Introduction of the PPP model in district hospitals is anti-people step and will further privatise healthcare in India


Letter by Shri E A S Sarma, Former Secretary to Government of India to Vice Chairman, Niti Aayog



Dr Suman Bery,
Niti Ayog.

Dear Dr Bery,

In the public healthcare set up in the country, the hospitals run by the State governments at the district level play a pivotal role, providing a vast social security cover for the people, spanning the length and the breadth of the country. The medical and the para-medical personnel at these hospitals are highly talented, committed to serving the people from the remotest corners of the district. Given adequate financial, technical and infrastructure support and the necessary encouragement, the district hospitals will not only be able to fulfill the healthcare needs of the people in the remotest corners of the district but also set benchmarks of efficiency and ethical standards for private hospitals. The need of the hour is to extend the concept of a district hospital to different taluks of a district, provide the hospitals with super speciality equipment, ensure that each such hospital has the full sanctioned strength of personnel, train the medical and the para-medical personnel in operating such equipment and motivate them by providing them amenities necessary at sub-district locations.

Niti Aayog’s report on district hospitals ( provides a comprehensive evaluation of the district hospitals in the country.

During the recent multiple Covid pandemic waves, the district hospitals provided a yeoman service to low-income households across the country, when several private hospitals exploited the crisis situation, over-charged the patients in terms of both treatment and drugs and callously profiteered in a highly unethical manner.

I am personally aware of some private hospitals holding the patients in distress to ransom, demanding exorbitant cash payments for both treatment and for drugs, without giving receipts, evidently to evade taxes. When I had brought such instances to the attention of the Centre and the concerned State authorities, no action was taken, as the promoters of private hospitals enjoy considerable political clout. No earnest attempt had been made either by the centre or by the States to regulate their activities and their charges.

Unfortunately, the district hospitals, victims of long neglect in many States, were unable to handle the enormous patient pressure during the Covid crisis, forcing many poor patients to fall prey to private hospitals, which in turn disrupted their meagre finances and impoverished them further. When the Centre mismanaged vaccine supplies by allocating a substantial portion of the vaccines to private hospitals, the latter further exploited the situation and earned undue profits on vaccines, even on those administered to the poor.

It appears that Niti Aayog, despite the fact that it is the promoters of many private hospitals who, instead of providing relief to the poor in a pandemic situation, chose to profiteer at their cost, has since proposed to provide a foothold to those very same private agencies in district hospitals through a Public Private Partnership (PPP) arrangement (, on the ostensible ground that private agencies would provide a ready solution to the problems faced by the district hospitals. It further appears that some States who are equally optimistic about the efficacy of the private sector have fallen in line with the Niti Aayog proposal. A proposal of this kind betrays lack of appreciation on the part of Niti Aayog and the concerned State authorities, of the ground realities of how district hospitals function and the problems they face.

Niti Aayog should know that induction of private agencies into district hospitals would progressively weaken the vast social security cover that the latter provide in the healthcare sector, as private agencies are known to exploit such an opportunity to maximise their profits in every possible way. Even if the PPP arrangement were to be governed by a well-defined agreement between the State Health Department and the private agency, the latter usually having a political clout, would invariably tend to have an asymmetric dominance in implementing the terms of the PPP contract. Many private hospital promoters have their own labs for medical tests, where patients are forced to undergo tests indiscriminately and charged excessive rates.

PPP arrangements in healthcare were tried in the past in several States such as Gujarat (“Effect of Chiranjeevi Yojana on institutional deliveries and neonatal and maternal outcomes in Gujarat, India: a difference-in-differences analysis” by Manoj Mohanan et al in Bulletin of the World Health Organisation · March 2014) , Maharashtra (, Chattisgarh ( etc., but they did not yield the expected outcomes. Those in Niti Aayog who are advocating the PPP model do not appear to have learnt lessons from past experience.

Both Niti Aayog and the Union Ministry of Finance seem to be caught up in a frenzy of privatisation of every valuable public asset and every strategic public service in the country, on the questionable assumption that privatisation per se would provide a universal panacea for all ills of governance, which, in my view, will obfuscate the real issues of governance, leading to an irreparable damage to the economy in the long run.

The Directive Principles of the Constitution require the State to discharge its welfare obligations, which include “raising of the level of nutrition and the standard of living of its people and the improvement of public health” (Article 47). Providing a social security cover in healthcare for the low-income households across the country is an important part of these obligations. Such a social security cover is presently provided, among others, by the district hospitals. The Centre and the States should together enhance their investments in the health sector so as to enlarge the network of the district hospitals, strengthen them by providing them technical, financial and infrastructure facilities, providing adequate amenities for both the medical and the paramedical personnel, give them adequate incentives to commit themselves fully to their duties in those hospitals and subject to them to greater public accountability so as to enhance the quality of the healthcare services they provide to the patients. Privatisation of even some of the services in those hospitals cannot help, as privatisation introduces cost barriers for the poor, which they cannot afford to overcome.

I would therefore urge upon Niti Aayog to revisit the idea of subjecting district hospitals to the PPP experiment and drop it altogether in view of what I have stated above.

In case Niti Aayog insists on going ahead with its ill-advised idea of introducing the PPP model in district hospitals, I am afraid it will be setting in motion a highly regressive process of dismantling a crucial social security cover that exists today for providing free healthcare for the poor, a process once started cannot be reversed easily.


Yours sincerely,
E A S Sarma
Former Secretary to Government of India



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