Archives: Publication

Trams are more energy-efficient and economical.

After the push for carbon neutral transport system, all metros in India are now moving towards electric-bus. Recently, Mumbai introduced double-decker e-bus like the one that plies in London. The impression one gets is that this is the preferred mode for an urban transport system.

However, one finds it is the tram and not e-bus that is making a resounding comeback worldwide. Take the case of Europe. Trams have been reintroduced in 25 cities of France. In Germany, a proactive nation for carbon neutral transport, trams has been reintroduced in five cities. Trams continue to ply in many of the old East-European cities with narrow roads. And recently, e-bus was withdrawn from Moscow due to poor performance. Surely, there must be an economic rationale on why worldwide tram is being adopted as a dependable transport medium for cities.

At the outset, the outlay for trams seems huge — permanent tracks, overhead wires, etc. However, once installed, trams are one of the lowest energy consuming and most sustainable mass transit systems. This is the principal reason why worldwide tram is being introduced.

Trams run on hard wheels and rails that can be fully recycled, and have much lower rolling resistance than soft rubber tyres. They are plugged directly into the mains, negating the need for energy and resource-intensive batteries that need their own separate and often expensive charging infrastructure.

Energy consumption
The two important factors that drive energy consumption of trams and e-bus are rolling resistance and drive efficiency. How do tram and e-bus compare by these two yardsticks? Because the length of trams can vary, a single carriage, which is comparable with the weight of a double-decker bus, has been used in these calculations. A three-car tram can carry as many as 140 passengers (standing and seating), whereas the new electric London/Mumbai buses are expected to have a capacity of 90.

A single carriage tram has a coefficient of rolling resistance of approximately 0.001, around ten times lower than a double-decker e-bus tyre (0.01). A double-decker e-bus travelling at 30 mph along a smooth tarmac road would need 24.9 kW to keep it moving. By contrast, the tram would need only 3.5 kW. That is, more than seven times less power.

An electric motor converts the electricity supplied to it into motion with around 90 per cent efficiency. An e-bus has an electric motor, just like in a tram, and so benefits from the improved efficiencies. However, it also needs to carry its own energy supply in the form of a battery. In theory, a battery has minimal losses, however in practice charging with different currents can result in significant losses, up to 50 per cent in some cases.

On average, for the life of a battery, the charge and discharge cycles are estimated to be around 80 per cent efficient. That means, using a battery adds in losses of 20 per cent to our equation: 80 per cent x 90 per cent gives a drive efficiency of 72 per cent for an e-bus. A tram is plugged into the mains and avoids storage losses.

The tram beats e-bus hands down in two other important aspects as well. First, the life of an e-bus is 10-12 years and one needs to replace the battery after five years. The cost of the battery is nearly half the price of the e-bus. By contrast, the life of a tram is easily 20-30 years. In Kolkata, trams that are more than 50 years old are still running.

And, one needs at least twice/thrice the number of e-buses compared to an ordinary bus to provide similar service as charging of an e-bus takes 8-10 hours. Clearly, it is a costly venture. Given the financial condition of urban transport corporations in India, 3-4 years down the line, the corporations may collapse due to the financial burden caused by e-bus.

Thus, to provide an affordable carbon neutral urban transport system for at least the next few decades, investment in tram and not e-bus would make more economic sense.

The writer is Professor, NCAER. Views are personal

Bank account ownership took a leap over the last decade. But some of the gains stagnated during the pandemic. 2021 Global Findex data show that 78% of women reported having bank accounts. However, 64% did not withdraw any funds during the last 12 months, and 28% reported having an inactive account. Budget 2023 announced the launch of Mahila Samman Bachat Patra Yojana, a savings scheme for women.

One of the highlights at the ET Global Business Summit last week was how GoI, over the last eight years, has launched schemes that directly empower women. The flagship initiative that has direct implications for women’s access to social safety net has been the opening of bank accounts under the Pradhan Mantri Jan Dhan Yojana (PMJDY), allowing GoI to directly transfer cash into the beneficiaries’ bank accounts. The benefit of having a PMJDY account was most evident during the pandemic when GoI initiated cash transfers to women account-holders in the middle of the nationwide lockdown.

