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The World Health Organization (WHO) defines health as “a state of complete physical mental and social well-being and not merely the absence of disease or infirmity.” The role of health as an engine of economic growth is not entirely unsubstantiated. Investments in health care lead to better healthier lives for the populace which in turn increases productivity and creates an efficient workforce thereby significantly adding to the social and economic progress of any country. It is in this context that the United Nations’ Sustainable Development Goal (SDG) has a target to “Ensure healthy lives and promote wellbeing for all at all ages” by 2030.

Healthcare and people’s well-being has been one of the greatest priorities of government at all levels – central state and local. This has assumed critical importance since the advent of an unprecedented health crisis in the form of the COVID-19 pandemic across the world. Governments have had to spend substantially higher than the usually budgeted amounts on providing healthcare building health infrastructure conducting free tests for infections undertaking free vaccination drives and many other such exigencies. This has not only put a lot of stress on the healthcare infrastructure it has also brought about the need to identify reliable source of finance for curative preventive medical scientific research & development vaccine development etc. While vaccinating is the top health priority for the government world over it has to be made sure that the access to basic healthcare is not compromised.

Currently therefore there is a greater-than-ever need to understand the financial flows of the health expenditure through various financing schemes. The Health Satellite Account (HSA) is a framework that fulfils this requirement. It helps the government in understanding on how optimally the resources on health can be utilized by identifying the resource gaps and areas for efficient resource mobilisation.

Conceptualised by the WHO HSA is a globally recognized framework to measure health expenditure and the flow of funds in the country’s health sector. It is a coherent systematic and integrated set of accounts and tables based on the SNA concepts and definitions. The HSAs present the health-related demand and supply structure. From the demand side health accounts present the expenditure by sources and by financing schemes through which expenditures are made. From the supply side these accounts identify the healthcare service providers and their services.

As far as the States are concerned they are largely independent in matters relating to the delivery of healthcare to the people as health is a state subject. Each State has developed its own system of healthcare delivery which is often independent of the Central Government. However the States receive funds from the Central Government and also implement some of the latter’s programmes. Some examples of health care financing schemes at the State level include government schemes (Central State and local) social insurance voluntary insurance and direct out-of-pocket payments to buy health care services.

The National Council of Applied Economic Research (NCAER) has recently prepared the first HSA for the hilly state of Himachal Pradesh for a pre-pandemic and normal year of 2017-18. However the framework can be used for later years including pandemic year for 2020-21 and thereafter. The health accounts are based on the methodology delineated by the National Health Accounts–Guidelines for India 2016 prepared by the Ministry of Health and Family Welfare Government of India which itself is based on the internationally accepted System of Health Accounts (SHA-2011). The HSA presents the health expenditure (public and private) by four different classifications namely sources of finance financing schemes healthcare functions and providers of healthcare facilities.

Himachal Pradesh is among the few states that despite having 90 per cent rural population has no shortfalls of PHCs CHCs and sub-centres that provide the most essential primary health care to the general populace. The state has 91 community health centres 576 primary health centres and 2084 sub-centres which reflect the capability of the State in providing primary health care in the scarcely populated state.

The HSA of the State reveals that the state spends a total of Rs. 4351.9 crore on healthcare services which amounts to about 3.14 percent of state GDP and 5.98 percent of total government expenditure. With an estimated population of 72.33 lakh in 2017-18 the per capita health expenditure works out to be Rs. 6017.6. At the same time the per capita Net State Domestic Product (NSDP) indicator of per capita income for the state is Rs. 1.65 lakh.

Out of the total health expenditure 47.9 percent is the expenditure incurred by government and private households (comprising out-of-pocket expenditure and voluntary prepayments for insurance schemes) account for the remaining 52.1 percent. The higher the proportion of public expenditure the lesser is the dependence on household out-of-pocket expenditure. At the same time the higher the proportion of private expenditure the higher is the extent of financial protection available for households towards healthcare payments.

Public Health insurance expenditure refers to the finances allocated by the government towards payment of premiums for health insurance schemes or reimbursements of government employees’ health expenditure. At Rs. 102.3 crore public health insurance expenditure is 2.4 percent of total health expenditure. On the contrary private health insurance expenditure is much lower at 0.4 percent of total health expenditure. This indicates the lower exposure of households to opt for voluntary prepayment plans. When distributed across healthcare functions 31 percent of total health expenditure is incurred on in-patient curative care while 42.1 percent is incurred on out-patient curative care. Preventive care accounts for 5.8 percent.

