Response to Aamir Khan's Satyamev Jayate

Aamir Khan’s thoughts in his column in HT’s 7^th May edition titled Daughters are Precious and his 6^th May launch of Satyamev Jayate has seen a lot of euphoria (never mind the copying of the tune of the Euphoria band) being expressed all around. He is the new hero to take up cudgels for lost social causes and stir the emotions and guilt of the middle classes. He does this indeed very successfully.

The first episode deals with the burning issue of sex selection which has created a gender disaster in India. The child sex ratio over the last four decades has witnessed a rapid descent leading to a huge deficit of the girl child in Indian society. Aamir Khan has captured this social disaster very well with powerful cases being brought into our drawing rooms that shame us and overwhelm us with guilt and tears. (Dil pe lagegi as Aamir tells us). The daughter aversion depicted through the cases are indeed a very powerful exposure of the social ills linked to patriarchy but two very powerful by products of this message will cause more harm than good.

The first is the use of the term female feticide. Yes female feticide should not happen but the actual problem is sex selection facilitated by the use of medical technologies by medical professionals. The second is the undue emphasis on abortions and relating it to killings. The two taken together is not only an emotional trap but also fodder for the right wing enthusiasts. I am afraid the womens’ right to abortion comes under threat by projecting such a stance. Aamir and his research team perhaps lack the expertise to vet such sensitivities – the program development when tackling such sensitive social issues, and I believe the forthcoming ones would be even more so, needs consultation and debate with appropriate experts/activists who have devoted their lives to these issues.

Fortunately the column in HT refrains from discussing feticide and abortion and looks more at female discrimination within our social customs and mores. Again the views of Aamir in this column are well appreciated but like the TV show the column too has failed to take head on the root cause of this malevolence.

While there may still be a lot of social acceptance for sex-selection in our patriarchal world, the real perpetrators of this crime (yes it’s a crime today because there is a law that prohibits sex-selection and sex-determination) is the medical profession. Neither the TV show nor the column deals with the role of medical professionals as being central to this heinous issue. The complete absence of ethics in medical practice and the unfettered commercialization of medical care is the root cause for the deficit of girls we face today. If the doctors learn to say NO then the problem will be taken care of substantially. I say substantially because the misuse of medical technology is only one, though the overwhelming axis of the problem. The other axis is the post-birth discrimination and elimination of girls which also needs to be dealt with through social action.

The humungous documentation through sting operations by the two journalists from Jaipur was shown on the TV program and I think that is the real target for action. While I have no problems with writing letters to a chief minister, and why only Rajasthan – the sting operations were across 8 to 10 states, the focus of the larger public action must be on the medical profession. Doctors have to be booked like they did in South Korea.

Finally something about the audience also made me uncomfortable. There was no significant participation from the audience except for the emotional expression of tears which have been used impactfully by the program designers. To me things looked staged, even the few contributions of the external audience, like the comment on Salman Khan. I guess creating the drama around this program is part of the strategy but it could obviate away from the main cause and the proposed action.