Data from the NCAER Delhi Coronavirus Telephone Survey conducted in June 2020, covering more than 3,400 households in Delhi-NCR, showed that female beneficiaries received the first instalment within three weeks of the declaration of lockdown. This shows the remarkable speed of delivery of cash benefits, facilitated through the Aadhaar-enabled payments system. Both below poverty line (BPL) and non-BPL households received the transfers, but some of the poorer households were excluded. These estimates are consistent with other studies using administrative data that suggest that less than half of poor households were likely to receive PMJDY transfers given the low prevalence of women PMJDY account-holders.

Bank account ownership took a leap over the last decade. But some of the gains stagnated during the pandemic. 2021 Global Findex data show that 78% of women reported having bank accounts. However, 64% did not withdraw any funds during the last 12 months, and 28% reported having an inactive account. Budget 2023 announced the launch of Mahila Samman Bachat Patra Yojana, a savings scheme for women. This has the potential to further boost women’s financial inclusion. But this is unlikely to have any effect on the poorest of the poor, especially those who remain unbanked.

Reasons can be linked to distance to the nearest bank, lack of documentation, financial illiteracy, keeping some financially excluded and being outside the purview of the social safety net. An effort needs to be made to further enhance last-mile delivery.

GoI had also launched schemes that have direct implications on women’s ‘time poverty’. Women traditionally play the role of water-bearers and firewood-collectors. Access to infrastructure, such as piped water and LPG, can significantly alleviate women’s time burden resulting from engagement in such activities. The National Sample Survey Office’s (NSSO) 2019 Time Use Survey indicated that 44% of rural households continued to collect firewood. Typically, women in households that use clean fuel, like LPG, spend less time in domestic unpaid chores, such as meal preparation time, freeing up women’s discretionary time.

Two key schemes deserve mention:

Pradhan Mantri Ujjwala Yojana (PMUY) has been providing free LPG connections since 2016, targeting women from BPL households, expanding LPG coverage across the country. However, response data from a Lok Sabha session indicate that in 2021-22, 58% of PMUY households took four or fewer refills, likely indicating that rural households continue to use solid fuel for cooking.

GoI’s initiative of extending subsidised LPG under PMUY since May 2022 is likely to increase LPG usage, although the post-subsidy LPG price could still be too high for sustained adoption. The consumer price index (CPI) inflation for fuel and light has been hitting double digits since May 2021, with only four months in between reporting less than10% fuel inflation. Also, NCAER research shows that it is women’s paid work that provides households incentives to adopt time-saving infrastructures such as LPG.

Jal Jeevan Mission aims to provide piped water connection to all rural households by 2024. While not exclusively targeted towards women, water security has the potential to significantly improve women’s well- being by freeing up women’s time to pursue productive work.

But where are the jobs? Data from the 2020-21 Periodic Labour Force Survey (PLFS) suggest a rise in work participation for rural women between 2019-20 and 2020-21. But much of it is in the form of distress employment in subsistence agricultural activities, in the form of self- employment and unpaid helpers. Plans for digital push in the agriculture sector, along with providing supply-side incentives for rural startups, as laid out in the budget, has the potential to convert this into an opportunity for women farmers.

But this will first require bridging the gender digital divide. Measures that directly empower women with skills training to exploit recent opportunities or provide sustainable income-generating avenues are likely to also reap greater gender dividends. According to GSMA’s (Global System for Mobile Communications) Mobile Gender Gap Report 2022, women’s mobile internet use increased from 21% to 30% between 2020 and 2021, while increasing from 42% to 45% for men, showing significant strides in bridging the digital divide.

GoI has made significant strides in empowering women. But the depth of the challenge makes this a work in progress.

The writer is senior fellow, National Council of Applied Economic Research (NCAER)

Ayushman Bharat: These schemes have a good coverage. But funds use will suffer, if people are unaware of entitlements

The introduction of social health insurance has been one of the most significant innovations of the past decade. While public health spending (including both Centre and States) has seen only a marginal increase over the last decade, government spending on social health insurance has increased consistently. Spending on social health insurance (at current prices) has almost doubled between 2013-14 and 2018-19.

