Get the World Bank in

Sunday 30 April 2006

That's the only way to make the government take note of corruption

-- the Indian government is all set to streamline its drug procurement process to remove corruption in tendering. In the past, it has -- with striking consistency -- turned the Nelson eye to the matter. There have been repeated complains from pharmaceutical companies. Investigations by the government's accounting watchdog, the Comptroller and Auditor General, reinforced the need to clean up this mess. The Central Bureau of Investigation has also pointed a finger at this nefarious business. The government has made a great deal of an effort to not act on any of this.

What inspired the government to act is a straight threat from the World Bank, which said it would put on hold one billion dollars of loans for health projects. This includes phase ii of the reproductive and child health (rch) project, one of the favourites of the present government. The bank took this step after it found inconsistencies in the procurement process of pharmaceutical drugs used in the phase I of the rch project. This would not have gone down too well, as India is in the process of negotiating for the funds for phase ii of the project.

The government was kind enough to assure the country that the rch programme would go on regardless of what the bank does. It has blacklisted the companies responsible for the procurement mess, which include Nestor Pharmaceuticals (which had its licence was cancelled in 1999 for producing substandard drugs) and the government-owned Hindustan Latex Limited. Pharmaceutical companies have, from time to time, complained to the authorities about Nestor being favoured. In February 2003, a tender had been floated by the Hindustan Latex Ltd for vitamin A used in the rch programme. This was granted to Nestor, though Nicholas Piramal India Ltd quoted a lower price. Nicholas Piramal complained to the bank. Fact remains the bank also took a long time to get serious about this case.

Obviously, the government doesn't take its role as the trustee of public good seriously. Strong regulation requires making an example of violators. The Union minister of finance, P Chidambaram, has reportedly assured the World Bank there will be no bungling in its projects. And what about the projects that aren't blessed with the bank's munificence? That's where Nestor Pharmaceuticals' future growth prospects lie.

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