After months of discussion,  the issue of FDI in retail is being deliberated in the Lok Sabha today.  In September 2012, the Cabinet had approved 51% of FDI in multi-brand retail (stores selling more than one brand).  Under these regulations, foreign retail giants like Walmart and Tesco can set up shop in India.  Discussions on permitting FDI in retail have focused on the effect of FDI on unorganised retailers, farmers and consumers. Earlier, the central government commissioned the Indian Council for Research on International Economic Relations (ICRIER) to examine the impact of organised retail on unorganised retail. The Standing Committee on Commerce also tabled a report on Foreign and Domestic Investment in the Retail Sector in May, 2009 while the Department of Industrial Policy and Promotion (DIPP) released a discussion paper examining FDI in multi-brand retail in July, 2010.  Other experts have also made arguments – both in support of, and in opposition to, the move to permit FDI in retail sales. The table below summarises some of these arguments from the perspective of various stakeholders as collated from the above reports examining the issue.

Stakeholder

Supporting arguments (source)

Opposing arguments (source)

Unorganised retail
  • No evidence of impact on job losses (ICRIER).
  • The rate of closure of unorganised retail shops (4.2%) is lower than international standards (ICRIER).
  • Evidence from Indonesia and China show that traditional and modern retail can coexist and grow  (Reardon and Gulati).
  • Majority of small retailers keen to remain in operation even after emergence of organised retail (ICRIER).
  •  Unorganised retailers in the vicinity of organised retailers saw their volume of business and profit decline but this effect weakens over time (ICRIER).
  • Other studies have estimated that traditional fruit and vegetable retailers experienced a 20-30% decline in incomes with the presence of supermarkets (Singh).
  • There is potential for employment loss in the value chain. A supermarket may create fewer jobs for the volume of produce handled (Singh).
  • Unemployment to increase as a result of retailers practicing product bundling (selling goods in combinations and bargains) and predatory pricing (Standing Committee).
Farmers
  • Significant positive impact on farmers as a result of direct sales to organised retailers.  For instance, cauliflower farmers receive a 25% higher price selling directly to organised retailers instead of government regulated markets (mandis).  Profits for farmers selling to organised retailers are about 60% higher than when selling to mandis (ICRIER).
  • Organised retail could remove supply chain inefficiencies through direct purchase from farmers and investment in better storage, distribution and transport systems.  FDI, in particular, could bring in new technology and ideas (DIPP).
  •  Current organised retail procures 60-70% from wholesale markets rather than farmers. There has been no significant impact on backend infrastructure investment (Singh).
  • There are other issues like irrigation, technology and credit in agriculture which FDI may not address (Singh).
  • Increased monopolistic strength could force farmers to sell at lower prices (Standing Committee).
Consumers
  • Organised retail lowers prices. Consumer spending increases with the entry of organised retail and lower income groups tend to save more (ICRIER).
  • It will lead to better quality and safety standards of products (DIPP).
  •  Evidence from some Latin American countries (Mexico, Nicaragua, Argentina), Africa (Kenya, Madagascar) and Asia (Thailand, Vietnam, India) reveal that supermarket prices for fruits and vegetables were higher than traditional retail prices (Singh).
  • Even with lower prices at supermarkets, low income households may prefer traditional retailers because they live far from supermarkets, they can bargain with traditional retailers and buy loose items (Singh).
  • Monopolistic power for retailers could result in high prices for consumers.

Source: ICRIER [1.  "Impact of Organized Retailing on the Unorganized Sector", ICRIER, September 2008]; Standing Committee [2.  "Foreign and domestic investment in retail sector", Standing Committee on Commerce, May 13, 2009]; Singh (2011) [3. "FDI in Retail: Misplaced Expectations and Half-truths",  Sukhpal Singh, Economic and Political Weekly, December 17, 2011];  Reardon and Gulati (2008)  [4. "Rise of supermarkets and their development implications," IFPRI Discussion Paper, Thomas Reardon and Ashok Gulati, February 2008.]; DIPP [5. "Discussion Paper on FDI in Multi-brand Retail Trading", Department of Industrial Policy and Promotion, July 6, 2010]


Today, the National Medical Commission Bill, 2019 was passed by Lok Sabha.  It seeks to regulate medical education and practice in India.  In 2017, a similar Bill had been introduced in Lok Sabha.  It was examined by the Standing Committee on Health and Family Welfare, which recommended several changes to the Bill.  However, the 2017 Bill lapsed with the dissolution of the 16th Lok Sabha.  In this post, we analyse the 2019 Bill.

How is medical education and practice regulated currently?

The Medical Council of India (MCI) is responsible for regulating medical education and practice.  Over the years, there have been several issues with the functioning of the MCI with respect to its regulatory role, composition, allegations of corruption, and lack of accountability.  For example, MCI is an elected body where its members are elected by medical practitioners themselves, i.e., the regulator is elected by the regulated.  Experts have recommended nomination based constitution of the MCI instead of election, and separating the regulation of medical education and medical practice.  They suggested that legislative changes should be brought in to overhaul the functioning of the MCI.

To meet this objective, the Bill repeals the Indian Medical Council Act, 1956 and dissolves the current MCI.

