Kerala government has been hailed time and again for its various policies during COVID pandemic. The latest instance is for being the only state with a surplus of oxygen compared to other Indian states. The medical oxygen stock in Kerala is around 219 metric tonnes as of this month. It has sizeably increased from approximately 100 metric tonnes last April. This increase and the corresponding preparedness by the health sector is a policy win for the Health Department of the state and for the Petroleum and Explosive Safety Organisation (PESO), a central agency which monitors oxygen supply across states. What is notable in this context is that major oxygen supplies in Kerala come from two sources: INOX plant located in Palakkad (149 metric tonne capacity) and Kerala Minerals and Metals Limited (KMML with 7 metric tonne capacity). INOX Air Products Private Limited is the major supplier of oxygen to many of the leading hospitals in Kerala as well as in other southern states. Meanwhile, KMML is a Public Sector Undertaking in Kerala. Following the pandemic, industrial supply of oxygen from INOX has fallen and supplies to the hospitals have risen. Reportedly, INOX, which is the largest manufacturer of oxygen in India, is also currently meeting 60 percent of the oxygen requirement across the country since the pandemic occurred. The company manufactures liquid gases in 44 locations across the country and plans to expand its production in coming years.
The story of growing demand for oxygen, its supply by a growing private enterprise, and the state as the facilitator of distribution could have several implications in our future policies. The first, of course, is the role played by the private sector in times of crisis. What the situation indicates is that the private sector could be a major facilitator in policy wins of the government. Although almost completely ignored by the layman in the pre-pandemic times, the dramatic increase in the need of medical oxygen has put private sector enterprises like INOX in the limelight.
The second is the need to pay more attention to why industrial activities in the state are slowing down. What would be an appropriate industry for a state like Kerala? The pandemic has shone light into what kind of development trajectory the state should follow. The industrial production of oxygen was a boost to the pandemic related efforts of the state, which otherwise would have struggled to manage the situation. For a state which boasts of its healthcare achievements and reliance on service sectors, liberalisation of industries which cater to these sectors should be a priority. Offering freedom for innovators to discover opportunities in health and services could be a significant development for Kerala.
To begin with, the pandemic should be used as an opportunity to revisit the industrial policies of the state and to attempt to free the undue burden on the investors. For instance, it is worth noting that a national policy last year, allowing industrial oxygen manufacturers to sell oxygen for medical use (rather than for industrial use alone) paved the way for averting a more severe crisis than what we face today. Marginal changes in policies are thus likely to have major impacts, especially in times of crisis. The third major consideration should be to scale up the production of oxygen to meet the demand. This is an indication of how we need to develop our infrastructure. For liquid gas manufacturing industries, reported losses arise mainly because of interrupted power supply. This is also an indication of the need to scale up efficiency in the power sector. For Kerala, losses in the power sector has always been a major challenge.
For a public policy enthusiast, there are many takeaways from Kerala’s success in oxygen production and distribution. The policy requirements indicate that we should not be content with these immediate achievements. Rather it is time to think about how we can prepare our infrastructure for acute shortages or major increases in demand, especially during a crisis. We have gone beyond borders to cater to the needs of our neighbouring states. In the near future, we might have to go beyond international borders to help our fellow nations. Kerala’s case validates that restrictions and regulations will not serve our purpose. The national policy to reduce customs duties on imports of COVID vaccines, oxygen and other related health equipment is an indication that a liberalised system serves our purpose rather than restrictions. There is always a need to identify comparative advantages for the state and liberalise those industries which could complement these comparative advantages. Our strength in Kerala lies in the service sector and therefore development of the industries could start from this sector itself.
Views expressed by the author are personal and need not reflect or represent the views of Centre for Public Policy Research.
Featured Image Source: The New Indian Express
Rahul V Kumar is a Research Fellow at CPPR. He has an MA in Economics and an MPhil in Applied Economics and International Relations from Jawaharlal Nehru University (New Delhi). Currently, he teaches graduate students.