That the communication satellite GSLV-5P should fail?this is the second in six months?is undoubtedly a setback to India?s indigenous space programme as well as to the areas the satellite was to be utilised for, in telemedicine, telecom, weather services and TV. It should, however, be kept in mind that such failures are pretty routine in this business, and have to be treated as a learning experience?indeed, India?s satellite programme is reckoned to be one of the lowest-cost in the world. What is unacceptable, however, is the fact that the satellite was not insured. While confirming this to FE, the head of PSU insurance firm New India Assurance pointed out that the government refused to buy any insurance cover as it thought the success ratio of the indigenous space programme was very high! That?s like not buying house insurance just because there hasn?t been a burglary or a fire in years, or discontinuing medical insurance just because you haven?t been hospitalised in the last 20 years. Paradoxically, the insurance chief argued the crash was good news from his point of view as it would now be possible to get the government to buy accident cover. Had an insurance cover of this sort not been taken in a private organisation, it?s safe to say the person in charge would have been fired immediately.
Instead of opposing buying of insurance for the satellite programme, the government should be trying to use more instruments like insurance to reduce its risk expenditure, and not just in this area. So, for instance, you?d think the government would be working with various insurance companies, both PSU as well as private, to develop models for crop insurance?while it is obviously the government?s job to provide physical relief in the event of calamities like floods and droughts, the availability of insurance funds for the affected would be a great help. There have been enough pilots done, so it is curious there has been no large-scale rollout so far. Nor is this restricted to insurance. Using financial instruments like futures and options to supplement the procurement programme, for instance, will lower costs dramatically and can even help moderate price spikes in a far more efficient manner than the current procurement-cum-ration shop system does. Since the finance ministry has to foot the bill for all of this, perhaps it needs to take a leadership role in this one.