Covid 19 Focus

Awakening from Neoliberalism?

Has neoliberalism lost its credibility now that the private health care sector is failing?

Is the Missing in Action of the Private Healthcare System A Call to Abandon Neoliberal State Policies?

By Deepak Kumar Nanda

The outbreak of the Coronavirus disease (COVID19) leading to the global pandemic has compelled us to revisit the old debate on the idea of public versus private services—the socialist, communist or redistributive model versus the neoliberal model—in the state policy. Given the present context, the discussion is primarily on public healthcare services; however, it also leads to the larger debate on neoliberal state policy altogether. The idea of neoliberalism took a dominant position in international politics and policy 1990s onwards after the collapse of socialism in Central and Eastern Europe, and a large part in Asia(1).

To begin with, neoliberalism was seen as “the idea of new economic, political and social arrangements in the society that emphasise new market relations, re-tasking the role of the state, and individual responsibility”(2). That was associated with some of the influential thinkers, politicians, and policy-makers like Friedrich Hayek, Milton Friedman, Margaret Thatcher, Ronald Reagan, and Alan Greenspan. According to it, “market is the most efficient and moral organization of human affairs” and therefore “market should replace any collective forms of planning” for which socialist and redistributive policies are the obstacle in its way(3). But the idea got translated into action as state policy with the rise of conservative governments in the USA and UK under the leadership of Ronald Reagan and Margaret Thatcher. Gradually, it also became the international policy guidelines for  many debt-ridden Latin American, African and South Asian countries with the guidance of the World Bank and International Monetary Fund. It includes some major recommendations like “reducing public expenditure” in education, healthcare, public infrastructure investment; tax reform; trade liberalization; encouraging foreign direct investment; privatisation of state enterprises with deregulation, etc(4).

Following the path of the changing international politics, in the year 1991, India took a turn from its earlier policy of state socialism and brought about a new macroeconomic reform in line with the neoliberal policy as a gesture of structural adjustment. Provisions like “expanding the tax on various services which was not included earlier; reducing the direct tax for Indians and corporate; abolishing most of the export subsidies and reducing import duties; providing tax incentives for infrastructure and export-oriented sectors”, were introduced(5). It also included a structural economic reform in various sectors like trade, industry, infrastructure and finance, looking into the interest of the market. So, private as well as foreign direct investment was encouraged in the sectors of public expenditure(6). This led to the foundation for the privatization, liberalization, and globalisation of education, industry and finance, including health care sectors. 

However, the neoliberal model of development is not free from criticism. The debate on the idea of public versus private services has re-emerged over time with privatization, liberalization, and globalization in various sectors like healthcare, education and industries and has remained important. According to Thorsen & Lie(7), neoliberalism and its nexus with democracy have been at the core of several political and academic debates since its domination in international politics and policy. Similarly, in the context of India, its new economic reform in line with the neoliberal model of state policy is considered to be responsible for “jobless growth, persistent poverty, and rising inequality”(8). It is because the “idea of neoliberalism was not shaped by the economic priorities of the people but by the economic problem of the government” with the changing international politics and the global economic crises. 

Yet again, the present crisis in the healthcare system due to the COVID19 infection has fundamentally questioned the relevance of privatised health care facilities at the time of a national health emergency. The situation of health emergencies in India due to the outbreak of COVID19 is getting worse day by day with increasing infections. According to the Ministry of Health and Family Welfare, Government of India(9), there are 9272 active cases while 1189 cases were discharged and 353 reported cases of death altogether as on 14th April 2019. Experts predict a worse situation in the months of April-May if the situation is not controlled in the first and second phases of infections. Put another way, it can’t be ruled out that India may be the next epicenter of the COVID19 pandemic like other afflicted countries(10). Therefore, to fight against it, a nationwide lockdown that was announced for 21 days from 24th March 2020 to 21st April has been now further extended till the 3rd of May 2020. This shows the severity of COVID19 in India.  