To conclude the HSA at national or sub-national level highlights the need to raise additional public resources improve the efficiency of spending and ensures the effective performance and sustainability of healthcare systems. It is a potential tool to enable the government to optimally utilise its health resources identify resource gaps and potential areas to ensure efficient resource mobilization and hence assist in effective policy making.

*Dr Poonam Munjal is Senior Fellow and Dr Palash Baruah is Senior Research Analyst at National Council of Applied Economic Research (NCAER) New Delhi. Views expressed in this article are personal.

While large farmers can be given insurance small and marginal farmers can be provided with assurance

In view of the rain-induced crop damage in the southern States crop insurance is once again likely to come into focus. Majority of the agricultural households (70 per cent) own land less than one hectare (2018-19). Farmers are vulnerable to crop failure occurring due to natural or man-made calamities. How do we protect the farmer? The traditional method followed in India has been crop insurance.

Publicly provided crop insurance for farmers has existed since the early 1970s. The latest one Pradhan Mantri Fasal Bima Yojana (PMFBY) was introduced in kharif 2016. Some of the advantages of PMFBY include: (i) no cap on premium to facilitate farmers to get claim against full sum insured; (ii) individual farm level assessment and settlement of claims for localised calamities and post-harvest losses when crops are kept in the field for drying and (iii) use of remote sensing smartphones and drones for quick estimation of crop losses to ensure early settlement of claims.

The PMFBY portal shows that the coverage has reduced from 22 States in 2018 to 19 by 2021 kharif season. The corresponding numbers for rabi season are 21 and 11. Why are States signing out of this scheme?

Under the PMFBY the premium paid by farmers is fixed at 1.5 per cent of the sum insured for rabi crops 2 per cent for kharif crops and 5 per cent for cash crops. The balance is equally shared by the Centre and States. The Scheme is implemented on an ‘area approach basis’ that is defined areas for each notified crop with the assumption that all the insured farmers in a unit of insurance face similar risk exposures incur identical cost of production per hectare earn comparable farm income and experience similar extent of crop loss due to the various calamities in the notified area.

The scheme involves multiple stakeholders. States carry the burden of activities including selection of insurance areas and crops estimation of threshold yield and extent of damage selection and coordination with insurance companies and timely payment of State’s share of premium (the Centre matches its share only after States pay their due). The NCAER had conducted an assessment of progress and prospects of Direct Benefit Transfers (DBT) of States and UTs in 2018. The assessment included the PMFBY which in turn yielded useful insights.

States had reported about the challenges that they faced in the scheme itself. First several States/UTs reported delays in claim settlements due to lack of adequate manpower. The delays notwithstanding the PMFBY portal showed that 96 per cent of the reported claims had been settled with regional variations.

Second the ‘area approach’ of the scheme could not take care of the damage caused by calamities such as hailstorms which can differently affect two adjacent pieces of land especially in hilly States. Alternatively States/UTs could offer specific single peril risk/insurance cover with or without opting for base cover which would tackle such damage an amendment in 2020.

Third in a State where the average loss of major crops (wheat and paddy) has remained below 10 per cent for long insurance does not seem viable for the farmers. This is because a crop loss of less than 10 per cent renders them ineligible for insurance whereas they pay their PMFBY premium nevertheless.

Fourth post-harvest losses like loss in mandis due to long wait are not covered.

Fifth the scheme was made voluntary in kharif 2020 instead of being mandatory for loanee farmers. Sixth many States felt their premiums added to their budget burden and were spent on insurance companies vis-a-vis farmers.

The NCAER study found that Bihar was implementing the ‘Crop Assistance’ Scheme as an alternative to the insurance model (Table 1). Farmers did not have to pay any premium. They were eligible for assistance up to 2 hectares and if shortfall in yield was more than 20 per cent of the average of last five years.

Farmers are more vulnerable than ever before due to global warming. The challenge is to stabilise farmers’ incomes. A comparison of insurance and assurance informs us that both can co-exist. While large farmers can be provided insurance small and marginal farmers sharecroppers/tenants can be provided assurance. With Central support implementation should be left to the States. Impact evaluation studies of both types of schemes would be helpful for policymaking.

Sahu is a Senior Research Analyst and Bhandari is a Senior Fellow at NCAER. Views expressed are personal.

India could nudge the US and China towards a win-win rather than zero-sum relationship on the critical issues we all face.

