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21 Jan 2020: The Hindu Editorial Analysis

1) On Guaranteeing healthcare: the Brazilian way

  • As Brazilian President Jair Bolsonaro visits New Delhi this Republic Day, one interesting field of cooperation to explore in the strategic partnership is healthcare. Achieving universal health coverage is a very complex task, especially for developing countries. 
  • Its success in getting universal coverage has lessons for India. It can also provide lessons for Ayushman Bharat, currently the world’s largest and most ambitious government health programme.
  • Here, the example of Brazil, the only country where more than 100 million inhabitants have a universal health system, is worth studying. Following the end of military rule, the Brazilian society decided to achieve universal coverage by establishing a government-funded system. 
  • The Unified Health System (SUS), which guaranteed free health coverage that included pharmaceutical services, was written into the new Constitution in 1988. Progress over 30 years: In the last 30 years, Brazilians have experienced a drastic increase in health coverage as well as outcomes. 
  • The life expectancy has increased from 64 years to almost 76 years, while Infant Mortality Rate has declined from 53 to 14 per 1,000 live births. In terms of service provision, polio vaccination has reached 98% of the population. 
  • A 2015 report said that 95% of those that seek care in the SUS are able to receive treatment. Every year, the SUS covers more than two million births, 10 million hospital admissions, and nearly one billion ambulatory procedures.

  • This has been made possible even amidst a scenario of tightening budget allocation. While universal health systems tend to consume around 8% of the GDP - the NHS, for instance, takes up 7.9% of Britain’s GDP. 
  • Brazil spends only 3.8% of its GDP on the SUS, serving a population three times larger than that of the U.K. The cost of the universal health system in Brazil averages around $600 per person, while in the U.K., this number reaches $3.428.
  • A study conducted by the Brazil-based Institute for Health Policy Studies (IEPS) forecasts that public health spending in Brazil will need to increase by nearly 1.6 percentage points of the GDP by 2060 in order to cover the healthcare needs of a fast-ageing society.
  • Achieving universal coverage in India, a country with a population of 1.3 billion, is a challenge of epic proportions. Hence, the advances in this field should be seen not in binaries but judged by its steady growth and improvement. 
  • For instance, India must record details of improvement in terms of access, production and population health on a year-by-year basis. A starting point for this daunting task is funding. Public health expenditure is still very low in India, at around 1.3% of GDP in the 2017-2018 fiscal year.
  • Establishing wellness centres: The Brazilian experience can also inform the design of the expansion of primary care that underlies Ayushman Bharat, that is, the creation of 1,50,000 wellness centre by 2022. 

  • The Family Health Programme (Programa Saúde da Família), which relies on a community-based healthcare network, is the backbone of the rapid expansion of coverage in Brazil. The strategy is based on an extensive work of community health agents who perform monthly visits to every family enrolled in the programme.
  • These agents carry out a variety of tasks. They conduct health promotion and prevention activities, oversee whether family members are complying with any treatment they might be receiving, and effectively manage the relationship between citizens and the healthcare system. 
  • The strategy works: a large body of research shows that the programme has drastically reduced IMR and increased adult labour supply. Equally impressive has been its expansion, from 4% of coverage in 2000 to up to 64% of the overall population in 2015; it was able to reach even the rural areas and the poorest States of the country.
  • Both Brazil and India are composed of large States with a reasonable degree of administrative autonomy. This fact implies great challenges and opportunities. The major challenge is that a one-size-fits-all approach for such heterogeneous regional realities is inconceivable. 
  • Tamil Nadu, Sikkim, and Bihar differ in so many ways and this diversity must be met by an intricate combination of standardised programmes and autonomy to adopt policies according to their characteristics. 
  • Moreover, regional disparities in terms of resources and institutional capabilities must be addressed. This diversity, nevertheless, can be a powerful source of policy innovation and creativity.

2) On Redesigning India’s ailing data system. 

  • The new series of Gross Domestic Product (GDP) figures with 2011-12 as base, released in 2015, has not gone well with analysts; the withholding of employment-unemployment data for some time and consumer expenditure data, which is not released, added to this unease. 
  • Bringing the National Sample Survey Office (NSSO) under the fold of National Statistics Office, altering its long-standing arrangement under the Governing Council and then National Statistical Commission, triggered suspicion. 
  • As official statistics is a public good, giving information about the state of the economy and success of governance, it needs to be independent to be impartial. The present national accounting and analytical framework misses out on many key dimensions of a complex economy. 
  • Wide-ranging impact: GDP covers all productive activity for producing goods and services, without duplication. In effect it adds apples and oranges, tractors and sickles, trade, transport, storage and communication, real estate, banking and government services through the mechanism of value. 
  • The System of National Accounting (SNA) is designed to measure production, consumption, and accumulation of income and wealth for assessing the performance of the economy. GDP data influence markets, signalling investment sentiments, flow of funds and balance of payments. 
  • The input-output relations impact productivity and allocation of resources; demand and supply influences prices, exchange rates, wage rates, employment and standard of living, affecting all walks of life.

