Sunday, July 23, 2017

India’s New Health Challenges

The day after Diwali, Delhi woke up to a rude shock. Smog had enveloped the whole city making it difficult to breathe. The PM 2.5 particles were almost three to four times more than the accepted level. Experts envisage that if Delhi does not get its act together soon it could see a situation akin to the Great London Smog that took the lives of thousands.  The presence of the PM 2.5 particles is particularly harmful for children and the old. These particles enter the lungs and can result in a number of respiratory problems which increases the mortality factor quite considerably. While the environmental concerns are being discussed in a broad manner, an issue that remains out of the limelight is India’s new emerging health challenges.

A globalised world has also become a more connected world where events affect a large number of human beings. While boundaries are being transcended there is also cross border exchange of diseases and emergence of new forms of disease. And it is this threat that India is facing that challenges the traditional paradigm of health and disease. While Indian health infrastructure grapples with the basic issue of access and facilities, new challenges are being thrown that policymakers have to face.

Today the Indian health profile is changing rapidly. As a large part of India moves to the urban areas, new challenges have emerged. Slowly, two different paradigms of health concerns are manifesting itself. The rural populace of the country still grapples with the issue of malnutrition, arsenic mixed in water, anaemia among others. Nutritional issues concerning health are a major problem in the rural areas. In the urban areas the profile is slightly different. Urban India is beginning to see rise in cardiovascular diseases, diabetes, respiratory problems among others. A large part of health problems in urban India can be attributed to the `lifestyle choices’ that are made and hence are non communicable in nature. Thus the health sector in India has to effectively combat this rising “Health Divide”.

Today the global boundaries have disappeared and so have boundaries that contained disease. Bird Flu, for example, was a disease that was hitherto unknown to India but has become a much focussed area in the past few years. During the past three decades more than 30 new organisms have been identified worldwide including HIV, Vibrio cholera O139, SARS, corona virus, highly pathogenic avian influenza virus A, and novel H1N1 influenza virus. Many of these organisms emerged in the developing countries of Asia. Every global outbreak of Bird Flu or Bovine Flu poses new challenges for the Indian health sector. While they have been effective in this fight till the recent times, there is no guarantee that this resilience might sustain in the nature. Hence there is an urgent need to  keep an eye on each emerging global health concern and prepare a roadmap to combat each disease effectively. India, which boasts of a phenomenal pharmaceutical industry, must also offer its expertise to global drug makers in times of need, even before a particular disease hits the Indian shores. This would ensure that should a disease or a health concern hit the boundary our drug makers are prepared to the extent possible to handle any eventuality.

While India has been able to effectively curb malaria, new forms of vector borne diseases have emerged that have posed new challenges to the health sector. Dengue and Chikungunya which were previously unknown in the Indian medical history have become major headache in the past few years. Dengue, for example, is witnessing a rapid increase in its profile. While a decade back dengue was restricted only to parts of Northern India, in recent times it has spread to the Eastern part of the country as well. In 2015, according to the WHO website, India reported close to 15,000 cases of dengue, the highest in a decade. On September 6, 2016 this figure stood at 19,704. This undoubtedly proves that newer diseases are posing newer challenges to the policymakers that they must address effectively.

As argued above, non communicable diseases pose a special challenge to the health of urban India. Today obesity and diabetes has become a regular occurrence in almost every major urban Indian household. If a person steps outside in order to break the monotony of a sedentary lifestyle, the polluted air increases the chance of respiratory diseases. Lifestyle habits have also increased the chances of cardiovascular diseases. Non communicable diseases account for 56% of deaths in urban areas. If we were to factor in other factors like road accidents, for example, this number would climb still higher. To counter threat of non communicable diseases however, infrastructure and doctors wouldn’t be able to provide the solution again. Awareness is one of the most vital weapons in the fight against urban non communicable diseases. Mental health for example is still an unexplored area. The people have to be made aware that mental health is of equal importance as physical health in the life of an individual. Sanitisation campaigns should be unveiled about food habits and the need for physical activities in a person’s life while setting up measures that would dissuade people especially children from certain kind of food should be encouraged. These steps would go a long way in improving the results of the fight against non communicable diseases.

Antimicrobial resistance demands a special mention in the fight to better India’s health profile. India’s global reputation took a major beating when in 2008 India’s name was attached to a super bug, the NDM-1.  The New Delhi Metallo-beta-lactamase-1 was an enzyme that rendered bacteria resistant to a broad spectrum of antibiotics. A strain of the NDM-1 had crossed the shores and spread resistance to other countries as well. And slowly India woke up to this new challenge. In 2010 India was the largest consumer of antibiotics in the world. Years of over the counter prescription and medication without proper consultation had resulted in disastrous consequences rendering many drugs useless. Attempts are however being made to control this aspect, new bills have been introduced which have made procurements of certain kinds of drugs harder. New regulations have come in place which make the availability of Schedule –H drugs over the counter almost impossible. Further steps have to be taken in this regard while consistently evolving newer strategies to counter over the counter sell of antibiotics.