In this context, it is imperative to look at the public health care infrastructure and facilities in India as the fight against the pandemic rests on the public health care system. In this regard, referring to the National Health Profile 2019 by the Government of India, the Times of India(11) reveals that there are only 7, 13,986 government hospital beds in India which is 0.55 beds per 1000 population. The availability of hospital beds for the elderly population is 5.18 beds per 1000 population. The situation in states like Bihar, Jharkhand, Gujarat, Uttar Pradesh, Andhra Pradesh, Chhattisgarh, Madhya Pradesh, Haryana, Maharashtra, Odisha, Assam, and Manipur is pathetic as they have less than the national average of 0.55 beds per 1000 population but they altogether amount 70 percent India’s total population. This shows that highly populated states have no adequate infrastructure to fight COVID19 infection. Likewise, in terms of the numbers of ventilators that are essential for treating COVID19 infected patients, the author reveals that at the maximum all over India possibly there are around 57 thousand ventilators available in all government hospitals. As per its calculation, possibly there are around 26,000 ventilators in actual numbers which are not verified due to the lack of government data. 

This abysmal situation of the public health care system in India is very much linked to the neoliberal state policy where private healthcare facilities and investments were given utmost priority after new economic reform in 1991. In this regard, Sengupta & Nundy (2005), state that:

“Spending on health has not been a priority for successive governments, and they have encouraged the growth of the private sector. They have subsidised the private sector by releasing prime building land at low rates (as long as a quarter of patients are treated free—a condition that is rarely met), by exemptions from taxes and duties for importing drugs and high tech medical equipment, and through concessions to doctors setting up private practices and nursing homes”
Sengupta & Nundy, 2005

They further argue that public health care expenditure in India is one of the lowest in the world, which is 0.9 percent of its gross domestic product (GDP), which was otherwise at the rate of 1.3 percent at the beginning of new economic reform(12). During the time of India’s independence in 1947, private healthcare accounted for only 5-10 percent of the patient care but that has boomed to 82 percent of outpatient visits, 58 percent of inpatient expenditure and 40 percent of institutional birth at the time of 2005(13). This shows the priority for private health care facilities over the public ones.

Moreover, despite the fact of priority been given to the private healthcare system in state policy, it is the public healthcare system now fighting the battle of COVID19 during the emergency. On the other hand, the private healthcare system is nowhere in the picture and missing in action. The Government of India only issued two guidelines; first on 17th March 2020 that is if any suspected or confirmed cases of COVID19 come to private hospitals, they should be treated with isolation and must be informed to the state surveillance team for further tracing of possible transmission(14). And the second order-cum-guidelines was issued on 21st March 2020 on the cost of testing in private laboratories. It stated that the testing charge should not exceed rupees 4,500 that includes rupees 1,500 for a screening test to suspected persons and an additional charge of rupees 3000 for COVID19 positive patients(15). It also encourages the private testing labs for free or subsidized testing due to a national health emergency but surprisingly it does not enforce that as an order. Moreover, there is no clarity or a list out on the number of private hospitals and labs for the treatment and testing of COVID19 patients. However, later the Supreme Court of India–the apex body of judiciary in India–hearing  a public interest litigation– ordered in favour of free of cost COVID19 testing in notified private laboratories and striked down the government’s earlier guidelines on the cost of testing in private laboratories(16).

Meanwhile, surprisingly, the neoliberal minds—mainly the sophisticated urban elites—who usually advocate for the privatisation of public services, are suddenly bestowing their faith in public healthcare services and other public affairs when it comes to fighting for COVID19. The usual notion of ‘the poor need public healthcare services and the private healthcare services are for the elite masses’ is no more true at this moment. The present situation has made everybody, including the neoliberal minds, realise the need of public services which the private services cannot replace; vis-à-vis the latter has failed miserably in its promises. Failure in the sense of combating COVID19 needs collective effort where no one is secured until everyone is secured; thereby making the individual private treatment and market irrelevant compared to the normal situation. Hence, COVID19 has made us realise that health is a public matter. If it is so, then there is a fundamental flaw in the basic philosophical principles of neoliberal state policy which is based on the premises of “individualism” and “the efficiency of the market”(17). As a result of the above mentioned, “reducing public expenditure” in education, healthcare, public infrastructures investment, etc. were the agendas of the neoliberal model of development carried out by the World Bank and IMF in most of the debt-ridden third world countries in the early 1990s(18) including India in 1991(19).

And so, with the missing in action of the private health-care system, the neoliberal politics and practices have been heavily tested. In short, they are losing their reliability as a universal model. I personally believe that the time has arrived in international politics to take a turn away from the dominant neoliberal state policy by taking a lesson from the current pandemic.

