‘Multiple Choice’ Question

Which is better? Private sector or public sector? This debate goes on for ages. Communists, socialists, trade unions and anti-capitalists who do not belong to these categories will certainly back Government (public) sector, whereas capitalist investors will prefer the other. Independent India is nearing its geriatric age, but still its teething problems are not over. We lost our original civilization, culture and identity due to foreign invasions like many others, which are extinct now. We have become a mixture of multiple culture and like many countries, we look towards western pattern of living and love to get their recognition. While capitalism and materialistic world economy is the order of this millennium in many countries, there is no wonder that we too choose to take that path. Since our Government has not fully recovered from “Nehruvian” pattern of democratic socialism (!), due to various compelling reasons, we need both Govt. and private sectors for many more years to come. Whether we like it or not, we have to bear with both.

Wherever corruption is deep rooted in existence, as seen from the lowest to the top most person in a Govt. institution, the quality takes a back seat. That is obviously evident with our nauseating experiences in any Govt. offices in India. (Previously, they used to do things properly after getting a bribe. Nowadays they are not even loyal to the bribe)! They try to loot you as much as they can. The term govt. brings a repulsion in our mind. Those people who talk about the benefits of govt.sector won’t even use them in their day-to-day life. How many Govt. employees get their children educated in Govt.schools? How many Govt. doctors take treatment for their family in Govt. hospitals? If you analyze the private sector in India, it is another exciting loot story. The look nice, present themselves in a wonderful way, pretend to give an excellent service for the money spent by us, but when a problem arises they behave much worse. The only comforting factor is that they are not uniformly bad as Govt. sector. Some offer really good service and are trustworthy.

The main problem with private sector is their financial strategy. They want to make quick gains financially when the market is good. As a result they are sometimes prohibitively expensive. If you analyze the service fee in private hotels, schools, colleges and hospitals, you can obviously feel that it is exorbitant. In fact the Govt. in one way is indirectly responsible for that. I shall give you an example. In 2002, the 11 judges’ constitution bench of the Supreme Court of India gave a unique verdict in the TMA Pai Foundation case, related to private medical colleges’ admissions. The excerpts of it are as follows: Every institution is free to devise its own fee structure subject to the limitation, that there can be no profiteering and no capitation fee can be charged directly or indirectly, or in any form. A provision for reasonable surplus can be made to enable future expansion. The reasonable surplus should ordinarily vary from 6 per cent to 15 per cent for utilization in expansion of the system and development of education. The relevant factors which would go into determining the reasonability of a fee structure, are:
(i) the infrastructure and facilities available,
(ii) the investments made,
(iii) salaries paid to the teachers and staff,
(iv) future plans for expansion and betterment of the institution etc.

When I was involved in a new medical college project in Chennai in 2005, I had the opportunity to sit with the auditors to fix the fee structure based on the above guidelines. It worked out, that the annual fee to be charged per student to be 6.75 lakhs INR. But the committee appointed by the Govt. to oversee the private college fee structure visited us and fixed the fee at 3.5 lakhs without considering any of the factors mentioned. I vehemently argued with them, that when the Tamilnadu Govt. had to spend 4 lakhs/ student/year to train a student, how could it be possible for a private college spending so much (to build an excellent center at commercial rate), afford to offer education at such an amount? But they didn’t listen. Now one can understand why private colleges collect (illegal) capitation fee. The Govt. indirectly forces them to do so. The committee and the Govt. should honor the court verdict. But any Govt. wants to play to the peoples’ gallery for vote bank politics! They show the people that, they can squeeze the private sector to obey them. Even though I do not justify the present fee structure of private colleges, people should realize that developing such a big infrastructure by private sector is not easy and is quite expensive. In UAE I could run a medical college with 100 students’ intake, with an annual fee equivalent to INR 15 lakhs. The total cost of medical education there was INR 65 lakhs, whereas, in an average quality college in Chennai, it was 105 lakhs! I could attract students from India!

I am not sure whether other private sector organizations face similar problems. But if any private organization is reasonable in getting their profits, they can give wonderful service affordable to all. When Reliance company swept the broadband mobile service in India, by offering more data at an affordable cost, every other player in the field including the Govt. BSNL reduced their rates and offered more data and speed, for lesser price. They could have done that on their own, but they didn’t, till they got a fierce competitor. This attitude, is the one which I hate in private sector. Of course, one good aspect of private sector is that it is competitive, which enables us to get you more options and better quality of product and service.

Hence I vote for private sector for the following reasons;

  1. There is no monopoly; you have variety of choices, so that bad ones can be boycotted or ignored.
  2. You have opportunity to draw them to legal suits if consumer agreement is broken and win. (You can’t fight with the govt.)
  3. There is no bribe culture (or at least not yet developed).

God bless India!




2 thoughts on “‘Multiple Choice’ Question

  1. Dear Sir.
    Nice read..thankyou for sharing…it is not in India but corruption is everywhere these days..yes I agree government sector is only for looting people in India from peon to highest official…and private sector buissness people in India give money directly or indirectly and buy government officers so that they can also exploit when needed.. one of my friend who is a doctor was not paid salary for 2 months saying hospital is at loss and later was removed saying target was not met by her..she could not do anything…as director has all politicians as friends …so not even patients but doctors are also looted..


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