Despite the obvious challenges there is however no doubt that India has performed remarkably in the health sector. Diseases like polio have been wiped clean from the country through sustained efforts and people’s participation. Diseases like Smallpox and guinea worm have been eradicated; their last cases occurred in the country in May 1975 and July 1996 respectively. Yaws, which mainly occurs in remote tribal areas, has been eliminated. The average life expectancy in India has risen from 36.5 years in 1951 to 63.5 in 2011. Maternal Mortality Rates and Infant mortality rates have improved considerably as well. Today India boasts or world class medical education. Indian doctors and India’s medical facilities are recognised amongst the best in the world in affordable prices on a global level. In the past sixty years, India has demonstrated remarkable will in responding to the challenges of the health sector. In a similar spirit, it must focus itself towards combating the new forms of health concerns grappling its people.

Tuesday, November 22, 2016

The GST Issue

The passage of the Goods and Services Tax (GST) Bill, officially called the Constitution (One Hundred and Twenty Second Amendment) Bill, 2014  recently passed in the Rajya Sabha is seen as one of the biggest reforms undertaken by the government since the opening up of the economy in 1990. While there is some road still left to be travelled towards implementation, yet its passage in the Parliament ensures that it will be a reality soon. The GST seeks to replace Central Excise Duty, Service Tax and at the same time will subsume State VAT, Central Sales Tax, and Purchase Tax, among other taxes. In effect, this bill seeks to end the cascading effect of indirect taxation in India.

Before understanding GST, we must understand the present system of indirect taxation prevalent in India. The constitution divides taxation powers between centre and states. Both levels of government have some exclusive areas where they can levy tax. Income tax, which includes tax on company profits, is in the exclusive domain of central government. These taxes are referred to as direct taxes. Indirect taxes are taxes levied on manufacture of goods, provision of services and consumption, which are again in exclusive domain of central government. Taxes on consumption, on the other hand, are under the exclusive domain of state governments.

This system of indirect taxation had some problems. First, there was the issue of multiplicity of taxes. From the moment a product was manufactured, it was treated to a bevy of taxes from central excise to VAT.  This added to the total cost of the product which was borne by the final customer. Another problem was that, different states had different taxation rates. Some states had lower VAT rates compared to others. This created a chance of tax evasion and states lost out on revenue that it had to earn.

GST seeks to correct these anomalies in the system. It seeks to replace the indirect tax regime in India which is replete with multiplicity of laws and barriers in interstate movement of goods. At the fundamental, GST is a value added tax. This will be levied at all points in the supply chain where credits will be allowed for any tax paid on inputs acquired for use in making the output. Since the GST will be tax added on each stage of value addition, the final consumer will bear the GST charged by the last dealer in the supply chain, with set off benefits for all previous stages. It would be applicable for both goods and services wherein the exemptions given are minimum. A minimalistic system that has less discretion will function as a much more transparent and robust system. The GST regime seeks to correct those faults that were present in the indirect taxation regime. GST will make India one unified market.
GST will seek to help the consumer in the following ways. First, all taxes will be collected at the point of consumption. This means that if any product is taxed at 18% (which is the GST rate fixed for now), it will include both central government’s taxes and state government’s taxes. This will decrease the cost of goods in long run and can create an environment of lower inflation rates in the country. Seen in this light, GST can also play an important role towards achieving the recently announced inflation policy where the government will attempt to keep inflation at 4% with tolerance level pegged upto 2%. Second, once barriers between states are removed, we as consumers will not end up paying “tax on tax” which is what happens when goods move across state borders. It will also widen the tax base which is necessary for lowering tax rates and eliminating classifications. GST will result in harmonisation of Central and State tax systems which would reduce duplication and compliance costs. The automation of compliance costs will also result in reduction of errors, thereby increasing efficiency.
In keeping with the federal structure of the country, GST will have two components: Centre GST (CGST) and States GST (SGST). This is keeping in mind the fact that base and essential design features would be same. Both the system will be based on tax on the destination model. Thus, exports would be zero-rated, and imports would attract the tax in the same manner as domestic goods and services. Inter-State supplies within India would attract an Integrated GST (aggregate of CGST and the SGST of the destination State). The GST will be accompanied by the GSTN which will work towards capacity building among others. Officers are already being trained towards administering the new GST.
However the GST will face stiff challenges in its road to implementation in the coming years. The first challenge percolates to the rate at which GST will be launched. The prevailing sentiments seems to be at 18%, which will finally be decided and yet to be notified by GST council, in the long run. While different studies have pointed to different rates, it would undoubtedly help the consumers when the present rate would be fixed at a level which would negate the cascading effects of indirect taxation.
Another challenge that has to be encountered is administering the GST with minimum exemptions. New Zealand had the best GST model when it started out with the taxation rate fixed at 10% with almost zero exemption rates. However as most taxation analysts would like to point, tax policies can never be fixated in one particular realm, as with changing circumstances and economic behaviour, taxation policies need to change as well. Today, New Zealand has increased its taxation rate from 10% to 15% .Countries have fared better in administering the GST regime when they have reduced the exemption while widening the base. This is the challenge India will hope to encounter and successfully resolve.
The third challenge would be the implementation itself. India since its independence has achieved its political unity while the economic unity remains a distant dream. India is composed of various states with different financial standings .While states like Maharashtra and Gujarat are capable of generating their own revenues, the north eastern states, for example, are not on a strong financial footing. Yet the GST will seek to treat every state equally. While this would be challenging, yet it would also harmonise the country as an economic entity in the end. In the long run, GST seeks to benefit all and can truly act as a harbinger of the next round of economic reforms. The road to the same is tricky but the goal is worth it.
- Ibu Sanjeeb Garg ( Views expressed by the author are personal)