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How healthy is health financing in India?

The overall health insurance coverage of house holds is impressive but pricier, complex self-financed insurance products hinder wider adoption.

One of the most concerning and unsustainable aspects of healthcare financing is the significant out-of-pocket (OOP) expenses that households bear. These costs are aggravated by the relentless rise in medical expenses and inflation. Health insurance, often called medical insurance, acts as a vital buffer. This coverage can come through direct payments to healthcare providers or reimbursements. Health insurance is increasingly recognised as a crucial financial tool designed to to safeguard the financial stability of the insured.

Health financing schemes can be self-financed, government-financed, or employer-financed. The Comprehensive Annual Modular Survey (CAMS) from the NSS 79th round (2022-23) reveals that 61.5% of urban households and 59.9% of rural households in the country have at least one member covered by such schemes. In urban areas, 50.2% of the lowest income quintile have coverage, rising to 77.6% in the highest. In rural households, the coverage is 54% for the lowest quintile and 66.1% for the highest. This data indicates a positive trend in health coverage accessibility across income levels in both urban and rural settings.

Analysis at the granular level reveals that 18.9% of urban households and 29.5% of rural households have at least one member covered under the Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY). This programme offers health coverage of Rs 5 lakh per family, each year, for secondary and tertiary hospital care, specifically targeting the poorest and most vulnerable 40% of the population. Since the scheme is designed for low-income families, its reach is notably higher among household.in the lowest income quintiles in both rural and urban areas.

The Janani Suraksha Yojana (JSY) is a programme dedicated to lowering maternal and neonatal mortality by encouraging institutional deliveries among economically disadvantaged pregnant women. Although its reach is modest, covering just 1% of urban households and 2.2% of rural households, the scheme’s coverage remains fairly consistent across all income groups. JSY’s goal of fostering safer births among low-income families highlights its vital role, especially in rural regions.

The Employees’ State Insurance Scheme (ESIS), managed by the Employees’ State Insurance Corporation (ESIC), offers targeted coverage for health issues commonly faced by workers. Currently, 7.7% of urban households and 1.6% of rural households benefit. from this scheme. Analysis reveals that the coverage is more prevalent among households in higher income quintiles, both in rural and urban areas, suggesting that the scheme’s reach aligns more with the middle- and upper-income workers.

The Central Government Health Scheme (CGHS), along with the Ex-Servicemen Contributory Health Scheme (ECHS) for retired armed forces personnel, and various health schemes under the Railway Ministry, collectively provide comprehensive medical coverage. for government employees and pensioners. These schemes cover approximately 3.2% of urban households and 1.1% of rural households. Designed to include all eligible family members of the insured, these programmes ensure holistic healthcare support for the entire household, with benefits provided through reimbursements.

Private sector employers often provide health insurance to employees, either as cashless claims or through reimbursement options, though this is largely limited to the organised sector. As a result, about 6.7% of urban households and just 1.1% of rural households have at least one member with this type of employer-sponsored insurance. Meanwhile, workers in the unorganised sector benefit from other supportive programmes, such as AB-PMJAY, the Unorganised Workers’ Social Security Act, the Employees Compensation Act (for those not covered under ESIC), and various health initiatives under the Labour Welfare Scheme.

State programmes score in reach

Among all the health financing schemes, state government programmes stand out for their broad reach. Unlike most schemes, these state-run health insurance plans strive for universal coverage. Approximately 22.5% of urban households and 26.8% of rural households have at least one member enrolled in a state health insurance scheme. Notably, these programmes maintain a fairly even spread across all income groups, both in urban and rural areas, underscoring their inclusive approach to healthcare access.

For individuals not covered by the above programmes, health insurance from commercial insurance companies is often the only option. Although these plans are accessible to most, subject to health requirements, their reach remains limited. Only 8.3% of urban households and a mere 1.1% of rural households have at least one member covered by private insurance. Given the complexities and higher premiums, these products are typically purchased by those in the higher income brackets.

