governance, political economy, institutional development and economic regulation

Posts tagged ‘health’

Grow up well India

statistic_id254469_median-age-of-the-population-in-india-2015

So, what are we trying to say when we repeatedly stress that 65 per cent of our population is below 35 years of age? It is not as if we are growing any younger. In fact we are ageing. And that is a good thing because it is an outcome of development. India became younger between 1951 and 1970 when the median age (the point at which one half of the population fall below and above) decreased from 21.3 to 19.4 years due to improved healthcare and rising incomes.

Demographic googlies

Since 1970, the median age has increased steadily as people live longer, fewer babies die and fewer babies are born. By 2040, the proportion of the population below 34.5 years will fall to 50 per cent from 65 per cent today. Will that be terrible? Consider that by 2040 we will be in the same demographic boat that Singapore is in today. Age merely indicates we can become like Singapore in two decades if we do the right things.

The point here is that the advantages of a youthful population are exaggerated. There are 84 countries with a more youthful population than us today. None of them is competitive with India. The virtues of youth are likely to fade over time. Advances in artificial intelligence and healthcare will reduce the demand for manual work — which is best done by the young — whilst also prolonging productive life. This means that the definition of the workforce will change to include older folk — possibly up to 75 years — who will continue to earn, pay tax and pay-in rather than draw out from health insurance. Tata Sons and the BJP have already used the magic number of 75 years as a marker for obsolescence.

We are working towards an ageless society. The Pradhan Mantri Jan Arogya Abhiyan being launched on September 25 will provide in-hospital medical insurance to 107 million families (45 per cent of the total number of families) at the bottom of the income and caste pyramid. Public health centres in 150,000 locations are to be upgraded to provide pre-hospitalisation diagnostics and preventive care. State governments have also taken the lead in launching similar schemes for health security. Robotisation is widespread already in our automobile sector. Machines will progressively replace workers in construction, agriculture and sanitation.

Wear those wrinkles with pride – they signal the long road we have travelled

wrinkles

The bottomline is that we should not emulate the paranoia of filmstars about ageing. Our collective shelf life is far longer than the first flush of youth or middle age. We should also not be nudged into having more babies to keep the median age low. China, with a median age of 37.4 years, is reversing its family size restrictions and doing just that. But their demographic transition, like their economic transformation, has been jagged and artificially staged via the heavy hand of State control. Ours has been a natural demographic transition driven by personal choice, higher incomes and better old age and health insurance.

Hone kids to be productive future citizens

What we do need to fear is that we may continue our business-as-usual approach which prioritises near term results over sustainable growth. If India is to grow up with dignity we need to transform our educational system to produce multilingual, multi-skilled and multicultural professionals, as capable of cooking up a meal, singing a song or cleaning their toilets as of designing a complex space mission.

Hai! the plunging Rupee

There is another number which is being bandied about with alarm — the exchange rate of the Indian rupee versus the American dollar breached the 70-rupee mark last week. Our currency has been overvalued since 2013 because of a complex belief in a “strong” currency being a proxy for a “strong” nation.

False pride

strength

This belief is wrong on two counts. First, if our exports are not competitive because our currency is overvalued, relative to our peer exporters, then a strong rupee is merely false pride, not strength. Second, if strength is gauged from the ability of domestic producers to beat back the competition from imports and retain domestic market share, then a strong rupee works at cross purposes to this objective. It subsidises imports at the expense of domestic production. It taxes our exports and benefits our competitors like China.

The only thing a strong (overvalued) rupee achieves is to artificially reduce the landed cost of imported coal, petroleum products and military hardware. It also signals to foreign investors that exchange rate depreciation risks are minimal, thereby reducing the risk premiums they add to the hurdle rate of expected return from their investments. To this extent it reduces the stress on our fiscal position, improves the external balance and also impedes inflation.

However, these advantages of a strong rupee must be evaluated against the numerous downsides. Reduced employment and the loss of revenue from GST for those state governments, where producers have shut shop because of cheap imports. Consider also that a strong rupee actually encourages Indians to go on holidays and shop abroad rather than at home. This impacts retail trade directly. It simultaneously makes India an expensive tourism destination, versus options in East Asia.

