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Value for
money
A massive contrast stalks India. It is not just emerging as
a clear global leader in growth but has begun to challenge
the job prospects of many skilled people in the developed
world. On the other hand, India’s human development standing
often remains poor not just in comparison with the developed
world but also with some other South Asian countries. Sri
Lanka’s superior status in this regard has been established
for long but what is disturbing is that in terms of some key
indicators, Bangladesh, long taken to be an international
basket case, is successfully challenging India.
India’s ascendancy in services exports is by now
well-established. Significantly the country is also emerging
as a competitive geography for manufacturing. Most recently,
the automobile industry and the railways are putting their
heads together to conceive several dedicated freight
corridors to enable quick transportation of cars to ports
for export to the rest of Asia. India, simply put, has
become an attractive place to make cheap cars for Asia.
If that is the big picture, here is a micro example.
Bangalore-based QuEST is a successful engineering services
firm doing non-core development work for global auto, oil
and gas, and aeronautical firms. This week, timed with the
annual promo BangaloreIT.in, QuEST has announced an
investment of $25 million (not insignificant for it as its
turnover last year was $28 million) over the next five years
to set up a plant to manufacture precision-machined
components for aeronautical OEMs.
I recall meeting its founder Ajit Prabhu a couple of years
ago and noting how careful he was in not overstating what
his firm was doing. We design the face lift for existing car
models and non-core concept design for developing
components, he said. From designing QuEST is going into
manufacturing. Given the robustness and unbounded confidence
of Indian entrepreneurs, it will not be surprising in a few
years to find a distinct Indian presence in the global
aerospace value chain.
Now the other side of the picture. Thirty-five years ago
India and Bangladesh were at about the same level in terms
of infant mortality—India stood at 138 deaths per thousand
live births in 1971 and Bangladesh at 145 in 1970. By 2003,
Bangladesh had brought down the figure to 46, and India had
distinctly fallen behind at 74 in 2000. Even if a child
manages to live, what are her chances of growing up
healthily? In 2004, 53 per cent of Indian children were
malnourished, compared to 48 in Bangladesh and 33 in Sri
Lanka.
The Oxfam International publication Serve the Essentials, an
exhortation to governments and donors to improve South
Asia’s essential services, has compiled these statistics and
more, mostly sourced from UN agencies. Twenty-five per cent
of hospitalised Indians fell back into the poverty trap in
1995-96 by having to meet medical costs. This is
unsurprising as out-of-pocket expenses accounted for a
massive 82 per cent of total health expenditure in India in
2002. The comparable figure for Bangladesh was 52 and Sri
Lanka 50.
What is to be done? Surely, it is not beyond the national
competence to make up these appalling deficits in human
development. As private initiative is seen to be at the
forefront of the current Indian economic resurgence, the
goal of public advocacy can be to convince as many Indian
businessmen as possible of the business opportunities that
lie at the bottom of the pyramid, as outlined by C K
Prahalad.
But the problem is the market failures in the areas of
health and education. The poor have difficulty in paying for
even very cheap healthcare although, as cited above,
overall, Indians privately pay for four-fifths of their
medical expenses. Hence the state has a “responsibility to
provide universally accessible and robust public delivery
systems for essential services,” says Jean Dreze in his
forward to the Oxfam report.
Few will quarrel with the contention that the government
should spend more on healthcare and primary education for
the poor. But the key issue is the mostly appalling nature
of the Indian public delivery system. The middle-class
attitude is that money which mostly goes down the drain is
best not spent. The fact that the eighties saw significant
improvements in human development through increasing public
expenditure despite leakages does not convince those whose
opinions matter.
Hence public debate today ought to be on how the money can
be better spent, the service better delivered. There are
really three ways of doing this. At the grassroots,
panchayati raj institutions have to take ownership of the
local primary health centre and primary school and demand
better delivery. Above that, wherever there is a choice, a
state-funded voucher system can be tried whereby people who
are slightly informed about the choices available, be it in
healthcare or education, can go and shop for better
delivery. The third leg is the role of NGOs, which have to
inform, help and monitor right down the line to help
delivery. There is strong opposition to a voucher system
from left ideologues and politicians, and the leaders and
members of trade unions.
The most remarkable improvement in human development in
India in the last 25 years has occurred in Tamil Nadu. Left
control over the government machinery need have nothing to
do with better service delivery to the poor. Politics in the
name of the poor delivers indifferently in West Bengal, but
it does very effectively in Tamil Nadu through the
politicisation of dalits. Caste- driven politics has not,
however, delivered in UP and Bihar. So there need be no one
answer to the same problem in different parts of the
country. The need is to keep arguing and experimenting.
Source :
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