Households with at least one member covered by other forms of health insurance make up 6.3% of urban households and 3.4% of rural households.

While approximately 60% of the households have at least one family member with some form of health insurance, there is a crucial concern that lingers. How many of these individuals are insured? The NSS data leaves us in the dark regarding the number of family members covered in these households, highlighting a significant gap in understanding the true extent of health coverage.

Government-funded health schemes offer affordability, often at no cost, but self-financed insurance products are pricier and more complex to understand. This discourages many from pursuing health insurance altogether. Also, there is a noticeable increase in premium costs, especially in the aftermath of Covid.

Reducing tax rates can entice more people to embrace health insurance, but simplifying insurance products is equally vital for wider adoption. Starting January 1, 2024, the IRDAI has mandated insurance companies to provide a simplified customer information sheet (CIS) but policy documents remain complex. Given that health insurance is a personalised product, a unique marketing approach with simplified product information can be a game changer.

(Palash is Fellow at the National Council of Applied Economic Research, New Delhi; Wankhar is a retired officer of the Government of India and Yashika is a Research Associate at NCAER)

The irony about climate meets

The emissions from air travel, local transport and accommodation for COP delegates are staggering.

The COP29 in Baku, Azerbaijan, from November 11-22, will take stock of climate commitments made by countries as well as advances in curbing carbon emissions. However, conducting such large-scale international conferences comes with its own costs, particularly additional carbon emissions — that is above what are already being emitted by citizens worldwide as they go about their daily business.

How many of us have closely looked at our flight ticket to see our own carbon footprint, i.e. the carbon emissions which can be attributed to our air travel? If it is not on your ticket, try out the ICAO Carbon Emissions Calculator (ICEC) (ICAO Environment).

According to this UN recognized tool, round-trip economy class travel to this year’s COP29 conference, from New Delhi to Baku, will result in per-passenger carbon dioxide emission of 236 kg (although business or first-class travel is attributed to a higher carbon footprint). For the shortest flight time from New York (JFK) to Baku, via Istanbul, a business class round trip will result in per-passenger carbon dioxide emission of 3,996 kg.

To top it up comes the emissions from energy use for local transportation and accommodation, and the waste generated from consumption of food and beverages, and other perishable and non-recyclable products. UNFCCC, in its report ‘How to COP’, has acknowledged that “it’s not easy being green” and that the “conferences generate considerable greenhouse gas emissions”.

Sustainability Reports

Host nations are expected to take proactive measures in achieving carbon neutrality and be prepared for questions raised by the media or civil society organizations on sustainability aspects. On their part, the host nations have published ‘Sustainability Reports’, a few months after COP events, giving details of the carbon footprint of the conference.

Like previous COPs, for COP29 as well, measures to make the upcoming event sustainable are published on their official website. At COP27, emissions from international air travel were 44,103.80 tonnes carbon dioxide equivalent (CO2e) (COP27 Sustainability Report), for hosting more than 46,000 delegates (COP 27 Sustainability Report) from all over the world (One tonne equals 1,000 kg).

Given that the total carbon footprint of COP27 totalled 62,695 tonnes CO2e, air travel alone accounted for more than 70 per cent of the total carbon emissions from this event. At COP26, more than 38,000 delegates were in attendance, resulting in a total carbon footprint of 131,556 tonnes CO2e, (COP 26 Sustainability Report) though the event’s sustainability report does not provide the amount attributed to air travel. A report for last year’s COP28 is still awaited, though the carbon emissions from event are said to have set new records.

Now, how many delegates are expected to arrive in Baku for COP29? As of October 21 2024, registrations have already exceeded 32,000. It is difficult to give an exact number to the total expected carbon emissions, as neither the data on attendance final, nor has it been cut across countries or originating cities.

Also we don’t have the data on how many of the registered delegates will fly by commercial airlines or use private jets, which will result in even higher emissions.

Still, these numbers help one to reflect on the scale of excess emissions which occur at the time of any major international conference, over and above the emissions already occurring due to other worldwide travel to the destination concerned.

