Category Archives: India

Top 12 Challenges Facing India in the Decades Ahead – 05 – Sanitation

Sanitation in India is a major problem. The fact that India is 13th among a list of the 16 countries outside of sub-saharan Africa that are poorer than it in the rankings does not do the severity of the problem justice. As we noted in our post on Poverty, in India, 55% of households practice open defecation. In comparison, in Bangladesh, which has half of the GDP of India per capita, only 8.4% of the population practices open defecation.

Moreover, only 88% of the population has access to an improved (clean) water source (for drinking). In rural areas, the statistic is even worse — 84% (compared to 96% in urban areas). That’s 16% of the population without even access to clean water. For an emerging country, this is a disgrace. In China, a country with three times the land area, the statistics are 98% and 85% (and 91% overall). Why is it so bad? Well, for starters, as of 2010, only two cities in India — Thiruvananthapuram and Kota — get a continuous water supply (which is a situation that needs to change).

This is a huge problem. Even worse than the health care situation. When you get right down to it, if more people had access to sanitary conditions, communicable diseases and infections, which account for a percentage of deaths that is (at least) 20 times the percentage of deaths that communicable diseases and infections should account for, wouldn’t be so widespread. (People can’t die from a communicable disease or infection they don’t get, and the number one way to stop the spread of communicable diseases and infection is better sanitary conditions and sanitary practices.) With respect to diarrhoea, 88% of deaths occur because of unsafe water, inadequate sanitation and poor hygiene.

Sewerage, where available, is usually in a bad state. In Delhi, for example, the sewerage network has lacked maintenance over the years and overflow of raw sewage in open drains is common, due to blockage, settlements and inadequate pumping capacities. The capacity of the 17 existing wastewater treatment plants in Delhi is only enough to process about 50% of the waste water produced. Across India, the most recent estimate (in 2003) was that only 27% of India’s wastewater was being treated, with the remainder flowing into rivers, canals, groundwater or the sea. Abysmal!

Just how bad is the situation? Consider this passage from Wikipedia:

For example, the sacred Ganges river is infested with diseases and in some places the Ganges becomes black and septic. Corpses, of semi-cremated adults or enshrouded babies, drift slowly by. NewsWeek describes Delhi’s sacred Yamuna River as “a putrid ribbon of black sludge” where the concentration of fecal bacteria is 10,000 times the recommended safe maximum despite a 15-year program to address the problem. Cholera epidemics are not unknown.

Plus, the continuing depletion of ground water tables and the continuing deterioration of ground water quality are threatening the sustainability of both urban and rural water supply in many parts of India. India can’t afford to pollute any more of its water supply and needs to get waste water treatment under control rapidly. Otherwise, health care problems are just going to get worse, and the repercussions will be substantial.

Top 12 Challenges Facing India in the Decades Ahead – 06 – Health Care

As per our post on poverty, health care is a substantial problem in India. Not only does India have the 9th lowest life expectancy among the 16 countries outside of sub-saharan Africa that are poorer than it is, but is also has the 10th lowest infant and under-5 mortality rates and the second worst proportion of children under 5 who are undernourished! Then, as per our last post on education and opportunity, at leaset 93% of the workforce has no health insurance in a country leaning heavily towards privatized health care.

And this is just the tip of the iceberg. Almost 40% of all deaths in India are still due to infections! (Source: Health and Health Care in India) The majority of the remainder are due to non-communicable conditions such as cardiovascular diseases, chronic respiratory disorders, and cancers. (Compared to the developed world which manages most chronic respiratory disorders and some of the cardiovascular diseases so well that the patients often die from other causes.) In comparison, the only type of death due to infections to break the top 10 in Canada is death due to influenza and pneumonia which strike down 1.6% of the population to grab the 9th spot. In other words, the number of deaths in India due to easily treatable infections is at least 20 times higher than it should be!

India currently spends about 1.2% of GDP on publicly funded healthcare, an amount considerably less than most other comparable countries. In comparison, health care spending clocks in at 5.1% of GDP in China and Russia and 9% in Brazil! (Total spending on health care, including all private spend, is about 4%, but the private spending is mainly by the rich.) Due to this limited funding, and the substantially insufficient funding allocated to the National Rural Health Mission (NRHM) (as outlined in our post on Poverty), 400 Million to 600 Million of the poorest Indians do not get access to the essential medicines they need. When you also consider that India is now the worlds 3rd largest producer of medicine by volume, the absurdity of the situation really comes into the spotlight.