Look to the RBI to set a predictable “real” exchange rate for the Rupee

A belief in a “strong” INR is as shallow as male machismo. Neither is a “weak” Rupee the answer. Setting the right “real” level for the rupee (accounting for domestic inflation), to optimise the complex trade-off, is best left to the Reserve Bank of India, which has the expertise and the information to strike this delicate balance. The rest of us must desist from creating false shibboleths of national strength. Our strength is best demonstrated by balancing our trade account without imposing prohibitive import or export tariffs; making our budget revenue surplus so that borrowings only finance investments and by following a need-based strategy for allocating resources for human capital development and social protection. None of these three milestones have been achieved yet.

collaboration

Grow up well India, collaboration is better than conflict; maximalist negotiating positions are self-limiting and the high from winning has diminishing utility unless the agenda ahead is compellingly uplifting.

Adapted from the authors opinion piece in The Asian Age, August 19, 2018 http://www.asianage.com/opinion/columnists/210818/grow-up-india-time-to-set-an-uplifting-agenda.html

FM walks the budget plank gingerly

happy kisan

The Union Budget 2018-19 appears an honest and judicious construct when first viewed on video. Reading the fine print takes some of the shine off, going by precedent. The biggest relief is that there has been no substantive deviation from the path of fiscal discipline. The fiscal deficit for 2017-18 is pegged at 3.5 percent of GDP. This is 0.30 per cent higher than the budgeted estimate for this year.

But it is well within the 0.50 leeway recommended by the N.K. Singh Committee report on Fiscal Responsibility and Budgetary Management. Disruptions caused by GST still linger. Banks need to be recapitalised to expand new credit and public investment pushed because the private sector is still sitting on its funds. The stage seems set for walking through the door opened by the FRBM committee, in the interest of growth and jobs.

More reassurance comes from the fiscal deficit target for 2018-19 set at 3.3 percent of GDP. This re-establishes the declining trend for fiscal deficit towards the magic number of three per cent of GDP, which has eluded us so far.

Marginalised agriculture gets a break 

On the expenditure side, agriculture and rural development take centrestage. This is welcome against the backdrop of agrarian distress and farmer suicides. Ajay Jakhar of the Bharat Krishak Samaj points out that an Indian farmer commits suicide every 40 minutes. No wonder then that Mr Jaitley outlined, in great detail, many of the specific measures proposed to reverse this trend.

One popular, but possibly ineffective step is an assurance that all the crops notified for the kharif cycle will be covered under the minimum support price (MSP) scheme. This means that if market prices fall below the cost of production plus 50 percent as margin for the farmer, the government will stand committed to make good the difference (as is being done in Madhya Pradesh now) or to physically procure the produce.

Ajay Jakhar

But representatives of farmers’ interests are not satisfied. They want the methodology for setting costs should be spelt out in a participative manner to ensure that a meaningful MSP is assured. The downside of an MSP type of production incentive is that it kills innovation and discourages crop diversification away from those covered under MSP. This way of assuring farmer incomes also privileges the traditional “Green Revolution” areas in the North, which unfortunately are not well endowed with the natural resources — water, for example — to sustain intensive modern farming. On the other hand Eastern India, has all of nature’s bounties, but it is too far away from the national capital-oriented policy making we follow. Consider how different things would have been if Lord Hardinge had not decided in 1911 to shift the capital of the British Raj from Calcutta to Delhi.

Agro-products exports to be liberalised – $100 billion potential

Other big-ticket items in agriculture are a more than doubling of the outlay for agro-processing industries to Rs 14 billion and assurances that the export of agri products would be liberalised to boost their exports threefold to their potential of around $100 billion. Corporate tax on income was also reduced from 30 percent to 25 percent for firms with a turnover upto Rs 2.5 billion (US $35 million) benefiting 99 percent of the registered firms in India.

Bamboo the new “green gold”

bamboo2

For the Northeast, a Mission for Bamboo – now recognised as a grass and not a tree to facilitate its commercial cultivation – with an outlay of Rs 13 billion. Two new infrastructure funds — one for fisheries and aquaculture and another for animal husbandry — at a total outlay of Rs 100 billion. Crop credit would increase by 10 per cent to Rs 11 trillion in 2018-19 and lessee farmers would be facilitated to access crop credit from banks — something which they cannot do today and have, instead, to rely on rapacious moneylenders.

The budgetary outlay for rural roads, affordable houses, toilets and electricity extension of Rs 2.4 trillion will leverage five time more funds from other sources and generate work for 10 million people, per the Budget documents.