Of course not all conferences decide the future course of mitigating carbon emissions, which is ironically the objective of COP.

Host countries are putting in efforts to account for the emissions and waste generated at COP events and push for sustainability. The attempts to use renewable energy sources, electric vehicles, and waste management practices must be lauded.

Yet, the fact remains that COP events continue to generate carbon emissions, and the statements that these emissions are ‘offset’ through purchase of credits from other certified green programmes appears like greenwashing the event as a zero-sum game: Where COP pollutes, other programmes save equivalent emissions.

Rather, why not try to push for a positive outcome, where everyone tries to save carbon emissions, and set an example on hosting greener events? Why not have a standardized carbon footprint measurement and sustainability reporting criteria to enable year-on-year comparisons of carbon emissions at COP events, and work towards lesser polluting ‘Greener COPs’?

To the extent possible, why not try to limit in-person gatherings to essential negotiations, or even attempt online deliberations? The Covid pandemic has taught us the time-cost benefits of virtual meetings and hybrid events.

Climate measures

Why not save money through these measures and use it to supplement the elusive financial commitments, which are meant to help lesser developed countries mitigate and adapt to climate change impacts?

The ideal way to disregard the carbon cost of COPs, however large or small their contribution may be to the global annual emissions, is by ensuring that the multilateral mechanism is delivering on its promises: Reducing global carbon emissions and helping decelerate the warming of our planet.

Unfortunately, global climate action has been slow, and reports by international environmental bodies, the latest being the UNEP Emissions Gap Report 2024 released on October 24, are constantly reminding us of the clock ticking towards doomsday. Emerging data and research on the ongoing wars, which involve countries that are parties to UNFCCC, highlights the role of these conflicts in further adding to global carbon emissions.

It is therefore important for the international community to seriously reflect on all the contradictions, and consider the above suggestions moving forward — keeping in view the severe impact that extreme weather events is having on not only lives and livelihoods but also the flora and fauna.

The writer is Fellow at National Council of Applied Economic Research (NCAER). Views expressed are personal

Gender parity: Lost in transit from school to labour market

When it comes to gender parity, India’s story seems quite curious. The Gender Parity Index (GPI) reached one in the country at primary education level (Class I – V) in 2009-10 and has been greater than one (in favour of females) for all levels of education since 2018-19. The GPI has also been consistent across states over the last five years.

According to the Global Gender Gap 2024 Report (GGGR), India has a Gender Gap Index score of 0.997 in enrollment in primary education, 1.0 in secondary education and 0.982 in higher education. In terms of co-equality, however, there is a huge gap between education and the labour market. In fact, the GGGR places India at the fifth-lowest rank in economic participation by gender gap, which partly explains the country’s overall rank of 129 out of 146 countries.

So why is it that gender parity in education has not been able to wipe out gender-based wage gaps or increase labour force participation rate for women? What are the obstacles for a smooth transition from higher female literacy to higher employment for women?

We can start where the trade-off is closest – higher education. The Gross Enrollment Ratio (GER) in undergraduate disciplines is traditionally skewed by gendered self-selection (for example, engineering courses enroll 42% more men while education courses have 25% more women). But the average gender gap across enrollment in all major disciplines is less than 5% (2021-22). The numbers tell a similar story when grouped by degree (B.Tech to B.A., diploma to PhD) or pass rates. The answer is, therefore. not in higher education alone.

Gender parity is being achieved from the primary level, but enrollment percentages are falling sharply from 103 percent at the primary level to 54% at the higher secondary level and 28% at the higher education level (2021-22). Between ages 14-15 and 16-17, it falls from 73 to 42%, signaling the inability or unwillingness of these students to undertake the transition from secondary to higher secondary level. It is interesting to note there are negligible differences between male and female enrollment and graduation rates in this respect (the differences are noticeable between urban and rural areas).