UHC Conference on HLEG April11-12, 2012

The UHC Conference in Delhi was a good pitch for the HLEG recommendations and very useful and insightful debate happened amongst a wide array of stakeholders. The discussions were good but there was one glaring deficit. I think the most problematic issue with HLEG report is that the Ministries of Health have been sidelined, both at the Centre and in States. The central problem is that even if the Planning Commission accepts it lock stock and barrel (which apparently it is not as we see differences with the Steering Committee Report and what may finally come into the 12th Plan) the Health Ministries get alienated and being the implementers of healthcare programs the latter are often at variance with the Planning Commission. The HLEG has also fallen into the same trap and despite reasonably good and broadly acceptable recommendations they are not going to be accepted because of not taking the Health Ministries fully into confidence. The role of Health Ministries have been marginal at best in developing the HLEG recommendations. The April 11-12 consultation on UHC in Delhi precisely suffered from that deficiency. An opportunity to get Ministries of Health on board was lost. The presence of secretaries from two states was only a consolation and there was no significant engagement with the Union Ministry of Health either. So it is not surprising that the grapevine is ripe with stories of the disjunct between the Planning Commission and the Ministry of Health on 12th Plan lines of action. So a lot of useful effort of HLEG is going to be wasted. During the 8th-10th Plan periods on various working groups of the PC I had raised this issue of sidelining the Ministry of Health in developing the trajectories of the Plans for health but these have been ignored and that is the reason after the 10th Plan I have turned down requests to be on any committees.
The above trajectory of the role being played by the Planning Commission seems to be across the board - the recent mess up with the Railways budget, which for the first time was influenced by the Planning Commission is a case in point; the Planning Commission wants to take it in the direction of privatization. These dangerous trends within the Planning Commission need to be monitored and countered.

Response to articles in Mint on Universal Access to Healthcare

In the "State of Healthcare" (23-2-12) you end by saying that the government must embrace the idea of health as a public good. I would add to this healthcare also as a public good. This is the key to universal access to healthcare. The High Level Expert Group on Universal Healthcare Coverage was appointed by the Planning Commission with great fanfare raising the expectation of the people that the government was serious about universal access to healthcare. It worked hard for over a year and a huge amount of resources were spent in research, meetings, consultation, background papers etc.. A reasonable report emerged as a result and now an internal coterie of the same Planning Commission is rejecting it and pitching for a larger scale private sector initiative in healthcare. This is no surprise. I have been on working groups of the Planning Commission in the 8th , 9th , and 10th Five Year Plans. We worked hard and came up with our reports and background papers but our esteemed planners did what they always do - ignore all that work and do what they had already decided. So 11th and 12th Plans I turned down being on any such working groups or committees.

When the HLEG Report came out I had a positive feeling that this time there was some serious intent but as you have reported in today's Mint the universal access story has been nixed. So history does repeat itself and ever so often! We at the Medico Friend Circle and Peoples Health Movement have been debating on universal access to healthcare for over three years and a lot of very useful literature has emerged on how to operationalize such a universal access healthcare system, how to finance it, its governance and management, it human resource requirements etc. (see www.mfcindia.org for a wide range of literature and debates ). The HLEG took all this on board - they attended the mfc meetings and consultations and invited mfc and PHM members to their consultations to contribute in the development of the HLEG report. When the report was finally ready and despite some differences with it, many of us felt that the time had come when we could stop dreaming about universal access to healthcare and that the journey had begun towards realizing it. But alas our planners have forced us back to dreaming.

If we look at global performance all developing countries which saw rapid economic growth in the last two decades have made the transition to universal access to healthcare - Brazil, Mexico, Malaysia, Thailand, Sri Lanka, Venezuela etc. Why has India not seen this transformation? The answers are not difficult to seek - complete lack of political will towards public good, unwillingness on part of our bureaucracy to make structural changes, inability of our taxation system to net in all revenues due to the treasury because of poor tax administration and too many concessions and deductions to business and trade, and the private healthcare business' overpowering dominance of the health economy.

So here we stand on a threshold once again. The HLEG report is an opportunity to bring in the change. Will the Planning Commission, the PMO and the Ministry of Health recognize healthcare as a public good and take on board HLEG recommendations to implement during the 12th Plan period? 

Campaign Against Corruption

Anna Hazare's fight against corruption and pushing for the Jan Lokpal Bill is laudable. Its great to see the huge mobilisation happening across the country, especially the fence sitting middle classes. If politicisation of the middle classes and the youth is happening around the issue of corruption its a good thing but will the politicisation sustain - is this only an event, a media event? One sees a lot of supporters coming to Jantar Mantar to commit support to Anna Hazare and his cause. They extend their support but the likes of Baba Ramdev and others come and play their own tune also on this platform - they all want to seize this opportunity to push their own agendas and hog the limelight. Many political leaders have tried to associate but supporters of Anna Hazare have kept them away. I dont know if that is a good thing. Campaigns cant be successful alienated from politics because what we want changed is the politics and not just the setting up of a Lokpal Authority. We have had the Lok Ayukts and other anti-corruption agencies but no dent against corruption has happened.