And progress is slow. Even if the extension of the Government’s National Common Minimum Programme, announced by Prime Minister Manmohan Singh on the country’s 66th Independence Day achieves its goal and provides access to free public health care to over half of the population by 2017 (as opposed to the fifth who currently have access) via the country’s 160,000 sub-centers, 23,000 primary health care centers, 5,000 community health centers, 1,000 sub-district hospitals, and 600 district hospitals, that will still leave hundreds of millions of Indians without access to even the most basic of health care services. (Furthermore, the proposal that the Federal Government would directly fund 75% of the relatively limited cost of extending the generic medicines supply to the public health service doesn’t go far enough. At least one third of the population cannot afford to pay even 25% of the cost of generic medicine, which, as it is produced in India, represents relatively little cost to the Government.)

And even though 160,000 sub-centers might sound-impressive, the requirements for a sub-center is one Auxiliary Nurse Midwife (ANM) and one Male Health Worker. That’s it. Not even a full nurse. You only find those in Primary Health Centers, Community Health Centers, and Hospitals. In addition, the primary health centers (PHC) also tend to be minimally staffed. They are only required to have one medical officer (doctor) who is supported by an average of 14 paramedical and administrative staff, in total, and, at current numbers, support a population base of 50,000 people! Furthermore, a community health center, which has to serve approximately 200,000 people on average, typically only has four medical specialists (a surgeon, general physician, gynaecologist, and paediatrician). Plus, per capita, the number of physicians is quite low. Right now, India clocks in at roughly 6.5 per 10,000 people (and many of the doctors are in the hospitals), while Canada has 20.7 and the United States has 24.2. (Source, KFF) Also, while India has roughly 1,600 hospitals to serve 1,237 Million people, the United States has almost 6,000 to serve 314 Million people. In other words, there are 15 times as many people per hospital in India as there are in the United States. (770,000 citizens per hospital in India vs 52,000 per hospital in the United States)

Health Care is a huge problem and one that desperately needs to be solved. After all, if your population is not healthy, how can you expect to give it a good education if it’s worrying about being well enough to study? And if you cannot educate it, how can you ready it to take advantage of any opportunity that may give it the hope of lifting itself out of poverty, something which must be done to increase the tax base enough to build the required infrastructure to support the fierce competition of today’s global economy?

Top 12 Challenges Facing India in the Decades Ahead – 07 – Education and Opportunity

If you remember our last post on poverty, you will note that we said that when India is compared to the 16 countries outside of sub-saharan Africa that are poorer than it, it doesn’t do well in any social indicator, with social indicators for Education being one of those indicators. In particular, it’s literacy rate among Afghanistan, Bangladesh, Burma, Cambodia, Haiti, Krygyzstan, Laos, Moldova, Nepal, Pakistan, Papua, New Guinea, Tajikistan, Uzbekistan, Vietnam, and Yemen ranks 9th for Males and 11th for Females (at 82.1% and 65.5%)! Not good. In comparison, the literacy rates in China (at 97.5% and 92.7%), Brazil (at 90.1% and 90.7%), and Russia (at 99.7% and 99.5%) are much higher in comparison, as are the literacy rates of most of its Asian neighbours.

But it’s educational challenges are not just limited to its literacy rate. The challenges also stem to the perception of the importance of education, especially at an early age, as a whole. In their newly published book, An Uncertain Glory, Dreze and Sen do a great job of outlining some of the significant challenges facing India in terms of education and literacy, challenges which start with the first five year plan created by the newly independent India back in 1951.

The first five year plan in 1951, even though sympathetic to the need for University education which it strongly supported, argued against regular schooling at the elementary level, favouring instead a so-called ‘basic education’ system, built on the hugely romantic and rather eccentric idea that children should lean through self-financing handcraft. It went on to say that ‘the tendency to open new primary schools should not be encouraged and, as far as possible, resources should be concentrated on basic education and the improvement and remodelling of existing primary schools on basic lines’. Other than an outright banning of education for the lower castes and Dalit, SI does not think one would find a better prescription for a return to the middle ages. (And what makes this especially sad is that India, in the 4th Century AD, more than 600 years before the first European University was founded in Bologna, had one of the first big Universities at Nalanda. This University, run by a Buddhist foundation and supported by Hindu kings, drew students from all over Asia, and, at its peak in the seventh century had over 10,000 students in its dormitories.)