This declining enrollment as one goes to higher levels of education or what may be called disinterest in undertaking additional years of education can be traced to a host of factors. Students place high expectations on institutions to provide them with tailor-made job opportunities. Any lack thereof erodes faith in the value of traditional arts and science programmes. In addition, the constant transformation of the economy requires a supply of new skills that schools and colleges are slow to implement.

We can consider returns to education as a probability distribution where if one gets a job post-college, it ensures a higher long-run return. But if they do not find employment or get a low-paying job that did not require the degree, the loss is immediate and greater, given the time and money already devoted to those additional years. The trade-off then between starting work at 16 or at 20 with a college degree becomes too small and unpredictable to invest in when low-income families are also often trapped in meeting short-term financial goals. The final decision might end up being a function of the student’s willingness and ability to remain a student, family support and understanding, financial solubility and social expectations.

So, gender parity in education does not mean much if more than 50% of students drop out along the way, or get absorbed unskilled and untrained into informal labour markets. One might take comfort in the gender parity at all levels of education, but this misses a large fraction of students (boys and girls in equal number) becoming unprepared job seekers, often permanently. This is where gender disparities rear their ugly heads again. Women and men, without completing a full quota of their school years, let alone a degree for formal employment, self-select into gender-specific roles, which means more women get reported in unpaid and self-employed categories. And this number is higher in the rural areas. These disparities are more unforgiving in the lower rungs of non-contractual employment in India where the rules and the workplace are still made by men for men. Statistically, the Indian labour market will be easier for the male school dropout to find a job (or have a choice among more jobs) compared to the same for a female.

Similar to how slowly the education system innovates, the labour market also stagnates in its ability to create new labour-intensive jobs for women. Stories of women fitting into male-dominated roles (often successfully) are the exception, not the norm, and the mere absence of female washrooms at a work place is sometimes enough to discourage an entire generation from pursuing a noted occupation.

Despite all this, female labour participation rate has increased by nearly 14 percentage points over the last six years. There is a new wave of female workers entering the labour force, though inadequately prepared to navigate an unflinching patriarchal market. These women will continue to face a disproportionately higher range of challenges related to working conditions, discrimination and balancing family responsibilities.

Our country is in the midst of a long transition period where women are spending more years on education compared to their parents, exercising their choice in marriage and often successfully delaying, having fewer children, and venturing into traditional male-dominated occupations, all while facing a constant battle with less-than-welcoming orthodox fraternities. It will take time for these changes to trickle down across different income and societal classes. As always, a sound education holds the key.

This article is authored by Jayanta Talukder, associate fellow at the National Council of Applied Economic Research (NCAER), New Delhi.

Circular economy adoption in MSMEs: unveiling enablers and barriers

The study aims to explore the enablers and barriers to the adoption of circular economy (CE) practices in micro, small and medium enterprises (MSMEs) and examine how these factors differ between developed and developing countries.

Design/methodology/approach

The research uses a systematic literature review (SLR) methodology to identify key enablers and barriers to CE adoption in MSMEs. The SLR process involved a detailed search and analysis of relevant academic articles from the Scopus and Web of Science databases, following the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) guidelines to ensure transparency.

Findings

The study identifies 19 enablers and 16 barriers to CE adoption in MSMEs. Technological upgrades are the key factor helping MSMEs successfully implement CE practices, while financial constraints are the main challenge they face, according to studies from both developed and developing countries.

Originality/value

This research contributes to the existing body of literature by not only identifying the primary factors that either support or impede the implementation of CE by MSMEs but also by classifying them according to developed and developing countries to provide policymakers and MSME stakeholders with valuable insights on enhancing the implementation of CE in both countries by taking into account the particular barriers and enablers faced by each group individually.

Brics’ daringly autonomous model for financial sovereignty

Three communiqués, two approaches, one global economy.

In the rarefied world of economic policy-making, where the public and markets are distanced from complex decision-making, communiqués serve as windows into the ambitions, hesitations and geopolitical leanings of powerful economic blocs. Released in October 2024, three influential documents from Brics, the International Monetary Fund’s International Monetary and Financial Committee and the World Bank’s Development Committee each offered a distinct view of the global economic landscape.

