Questions of a Friday Night

I chose to work while two of my friends who are paying me a visit decided to “chill out” the Friday night with some vodka. And then after they were sufficiently drunk, I joined them to discuss grave issues related to social and economic development.

Aware of my sober state (and hence a self perceived notion of intellectual superiority at the time), I started, “You know, this is really a good time that we are living in. The economy is prospering and there are opportunities everywhere. I don’t think any of the previous generations enjoyed these..”, I could not even finish when one of my drunken friends cut me short, “ Opportunities are increasing? For whom? Go to any Indian village and look at the state of primary education, access to health services, access to basic infrastructure like roads, power drinking water.”

“But people have more to choose from”, I persisted. It was now my other friend who had to speak, “Most certainly village women can choose a Fair-ever over a Fair & lovely. But do you seriously they’d have a choice when it comes to getting good primary-education for their children.”

I sought defence in my favorite muse – microfinance, “Take financial services for example. With increasing market integration, even the poor have an opportunity to access credit and scale-up their businesses in case they are self employed and are involved in petty trade etc. Further, they can invest and park part of their savings in specialized mutual funds schemes that offer micro systematic investment plans and therefore, benefit from the wealth being created by the Indian corporate” I knew I was far from convincing. Market opportunities were limited for the poor. Moreover our regulators can still not ensure that the rights of the small investors in capital markets are protected against manipulations. In fact, in the nineties the Indian stock markets had been a zero sum game for the small investors. The evidence that this is no longer the case is still not over-whelming. Also, who would educate the poor about the risks involved in such investments?

But my friend had other arguments, “How do you ensure market access and development in education and health? Are the poor willing to pay a premium here too? How do you right size and right price these services to ensure that the poor can consume them?”

For once, I really had no answers. There are several examples of public-private initiatives in education and health in India but how many of these are really scalable? Given our government’s track record in public expenditures and the quality of work done, and the private sector's reluctance/inability to invest in such basic services and create a business model which makes quality education and health services accessible and affordable for the Indian poor, would we ever have a solution where quality health and quality basic education is available in every Indian village?

The vodka had started taking an effect on my friends as they dozed off…