But it’s not just the outlook on education that’s the problem, it’s the delivery. In a nation-wide school survey conducted by the PROBE (Public Report On Basic Education) team in 2006, only two thirds of the students were present on the day of the survey (according to the school registrars) and even fewer according to the field investigators’ direct observations. In addition, there was considerable absenteeism of teachers as well, in addition to widespread late arrival and early departure problems. Given that 12% of schools had only 1 appointed teacher at the time of the survey, any teacher absenteeism at all is a huge problem. Furthermore, on the day of the survey, 21% of the schools were operating as single teacher schools and, to make matters worse, half of the schools had no teaching activity at all at the time of the investigators’ unannounced visit! (Why? Due to the relatively high salaries accorded to appointed teachers, there is a reluctance to make appointments. In addition, appointed teachers typically have the equivalent of tenure and there is little oversight.)

Officially, there are supposed to be about 200 school days per year. But with a teacher absenteeism rate that was found to be about 20%, a pupil absenteeism rate of about 33%, the chance of both a pupil and a teacher being present on the same day is about 50%. Then there is the chronic problem of a lack of teaching activity and the fact that a given student only gets taught about half the time the student and teacher are both present on a teaching day. The net result is that the average student gets about 50 teaching days per year, or one fourth of what the student would get in a well-functioning school system!

For a considerable portion of the population, the words of Nobel Laureate Rabindranath Tagore (1913, Literature), spoken in an interview with Izvestia in 1930, still ring true. In my view the imposing tower of misery which today rests on the heart of India has its sole foundation in the absence of education. Because, as Dreze and Sen point out in their work, in a society, particularly in the modern world, where so much depends on the written medium, being illiterate is like being imprisoned, and school education opens a door through with people can escape incarceration.

This lack of education is a big contributor to the Unemployment problem in India. (After all, how can you even apply for any meaningful work in our modern economy if you can’t even read and write?) While the official unemployment rate is 9.9% (as per a press release from the Labour Bureau of the Government of India), the problem is much, much worse than that. (How can it not be when over two thirds of your population has to survive on less than $2 US dollars a day?) Consider the recent example of SBI, the nation’s biggest bank, who in April of last year decided they wanted to recruit 1,500 employees and received over 1,700,000 applications?

While the Indian economy did create approximately 60 Million jobs between 2000 and 2005, during the forefront of the outsourcing craze, it did not create more than 2.8 Million between 2005 and 2010 (as per the Institute of Applied Manpower [IAM]). And while the loss of jobs in the agricultural sector was absorbed in the construction sector, the IAM estimates that 5 Million construction jobs were lost between 2005 and 2010. In addition, 93% of the Indian workforce is interim or informal and receive no health insurance, retirement pension, or basic benefits. As a result, the real unemployment statistic is estimated by experts (Source: WorldCrunch) to be around 20% and doesn’t include the interim or informal workers, especially in rural areas or employed in season sectors, who are underemployed.

And the problem is likely to get even worse. The population in India is still increasing, and in order to maintain the current levels of employment, India needs to add about one million jobs a month, but only managed to add about 50,000 a month between 2005 and 2010, one twentieth of the required number! An educated population could at least try to seek work elsewhere, or, like the services sector, compete to bring more work in. An uneducated population, on the other hand … well, ask South Sudan, Afghanistan, or Niger how an utter lack of literacy is working out for them! (Or even Belize, Bangladesh, or Syria — with slightly higher literacy rates, but still quite low with respect to the developed world.)

Top 12 Challenges Facing India in the Decades Ahead – 08 – Poverty

As per our last post, India is poor. Really poor. By far the poorest of the BRICs with 2/3rds of the population poor by any reasonable definition of poverty. Just how poor is India? In just about any ranking that matters, it’s not well off. When it is compared to the 16 countries outside of sub-saharan Africa that are poorer than it, India is in the lower half of the rankings at best, and near, or at, the bottom in a few cases.

For example, let’s start with some of the leading social indicators (Source: An Uncertain Glory, p 49):

  • Life Expectancy at Birth: 9th
  • Infant and Under-5 Mortality Rates: 10th
  • Access to Improved Sanitation: 13th
  • Mean Years of Schooling: 11th
  • Literacy Rate: 9th for Males, 11th for Females
  • Proportion of Children Under 5 Undernourished: 15th

And this list includes Afghanistan, Bangladesh, Burma, Cambodia, Haiti, Krygyzstan, Laos, Moldova, Nepal, Pakistan, Papua, New Guinea, Tajikistan, Uzbekistan, Vietnam, and Yemen!