The problem with the India Against Corruption is that it is anti-reservation and so it alienates a very large section of the poor, exploited, opressed and impoverished people. So this is a clear urban middle class, non-lower caste platform and the protests are largely confined to cities. We are told the corporate sector is supporting this but what about their corruption? Are the corporates willing to list the bribes they have paid? Are they willing to tell us about the taxes they have evaded? Are they willing to tell us about their "swiss" bank accounts and various other frauds done in collaboartion with politicians? Let them come clean and then become supporters of this campaign. They are cashing on this campaign because with 2G and other scams their misdeeds are being exposed.

My fear is that the government may accept the demands of the protestors and even pass the desired bill soon but then what next? Will the Lokpal office be able to rid the country of corruption in public life? Unlikely. We already have enough laws to prevent corruption and take the corrupt to task. Another Act will not add much value. The question is that how do we get the various public institutions to function the way they are supposed to function, without political interference and without the fear of being victimised. We have to change the politics and unfortunately I dont see that demand in this campaign.

India Budget 2011-12 – A Brief Comment

The 2011-12 budget overall shows that there is further compression in public spending. There is a southward trend in the budget with the estimates indicating only a 13% nominal increase over the previous year and a decline in the budget estimate as a proportion of the GDP by more than 1% point to14% of GDP. This is happening despite the real growth rate being over 8%. Similarly tax revenues of the Central budget have stagnated around 10% of GDP. The Centre has failed to net in increased revenues from the growing national income. And the present budget does not give any indication that the Tax:GDP ratio will move northwards. Unless the latter happens we cannot expect public spending, especially for the development and social sectors like rural development, health, education, welfare, housing etc.. to grow significantly. Today public spending on health is a mere 1% of GDP when WHO recommends that it should be atleast 5%. The government over the last six years has not been able to move towards its own target of 3% of GDP for health. The share of the Central government in public spending for health is a mere 0.25% of GDP when as per the UPA target it should be 40% of 3% of GDP that is 1.2% of GDP or Rs. 86,400 crores at today’s prices.

In contrast to that the Central Ministry of Health allocation is only Rs. 30456 crores (including grants to states), short by Rs. 55944 crores as per commitment of UPA government. Of the Rs 30456 crores, Rs. 1700 crores or 5.5% of the Health Ministry's budget goes to HIV AIDS, which has been accorded a status of a separate Dept in this year’s budget; Rs 771 crores goes to Health Research, mainly ICMR and its institutions and Rs. 1088 crores to AYUSH. The Health and Family Welfare department gets Rs 26897 crores of which Rs. 16140 crores goes to NRHM and Rs. 5435 crores goes to the Central Government Hospitals and Medical Colleges and further Rs. 653 crores goes for healthcare of Central government employees under CGHS - a whopping Rs. 3628 per Central government employee in sharp contrast to about Rs. 500 per capita which all state and the Central governments together spend on healthcare for its citizens

Under NRHM some of the key allocations are Rs. 1238 crores for the various National Disease Control Programs like TB, Vector borne diseases, blindness. leprosy etc., Rs 3378 crores for Family Welfare, Rs. 240 crores for RCH, Rs 511 crores for routine immunisation and Rs. 664 crores for polio, and the Mission and RCH Flexipool gets Rs. 8776 crores. In addition NRHM also gets funds of Rs. 1784 crores under the NE special program and Rs. 247 crores under AYUSH.

