Why you should care
Because a healthy, booming India might be in the cards — but it could depend on whether a few bureaucratic policies succeed.
If you’re unfamiliar with newly elected Indian Prime Minister Narendra Modi’s economic vision, here’s a quote to get you started:
“We have to go one step ahead of the PPP model to a P-four model of people -public-private partnership,” Modi said at a televised campaign event in April. “We have to inform people what we are doing, involve them, and then see how we can work wonders.”
The phrases “PPP” and “3P” refer to what’s known in India as public private partnerships, a means of development that unites government and corporate resources to complete infrastructure projects like highways and transit systems. One example is the Mumbai Monorail Project: The Danish-based group Larsen and Tourbo and the Malaysian-based group Scomi Engineering paired with the Mumbai Metropolitan Development Authority in order to facilitate the creation of a shiny, but flawed new urban transit system.
What positive effect did Modi’s emphasis on privatization have on the over 20% of Gujarati citizens living below the poverty line?
PPPs are declining in other parts of the world , but the phenomenon is surging in popularity here, largely on the influence of business-first politicians like Mr. Modi. His election is therefore not only a public acknowledgement of support for the practice of privatization of public works, but also represents the start of what could become a testing ground for the phenomenon on the world stage.
Part of a series on the happenings before, during and after the Indian election
In these contracts, corporations take on early elements of risk in order to alleviate the burden of taxpayers in return for tax breaks and guarantees of annual revenue. But they’re often charged with worsening an already inefficient public works system here, and pulling in large profits at the expense of the government.
The Delhi Metro, which opened in 2008, is among the longest transit systems in the world, and was created almost exclusively by government manpower. One line was created through private resources, however, and that’s the only one that doesn’t work: It’s a track that runs from the city center of Connaught Place to the airport. The Delhi government handed construction to the corporation Reliance, and the results have been disastrous. Not only is the airport line the only non-functioning line on the entire metro, sitting abandoned along the highway for all travellers to see, but Reliance is also suing the Delhi government for losses, calling the project in legal documents a “non-performing asset.”
Similar, if less dramatic, issues have arisen over the aforementioned Mumbai Monorail project. Critics have pointed to the Monorail’s slow, seven-year construction of a nine-kilometer line that does little to alleviate the city’s immense traffic burden. The verdict is still out, but early evaluations haven’t been positive.
Ratoola Kundu is a faculty member at the Tata Institute of Social Sciences’ School of Habitat Studies in Mumbai, and has studied the effectiveness of PPPs.
And because of examples like these, Kundu sees “PPP” as being little more than a polite word for collusion between wealthy politicians and even wealthier corporations.
“What we see with these PPPs is that the private side always makes money,” Kundu explains. “But the state and the people aren’t getting enough of a benefit.”
Modi’s Gujarat has been celebrated for its surging economy, leading his supporters to laud the (possibly) former chaiwalla as a job-creating savior. But in a country where starvation is still a mainstream epidemic , what positive effect did his emphasis on privatization have on the over 20% of Gujarati citizens living below the poverty line?
Modi’s insurance plans, which enroll private Indian insurance companies to protect the poor families from health costs of up to 200,000 rupees ($3,400 U.S. dollars), are often touted as one of his signature achievements as Chief Minister. But when I visited Ahmedabad in February, the majority of doctors I spoke to trashed the plans, saying that they relegate poor patients to same the problematic government hospitals they always used before. The difference, they said, was now private insurance companies were seeing a rise in revenue from state related losses, as state hospitals fell deeper and deeper into debt.
Inequality is sharpening here in India.
— Ratoola Kundu, Tata Institute of Social Sciences, Mumbai
A Duke University study issued in 2013, deemed Modi’s Maternal Health program, one meant to encourage impoverished mothers to deliver their babies in private hospitals, to be a failure. It noted that the few patients who used the plans were being hit by private hospitals with unanticipated costs that were not covered by the basic structure of the plans.
“Inequality is sharpening here in India,” Kundu explains. “During his tenure, as corporations begin to play a larger role in our public works, I think that you’ll see it sharpen even further.”
As Prime Minister, Modi’s ability to create through privatization may be limited, at least compared to his time working as Chief Minister of Gujarat. India offers its states a great deal of self-reliance regarding infrastructure. But he will certainly wield tremendous influence after his overwhelming electoral victory this past Thursday, and he can offer incentives for PPPs in the form of tax breaks, and other means.
When he does it will be corporations, and not the current chaiwallas of India who reap the lion’s share of benefit.