Consider the sanitation metric in particular. In Bangladesh, which is considerably poorer than India, only 8.4% of the households practice open defecation. However, in India, 55% of households practice open defecation. How can you become a first world country if you can’t even provide your citizens with toilets? (Or even outhouses?)

The metrics are even worse when you compare it to the BRICs. Worst life expectancy. Worst mortality rates. Least access to sanitation. Worst literacy rates. Most undernourishment. In addition, it has the lowest immunization rates and the lowest health care expenditures as a percentage of GDP.

With respect to health care, India did launch the National Rural Health Mission in 2005-2006, but allocated it a measly RS 10,000 crores per year for the fist five years. Given that almost 70% of India’s population is still rural, if two-thirds are poor and likely in need of the program, that’s about 560 Million people who could use help from the program. If you do the math, that’s less than 1 rupee per five people! Plus, it seems to be going down a road of privatization, relying on private institutions and private insurance, with public transfers for the poor who make the BPL (Below Poverty Line) cutoff and qualify, and this is a direction that has yet to work successfully for any major country. In almost every country with good health care, a good public system preceded a good private system.

SI could go on, but you get the point. While India is increasing its GDP at a relatively rapid rate, it is still poor (and the poorest of the BRICs) and the average person is really poor and needs a lot of social assistance to even reach the same standard of life that poor people have in China, Brazil, and Russia. With about 800 Billion people who could use some form of government assistance, this is a huge burden in a country that collects, on average, 1 US dollar for every 3 citizens in tax revenue.

Top 12 Challenges Facing India in the Decades Ahead – 09 – Taxation

India has a lot of challenges ahead of it whose solution requires capital. Lots of capital. This capital is going to have to come from taxes. But in this regards, India also has a lot of challenges. The most significant of which are:

  • Poverty
    Despite rapid economic growth in recent years, India is still one of the poorest countries in the world as only 15 countries have a lower gross national income per capita. Officially, 30% of the population is below the poverty line as defined by the Tendulkar Committee Report (2009) which clarified the official poverty estimation methodology and set the poverty line at Rs 32 per person per day in urban areas and Rs 26 per person per day in rural areas at 2011 prices, which is approximately 52 US cents in Urban areas and 46 US cents in Rural areas at the end of 2013. This line is so low that it is actually a destitution line that does not ensure anything above bare subsistence. If we use the international poverty line of $1.25 US per day as defined by the World Bank, then almost 33% of the population is below the poverty line and if we define the poverty line at $2.00 US per day, which is barely above subsistence levels in many of the bigger urban areas, then almost 69% of the population is poor!
  • Unequal Wealth Distribution
    The top 1% own 16% of the country’s wealth, and the top 10% own 53%. India has three of the 100 richest men in the world, and the richest man in India is worth almost 22B, while the second and third richest men are worth about 17B and over 11B, respectively. This says the three richest men are worth about 50B in a country with only 1.8 Trillion in GDP and that they alone represent a net worth that is about 2.8% of the overall economy.
  • Import Duties
    India does not charge, or often forgives, import duties on certain types of materials and products that could provide a considerable contribution to the economy, even if the duties were kept low with respect to the rest of the world, and it does a poor job of collecting import duties on some categories that it has stated it will make an effort to collect import duties on. For example, the annual “Revenue Foregone” statement released by the Finance Ministry estimates that India lost RS 529,432 crore (97 Billion) in 2011-2012, or more than 5% of India’s GDP and nearly 67% of total tax collections in India in 2011-2012! (Source: IndiaSpend) This included almost Rs 66,000 crores of customs duties foregone on “diamonds and gold” alone. Any one, or any business, that can afford to buy diamonds and gold can certainly afford to pay a small import duty! And the duty is small — in India, the import duty on gold is a mere 2%! (In the US, the duty and taxes for gold jewelry can be up to 5.5%.)

In other words, India has the situation where:

  • Approximately 2/3rds of its population cannot afford to pay tax.
  • Almost 1/3rd of the remaining population that can afford to pay tax is extremely wealthy, influential, and able to influence the government that sets the tax rates.
  • The government, unwilling to deal with intense complaints or publicity when it tries to collect, or raise, import duties is giving up over 40% of its potential current tax base.

For a country that can’t even address the basic needs of its population, how is it ever going to address its infrastructure, energy, and global economic challenges if it doesn’t stand up and collect taxes where taxes are due?