NamoCare is bigger than ObamaCare – health-equity in motion

Big changes were also announced in healthcare. A new flagship scheme will provide in-hospital medical insurance to 100 million poor families with an insurance cover of Rs 5 lakhs. Compare this with the measly cover now available of Rs 30,000 only under the Rashtriya Swastha Bima Yojana. The outlay on health, education and social protection increases by around 13 per cent over the 2017-18 spend to Rs 1.4 trillion. Simultaneously, the three publicly owned general insurance companies – National Insurance Company United India Insurance Company and Oriental Insurance Company are to merged to create a behemoth conservatively valued at Rs 4 trillion and listed on the stock exchange. Listing would enable the government to progressively hive off equity in them to the public and generate the estimated Rs 1 trillion per year premium to fund this mammoth programme, nick-named NamoCare after ObamaCare of the US. The scale of the ambition embedded in the program is breathtaking. A Rs 5 lakh cover is what even the well-off deem sufficient as health insurance. More importantly it signals that for the government the life of the poor is as valuable, as that of a well off person.

Incentives for generating employment rather than buying machines

The government proposes to extend the existing scheme under which it meets the cost of a contribution of 12 percent per year towards the Employees’ Provident Fund contribution in the medium, small and micro enterprises to all the manufacturing sectors. The idea is to increase the attractiveness of employing young job seekers by reducing their cost to the employer for three years, by which time it is expected the skills they acquire will make their value addition viable on its own.

Infrastructure development – falling short

The highlights for new projects in infrastructure are that 99 smart cities have been selected with an outlay of Rs 2.4 trillion,  against which projects worth around 10 per cent of the outlay are ongoing and projects worth one per cent of the outlay have been completed. The government expects to complete 9,000 km of highways in this year. Bharat Net, the fiber connectivity programme, is also proceeding apace. The Railways will spend Rs 1.48 trillion on capital investments, mostly in new works in 2018-19. Six hundred railway stations are to be upgraded.

The nominal GDP in 2018-19 is estimated to be 11.5 per cent  higher than in the current year. The total expenditure next year is around 10 per cent higher than the estimate for 2017-18 of Rs 22.2 trillion. On the revenue side, the big increase is an estimated increase of 53 per cent (after accounting for the fact that GST was collected only for 11 months in 2017-18) in GST revenues next year by around Rs 2.6 trillion to a level of Rs 7.4 trillion, and a conservatively assessed Rs 20,000 crores from the new capital gains tax of 10 per cent on equity sold after holding it for one year. The huge increase assumed in GST and the undefined budgetary support for “NamoCare” make sticking to the 3.3 fiscal deficit target a bit dodgy in 2018-19.

FM keeps his gun-powder dry and in-reserve

Jaitley budget 2018

But who knows, maybe the finance minister has some artillery hidden up his sleeve.. Disinvestment has been assessed conservatively in 2018-19 at Rs 80,000 crores, against the achievement this year of Rs 1 trillion. The bank recapitalisation support of Rs 80,000 crores is expected to leverage new lending capacity of Rs 5 trillion. One cannot but  feel that some of the expenditure estimates are a bit conservative relative to the ambition embedded in the programmes.

The good news is ending 2018-19 with a higher fiscal deficit but equal to this year’s at 3.5 per cent is no big deal from the view point of fiscal stability, if all of it is pumped into infrastructure and other investments. But for the Narendra Modi government, which takes targets seriously, it would be an unhappy ending.

The blog and the article mistakenly mention the estimated value of a merged insurance behemoth as Rs 400 trillion. The error has now been corrected in the text. I am deeply embarrassed by this snafu. A more reasonable number is Rs 4 trillion. Regrets.

Adapted from the authors article in The Asian Age February 1, 2018 http://www.asianage.com/opinion/oped/020218/fm-walks-the-talk-honestly-and-judiciously-but-very-diffidently.html

Gender benders and the Indian State

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The duality of India’s gender equity environment is pretty extreme. At the very top there is nothing new about upper crust women exercising political power; Ahilyabai Holkar in the 18th century; Begum Hazrat Mahal in the 19th ; Indira Gandhi in the 20th and Sonia Gandhi today. Post-independence, the glass ceiling at the workplace has been progressively bent. It is fairly common now to be flown by a woman pilot; to petition a woman babu for accessing a public service; collaborate and compete with women colleagues or serve on company boards alongside women. Unfortunately there are still not enough women in the “relentlessly tough” professions; police; engineering and surgery.

At the very bottom, the poor have never had the luxury of not being gender neutral in their fight for survival. If the man cannot provide for his family, women take over the burden through self or casual employment, though it is a much harder fight to take control of common assets. Thankfully, better access to micro-finance; targeted work opportunities and the potential for economic migration in a growing economy, no longer makes it necessary for a poor woman to be a Phoolan “Bandit” Devi to survive.

The problem of gender inequity is most acute in the middle class, where upwardly mobile appearances have to be maintained. There are clearly not enough Bhenjis (Mayawati) and Didis (Mamta) around in the political space. Much the same is true for the workplace.

