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Aadhaar linkages of individuals and bank accounts already exist. If residential information in the Aadhaar database can be efficiently structured this would allow for geographic targeting.

The US Congress acted expeditiously in late March to provide relief on account of the COVID-19 to poor and middle-class individuals and to stimulate the economy by enacting a Coronavirus Aid Relief and Economic Security (CARES) Act that sends $1200 to each individual below the income threshold of $75000. Nonetheless as The Washington Post reported even in October millions of households were yet to receive their stimulus payments. What accounts for this and what is the lesson from this experience for India or other countries that are trying to build robust social safety nets?

What happened was simple: The tax authorities who were charged with disbursing the funds had no way of knowing how to send the cheques. For taxpayers who received refunds in their bank accounts in 2018 and 2019 account information was available with the authorities. But the poor — whose incomes were below the income threshold for filing or those who owed money to the government — had to cross several hurdles to get this money and the computer system did not make it easy for them to register their claim. There are reports that clearing up the backlog of sending stimulus checks could take until January 2021 in some states. Such exclusion from safety nets is particularly large for racial and ethnic minorities. A study by the National Opinion Research Centre (NORC) at the University of Chicago shows that while 24 per cent of White Americans were likely to receive unemployment benefits only 13 per cent of Black Americans received such payment between April to June 2020.

In contrast 23 per cent of Indians living in Delhi-NCR received a payment of Rs 500 in their Jan Dhan accounts within three weeks of the lockdown being declared. Farmers registered for PM-KISAN also received Rs 2000 in their accounts immediately. However while using prior registries allowed for quick disbursement of funds it is not clear that the money reached the most vulnerable households. For example recipients of PM-KISAN were not amongst the poorest households nor were these the households that were most affected by the COVID-related lockdown. Data from round-3 of the NCAER Delhi Coronavirus Telephonic Survey (DCVTS-3) covering a sample of 3466 households in June in the Delhi NCR area suggests that 21 per cent of farm households received transfers through PM-KISAN. However 42 per cent of such households belonged to the wealthiest one-third of the sample while another 28.5 per cent belonged to the middle third. The PM-Kisan Yojana applies to landowners thereby excluding agricultural labourers as well as the urban informal sector workers who were most affected by the lockdown.

Similarly for the PMJDY payment BPL and non-BPL households record similar receipt transfers. These findings are consistent with estimates by Anmol Somanchi as well as by Rohini Pande Simone Schaner Charity Troyer Moore and Elena Stacy who observe that nearly half of poor women are unlikely to receive PMJDY transfers.

These observations outline the twin challenges in designing social safety nets that reach the most vulnerable and can be activated effectively when disaster strikes. Unless a registry containing data about individuals and their bank accounts exists money cannot be transferred expeditiously. However registries based on specific criteria (for example identified BPL households) may not identify individuals most vulnerable to crises. Using data from the Indian Human Development Survey (IHDS) Amit Thorat Reeve Vanneman Sonalde Desai and Amaresh Dubey find evidence that factors that contribute towards alleviating poverty may differ from the ones that push people into it — indicating the challenge of targeting welfare beneficiaries in response to shocks. About 40 per cent of the poor in 2012 were pushed into poverty by special circumstances and would not have been classified as being poor based on their 2005 conditions.

Such exclusion errors can get magnified in the event of large-scale disasters when using pre-existing databases since many people are likely to fall into poverty from an economy-wide negative shock leading to coverage errors. Recent estimates from the World Bank suggest that 88 to 115 million people could slide into poverty in 2020 which presents a daunting challenge for targeting welfare beneficiaries. It also emphasises the need for post-disaster revalidation of any existing social registration database.

These observations suggest that in a disaster response situation we cannot rely on registries based on individual characteristics to identify beneficiaries. Unfortunately universal benefits may have serious fiscal impacts if expanded nationwide. However most disasters are geographically clustered. Floods or earthquakes often devastate a swathe of districts; pandemics may affect densely-populated cities more than villages. If there is a way for us to set up social registries that identify individuals their place of residence and their bank accounts these linkages can be used to transfer funds to everyone living in the affected area quickly. Aadhaar linkages of individuals and bank accounts already exist. If residential information in the Aadhaar database can be efficiently structured this would allow for geographic targeting.

Any social registry that can serve as a potential beneficiary platform for safety nets inherently runs the risk of violating individual privacy. To the extent that such social registries store only basic information such as location instead of more sensitive identifiers such as poverty status they are unlikely to violate privacy while still serving the purpose of providing a list of potential beneficiaries in the event of a sudden shock. As we try to disaster-proof future welfare programmes these are some of the considerations that deserve attention.

This article first appeared in the print edition on November 28 2020 under the title ‘Plugging holes in welfare net’. Choudhuri is fellow and Desai is professor and centre director NCAER National Data Innovation Centre. Views are personal.

No one would have ever thought or anticipated that Covid-19 would shake the world to such an extent that it is impacting and perhaps changing and re-defining every aspect of our lives.

It also proved that no country is invincible no matter how developed rich and powerful and it demolished the notion that these nations would have the best defence for its citizens keeping in mind the best standards in healthcare systems that these countries boast off.

