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By:

Rajendra Joshi

3 December 2024 at 3:50:26 am

Procurement first, infrastructure later

Procurement at multiples of market price; equipment before infrastructure; no accountability Kolhapur: Maharashtra’s Medical Education and Public Health Departments have been on an aggressive drive to expand public healthcare infrastructure. Daily announcements of new centres, advanced equipment and expanded services have reassured citizens long denied dependable public healthcare. Procurement of medical equipment, medicines and surgical supplies is reportedly being undertaken at rates two to...

Procurement first, infrastructure later

Procurement at multiples of market price; equipment before infrastructure; no accountability Kolhapur: Maharashtra’s Medical Education and Public Health Departments have been on an aggressive drive to expand public healthcare infrastructure. Daily announcements of new centres, advanced equipment and expanded services have reassured citizens long denied dependable public healthcare. Procurement of medical equipment, medicines and surgical supplies is reportedly being undertaken at rates two to ten times higher than prevailing market prices. Basic economics dictates that bulk government procurement ought to secure better rates than private buyers, not worse. During the Covid-19 pandemic, equipment and consumables were procured at five to ten times the market rate, with government audit reports formally flagging these irregularities. Yet accountability has remained elusive. The pattern is illustrated vividly in Kolhapur. The Dean of Rajarshi Shahu Government Medical College announced that a PET scan machine worth Rs 35 crore would soon be installed at Chhatrapati Pramilaraje (CPR) Government Hospital for cancer diagnosis. But a comparable machine is available in the market for around Rs 6.5 crore. A senior cancer surgeon at a major cancer hospital in western Maharashtra, where a similar machine was recently installed, remarked that the gap between what his hospital paid and what the government is reportedly paying was enough to make one ‘feel dizzy’. The label of a ‘turnkey project’ does not adequately explain a price differential of this magnitude. High Costs CPR Hospital recently had a state-of-the-art IVF centre approved at a sanctioned cost of Rs 7.20 crore. Senior fertility specialists across Maharashtra note that even a modern IVF centre with advanced reproductive technology equipment typically costs between Rs 2.5 crore and Rs 3 crore. The state’s outlay is reportedly approaching Rs 15 crore. Equipment arrived in June 2025 and lay idle for months owing to indecision about the site. Similarly, digital X-ray machines approved for CPR Hospital and a government hospital in Nanded; available in the market for roughly Rs 1.5 crore; were reportedly procured at Rs 9.98 crore per unit. Doctors in CPR’s radiology department, apprehensive about being drawn into potential inquiries, reportedly resisted accepting the equipment. One departmental head was transferred amid disagreements over signing off on the proposal. What’s Wrong These cases point to a deeper structural failure: Maharashtra has perfected what might be called the ‘equipment first, infrastructure later’ model. In any public hospital, the administrative sequence ought to be: identify space, create infrastructure, sanction specialist posts, and only then procure equipment. Compounding the procurement paradox is a parallel policy decision. On 20 December 2025, the state government decided to introduce radiology diagnostic services through a Public-Private Partnership model (PPP). Following this, an order issued on 6 February 2026 authorised private operators to provide PET scan, MRI and CT scan services at six government medical college hospitals: in Pune, Kolhapur, Miraj, Sangli, Mumbai and Baramati. CPR already has a 126-slice CT scan machine and a 3 Tesla MRI scanner, with another CT scan proposed. If the PPP arrangement proceeds, the hospital could simultaneously run one PET scan machine, two MRI scanners and three CT scan machines. Medical experts warn this could lead to unnecessary diagnostic testing simply to keep machines occupied, thus exposing patients to excess radiation while government-owned equipment gathers dust. A similar pattern was seen during the pandemic, when the Medical Education Department spent hundreds of crores on RT-PCR machines, only to award swab-testing contracts to a private company. Many of those machines remain unused today.

The Innovation Imperative

The 2025 Economics Nobel reminds India that lasting prosperity comes from open markets, fearless innovation and a culture that rewards curiosity.

Philippe Aghion, Peter Howitt and Joel Mokyr
Philippe Aghion, Peter Howitt and Joel Mokyr

This year, the Nobel prize for Economics was awarded to Joel Mokyr, Philippe Aghion and Peter Howitt for explaining how innovation drives long-term growth and how new ideas replace old ones through what economists call “creative destruction.” The award carries a strong message for every nation: prosperity depends on a steady stream of ideas, fair competition and the wide use of better technologies and practices.