So what does the above tell us. The overall spending on healthcare by government is certainly very low when we consider global standards. As a consequence the out of pocket burden for citizens, especially so of the bottom two quintiles is huge - about Rs. 3000 per capita. While within the Central budget the allocation to health ministry has increased by 21% over the previous year and gives the impression that health and other social sector programs are an important priority for the government. This is largely due to the political push under the flagship programs and is a good sign but when we look at actual expenditures then this optimism is belied. Actual spending in the social sectors like health and education are invariably 10-15% less than the budget estimates and often in the key programs like NRHM and Sarva Shiksha Abhiyan as also pointed out in the audits conducted by the CAG. This year for the first time the Central budget has included actual expenditure for 2009-10 and we see that for the Health Ministry the overall shortfall in expenditure as per the budget estimate was 8%, and 10% for the plan component of the budget, most of which goes as grants to state governments. However the surprise is (actual expenditures are still provisional) that NRHM shows an actual expenditure in excess of 17% (7% excess in plan expenditures), largely due to the RCH and immunisation programs and pumping in of non-plan resources (whopping increase from the Rs.72 crores in budget estimates to Rs. 1397 crores in actual expenditure) which certainly shows an increased commitment on part of the Central ministry of Health. Perhaps 2009-10 was the year for the consolidation of the NRHM program but this came as a cost to the medical care sector under the Ministry of Health, which means that public hospitals and teaching hospitals were neglected, their shortfall in expenditure being as much as 20%

To conclude, while the UPA government seems to be inclined towards strengthening the public health system by giving a larger weightage to the health sector in budgetary allocations, overall this is not enough because there is significant compression of overall public spending. The consequence is that this impacts public health spending and the neglect of the public health system continues.

Universal Access to Healthcare – How to Drive the 12th Plan

Universal access to healthcare implies that everyone gets equitable access to healthcare and there is no discrimination whatsoever, especially discrimination based on the capacity to pay. Worldwide countries which have established universal or near universal access have clearly demonstrated that public financing of healthcare is critical to realize this. However delivery of health services need not be only in public domain.

For instance Canada, which has the best and most equitable healthcare system in the world assures full access to everyone without the need to make any payment at the point of care. Health Canada, a public Corporation pools all resources and is a single payer for all healthcare services. While most hospitals are run by governments in Canada, private hospitals are also given access to these resources when citizens access them. And for out-patient care most providers in Canada are private providers who are contracted in by Health Canada on pre-agreed fee for services. The NHS in UK is very similar and Brazil, Venezuela, Mexico close to emulating these models. On the other hand there are examples like Sweden, Sri Lanka, Cuba which are completely state run systems which provide universal access to healthcare. Thailand is the most recent entrant into this club and I think we have a lot to learn from the Thai experience because the structure of the healthcare system in India and Thailand historically has been very similar.

In India the NRHM affords us a great opportunity to change the way the healthcare system works in India. NRHM talks about architectural corrections, public-private partnerships and the UPA backs this with a political commitment of providing upto 3% of GDP to realize universal access to healthcare. But so far the UPA and NRHM have failed because the required political backing to make radical changes and shake up the healthcare system has not been forthcoming. So what needs to be done to realize universal access to healthcare? To begin with:

• equating directive principles with fundamental rights through a constitutional amendment

• incorporating a National Health Act (similar to Canada Health Act) which will organize the present healthcare system under a common umbrella organization as a public-private mix governed by an autonomous national health authority which will also be responsible for bringing together all resources under a single-payer mechanism

• generating a political commitment through consensus building on right to healthcare in civil society

• development of a strategy for pooling all financial resources deployed in the health sector

• redistribution of existing health resources, public and private, on the basis of standard norms (these would have to be specified) to assure physical (location) equity

As an immediate step, within its own domain, the State should undertake to accomplish the following:

• Allocation of health budgets as block funding, that is on a per capita basis for each population unit of entitlement as per existing norms. This will create redistribution of current expenditures and reduce substantially inequities based on residence. Local governments should be given the autonomy to use these resources as per local needs but within a broadly defined policy framework of public health goals