One area where we shall see predominant changes are no doubt in how we redefine our health policies and strategies by the public health experts scientists medical experts strategists healthcare providers governments healthcare organisations and pharmaceutical industry. Some of these stakeholders more often than not have their own diverse and sometimes conflicting interests to serve.

The current Covid-19 pandemic is an indication that inter-linkages exist between the healthcare systems and overall economic development. This will in a way force all the stakeholders to stand up and collaborate. There is perhaps no other option.

In the long run countries with good efficient responsive and affordable healthcare systems would be able to tackle not only such pandemics but any form of health disasters. However there are no short cuts and it will be a long drawn and tedious process to evolve appropriate systems.

Public authorities and private medical service providers across the world should be conscious of the fact that they have the obligation to ensure better healthcare systems through preventive and curative measures. Adequate attention is warranted to understand the ability of the general population at large to meet the rising healthcare cost. The fact that some State Governments (Delhi and Maharashtra) had to step in to put price caps on how much Covid-19 patients should be charged is one pointer to the fact that healthcare cost do become unaffordable for the population.

In general it would be of interest to analyse which are the components of healthcare cost which are having a bearing on the individuals’ capacity to afford? To have an understanding of some of these issues we refer to a country-wide survey which will give us some indication and perhaps throw light on (i) how affordable is India’s healthcare system; and (ii) which components of healthcare cost negatively impact patients the most.

The estimates from the 75th Round of the National Sample Survey Office (NSS) on “Household Social Consumption: Health 2017-18” is to put forth analysis. In view of space constraints we limit to analysing the expenditure on account of hospitalisation for two chronic diseases – Cancer and Diabetes.

As per NSS data the average medical expenditure per case of hospitalisation for cancer was Rs. 61215. Under medical expenditure component around 30 percent of the cost goes into purchase of medicines while the balance 70 percent goes into expenditure on the package component of treatment (31.40 per cent) doctor’s/surgeon’s fee (11.41 per cent) diagnostic tests (10.88 per cent) bed charges (7.85 per cent) other medical expenses (7.9 per cent).

On the other hand average medical expenditure per case of hospitalisation for diabetes was Rs. 16091. Under medical expenditure component 32.25 percent of the cost goes into purchase of medicines while the balance goes into expenditure on the package component of treatment (19.28 per cent) doctor’s/surgeon’s fee (13.71 per cent) bed charges (13.29 per cent) diagnostic tests (12.64 per cent) other medical expenses (8.83 per cent).

Thus we observed that purchase of medicines accounts for a substantial share of expenditure in case of cancer and diabetes hospitalisation. This is more so when treatment of these diseases involves medication beyond hospitalisation.

Why this analysis is of importance is also the fact that high price of medicines has been cited as a major reason for the substantial ‘out of pocket expenditure’ in healthcare cost. The nature of pricing pattern of medicines are such that they are ‘demand inelastic’ i.e. prices do not inversely respond to changes in demand.

Because of asymmetric information patients have little or no option to make purchase preference on the basis of price. It presents a striking example of a ‘seller’s market’. In this scenario not surprisingly high price medicines often called ‘blockbuster’ drugs generates huge revenue for firms.

Not only this we also often observed wide variation in the prices of medicines across various therapeutic categories which point to an obvious fact that perhaps medicine prices do not reflect the actual production cost of medicines. Surprisingly we observed the same nature of variation in prices of medicines which are regulated under the National List of Essential Medicines (NLEM) whose prices are fixed / revised as per the Drug Price Control Order (DPCO) of 2013.

Most doctors/physicians in India prescribed medicines by brands not by generic name. There is no option but to purchase medicines of a brand prescribed by doctors thus eliminating the element of informed choice making behaviour whatsoever. Even in a situation where the doctors/ physicians prescribed medicines by generic name the consumer would still be dependent on the pharmacies who would invariably dispense the higher price medicines (equated as being of higher quality) as it commands a higher trade margin for them.

It also begs the question as to whether high priced medicines are of comparatively higher quality in terms of its therapeutic benefits when manufacturing process of firms are subject to stringent and uniform application of the statutory approvals inspections and quality controls?

One major factor that contributes to high medicine prices in India is the unreasonably high margins that the trade offers. Of late though the Government has also recognised this and hence in order to cap the high trade margins the NPPA (regulatory body) vide its notification dated 27.02.2019 had put a cap on trade margin of 30 per cent on 42 anti-cancer medicines.

Whether there will be similar policy stand for the sale of other medicines remains to be seen. One of the steps that can be quickly initiated to provide cheaper medicines is public procurement of medicines which have seen success in States like Tamil Nadu Rajasthan etc.

We feel that holistically there should be a conscious and justified approach on how we balance private profit and public benefit when it comes to life-saving and life-extending medicines. Balancing the pricing of healthcare cost and at the same time providing a decent justified profit for the stakeholders is the need of the hour. Policies and standards would have to be re-worked to ensure timely accessibility quality and affordable healthcare systems.

(Views and opinions expressed in this article are personal) (Dr Palash Baruah is Senior Research Analyst National Council of Applied Economic Research (NCAER) New Delhi and D L Wankhar is a retired Indian Economic Service officer)