Private equity in health and education is to be welcomed. Several lakh crores are being invested by foreign and Indian PEs, especially into hospitals, diagnostics and home healthcare services, and to a comparatively lesser degree, into education. Groups such as Apollo, Fortis, Max, Manipal and Narayana account for less than 5 per cent of India’s total private-hospital beds. Care continues to be delivered by smaller, fragmented facilities. But the infusion of equity into corporate hospitals marks two things: India has the capacity to provide quality care in health, and the country has a huge market, both Indian and international, which will assure wholesome returns.

For over three decades, policy has encouraged private investment in hospitals and allied sectors. Public hospitals have not been able to meet rising demand. India needs thousands of additional hospital beds, diagnostic facilities, specialised medical services, rehabilitation centres, home-care services and medical colleges. Without such private investment, India will struggle to meet the healthcare needs of an ageing population. The issue is not whether private investment is good or bad, but whether India has built institutions that allow investors to earn legitimate returns without leaving patients captive to the pursuit of profit.

Private equity funds carry a fiduciary duty to deliver attractive returns to their investors within a defined investment horizon. PEs have no........

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