• Strictly implementing the policy of compulsory public service by medical graduates from public medical schools, as also make public service of a limited duration mandatory before seeking admission for post-graduate education. This will increase human resources with the public health system substantially and will have a dramatic impact on the improvement of the credibility of public health services

• Essential drugs as per the WHO list should be brought back under price control (90% of them are off-patent) and/or volumes needed for domestic consumption must be compulsorily produced so that availability of such drugs is assured at affordable prices and within the public health system

• Local governments must adopt location policies for setting up of hospitals and clinics as per standard acceptable ratios, for instance one hospital bed per 500 population and one general practitioner per 1000 persons. To restrict unnecessary concentration of such resources in areas fiscal measures to discourage such concentration should be instituted.

• The medical councils must be made accountable to assure that only licensed doctors are practicing what they are trained for. Such monitoring is the core responsibility of the council by law which they are not fulfilling, and as a consequence failing to protect the patients who seek care from unqualified and untrained doctors. Further continuing medical education must be implemented strictly by the various medical councils and licenses should not be renewed (as per existing law) if the required hours and certification is not accomplished

• Integrate ESIS, CGHS and other such employee based health schemes with the general public health system so that discrimination based on employment status is removed and such integration will help more efficient use of resources. For instance, ESIS is a cash rich organization sitting on funds collected from employees (which are parked in debentures and shares of companies!), and their hospitals and dispensaries are grossly under-utilised. The latter could be made open to the general public

• Strictly regulate the private health sector as per existing laws, but also an effort to make changes in these laws to make them more effective. This will contribute towards improvement of quality of care in the private sector as well as create some accountability

• Strengthen the health information system and database to facilitate better planning as well as audit and accountability.

Infact the NRHM clearly articulates the need for architectural correction. Such restructuring will be possible only if:



 The healthcare system, both public and private, is organized under a common umbrella/framework as discussed above

 The financing mechanism of healthcare is pooled and coordinated by a single-payer system

 Access to healthcare is organized under a common system which all persons are able to access without any barriers

 Public finance of healthcare is the predominant source of financing

 The providers of healthcare services have reasonable autonomy in managing the provision of services

 The decision-making and planning of health services is decentralized within a local governance framework

 The healthcare system is subject to continuous public/community monitoring and social audit under a regulated mechanism which leads to accountability across all stakeholders involved



The NRHM Framework one way or another tries to address the above issues but has failed to come up with a strategy which could accomplish such an architectural correction. The framework only facilitates a smoother flow of resources to the lower levels and calls for involvement of local governance structures like panchayat raj institutions in planning and decision making. But the modalities of this interface have not been worked out and hence the local government involvement is only peripheral. The 12th Plan will need to focus on developing such modalities to bring in the structural changes.



In order to accomplish the restructuring that we are talking about the following modalities among others would need to be in place:



 All resources, financial and human, should be transferred to the local authority of the Health District (Block panchayats)

 The health district will work out a detailed plan which is based on local needs and aspirations and is evidence based within the framework already worked out under NRHM with appropriate modifications

 The private health sector of the district will have to be brought on board as they will form an integral part of restructuring of the healthcare system

 An appropriate regulatory and accreditation mechanism which will facilitate the inclusion of the private health sector under the universal access healthcare mechanism will have to be worked out

 Private health services, wherever needed, both ambulatory (FMP) and hospital, will have to be contracted in and appropriate norms and modalities, including payment mechanisms and protocols for practice, will have to be worked out

 Undertaking detailed bottom-up planning and budgeting and allocating resources appropriately to different institutions/providers (current budget levels being inadequate new resources as suggested in the paper will also have to be raised)

 Training of all stakeholders to understand and become part of the restructuring process

 Developing a monitoring and audit mechanism and training key players to do it

The above is not an exhaustive list but certainly critical issues to be addressed under the 12th Plan strategy. Further the most important challenge would be reining in the completely as yet unregulated private health sector. Where the private health sector is concerned it functions completely on supply-induced demand which fuels unnecessary procedures, prescriptions, surgeries, referrals etc.. leading to its characterization as an unethical and mal-practice oriented provisioning of healthcare. This has huge financial implications on households, inflating costs of healthcare, spiraling indebtedness and pauperization and being responsible for the largest OOPs anywhere in the world.



