Column : 3Es of India’s growth

: The biggest lesson of 18 years of reform is that growth is a necessary but not sufficient condition for poverty reduction. Poverty reduction needs access and access comes from the 3Es (education, employability and employment).

I believe that radically reforming our 3E ecosystem is stalled because of a sometimes fair but mostly unfair distrust of privatisation as a sustainable, effective and scalable alternative to public delivery. Some of the fears around private delivery are not misplaced; the private sector cannot venture into unviable territory (geographies, communities, etc) without letting down some stakeholders. Sometimes the private sector may cherry pick “customers” and this will not be inclusive. But the most dangerous argument used most often is that the information asymmetry of disadvantaged populations attracts players playing a one innings game who abuse the system. But I have no sympathy for the last argument because drunk driving is not an argument against cars. If there are drunk drivers you don’t ban cars but focus on ensuring competent and certified drivers.

If we accept that the deep rooted distrust of markets (I have often wondered why the Indian mind is instinctually slightly left of centre) creates difficult optics for the private sector in areas that have traditionally been dominated by state delivery, is there an alternative? It is important to remember that the fundamental question is not private or public but competition vs monopoly. India’s reform experience throws up many examples where competition accomplished the same objective without any private equity participation in public sector units; mutual funds, airlines, general insurance, telecom, etc. We also have many examples where competition policy has not worked like banking, bond markets, pensions, etc because public policy reinforced the status quo or grants a monopoly. In fact, I believe that the reform of education, employment and employability will be most effective by focusing on choice and competition rather than privatisation.

Let’s think about specific examples in employability and employment. It does not matter if Employee State Insurance hospitals are owned and run by the government as long as employers have the option to pay into and use other public and private hospitals. It doesn’t matter if the Employees Provident Fund Organisation is government managed as long as employers have a choice to pay their monthly contributions to the New Pension Scheme of PFRDA. It doesn’t matter if Industrial Training Institutes (ITI’s) are run by the government as...