The 2019 Bill sets up the National Medical Commission (NMC) as an umbrella regulatory body with certain other bodies under it.  The NMC will subsume the MCI and will regulate medical education and practice in India.  Under the Bill, states will establish their respective State Medical Councils within three years.  These Councils will have a role similar to the NMC, at the state level.

Functions of the NMC include: (i) laying down policies for regulating medical institutions and medical professionals, (ii) assessing the requirements of human resources and infrastructure in healthcare, (iii) ensuring compliance by the State Medical Councils with the regulations made under the Bill, and (iv) framing guidelines for determination of fee for up to 50% of the seats in the private medical institutions.

Who will be a part of the NMC?

The Bill replaces the MCI with the NMC, whose members will be nominated.  The NMC will consist of 25 members, including: (i) Director Generals of the Directorate General of Health Services and the Indian Council of Medical Research, (ii) Director of any of the AIIMS, (iii) five members (part-time) to be elected by the registered medical practitioners, and (iv) six members appointed on rotational basis from amongst the nominees of the states in the Medical Advisory Council.

Of these 25 members, at least 15 (60%) are medical practitioners.  The MCI has been noted to be non-diverse and consists mostly of doctors who look out for their own self-interest over public interest.   In order to reduce the monopoly of doctors, it has been recommended by experts that the MCI should include diverse stakeholders such as public health experts, social scientists, and health economists.  For example, in the United Kingdom, the General Medical Council which is responsible for regulating medical education and practice consists of 12 medical practitioners and 12 lay members (such as community health members, administrators from local government).

What are the regulatory bodies being set up under the NMC?

The Bill sets up four autonomous boards under the supervision of the NMC.  Each board will consist of a President and four members (of which two members will be part-time), appointed by the central government (on the recommendation of a search committee).  These bodies are:

  • The Under-Graduate Medical Education Board (UGMEB) and the Post-Graduate Medical Education Board (PGMEB): These two bodies will be responsible for formulating standards, curriculum, guidelines for medical education, and granting recognition to medical qualifications at the under-graduate and post-graduate levels respectively.
  • The Medical Assessment and Rating Board: The Board will have the power to levy monetary penalties on institutions which fail to maintain the minimum standards as laid down by the UGMEB and the PGMEB.  It will also grant permissions for establishing new medical colleges, starting postgraduate courses, and increasing the number of seats in a medical college.
  • The Ethics and Medical Registration Board: This Board will maintain a National Register of all the licensed medical practitioners in the country, and also regulate professional and medical conduct.  Only those included in the Register will be allowed to practice as doctors.  The Board will also maintain a register of all licensed community health providers in the country.

How is the Bill changing the eligibility guidelines for doctors to practice medicine?

There will be a uniform National Eligibility-cum-Entrance Test for admission to under-graduate and post-graduate super-speciality medical education in all medical institutions regulated under the Bill.  Further, the Bill introduces a common final year undergraduate examination called the National Exit Test for students graduating from medical institutions to obtain the license for practice.  This test will also serve as the basis for admission into post-graduate courses at medical institutions under this Bill.  Foreign medical practitioners may be permitted temporary registration to practice in India.

However, the Bill does not specify the validity period of this license to practice.  In other countries such as the United Kingdom and Australia, a license to practice needs to be periodically renewed.  For example, in the UK the license has to be renewed every five years, and in Australia it has to renewed annually. 

How will the issues of medical misconduct be addressed?

The State Medical Council will receive complaints relating to professional or ethical misconduct against a registered medical practitioner.  If the medical practitioner is aggrieved of a decision of the State Medical Council, he may appeal to the Ethics and Medical Registration Board.  If the medical practitioner is aggrieved of the decision of the Board, he can approach the NMC to appeal against the decision.  It is unclear why the NMC is an appellate authority with regard to matters related to professional or ethical misconduct of medical practitioners. 

It may be argued that disputes related to ethics and misconduct in medical practice may require judicial expertise.  For example, in the UK, the regulator for medical education and practice – the General Medical Council (GMC) receives complaints with regard to ethical misconduct and is required to do an initial documentary investigation in the matter and then forwards the complaint to a Tribunal.  This Tribunal is a judicial body independent of the GMC.  The adjudication decision and final disciplinary action is decided by the Tribunal.

How does the Bill regulate community health providers?

As of January 2018, the doctor to population ratio in India was 1:1655 compared to the World Health Organisation standard of 1:1000.  To fill in the gaps of availability of medical professionals, the Bill provides for the NMC to grant limited license to certain mid-level practitioners called community health providers, connected with the modern medical profession to practice medicine.  These mid-level medical practitioners may prescribe specified medicines in primary and preventive healthcare.  However, in any other cases, these practitioners may only prescribe medicine under the supervision of a registered medical practitioner.

This is similar to other countries where medical professionals other than doctors are allowed to prescribe allopathic medicine.  For example, Nurse Practitioners in the USA provide a full range of primary, acute, and specialty health care services, including ordering and performing diagnostic tests, and prescribing medications.  For this purpose, Nurse Practitioners must complete a master's or doctoral degree program, advanced clinical training, and obtain a national certification.