from a sudden heart attack. When I asked around if medical help had been called for, someone pointed towards an ambulance already waiting outside the lobby. One could not spot anyone in the ambulance and – from a distance – it appeared bare of any special medical fittings. I walked out towards the ambulance and looked inside: there were again no special fittings, except for a metal bench fixed on each side. It was no more than a converted van painted white on the outside with the word "AMBULANCE" running across the sides. The vehicle was from one of several private ambulance service companies operating in the city. My next interest was to locate the elusive ambulance personnel: if they had arrived, why were they not attending to the patient? I was to soon notice someone in white nursing uniform emerging from inside the building and walking - in what appeared to be a remarkably leisurely pace (there was clearly no briskness in his steps) - towards the crowd. Mercifully, a small bag dangling from his shoulder suggested that he might be after all equipped with some form of medical kit. But I had to leave the place. Upon returning to office on Monday we heard that the collapsed man (in his mid-thirties) did not survive – one could be surprised only if the man had instead survived in spite of the type of emergency care we had witnessed - and was leaving behind his wife and two children. After more than 50 years of independence, such was the medical care available to an ordinary man in the very heart of India's commercial capital. To a Singaporean it was very upsetting, but the locals were uniformly resigned to the fact. I was later to hear comments from ordinary folks about the conditions prevailing in many government hospital wards – they imagined that mortuaries in developed countries might be better than these wards in terms of basic hygiene. In many cases, that may not be an overstatement.

Note 5b: (filled: 26.9.05)

Health care and private insurance in the USA

Paul Krugman, eminent economist and New York Times Op-ed columnist, in his column titled “Passing The Buck” in the New York Times (22 April 2005):

“The United States spends far more on health care than other advanced countries. Yet we don't appear to receive more medical services. And we have lower life-expectancy and higher infant-mortality rates than countries that spend less than half as much per person. How do we do it?

An important part of the answer is that much of our health care spending is devoted to passing the buck: trying to get someone else to pay the bills.

According to the World Health Organization, in the United States administrative expenses eat up about 15 percent of the money paid in premiums to private health insurance companies, but only 4 percent of the budgets of public insurance programs, which consist mainly of Medicare and Medicaid. The numbers for both public and private insurance are similar in other countries -- but because we rely much more heavily than anyone else on private insurance, our total administrative costs are much higher.

According to the health organization, the higher costs of private insurers are ''mainly due to the extensive bureaucracy required to assess risk, rate premiums, design benefit packages and review, pay or refuse claims.'' Public insurance plans have far less bureaucracy because they don't try to screen out high-risk clients or charge them higher fees.

And the costs directly incurred by insurers are only half the story. Doctors ''must hire office personnel just to deal with the insurance companies,'' Dr. Atul Gawande, a practicing physician, wrote in The New Yorker. ''A well-run office can get the insurer's rejection rate down from 30 percent to, say, 15 percent. That's how a doctor makes money. It's a war with insurance, every step of the way.''

Isn't competition supposed to make the private sector more efficient than the public sector? Well, as the World Health Organization put it in a discussion of Western Europe, private insurers generally don't compete by delivering care at lower cost. Instead, they ''compete on the basis of risk selection'' -- that is, by turning away people who are likely to have high medical bills and by refusing or delaying any payment they can.

Yet the cost of providing medical care to those denied private insurance doesn't go away. If individuals are poor, or if medical expenses impoverish them, they are covered by Medicaid. Otherwise, they pay out of pocket or rely on the charity of public hospitals.

So we've created a vast and hugely expensive insurance bureaucracy that accomplishes nothing. The resources spent by private insurers don't reduce overall costs; they simply shift those costs to other people and institutions. It's perverse but true that this system, which insures only 85 percent of the population, costs much more than we would pay for a system that covered everyone.

…………At a rough guess, between two million and three million Americans are employed by insurers and health care providers not to deliver health care, but to pass the buck for that care to someone else. And the result of all their exertions is to make the nation poorer and sicker.

Why do we put up with such an expensive, counterproductive health care system? Vested interests play an important role. But we also suffer from ideological blinders: decades of indoctrination in the virtues of market competition and the evils of big government have left many Americans unable to comprehend the idea that sometimes competition is the problem, not the solution.”