Way back in 1972 a study on ‘The Limits of Growth’ commissioned by The Club of Rome had issued a dire Malthusian warning that without significant curbs on the observed pattern of resource consumption both economic activity and population growth would encounter a sharp collapse by around the middle of the 21st century. Repeated validation checks most recently by Gaya Harrington in the Journal of Industrial Ecology in 2020 (Volume 25 No. 3) have unfortunately confirmed that there has been no significant change in patterns of resource consumption. Fifty years later the Global Commission has now issued a similar dire warning in its recent report which overlaps with but is quite distinct from ‘The Limits of Growth’ study.

The Commission a group of eminent global citizens drawn from across the world including Montek Singh Ahluwalia from India has highlighted the key challenges facing the world today. A sad message of their report is that while technical solutions to these challenges are known the global institutions and governance priorities necessary to deliver these solutions are missing.

The most urgent challenge of course is the continuing covid pandemic. Several vaccines are now available a great achievement of scientists. But the distribution of vaccines in most developing countries has been very limited. And the global response in making vaccines available adequately and affordably in these countries has been woefully insufficient. This provides time and space for new variants to emerge and for the pandemic to persist.

Consequences of the prevailing pandemic supply bottlenecks rising inequality demand constraints and massive public debt in developing countries are hobbling economic recovery. Deep uncertainties arising from the pandemic are preempting business decisions as well as government policies that would enable the massive private investments and public spending on infrastructure health and education that are necessary to extricate the global economy from its current crisis.

Underlying these immediate challenges is the long-developing climate crisis. Once again the technologies required to replace carbon emitting fossil fuels by renewables are known and commercially viable. But most developing countries lack the resources to finance the massive investments required to make the transition from fossil fuels to renewables within the time available to prevent catastrophic global warming. And misconceived national interests in advanced countries have clouded perceptions about the negative global externalities of not financing such a transition in developing countries. Witness the just concluded CoP-26 Glasgow summit.

The asymmetry between key challenges that are global and policy responses that are national especially those of major countries is itself a key challenge. There is no global institution not even organizations of the United Nations that has the clout required to override the priorities of individual countries especially major powers. Indeed these institutions are typically controlled by the most powerful nations. The Commission attributes the failure to seriously address the big challenges of our times to this missing global institution. In particular the Commission has identified increasingly fraught relations between the two most powerful nations China and the US as the most dangerous challenge we face today.

That warning is welcome. Rising tensions between the US with bipartisan support for a more aggressive China policy and an increasingly assertive China under President Xi Jinping can lead to disastrous consequences not just for these two countries but the whole world. Such an outcome is not inevitable though. During the Cold War the fear of mutually assured destruction held back the US and Soviet Union from the brink for nearly 50 years. Today’s leaders in China and the US must have the same fears.

Besides as Harvard economist Dani Rodrik has recently argued a positive-sum strategic perspective offers better outcomes than a zero-sum approach. Taking that positive path is not easy with many risks of misinterpreted actions. But a robust framework of communications can pre-empt misunderstandings and accidental conflict (Mint 12 November 2021; bit.ly/3oBQcxG).

There are some signals that the leaders of both countries are indeed seeking ways to avoid accidental conflict. On the day that the Chinese Communist Party recognized Xi as one of the tallest leaders of the party alongside Mao and Deng he issued a warning against the risks of a new Cold War in Asia. On the same day China and the US the two highest carbon emitting countries in the world also reached an agreement to increase their cooperation in speeding up action on the climate front. This was perhaps the most significant outcome on the sidelines of the CoP-26 summit which was itself disappointing as had been expected. Presidents Biden and Xi have since had a bilateral virtual summit with frank discussions on many outstanding issues. No agreements were reached and no outcomes were expected. The purpose was to establish lines of communication to pre-empt accidental conflict through mis-understanding or miscommunication very much along the lines that Rodrik has suggested.

So where does all this leave India? Like most countries India will mainly be a passive recipient of what great power rivalry throws up. However along with its partners India can seek to nudge both China and the US towards positive-sum outcomes that address the key global challenges of our times.

Such a shift in strategic perspectives would greatly benefit not only the two countries but also the rest of the world.

Sudipto Mundle is a Senior Adviser at the National Council of Applied Economic Research. These are the author’s personal views.

Opinion: Mythili Bhusnurmath

This is not the first time Das has urged caution on cryptos. His speech on Tuesday coming days after the PM convened a meeting on the issue last Saturday draws an important distinction between using technologies like blockchain for economic progress and for mining cryptos.