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Footnotes

  1. Plehwe, D. (2016). Neoliberal Hegemony. In S. Springer, K. Birch, & J. MacLeavy (Eds.), The Handbook of Neoliberalism (pp. 61-72). Oxon; New York: Routledge.
  2. Springer, S., Birch, K., & MacLeavy, J. (2016). An Introduction to neoliberalism. In S. Springer, K. Birch, & J. MacLeavy (Eds.), The Handbook of Neoliberalism (pp. 1-14). Oxon; London: Routledge.
  3. Ibid.
  4. Peet, R., & Hartwick, E. (2009). Theories of Development: Contentions; Argument and Alternatives (Second ed.). New York; London: The Guilford Press.
  5. Wadhva, C. D. (2004). India trying to liberalise: economic reforms since 1991. In J. Rolfe, Asia Pacific: A Region in Transition (pp. 259-284). Honolulu: Asia Pacific Center for Security Studies.
  6. Ibid.
  7. Thorsen, D. E., & Lie, A. (2006). What is Neoliberalism? Oslo: University of Oslo.
  8. Nayyar, D. (2017). Economic Liberalism in India. Economic and Political Weekly, 52 (2).
  9. Ministry of Family and Health Affairs, Government of India. (2020).
  10. Laxminarayan, R. (March, 2020). Youtube: ‘India Could Be Next Coronavirus Hotspot, in Worst Case upto 60% Could Be Infected’. (K. Thapar, Interviewer)
  11. The Times of India. (March 26th, 2020). Coronavirus: Does India have enough ventilators, hospital beds? New Delhi, India.
  12. Sengupta, A. & Nundy, S. (2005, November 19). The private health sector in India: Is burgeoning, but at the cost of public health care. BMJ, 331, 1157-1158.
  13. Ibid.
  14. Ministry of Health and Family Welfare, Government of India. (2020).
  15. Ibid.
  16. Mathur, A. (2020). India Today: Supreme Court orders free coronavirus testing at private labs.
  17. Springer, S., Birch, K., & MacLeavy, J. (2016). An Introduction to neoliberalism. In S. Springer, K. Birch, & J. MacLeavy (Eds.), The Handbook of Neoliberalism (pp. 1-14). Oxon; London: Routledge.
  18. Peet, R., & Hartwick, E. (2009). Theories of Development: Contentions; Argument and Alternatives (Second ed.). New York; London: The Guilford Press.
  19. Wadhva, C. D. (2004). India trying to liberalise: economic reforms since 1991. In J. Rolfe, Asia Pacific: A Region in Transition (pp. 259-284). Honolulu: Asia Pacific Center for Security Studies.

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About the Author:

Deepak Kumar Nanda is a Ph.D. Scholar at the school of social work, Tata Institute of Social Sciences, Mumbai, India. He is also a former visiting scholar to the school of social work, Lund University, Sweden. Currently, he is working on his Ph.D. research on the “politics of development and regional disparities in Odisha, India”. His research areas of interest are development, poverty, inequality, and politics of development. Besides his academic and research interests, he is also interested in writing opinion pieces and short articles on various issues of politics, society, and development.

4 comments on “Awakening from Neoliberalism?

  1. Anonymous

    Very good article hoo master

    Liked by 1 person

  2. Well reasoned article. Private health care can’t be a universal model. But consider this. We create elaborate Public Hospitals in remote regions(eg. Koraput) but do not fill the vacancies, the doctors and Specialists posted do not attend to their duties and the facilities created are not well maintained for the future. The public at their wits end run to private hospitals across the border. The point is that Public Service without public spirit and accountability shall fail to deliver. Private practices shall thrive on the failure and defunct state of Public facilities. Yes, budgetary allocation for health care should improve however. It is not extravagant expenditure as pandemics have become common occurence.

    Liked by 1 person

  3. Dr. Simanchalla Ranjit

    Neoliberal state policy in India is a half baked idea. The present essay well argues that public vs private policy orientation in dealing with COVID-19 pandemic has become a case of textbook failure. Therefore, state must own responsibility to take care it’s citizens and spend enough for healthcare infrastructure and services.

    Liked by 1 person

  4. Pingback: COVID19 – Live Blog

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