A Singapore sling
Instead of being obsessed with our competition with China, India should look at Singapore to reduce inequality in society, writes K Anji Reddy.india Updated: May 21, 2011 16:47 IST
The impending visit of US President Barack Obama has generated a lot of excitement in the media. Ironically, this is at a time when the majority of the English-speaking global Indian business community thinks that the George W Bush administration was more favourably disposed to their interests than the present Obama regime.
Maybe it is these thoughts about statesmanship, the nation-State and the future of India Inc that made me buy the latest biography of Lee Kuan Yew, former prime minister of Singapore. Writings on Lee have always caught my attention in terms of lessons for India. In fact, while 'Bangalored' is becoming an adjective, 'Singapored' may become a contemplative verb.
Recently, I found myself chatting with my cab driver in Singapore. A cab driver is quite like an updated, walking wikipedia entry on the political economy of that society. This gentleman explained to me that every single cab driver in Singapore owns a decent two or three-bedroom apartment. He shells out approximately S$300 per month for 30 years almost as if it is part of a national housing plan. Every person in Singapore, employed in the organised or unorganised sector, has to earmark 20% of their monthly earnings as provident fund. This is matched by the employer or the State. Most of this amount is linked to guaranteeing quality healthcare. Up to a certain cost bracket, the patient is expected to bear the expenses. Above that, the State looks after the expenses, drawing partly from the provident fund.
The scheme, according to explanations provided by Lee, is based on the philosophy of not giving anything free to anyone. Human nature will misuse anything free, he says. So, housing and healthcare is linked to an individual's earning power and his responsibility towards sustaining these services.
Though a votary of the Indian model of democracy, I cannot but agree with Lee on two fundamental premises. What is a Nation-State if it cannot provide its people clean drinking water, sanitation, quality education, healthcare and a decent house? Also, shouldn't these be provided under the principles of affordability rather than as freebies?
There are a few successful experiments that I did with my own company to provide affordable medicines for all in India. The government enacted the Indian Patents Act in 1970. Accordingly, India accepted the international product patent regulation but made sure that only process patents were recognised in the Indian Act. During the 80s, I saw in process patents a window of opportunity. The window opened to two different paths: one that could lead to excessive profiteering and the other to moderate profits that could pave the way for affordable medicines for all.
In 1985, a pharma multinational was selling the popular drug Vasotek for $1.2 per tablet. This was the most common successful medicine related to hypertension and prevention of cardio-thoracic ailments. We synthesised the same compound through a different route without any patent infringement and brought out a tablet that served all the purposes that Vasotek did. Without using a pricing committee or even a calculator, we pegged it at R1.20, which guaranteed reasonable profits even at that price. This meant that almost everyone could afford it. The same goes for a popular drug which revolutionised the way acidity and ulcers are treated. A monopoly supplier of the equivalent drug called Losec priced it at $3. We priced it at R2.50. What we did was combine altruism and sustainable capitalism. Probably Lee is urging us to use these principles of 'seizing opportunities' and offer it to consumers, not free but at affordable prices for solving quality of life issues in a fast changing India.
I often differ when people say that India has grown despite the government. I believe that in a democracy, it is almost entirely governments that dictate the destiny of a nation. In fact, the global standing of an average Indian hit me during the 1995 Republic Day Parade when President Nelson Mandela was the chief guest and Jerry Matsila frantically called me to arrange for a year's supply of various drugs to be taken back as personal supplies for Mandela. The price difference and the availability presented an opportunity cost that was irresistible for even the Gandhian Mandela. Indian healthcare is at a crossroads — we need a policy overhaul that will guarantee affordable healthcare for all. Maybe, we should pay attention to our neighbouring Singapore rather than being obsessed with China.
Many of you might not be aware that Lee considers Deng Xiaoping as the greatest leader ever. Deng studied Lee's Singapore closely and emulated it in building modern China. Early interactions between Lee and Deng led to the creation of 10 new towns in China, each with a population of 40 million people. If China could chart out its urbanisation plans drawing lessons from Singapore, isn't it time we tried doing so?
We are a greater, larger and better democracy than Singapore but we cannot wish away the fact that at $52,190 per capita (ranked ninth in the world), it is a less inequitable society (per capita income in India is $2,900, ranked 167 in the world while the US at $47,500, is ranked 10th in the world). In the 1990s, Manmohan Singh and P Chidambaram had visited Singapore as part of the run-up to economic reforms. This interaction gave teeth and credibility to Association of Southeast Asian Nations and India became a dialogue partner on equal terms with China. I think it is time for the Indian prime minister and his team to take a closer look at our neighbour before the next round of reforms.
K. Anji Reddy is Founder Chairman, Dr Reddy's Laboratories Ltd. and a member of the PM's Task Force on Trade & Industry. The views expressed by the author are personal.