The challenges across the country differ due to different levels of development of the public and private health sectors in the states. For instance a state like Mizoram, a small and hilly state, already has an excellent primary healthcare system functioning with one PHC per 7000 population and one CHC per 50000 population and since it has virtually no private health sector the demand side pressures are huge and hence the public health system delivers. Each PHC has 2 to 3 doctors on campus available round the clock with 15 – 20 beds which are more or less fully occupied and 95% of deliveries happen in public institutions. So Mizoram has indeed realized the Bhore dream. The problem in Mizoram is that there are very few specialists available and hence higher levels of care become problematic – the CHCs are however run by MBBS doctors who have received some additional trainings. Mizoram does not have a medical college but it does have reservations in other state medical colleges. While the state cannot provide tertiary care it has a budget to send people elsewhere to seek such care. And Mizoram does this with 2.7% of its NSDP and has the best health outcomes in India. In some sense Mizoram is like Sri Lanka – a statist model. There are few other states in India which can do a Mizoram because they too do not have a significant private health sector but to do that they have to demonstrate the political will of Mizoram.



Even though extremely successful Mizoram cannot be the national model because the reality across most other states is very different, the reality of an entrenched private health sector which is unethical and unregulated. The private health sector has to be reined in and this can only happen with a strong political will which declares healthcare to be a public good and which takes on the private sector to get organized under public mandate. Under NRHM sporadic efforts towards this end are being undertaken in the name of public-private-partnerships like Chiranjeevi in Gujarat, Yeshasvani in Karnataka, Arogya Rakshak in AP, Rajiv Gandhi Hospital in Raichur (Karnataka Govt and Apollo Hospitals) etc. They may have achieved limited success but then healthcare systems cannot be built by segmenting it into programs and one-off initiatives like PPPs. There have to be serious efforts at building a comprehensive healthcare system and it goes without saying that given India’s political economy of healthcare the private sector will have to be a significant partner in this process. So states have to think beyond the Chiranjeevis and Yeshasvanis and learn from the recent experiences of Thailand, Mexico and Brazil to invest in an organized healthcare system, and with a booming economy resources will not be a constraint.



So the challenge for the 12th Plan is enormous demanding huge restructuring of the healthcare system in the country through strong regulatory mechanisms both for the public and private sectors, education of professionals in ethics of practice, pushing the politicians for creating a strong political will to make healthcare a public good as well as generate and commit adequate resources to realize universal access. The restructuring of the healthcare system and its financing strategy, given the price advantage of India and economies of scale it offers, will actually reduce nearly by half the healthcare spending in the country and reduce substantially the household burden to access healthcare. Calculations I have done show that for universal access to healthcare across India we need less than 3% of GDP provided we show the political will to shift healthcare from the domain of the market to the category of a public good. This will indeed do a lot of public good!

Ravi Duggal / rduggal57@gmail.com

Revenues Forgone and Social Sector Budgets

In undertaking budget analysis somehow the larger focus has been on looking at expenditures while the revenue side of the budget is often ignored, except perhaps oil and gas or other mineral/natural resource based revenues when the particular economy is driven by such resources. However, often taxes do receive some attention in budget analysis within a macro-economic analysis with a focus most often on reducing or increasing tax rates or the tax base. The composition, character, nature and depth of the revenues have received very scant attention. Thus revenues not collected, revenues forgone, equity impact of revenues, etc. are often overlooked in mainstream budget analysis. It is time to shift gears and give greater weight to the revenue side of the budget because expenditure can only happen when there are adequate revenues.  