Meanwhile, the government in September 2018 revamped the existing Rashtriya Swasthya Bima Yojana (RSBY) and introduced the Pradhan Mantri Jan Arogya Yojana (PMJAY) or Ayushman Bharat scheme with an aim to expand the services to a larger number of households. The annual coverage also increased to 5 lakh per household as opposed to 30,000 in RSBY. A surprising aspect of the Budget 2022-23 was that Ayushman Bharat did not receive a single mention in the speech.

According to the estimated demand and expenditure for PMJAY by the 15th Finance Commission on Ayushman Bharat (2019), the total costs (Centre and States) of PMJAY could range from ₹28,000 crore to ₹74,000 crore for the next five years. However, we did not see an expenditure of this order for PMJAY since its inception. In fact, actual spending was much lower than the budgeted estimates over the last three Budget periods (Figure 1).

Expanded coverage
There can be no denying that coverage has expanded vastly, although meeting the initial target to cover 10.74 crore families (or nearly 55 crore individuals) from the lowest socioeconomic strata may take some time. However, access to PMJAY cards is not the same as using them. The utilisation of the amount allocated to the scheme has been poor. While 83 per cent of the Budget allocation was utilised in 2018-19, the utilisation decreased to 50 per cent in 2019-20, and to 42 per cent in 2020-21. With the pandemic raging in these two years, this decline is surprising and implies gaps in the implementation of the scheme.

While it can be argued that the use of funds for social insurance can be unutilised if the claims are less, it is also a fact that lack of awareness has played a major role here. NCAER research brings out lack of awareness on the part of the beneficiaries about the health benefits for which they are eligible and the process of accessing them. In 2019, National Data Innovation Centre at NCAER examined the knowledge and perceptions of health insurance beneficiaries regarding their entitlements from the schemes.

We assessed the knowledge of benefits and entitlements of various social health insurance schemes among the households in the Delhi NCR region who had access to a health insurance scheme over one year, 2019-20. We found that a significant proportion of the beneficiary households lack useful knowledge of their entitlements. Moreover, some of those who reported having knowledge turned out to have incorrect knowledge. We also examined the knowledge of beneficiaries about the entitlements and benefits of a popular health insurance scheme from Rajasthan. Before it got merged with PMJAY, Bhamashah Swasthya Bima Yojana (BSBY), the flagship health insurance programme of the Government of Rajasthan, used to provide an annual health cover of ₹30,000 for general illnesses and up to ₹3 lakh for critical illnesses. Besides hospitalisation coverage, the scheme also covered outpatient expenses for seven days before and 15 days post-hospitalisation. But when asked if members of the beneficiary households were aware that BSBY scheme covered outpatient expenses for the pre- and post-hospitalisation periods, 14 per cent of them reported that they were not aware of the same.

Among the remaining 86 per cent of the beneficiary households, 48 per cent reported that BSBY didn’t cover any pre- and post-hospitalisation expenses — which was not correct.

Awareness deficit
Similarly, a third of the beneficiary households did not know that BSBY pays for pregnancy and delivery-related expenses. This incorrect knowledge often leads to lower utilisation of the defined benefits of such schemes. Less than one-third of the individuals with insurance in the Delhi NCR region actually claimed their benefits in the event of hospitalisation.

If we expect to achieve universal access to healthcare through the provision of health insurance schemes, it is important to enhance knowledge about the scheme’s benefits and entitlements among the beneficiaries. Increasing coverage alone is not sufficient to achieve the goal. Without devising proper strategies to inform the card holders about where to go and what to claim, the vision of achieving comprehensive health will remain unattended. At this rate, each Budget may only see only a reduction in outlays due to lack of utilisation.

The writer is a Fellow at the NCAER. Views expressed are personal

India’s expenditure on health budget is a smaller share of the GDP than assured.

Budget 2023-24 can be seen as the first Union budget since the recovery from the pandemic, in which the health sector did not receive much focus, unlike the previous two years. We can note a marginal reduction in the share of health in the aggregate Union budget, which was 3.6% in 2021-22, fell to 2.7% in 2022-23 and stands at 2.4% in 2023-24. The fact that draws even more attention is the 15% decline in the revised estimate of the Union health budget for 2022-23 compared with the budgeted amount for that year.

