The Politics/Economics and Management of Free Distribution in India

By Amit Bhushan Date 15th August 2012 Contact: amitbhushan@rediffmail.com

The immediate provocation for the article is announcement of Free distribution of essential medicines by the Honable Prime Minister in his address to the Nation on the occasion of the Independence Day. This is another sign as to how crafty businesses/politicians highjack public policy to create niches for private benefits and policy level corruption soaking even a person who otherwise seems to be unimpeachable. The readers may wonder as to how an innocuous announcement of distribution of medicines Free of cost amongst teeming population of poor could be an alarm for raising hackles of the society. However, digging our past and analyzing the fate of Free Distribution policies across various goods and services by the government would certainly make every India skeptical and would make the political parties and politicians including big business, a suspect. To begin with Free medicines distribution from government hospitals and healthcare centers is not a new scheme. Such schemes have been run government at Both Central and State levels with NRHM, DOTS, CGHS, ESIC etc. being some of the shining examples of the failure of the government to effectively achieve its stated objectives. Some of these schemes have defined targeted beneficiary while some others have all publics in selected district/states and are exercised through machinations of Center and state together. What is common across the schemes is that these are all afflicted by tremendous leakages and the beneficiaries are able to receive some benefits i.e. if they manage to receive any at all; with great stress. Making medicines available to the needy and poor can be a great service which if a society achieves then it can definitely take pride for the same. However, would Free medicine announced by government be a panacea and results in such achievement. Well, our past experiences do not confirm the same. However, our politicians and businesses do not want us to learn from such mistakes and in fact continue to guide us getting into the same, again and again and again We all know that we do not get Free medicines from government hospitals where such schemes have already been implemented. If you are a patient and stand in the queue of normal people, you would always find them in short supply. However if you are somewhat intelligent and better informed about who all are in-charge of such distribution, then you have a chance to strike a mutually beneficial relationship and receive such medicines. The dark side is that you do not need to be a patient to strike such a relationship; all you need is to know people who would buy these medicines from you at a price that is higher than what you would spend on cultivating the in-charge/s of the medicine distribution centers. Sometimes, with some sincere efforts, one can even find a friendly procurement specialist in the government department who may help by buying the same medicines again in the pursuit for buyers. I think enough has been said above about the distribution machinery for Free Distribution. Now lets focus on Procurement side. When the distribution is supposed to be Free; the procurement guys know that whatever they procure would be sold/distributed. It is impossible that there are stocks for

which there are no takers because such stocks can even be dumped in neighboring regions with porous borders and the smugglers there would be happy to offer a helping hand. Thus, they focus in buying those medicines which offer the highest margins rather than those which are needed by the so called poor patient or the targeted beneficiaries. Their faith in distribution departments ability to achieve distribution is complete. They know that distribution department would be able to find enough patients for these medicines to achieve distribution. This essentially gives leeway to select corporates with connections amongst politicians to dump their medicines that may not be in much demand in the market. Such actions have generally damaged the whole industry in the long run however in the short span, the politicians become messiah of the poor and the corporate become super successful. These corporate could be seen selling shares to Public to de-risk losses that may accrue later. What needs to be understood is that demands by public is often cryptic and rarely can be explicit in the complex politico-economic-cultural environment such as ours in India. Thus demand for Cheap medicines means that the government should make policies that rid industry of current malpractices that inflate the prices of medicines several times before making it available to the patients. Often, the poor suffers as he is unable to afford the medicines and is unable to negotiate with the complex environment around. There could have been several ways to solve the problem: 1) Government could have created a PPP model for distribution with full costs recovery along with Private Practitioners/doctors who are willing to participate. Several doctors who do not have enough patients could have found the scheme attractive as this would have allowed them to publicize their Practice and allowed them to reach out to masses in a fair way. This would have still brought down cost of medicines for the patient by 70-80% from current prices. Competition amongst private practitioners could have resulted in spread of this mechanism to masses without burdening taxpayers while managing to achieve distribution of medicines for urban poor to begin with. 2) To achieve rural poor, Distribution vans alongwith Haats and paramedics can be roped in so that the poor is able to buy medicines at his doorsteps rather than travelling all the way to cities. The government however has succumbed to populist pressures of making bold announcements which would achieve little except for the selected few politicians, business houses and bureaucrats. The middle class salaried taxpayers would be the worst hit as they would be slapped with yet another expense budget of the government while they receive no benefits. It seems the art of leadership in India is about not speaking ones mind on the subject but allowing politicians and businesses have their way in order to keep up with the requirement of numbers in our democratic polity. It is nave to believe that our learned economist would not have a view about the Free distribution schemes in India, yet all these so called professional have chosen not to voice their views in order to keep their leadership position intact within the governance structure. This speaks volumes about the quality of political leadership I our country and the direction/signal we are giving to domestic and international observers.