While the IMF and World Bank communiqués aim to reinforce established frameworks and shape policy discourse, Brics presents an alternative vision. With an expanded bloc representing over 32% of global gross domestic product and projected by the IMF to control one-third of global output by 2028, Brics is asserting its place in global growth dynamics.

This enlarged group now includes the founding five – Brazil, China, India, Russia and South Africa – alongside the newly admitted Egypt, Ethiopia, Iran, Saudi Arabia (as an invited country) and the United Arab Emirates. Through a dense 134-point communiqué, the Brics bloc articulates its stance on economic and financial sovereignty with increasing clarity and determination.

This latest vision from Brics could be read as an intent to gradually dismantle or, at the very least, challenge the long-standing post-second world war frameworks governing international monetary and financial systems. Or perhaps, more moderately, it signals a loud call for fundamental reform – seeking an ‘inclusive and just’ international financial architecture that better serves emerging and developing economies. Underlying this demand is a palpable distrust in the current system and how global policies are decided.

Are the paths outlined in the IMF and World Bank communiqués and the Brics declaration truly so divergent? Do they not all, in some sense, seek continuity within change or is the world moving towards an institutionalised, bifurcated economic order?

Multipolar sovereignty 

The Brics declaration envisions a multipolar financial system that stands free from the dominance of traditional international monetary structures. Central to their vision is prioritising regional autonomy and financial sovereignty, which directly challenges established global payment systems, such as Swift.

At the heart of this strategy lies the Brics cross-border payments system designed to facilitate transactions in local currencies, reducing reliance on dominant international currencies (once the sterling and now the dollar) and the extensive dollar-centric financial infrastructure. This move aims to shield participating nations from the potential ‘weaponisation’ of reserve currencies and geopolitical pressures.

In contrast, the IMFC communiqué underscores the value of the existing monetary and payments system, reinforcing its role as a stabilising force amid global economic uncertainties. Acknowledging challenges like inflation, rising debt and geopolitical tensions, the IMF’s message remains one of cautious continuity, emphasising stability over transformation.

Double alignment 

With its rapidly growing economic influence and expanded membership, Brics is increasingly positioning itself as an alternative voice and a formidable player with the potential to reshape the international financial order.

However, the dual memberships of many Brics countries in other global economic bodies, including the IMF, World Bank, Financial Stability Board and G20, create a strategic positioning dilemma. Rather than pursuing an exclusive alignment, Brics members may engage in ‘double alignment,’ where they balance the benefits of dollar stability while exploring pathways to financial independence. This delicate balancing act raises the question of whether Brics, as it expands, can maintain cohesion amid diverse national interests and priorities.

For instance, Brazil and India’s nuanced positions – supporting regional co-operation within Brics while remaining committed to Western trade ties – highlight the bloc’s internal diversity. While Russia and China advocate for rapid de-dollarisation and the creation of parallel financial systems, India favours a more measured approach that preserves its integration with global markets. These internal divergences underscore the complexities of Brics’ mission and raise questions about its ability to drive systemic change in the international financial order.

The three communiqués reveal fundamental policy divergences across four critical areas: macroeconomic stability, debt sustainability, climate finance and financial infrastructure.

Macroeconomic stability and debt 

Both Brics and the IMFC/Development Committee acknowledge the growing pressures on emerging economies, aggravated by escalating debt servicing burdens. The IMF’s response has been to expand concessional lending through the Poverty Reduction and Growth Trust – a vital mechanism to support vulnerable economies within the existing dollar-centred monetary framework. The IMF’s coordination with the World Bank’s International Development Association fund replenishment also seeks to provide structured financial support with attached policy conditions, reinforcing a framework prioritising policy continuity and fiscal discipline.

