On 2nd December this year over
15000 people from over 150 movements and organizations from across the country
descended on Jantar Mantar near the Parliament in Delhi under the banner of
Abki Baar Hamara Adhikar (ABHA). They were all demanding the protection of
their various constitutional and legal rights, many of which are being
threatened by Modi sarkar’s new policies and amendments to existing
entitlements and provisions – land and forests, health and education, water and
food security, NREGA and worker rights, social security and welfare. ABHA
discussed each of these rights in a People’s Assembly over 2 days prior to the
rally with experts/activists working on these issues and grassroots activists
from each of these movements. At one level the discussions revolved around
strategies of how to protect what exists but also on how we can strengthen each
of these entitlements. Invariably one of the issues which emerges in such
discussions is where will the money come from given that India has one of the
lowest Tax:GDP ratios of only 17% amongst group of countries at the same level
of development.
Social sector investments like health,
education, food security and old age and disability pensions create basic
equity amongst citizens and help reduce misery and poverty. With adequate
public investments in these sectors and universal access to services and
benefits therein the poverty line would be history. At the minimum for such social security for health
we need 3% of GDP, for education 6% of GDP, for Food and Nutrition security 2%
of GDP and for pensions 2% of GDP. Thus at today’s prices we need close to Rs.
15 lakh crores for these social sectors. We already spend about Rs. 7 lakh
crores by National and subnational governments and the deficit is about Rs. 8
lakh crores. Where will this money come from?
Raising resources or budgets for social
sectors and social security is not as difficult a task as it may appear to be
given the low level of allocation and spending. What is needed is a small doze
of political commitment and will to increase the tax:GDP ratio from the present
17% to atleast 25% so that adequate budgets can be allocated for social
sectors. The Modi government seems to be compressing public spending as we see
that compared to 2013-14 budget estimates which was 15.7% of GDP, the first
budget of Modi sarkar for 2014-15 saw public spending by the national
government drop down to a low of 13.9% of GDP. The first casualty of this is
the social sector expenditures like health, education and food security where
we have already seen some compression in spending. Jaitley in his first budget speech implied that a lot was
being invested in social sectors and these investments were populist and
wasteful, harking back to what Modi’s reference to MGNREGA in his election
campaign as a dole and a humiliating experience for such beneficiaries. Jaitley
pointed out that social sector spending needs to be made more efficient and
further increases should happen via the PPP route. The problem in the social
sectors is not so much about efficiency as it is about deficiency. It is in
fact a shame that in India public resources committed to healthcare amount to
only 1.2 per cent of GDP, for education 3.5 per cent of GDP. Social security of
the unorganised sector that constitutes over 90 per cent of the workforce
accounts for a mere 0.15 per cent of GDP, and the share of the Union government
in that being between one-fourth and one-fifth. The global benchmarks are three
to five times higher. No wonder India, the third largest economy in the world
(in purchasing power parity GDP terms) has a low HDI rank of 136. But this can
be changed mostly by mining resources from within the existing kitty, though
ultimately new resources will also have to be generated. So here’s where the
money can come from:
·
The national government
gives subsidies to the corporate sector
of over Rs. 6 lakh crores and atleast
Rs. 4 lakh crores is contestable for any social benefits being accrued.
·
Uncollected taxes because of
disputes is Rs. 4 lakh crores and there is no reason why this cannot be first
collected and disputes settled later.
·
The daily turnover in
speculative markets (shares, commodities, currencies, securities etc) is Rs 5
to 6 lakh crores . This is pure circulation of money and does not create new
wealth or value addition and what is worse it is not taxed in any significant
way. Even imposing a 0.5% turnover or transaction tax on this would mean Rs.
3000 crores daily as revenues or Rs. 9 lakh crores annually, the precise
deficit that exists for social sector budgets
·
Apart from the above there are
many other possibilities of raising resources. For instance a small amount like
Rs.5 each month as social security cess on mobile connections can raise about
Rs. 5000 crores annually; a 2% health
cess on sales turnover of tobacco and alcohol, and personal vehicles can
raise Rs. 10000 to 15000 crores; a tax similar to profession tax from all those working or doing business and
not covered by any social security like ESIS or CGHS etc. could generate substantial contributions etc…
·
Universalizing the ESIS to all
employees by removing the salary upper ceiling of Rs. 15000 so that all
employees earning higher incomes will also contribute compulsorily and this
will raise ESIS revenues manifold. For instance a person like Mukesh Ambani who
gets a total remuneration of Rs. 36 crores per year would contribute against
his such income Rs.2.34 crores (@6.5% wages) to the ESIS fund. Today ESIS has reserves of
Rs.30000 crores and it is using workers money to start 18 medical colleges, 9
dental colleges and 12 PG medical institutes.