In India, the total Union health budget is allocated through the ministries of AYUSH, health and family welfare and finance. Considering the allocation through all three ministries, Rs 1,06,654 crores has been allocated to health for 2023-24. This is a slight decrease from last year’s budgeted allocation of roughly Rs 1,07,433 crores. But it is important to note that despite this budgeted allocation in 2022-23, the revised estimate for health sector was slashed to Rs 91,90,000 crores for the financial year 2022-23 (Table 1).

Table 1: Allocation for Health care in Indian Federal Budget (Figures are in Rs. Thousand Crore)

The reduction in allocation in the revised estimate as compared to the budgeted estimate is in all three ministries: by 10% in AYUSH, 8% in Health and Family Welfare and 46% in Finance. The huge reduction in the allocation through the Ministry of Finance in the revised estimate for 2022-23 stems from the reduction in the temporary grant to support COVID-19 vaccination, and in the health grant for the 15th Finance Commission. The probable reasons are that more than 70% of the Indian population is fully vaccinated against COVID-19 and government considers it a diminished threat.

India’s COVID-19 emergency response and health system preparedness package was discontinued in the previous Union budget (for 2022-23) and now we have a drastic cut in budget for in the revised estimate for 2022-23 and the budget estimate for 2023-24.

The 15th Finance Commission grant for health is supposed to be spent through local bodies. The release of this grant also needed substantial coordination among the federal, state and local governments. The low capacity of local bodies to spend what is allocated is often argued as a crucial factor behind the poor utilisation of finance commission grants executed through local bodies. However, 93% of the funds budgeted as 15th Finance Commission health grants were utilised (as reflected in the actual spending for the financial year 2021-22). A 33% decline in 15th Finance Commission health grants in the revised estimate for budget for 2022-23 in this context is quite surprising.

In the ministries of health and family welfare and AYUSH, the revision in budget allocation for 2022-23, is due to the reduction in fund allocated for Central Schemes and Centrally Sponsored Schemes (CSS). The government has undertaken several efforts to improve the financial management system and reduce efficiency losses in fund transfers. The Ministry of Finance revised the system of Centre-to-State fund flows after introducing the PFMS or Public Finance Management System in 2022 to enhance transparency in use the of CSS funds and improve the Union government’s cash management.

The Ministry of Finance mandates every State to designate a Single Nodal Account linked with the PFMS for each CSS. It directs each State to deposit all its unspent balance parked in different bank accounts for every particular CSS to the scheme-specific SNA. With full implementation of PFMS, the Ministry of Finance would be able to monitor the utilisation of every amount spent by the Union government and release the share of States from State treasuries under each CSS. Under this new system, the Union government will release funds only after the utilisation of 75% of the funds in SNA. The funds cannot be parked in accounts, as was often done earlier. This has reduced the allocations to Central Schemes and CSS in the revised budget as compared to the proposed budget in 2022-23, as the majority of States suffer from low utilisation.

Besides, the Union health budget is 0.35% of GDP in 2023-24, and it was 0.42% in 2022-23 and 0.56% in 2021-22. The 11th Five Year Plan had recommended scaling up government health spending to at least 2% of the GDP by 2012. The National Health Policy, 2017, recommended raising public health spending to 2.5% of the GDP by 2025.

India is far behind the target level. Assuming the Centre and State governments spend 30% and 70% of total government spending on health care, respectively, in 2023-24, the combined budgeted expenditure on the health sector would be 1.18% of GDP. But surprisingly, Economic Survey 2022-23 claims that the combined budgeted expenditure on the health sector by the Centre and State government reached 2.1% of GDP in 2022-23 (Budget Estimate) and 2.2% in 2021-22 (Revised Estimate), against 1.6% in 2020-21. This is not likely to be achievable in immediate future.

In the nutshell, India is lagging far behind reaching the target set for the share of health budget as percentage of GDP. However, utilisation is also important to translate budget allocation to actual spending. One must keep a careful watch on how resource-poor States are balancing their priorities, managing funds and maintaining fiscal autonomy in the new PMFS. Revisions in allocation to improve efficiency should not tighten the fiscal situation, which would strain the development process of poorer States, further widening inequality.

Pritam Datta is a fellow at the National Institute of Public Finance and Policy (NIPFP), New Delhi and Chetna Chaudhuri is a consultant at the National Council of Applied Economic Research (NCAER), New Delhi. The views are personal.