In contrast, Brics aims to expand the reach of its New Development Bank, which provides loans with fewer policy conditions. The appeal of the NDB lies in its flexibility, enabling countries to retain control over their development agendas without the rigorous reforms often mandated by IMF and multilateral lending. By including new members like Egypt, Ethiopia and the UAE, Brics signals a commitment to building an alternative financing model that champions policy sovereignty and gives developing nations more agency in their development pathways.

Climate finance 

Ideological differences also surface on the issue of climate finance. While both Brics and the IMF/World Bank emphasise the importance of climate action, their approaches diverge markedly. The IMF’s communiqué promotes a standardised, multilateral approach, channelling resources through frameworks that align with global climate targets and metrics. For instance, the World Bank’s pledge to double agri-finance commitments by 2030 aims to enhance climate resilience in agriculture through globally standardised frameworks and metrics.

In contrast, Brics supports a decentralised model via the NDB, allowing member nations to fund climate projects tailored to their national needs. Countries like India and Brazil argue that standardised frameworks can overlook emerging economies’ unique priorities and capacities. Brics’ flexible approach to climate finance empowers countries to align investments with their specific developmental paths, avoiding a one-size-fits-all model often favoured by multilateral institutions.

Financial infrastructure 

One of the most ambitious initiatives in the Brics communiqué is a cross-border payment system designed to operate independently of Swift. This effort emphasises the bloc’s frustration with advanced markets’ control over global financial infrastructure, which Brics countries view as susceptible to geopolitical pressures. The bloc seeks to foster financial autonomy by promoting regional trade in local currencies and reducing exposure to the dollar-dominated system through initiatives like the Brics Interbank Cooperation Mechanism and a proposed Brics Reinsurance Company.

Meanwhile, the G20 is advancing its own vision for cross-border payments reform. In collaboration with the IMF, World Bank and Financial Stability Board, the G20 has outlined a roadmap focused on enhancing the existing payment system. Unlike Brics, the G20 initiative aims to incrementally improve the current system through technical upgrades, prioritising faster and more transparent cross-border transactions while continuing to use Swift (at least for now). This divergence represents two competing visions: Brics’ push for a multipolar financial infrastructure versus the G20’s aim to strengthen and modernise the current dollar-centred system.

Navigating a bifurcated financial landscape

The 2024 communiqués from Brics, the IMF and the World Bank represent two diverging visions for global finance. While Brics promotes a multipolar model grounded in financial autonomy, the IMF and World Bank remain committed to continuity within the existing frameworks. As the stakes increase, the influence of these statements – often fraught with contradictions and ambiguous messages – creates uncertainty for investors and policy-makers alike. This unpredictability is unsuitable for global markets or investment flows, particularly when international coherence is needed to address fragile economic growth and mounting social challenges.

For those who monitor the fine print of these communiqués, the messages conveyed can be at odds: a Brics advocating for regional sovereignty, a G20 emphasising cohesion and an IMFC endorsing stability. Yet, without a governance structure that holds these bodies accountable for consistency – especially given the significant overlap in member countries – this fragmented communication risks exacerbating global financial instability. Such inconsistencies sow confusion when both democracy and capitalism are under critical scrutiny, making it essential to communicate a unified approach to pressing global challenges.

As we anticipate further statements from the 11th G20 and COP29 in November 2024, the global financial community will be watching to see whether common ground emerges in areas like sustainable development, trade, climate finance, financial stability, cross-border payments and digital finance. These discussions could pave the way for a more harmonious global economic order or underscore an increasingly divided landscape. While Brics’ calls for a multipolar world may appeal to many developing countries, the entrenched dollar-based system remains a stabilising force that cannot be overlooked. How these bodies address and articulate their differences could determine whether the world heads towards co-operation or confrontation in the coming years.

Udaibir Das is visiting professor at the National Council of Applied Economic Research, senior non-resident adviser at the Bank of England, senior adviser of the International Forum for Sovereign Wealth Funds, and distinguished fellow at the Observer Research Foundation America. He was previously appointed at the Bank for International Settlements and the International Monetary Fund.

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