Note 6:

“…….it's interesting that when Tagore goes to Russia in the 1920s, the thing that he separates out for special praise is the expansion of education across the territory in the Soviet Union, including Soviet Asia. The thing that he was critical of, in an interview that he gave to Pravda that was not published in Pravda but appeared in The Manchester Guardian, was the lack of democracy. It was quite interesting that in terms of getting his perspectives right, he did emphasize what personally I believe to be the important part of the Soviet achievement, namely its education. At the same time he was already very aware of the penalty that the Soviet Union was paying and would pay more in the future by not having a democracy and not allowing criticism and open public discussion……”
- Amartya Sen talking to David Barsamian of Alternative Radio in Sep 2001.

Note 7: (filled: 25.8.2005)

The Times of India (22 August 2005) reported on a major story carried by the Across the Board journal in its August 2005 issue. The Straits Times (24 August 2005) also covered the story under the title ‘Indian business gurus winning over Americans’.

The article in the journal is authored by Stuart Crainer and Des Dearlove, and headlined “The Indians Are Coming”. It deals with how management thinkers from India are changing the face of American business. Excerpts from the article:

The rarified world of business thinking has been largely American terrain over the last hundred years. From Frederick Taylor with his stopwatch to the modern generation of gurus, Americans have monopolized business wisdom. Even the brief love affair with Japanese business practices in the early 1980s was intellectually colonized by U.S. thinkers such as W. Edwards Deming and Richard Pascale.

But change is in the air, blowing from a direction unforeseen a few years ago -- from the Indian subcontinent, where a new cohort of thinkers and ideas is emerging. Superstars include strategy guru C.K. Prahalad, itinerant executive coach Ram Charan, Nobel economist Amartya Sen, and Vijay Govindarajan of Dartmouth College's Tuck School of Business. London Business School's Sumantra Ghoshal, who died unexpectedly last year, would have placed high on anyone's list of key business figures.

While no one can predict the Indian thinkers' long-term impact on American business, there's no question that they are bringing a refreshing diversity to boardrooms and MBA programs. Just as the skills of Indian software programmers have rescued Silicon Valley firms desperate for workers, the fresh perspectives and unfamiliar backgrounds of Indian authors and executives may change the way that tomorrow's corporations run…………..

………….. Indian thinkers' increasing influence coincides with a period of introspection into the nature and purpose of Western capitalism. Post-Enron, there is widespread disillusionment with the individualistic model, a sense that corporate America has bred executives whose personal greed and egos eclipsed their sense of public duty. Indian thinking taps into this debate, since India's collectivist culture offers a ready foil to America's rampant individualism. Among Indian thinkers, there is a keen sense of capitalism's ethical and societal obligations -- note C.K. Prahalad's most recent book, The Fortune at the Bottom of the Pyramid, which advocates a new approach to business to take account of micro markets among the world's poor……….

"Many Indians growing up in the United States detect an inconsistency or incoherence about modern life, which for Indian-born people like my parents is very, very difficult," says Rakesh Khurana. "Somehow you are supposed to be moral and generous in your private life, but that doesn't apply when you go to work -- you don't have to be the same person. That kind of role fragmentation or inconsistency was really seen as profane. One must find a way that synthesizes both who you are in private and who you are in public life and work. One has to find a role that creates integrity. In India they are also dealing with the issue of how you reconcile traditionalism, where there's a lot of meaning and symbolism imbued in everyday life and family and community, with making sure you get the benefits and individual spark of modern society."

Khurana points to the fusion seen in Indian Bhangra music -- a synthesis of modern dance and traditional music -- and the unsettling questions raised in literature by Indian novelists such as Arundhati Roy and Salman Rushdie. "People are trying to find a synthesis between the benefits of modernity without losing the meaning associated with traditional structures such as family. A growing number of people are uncomfortable with the winner-take-all markets as they currently exist and that the indicator of one's worth in the world is perfectly correlated to the size of their bank accounts. Another key question for them is how do we enjoy the advantages of modernity -- but without a 50 percent divorce rate?" ........

Comments may be forwarded to: anbarul@yahoo.com