  • The data on GDP are initially estimated at current price and then deflated for constant price for comparability of data over time. It is necessary to separate out price effect to adjust value for real volume for comparison over time and sectors.
  • There is a way of adjusting price effect through appropriate price index. The present series encountered serious problems for price adjustment, specifically for the services sector contributing about 60% of GDP, in the absence of appropriate price indices for most service sectors. 
  • The deflators used in the new series could not effectively separate out price effect from the current value to arrive at a real volume estimate at constant price. Price indices going into a low and negative zone in 2014-17 distorted real growth.
  • The shift from establishment to enterprise approach, replacing Annual Survey of Industries (ASI) with Ministry of Corporate Affairs MCA21 posed serious data and methodological issues. 
  • The use of MCA21 data and blow up factors thereof without weeding out defunct enterprises, and then insufficient work on mapping of comparable ASI data, followed by similar survey on services sector enterprises were another major lacunae.
  • Unchanged approach: The approach for collection of data remains largely the same for long: price and production indices are constructed using a fixed base Laspeyres Index, yield rate for paddy is estimated by crop cutting experiments. 
  • The organisation of field surveys for collection of data on employment-unemployment, consumer expenditure, industrial output, assets and liabilities continue. 
  • When productivity and remunerative price of output are major concerns for agriculture, it is necessary to collect data on factors such as soil conditions, moisture, temperature, water and fertilizer use determining yield, impact of intermediary and forward trade on farm gate price & so on. 
  • For example, Israel collects these data for analysis to support productivity. The initiative under e-governance enabled the capturing of huge data, which need to be collated for their meaningful use for production of official statistics. The process for collection and collation of data needs modernisation using technology.

  • Data logistics: Along with GDP, we need data to assess competitiveness, inclusive growth, fourth-generation Industrial Revolution riding on the Internet of things, biotechnology, robotics-influencing employment and productivity, environmental protection, sustainable development and social welfare. 
  • Hence GDP data needs to be linked with a host of other data for deeper insight. We need to re-engineer the existing system, creating an integrated system populated with granular data. The country is vast, heterogeneous. 
  • There are non-linearities and path dependence, which should be considered while setting goals for development, reducing regional imbalance. To pursue the goal of a $5-trillion economy by 2024-25, harnessing demographic dividend. 
  • We must tap underused resources for demand creating investment, which require data to pursue policy right from a district and evaluate performance for efficiency including governance.
  • We cannot reconcile data inconsistencies by setting up committees alone. We need systems which have the capability to sift through a huge volume of data seamlessly to look for reliability, validity, consistency and coherence which, I am afraid, will be difficult without the aid of a versatile data warehouse as a component of big-data technology. 
  • Also such committees should have the support of a dedicated team for audit, and the ability to implement decisions by cutting red tape. This is what has been wanting as thoughtful and well-meaning key recommendations of the Rangarajan Commission and subsequent recommendations from 2006 onwards by successive National Statistical Commissions, faced stumbling blocks in implementation. 
  • What is the guarantee that the recently constituted committee will succeed in its effort to restore credibility? It is as much a system and has implementation capability as the expertise behind it.
  • The present and future: The present national accounting and analytical framework misses out on many important dimensions of the economy and its complex character as an evolving economy that is constantly experiencing technological and institutional transitions and power plays in a market economy. 
  • We need a new framework for analysis for such a complex system and evolutionary process. There is a question of growing market power, automation, robotisation and other labour-replacing technologies affecting profitability, structural change and general welfare.
  • We need to find alternative avenues for the unemployed and jobs lost. In order to inject efficiency and stability, we need to have detailed data on how: markets clear, prices are formed, risks build up, institutions function and, in turn, influence the lifestyle of various sections of the people. 
  • We also need to know in greater detail about market microstructure and optimality therein, the role of technology and advanced research, changing demand on human skills, and enterprise and organising ability, which are all complex. 
  • The growing inequality and concentration of wealth in a few hands to the detriment of social welfare needs to be arrested at the earliest. The deadweight loss caused to the economy through monopoly power, inefficient input-output mix, dumping, obsolete technology and production mix must be contained.
  • The consensus macroeconomic framework of analysis assumes symmetric income distribution, and does not get into the depth of structural issues, as it focuses on a trend-cycle decomposition of GDP for growth and stability in market parlance and a trickledown effect for percolation of income. 
  • This framework is questioned by many. The alternative to be realistic for the real world must rest on two pillars: the micro-behaviour of individuals, and the structure of their mutual interactions. 
  • In the changed situation of availability of micro data, we need to build a system to integrate the micro with the macro, maintaining distributional characteristics. Data is the new oil in the modern networked economy in pursuit of socio-economic development. 
  • The economics now is deeply rooted in data, measuring and impacting competitiveness, risks, opportunities and social welfare in an integrated manner, going much beyond macroeconomics. 
  • We have a commitment to produce these statistics transparently, following internationally accepted standards, tailor-made to suit local conditions, for multi-disciplinary analytics. As these statistics reflect on the performance of the government, it is necessary that its independence is maintained scrupulously.