The formal/organized sector is the benchmark for middle class gender bending. It is here that employment is stable; compensation is adequate and working conditions bearable. It is not as if nothing has changed since 1947. Formal employment has increased, albeit marginally, and today is around 29 million or just 5% of total employment. Whilst women have benefited disproportionately, their share in formal employment increased inadequately from a low 15% in 1995 to a miserable 20% today.

Change is happening but if formal employment is to be enlarged for women, the State needs to intervene to make a difference in the next 10 years. Four initiatives are proposed:

First, government must not shy away from the “win-lose” option of pushing employment of women in the formal sector by statute at the expense of men. The private sector which has lower institutional and labour market rigidities, is already responding, on a strictly “value for money” basis to enlarge women employment. Since 1995 the formal private sector added 2.8 million jobs, of which 39% (1.1 million) went to women. Their share has increased from 20% in 1995 to 24% today.  

It is in public sector formal employment that more needs to be done. Public sector formal employment shrank by 2 million jobs since 1995 to 17.5 million today. Despite the shrinking pie of government jobs, jobs for women increased by 0.6 million to 3.3 million or 18% of total public sector employment: way behind their share in the private sector.

It will hurt men directly but government must reserve 50% of entry level positions for women across the board in the civilian cadres of government, including within the existing quotas for scheduled caste, scheduled tribe, other backward caste, and minorities (a few states). Income based “brownie points” in selection and a “one-time quota benefit, not transferable to children” can serve to churn the ensuing benefit better.    

It is shameful that our leaders have been the most regressive. The 15th Lok Sabha was unable to agree on a quota of 30% for women in politics because of opposition from backward caste based parties, who continue to be male dominated. One hopes that the emerging “chatur-murti” of Amma, Bhenji, Didi and Sonia with a possible 170 votes between them, aided by the left’s indefatigable Brinda Karat shall bring this to fruition in the 15th Lok Sabha.

Second, continuing female infanticide and the resulting adverse gender ratio is a slap in the face of our social policy. Whilst the preference for male offspring is rooted in tradition and rituals, the perceived negative financial cost of getting a daughter married is also a major inhibitor. There is ample evidence today, including from neighboring Bangladesh, that conditional cash transfers result in significant improvements in the life cycle of social protection from infant immunization to maternal health and education.  Cash transfers substitute for the opportunity cost to the family of relieving the girl child from household chores (collecting wood and water, rending to livestock) and ensure that the girl child gets minimum levels of health care, nutrition and education. The UID (Aadhar Card) is a key instrument for plugging the leakages usually associated with cash transfers. One hopes that Nilikeni’s physical departure and the likely change in government do not kill this this worthy initiative.

Third, implementing institutional arrangements, already in the Constitution, such as decentralization of administrative and political powers to lower levels of government is a key driver of change. Participation rates of women increase dramatically when decisions are taken closer to home. The woman who is a tigress at home often transmutes into a compliant mouse in the workplace, to remain “below the male opprobrium radar”.

The average Indian woman looks for succor from just four public horrors; (1) the lack of public safety in the street and often also at home; (2) informal gender bars for education; (3) biased job recruitment and assessment and (4) rigid work environments, which do not recognizes their multiple roles as bread winner; home stabilizer and comforter. Their effective participation in the public space needs to fit in within this framework. Doing so, requires adapting national work and public participation practices to local norms and culture. This is impossible at the national level in heterogeneous India.

Fourth, technology is the biggest gender bender but the government does not use it strategically. Monitoring outcomes effectively and improving access to services are two sorely neglected areas. Policing in India continues to be a low tech, “danda” swinging profession. Why cannot an FIR be filed electronically, with a phone number attached for authentication, thereby putting the onus on the police to follow up with the complainant? Why are mixed gender police patrols, armed with smart phone access, to record and report crime and access the crime database, not visible to citizens? Why are blood samples not collected at home in rural areas by mobile agents of laboratories and reports sent electronically to users? Why are interactive phone based health and education counseling services, on the Tamil Nadu pattern, not scaled up nationally? Why do development babus still not have specific household specific, annual targets for the multiple social benefit schemes of government? Why do they have the discretion to fish for beneficiaries?

Gender bending goes beyond public exhortations for change. Role models of liberated upper crust women are non-contextual and often not actionable options for the average woman.

Changing the institutional structures and incentives which reinforce traditional gender roles is a precondition for achieving gender equity. Significant change is going to be tough for men of course, but they coined the slogan “when the going gets tough, the best get going”.

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