ESIS’s mandate is social security and not medical education. The latter
would further destroy the already ailing ESIS health system. ESIS should be merged
with general public health services and workers benefits from the scheme should
be protected and further strengthened. Also the effort should be to extend the
ESIS to as many uncovered or unorganised sector workers who can be federated
into occupational groups like beedi workers, miners , plantation workers,
headload workers etc. so that there is only a single scheme for social
security. It would be very easy to cover even NREGA workers under ESIS where
all jobcard holders should automatically be registered with ESIS and the NREGA
program should contribute say 1% of the wages as social security on behalf of
workers.
·
States could raise the VAT by
2.5% and earmark this for social sectors. Ghana for example does this to raise
resources for its National Health Fund. There are many other possibilities
provided there is a political commitment to seriously support increased budgets
for social sectors.
For social sector services human resource
availability for frontline service delivery is a huge problem, especially for health
and education. The government invests heavily in professional and higher
education, nearly Rs. 2 lakh crore each year, but outturns coming into the
public system is very small. Compulsory public service for 3 to 5 years by all
professionals like those graduating from medical and nursing schools,
management and technology schools (IIMs, IITs, IIIT etc..), agriculture, education, humanities, sciences and social
sciences etc. is the only solution. All
those graduating must serve public systems for 3 to 5 years and only if they do
so they would be allowed to do PG (say after 2 years of public service) and get
their degree after 3 to 5 years. The rationale is that huge public resources
are invested in higher education, which is almost free for the recipients and
the people of the country have a right to a social return from such
investments. For instance, to train one
MBBS doctor the government spends more than Rs. 20 lakhs. Such compulsory
service will solve the problem of availability of doctors and nurses in health
institutions, of teachers in schools and colleges, of engineers in
infrastructure projects, of managers for public programs etc..
Those working in government get huge
pensions and family pensions linked to inflation index which secures their old
age for a comfortable living. All those crossing age 60 (55 for women) and not
receiving any other pension should be entitled for a social pension which
should be atleast equal to the minimum wage – why I am saying minimum wage and
not 50% is because the minimum wage definition in India is a survival wage.
Often in public services like health and
education or in delivery of welfare benefits the issue of efficiency and
absorptive capacity is raised. This is
not correct. The issue is not of efficiency but one of gross deficiencies.
Investments in public services are very inadequate (health 1.2% of GDP,
education about 3.5% of GDP). As a consequence the approach to these services
use targeting and/or para professionals
like para teachers or non-allopathic doctors and this distorts the access to
these services. Because of inadequate budgetary allocations there are huge
vacancies in frontline positions where services are delivered, shortages in
critical supplies and consumables and poor maintenance of infrastructure. This
impacts the quality of the service and discredits it in the eyes of the user
creating a scenario for users to migrate to private provision. The other issue
that is raised by the top bureaucracy is lack of absorptive capacity when they
are confronted to raise budgetary allocations.
Absorptive capacity is a myth. The problem is
of underfunded budgets, that lead to loss of credibility, poor quality,
frustration, sanctioned posts not filled up leading to underspending. This
underfunding and underspending viciousness is the root cause of poor service
delivery and this can certainly not be termed as lack of absorptive capacity at
the service delivery level. The problem therefore is not the absorption
capacity but the bureaucracy itself which does not have the capacity to plan
and budget in a way that service delivery is appropriately structured and
financed so it can meet the demands of the people.
To conclude the question of absorptive capacity is a convenient
tool which the bureaucracy uses to circumvent real issues that are a cause of
the underfinancing and underspending of social sector budgets. The lack of
bottom up planning and budgeting that is based on expressed needs and demands
of the community for which services are being provided, and the lack of
decision-making power and autonomy to govern and manage the provider
institutions are the main causes for poor service delivery. This needs to be
remedied immediately if resources invested in public services have to realize
the policy goals.
