M5L1: Demography, Democracy and Demand
India is at the cross roads. On one side, India aspires to be a global power. On the other side, it cannot manage its neighbors. On one side, Indians like Satya Nadella and Indra Nooyi are members of US President’ advisory board. On the other side, the quality of its labour force is questionable. On one side, Mukesh Ambani invites Hillary Clinton to India. On the other side, nearly 30 crore Indians still lack access to sanitation, primary education and healthcare.
So, the glory we want to achieve, is uncertain. Isn’t it? Not completely. The picture is not as dark as it seems to be
A study on demographic dividend in India by United Nations Population Fund (UNFPA) throws up two interesting facts. One, the window of demographic dividend opportunity in India is available for five decades from 2005-06 to 2055-56, longer than any other country in the world. Second, and more interesting, is the fact that this demographic dividend window is available at different times in different states because of differential behaviour of the population parameters.
Demographic dividend is said to be occurring when the ratio of the working age population is high and the dependency ratio in terms of proportion of children and elderly people low. This advantage can create the space needed to increase investments in enhancing human capabilities, which, in turn, can have a positive influence on growth and development.
At present, India, overall as a country, has a large proportion of population that is young as shown in chart 1. Close to 30% of India’s population is in the age group 0-14 years. The elderly in the 60-plus age group are still a small proportion (8%) of the country’s population. The working age group 15-59 years accounts for 62.5% of India’s population. The working-age population will reach the highest proportion of approximately 65% in 2036. These population parameters indicate an availability of demographic dividend in India, which started in 2005-06 and will last till 2055-56.
The story gets interesting when we look at the sub-national picture. The demographic dividend is not available in all the states at the same time. This is because different states have behaved differently in the past and are projected to behave differently in terms of population parameters in future also.
Okay, so where do we stand now?
The picture looks beautiful, but it has certain blind spots. This demographic dividend is not healthy and productive as we think. They are also suffering from a lot of diseases.
DISEASES IMPACTING DEMOGRAPHY IN INDIA
· Among the top ten largest killer diseases in India, NCDs contribute around 60% of all deaths (5.87 million). This includes Cardiovascular and chronic respiratory disease, cancer and diabetes.
· According to the World Economic Forum, India stands to lose $4.58 trillion between 2012 and 2030 due to NCDS.
· Apart from these, infectious diseases such as TB, malaria, dengue, H1N1 pandemic influenza and antimicrobial resistance also remains a continued threat to health and economic security.
· This impacts India’ commitment to achieving the targets mentioned under SDG (2030) and commitments at international levels to control Drug Resistance.
Now Indian Health sector is mostly dominated by Private sector. This leads to an enormous amount of Out of Pocket Expenditure, that pushes a family into poverty. The impact can be divided in three blocks
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Household & individuals
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Health
systems
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Effect on the Economies
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·
Reduced
well being
·
Increased
disabilities & premature deaths
·
Loss
of household incomes
·
Higher
out of pocket health expenditures.
·
Erosion
of savings & assets
·
Loss
of opportunities
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·
Increased
consumption of NCD-related healthcare
·
High
medical treatment costs / per episode
·
demand
for more effective treatments e.g. cost of technology and innovation)
·
Health
system adaptation needs and costs (e.g. organization, service, delivery,
financing)
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·
Reduced
labor supply
·
Reduced
labor outputs e.g. cost of absenteeism
·
Lower
tax revenues
·
Lower
returns on human capital investments
·
increased
public health & social welfare expenditure cost to the employers (e.g.
productivity, Health etc.)
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Now think, in the other way.
How will a healthy person contribute to the
economy? Since, he is active and dynamic, he will free from diseases. This will
help to reduce his personal expenditure on sickness, if any
For e.g. it has been found that the Aam Aadmi
Party’ policy on Mohalla Clinics in New Delhi has increased the savings per
family. (Recall the fact, that as per World Health Organization data for the
year 2015, more than 65% of the population in India paid for health from their
own pockets.)
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Mohalla Clinic project has earned praises
from former UN Secretary General Kofi Annan and from the former Prime
Minister of Norway Gro Harlem Brundtland.
In a report published by The Washington Post
(March-11-2016), it was suggested "It may well be time for America to
build mohalla clinics in its cities".
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This savings accrued by reduction in his out of
pocket expenditure will help him spend more on the betterment of his family. He
will provide better food and nutrition security for his younger generation. He
will spend more on extra-curricular activities held in his/her school and
education. This will help them to grow better.
Now, since he is healthy, he will more
productive. As an employee, he will be able to contribute more to the company
or the firm in which he/she is working. The company will grow faster and earn
more profits.
With these profits, they will reinvest back
into the economy or try to scaleup this investment to launch better products.
At the end of the day, this will help to create more jobs in the economy and
thereby, trickle the benefits of growth to the bottom level of the population.
Additionally, this company will pay more
Corporate tax and CSR. Since, they are expanding with this money and creating
more jobs, they are also parking a certain percentage of their employee’s money
in government accounts like provident fund.
Well this was about the company or the firm in
which he/she is working. Let us return back to that individual. Now since, that
individual is healthy and more productive and more creative, he will make a
faster progress. This will help him get promoted to the higher levels of the
company, that will pay him better salary.
After using this money for his personal
expenditures, he will also reinvest the surplus amount that he has pay a
certain amount of money to the government in the form of income tax. With this
higher income, he will spend more on luxury products that will create more jobs
in some other sector of the economy. And say, even after this event, if surplus
money persists than he will invest it in financial and capital markets like
corporate shares and bonds, tax saving instruments under Sec 80 C and 80 D,
government bonds and Treasury bills, invest in Fixed Deposit/Recurring Deposit
account of Banks etc. In summary, money will be more fluidic and will help to
create more jobs.
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Capitalism is good. But it has a flip side.
If the money gets locked in some hands, it may lead to inequality measure by
Gini coefficient. This may eventually give rise to in satisfaction in the
society that seeks outlets in the forms of reservations in government jobs,
violence (Naxalism) etc.
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There can be two ways in which we can help to
revive the health system from getting collapse. One is by fixing problems from
the supply side. This includes improving primary sector, reducing communicable,
vector borne and NCDs, improving education, awareness and sanitation facilities
etc. On the demand side, we are supposed to reduce out of pocket expenditure.
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