Mokyr, a noted economic historian, asked a question that sounds simple but has shaped our modern world. For most of human history, people lived with low incomes and short lives. Why did this pattern change only in the past two centuries? His answer highlights the partnership between two kinds of knowledge. One is scientific understanding; the other is practical know-how that turns theory into tools and machines. Societies that encourage curiosity, debate and freedom to experiment advance faster because they make both kinds of knowledge flourish together. These ideas make Mokyr’s work not just historical but powerfully relevant to the future of development.


Philippe Aghion and Peter Howitt built the formal model behind this story. In their view, economies grow when innovators create better products or processes, forcing existing firms to improve or exit. This process of creative destruction is not chaos; it is renewal. It explains why productivity rises over time and why it stalls when powerful incumbents block newcomers. The Nobel committee noted that their theory captures both the promise of innovation and the danger of stagnation when competition weakens.


The timing of this message could not be more appropriate. Many rich countries are facing slow productivity, aging populations and fiscal stress. Developing nations, meanwhile, want to move from growth based on adding labour and capital to growth powered by knowledge and efficiency. The prize reminds us that economies cannot coast into prosperity. They must climb, and the ladder’s rungs are research, competition, finance, skills, and open institutions. If these weaken, the system slows down. If they strengthen, innovation spreads and growth becomes self-sustaining.


Simple reforms

For India, the lessons are clear. The country has grown rapidly over the past decade by investing in infrastructure, digital systems and formalisation. The next leap must come from a rise in productivity across agriculture, manufacturing and services. This will happen only when innovation reaches every corner of the economy. It is not enough for new ideas to remain in big cities or elite labs. Improved seeds and sensors must reach farmers, efficient machines must reach small workshops, and affordable diagnostic devices must reach rural clinics. Simple reforms can make this easier: faster clearances, reliable power and broadband, and consistent standards that keep supply chains running.


Policy must also find the right balance between intellectual property and competition. Businesses need incentives to invest in research, but markets must remain open to challengers. Support for emerging sectors such as clean energy, water technology, healthcare and agri-tech should be time-bound and linked to performance. Procurement rules should reward quality and openness so that better solutions can win.


Innovation needs money that matches its risks. Many experiments fail, and that is part of learning. Public programs that combine grants, guarantees and long-term finance can help promising ideas cross the gap between prototype and scale. For small enterprises, quick invoice payments and cash-flow-based loans are often more useful than tax concessions. In deep-tech areas, shared early-stage research and milestone-based funding can speed up progress while spreading lessons from both success and failure.


People remain at the heart of this story. India needs scientists and engineers who can push frontiers, but it also needs millions of skilled technicians who can install, maintain and repair equipment. Short, modular courses tied to clear certificates and strong apprenticeships can bridge this gap. When a medium-sized factory in a smaller city can find a trained maintenance engineer within days, productivity rises immediately. Mokyr’s work reminds us that practical skills are not secondary to theory—they complete the circle of innovation.


Change always creates unease. Workers and firms need confidence that they can survive transitions. Training programs must be linked to real jobs, and social benefits should be portable so people can move where opportunities arise. Affordable housing, reliable transport and flexible safety nets make adaptation easier. This reduces the fear of change and helps society embrace new technologies faster.


Inclusive innovation

Innovation is also global. Ideas, talent and data flow across borders, and countries that close themselves off lose out. The 2025 Nobel has warned against rising protectionism. India should remain open to collaboration and learn from global research networks while offering its own strengths to the world. Its frugal innovations - low-cost medical devices, affordable water filters, efficient solar systems - are valuable not only at home but across the developing world. By sharing such solutions, India can become a leader in inclusive innovation.


The green transition offers another arena where the Nobel lessons apply. Clean technologies must expand quickly, while older, polluting systems must be phased out on clear timelines. This is creative destruction on a planetary scale.


The deeper message of this Nobel is that sustained growth is rare and fragile. It depends on keeping the channels open through which new ideas challenge old ones. When those channels narrow, frustration grows. When they widen, opportunity expands. The choice before nations is not between change and safety, but between managed renewal that shares its benefits and stagnation that spreads its costs.


The 2025 Economics Nobel offers India a map for the decade ahead. Protect competition, fund science, share knowledge, and ensure that workers can adapt to change. Encourage universities, startups and industries to learn from each other. If these principles guide policy, innovation will become a habit rather than an event, and growth will become a steady journey rather than a brief sprint.


(The author is the former Director, Agharkar Research Institute, Pune; Visiting Professor, IIT Bombay. Views personal.)

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