Across OECD countries, as well as in a number of emerging economies, where tax:gdp ratios range between 30-50 percent, we see more responsible and accountable governance as well higher expenditures on social and welfare sectors. This is possible because adequate revenues, especially through taxes are raised but also because there is a large tax base, better tax compliance and minimal tax expenditures or forgone revenues. In most developing countries the contrary is true – lower tax:gdp ratios, smaller and skewed tax base, poor tax compliance, large scale evasion, large tax expenditures and incentives – and hence social sector spending is small and inadequate. For instance, in 2005 the average tax revenue to GDP ratio in the developed world was approximately 35%. In the developing countries, it was equal to 15%, and in the poorest of these countries, the group of low income countries, tax revenue was just 12% of GDP. The cocktail of tax avoidance, tax expenditures and tax evasion are widely believed to be important factors limiting revenue mobilization in the developing world. Further in developing countries in addition there is the international dimension of tax evasion via price distortions or transfer pricing, that is  sending of overpriced imports into developing countries and underpriced exports from developing countries. This shifts incomes to the host countries of MNCs and results in revenue losses within the developing countries. And finally there are the tax haven countries and the “Swiss banks” which attract tax evaded incomes and shadow economy incomes from both developing and developed countries and this also leads to revenue losses for the state.

India, despite being a rapidly growing economy has revenue characteristics of developing country economies. The present tax:gdp ratio is a meager 17% and this is certainly not adequate to finance social sector budgets if we accept the ESCR commitments to realize universal access to all social and economic rights like education, health, housing and social security. So why does the Indian government fail to realize adequate tax revenues. There are many reasons but some of the important ones are:

1. Lax tax collection: Adequate efforts are not put in to maximize tax collections. Small businesses, large volumes of unregistered or even illegal economic activities, evade taxes completely. It is estimated that in India the parallel economy is atleast 60% (conservative) to 150% of the legal/registered economy. If revenues were realized from this through efficient tax administration at least 50% more tax revenues would be generated.

2. Corrupt Practices: Revenue officials like income tax officers, excise inspectors, customs collectors often are in league with businesses and individuals to facilitate tax evasion, including transfer pricing and transfers to tax havens ( it is estimated that the equivalent of India’s GDP is parked in “swiss banks” and this is mainly money belonging to the business elite and politicians from India). This results in huge losses to the state exchequer.

3.  Tax Expenditures: Fiscal policies and decision making lead to concessions in taxes for selected individuals and businesses. The latest budget 2010-11 estimates that for the Central government alone these tax expenditures account for 85% of Tax revenues during 2009-10 and the trend is increasing (see Table below) – so a clear potential for doubling tax collections if most of these tax expenditures, especially for businesses are taken away.

4. Subsidies that are not declared as tax expenditures: Organisations registered as Trusts under the Public Trusts Act are exempt from tax payments. A large number of private educational institutions, hospitals, religious institutions etc operate as Trusts and accumulate huge surpluses. Such institutions are supposed to engage in charity and provide social benefits but the reality is that most of them do not and neither do the concerned government agencies monitor their financial transactions. So these are again clear losses of revenues for the state exchequer.

Table: Revenues Forgone (Tax Expenditures) during 2008-09 and 2009-10 Central Government, India – figures are INR crores (1 crore = 10 million)

Source: Govt. of India Budget 2010-11

To conclude, if the tax administration becomes more efficient, disciplined, and ethical at one level and most of the tax expenditures, especially the non-personal income tax, and other subsidies which do not provide effective social returns are done away with there is clear plausibility that India’s tax:gdp ratios should reach the level of over 35% (without increasing tax rates) and this would provide the “maximum available resources” to meet the ESCR commitments, especially universal school and college education, universal access to healthcare and universal access to housing.

Ravi Duggal

rduggal57@gmail.com