Thought Leadership

In my individual capacity as a honest tax payer of the country, I wish to highlight key concerns over the budgetary allocations for two critical areas — Health and Education — as also the need to bridge the income and wealth inequality, the glaring, ever widening divide between the haves and the have nots of the country.

Healthcare

Talking of Health, there is a huge disparity in the quality and accessibility of health services between the metros, tier 2/3 towns and rural areas. Although as high as 76% of India’s healthcare is run by the private sector, most of it is concentrated in urban areas.

The reasons for this disparity are largely economic. Given that Average Revenue Per Occupied Bed (ARPOB) say in regions like NCR is ₹75,000, why should a private enterprise think of penetrating deprived regions where the ARPOB at best hovers in the range of ₹ 10,000 to ₹ 12,000. Clearly, if we have to improve the penetration of healthcare in rural and deprived areas, we must improve the ARPOBs in the hospitals of the vicinity.

This calls for proper reimbursement of health spends by the people of these areas. Yes, there are schemes like Ayushman Bharat, CGHS, Pradhan Mantri Suraksha Bima Yojana and the like but the healthcare reimbursement processes need to be made more efficient in order to ensure healthy occupancy rates for healthcare establishments in rural areas which alone can ensure recruiting and retaining of best in class doctors, nurses and support staff as also the acquisition of advanced technology and infrastructure.

Better reimbursement models and smart incentivisation of efficient private hospitals would be a key baby step towards the accomplishment of this crucial healthcare goal.

Another key area to be addressed in that of GST. A ‘zero rate’ GST on healthcare services is the need of the hour towards easing compliance and protecting the input tax credit chain. If hospitals can’t claim input credit despite the huge embedded GST costs, how can they be expected to reduce the cost of healthcare services for the end user, who is a patient in need of treatment, not a customer making a discretionary purchase.

Education

Talking of Education, we face another glaring disparity between urban and rural areas. Sadly, students of rural areas lose out on several employment opportunities despite needful qualifications given the poor quality of education services in these regions.

So, how do we address this challenge? Why not incentivise the private sector penetrate rural and deprived regions to transform the primary and secondary education in a sustainable manner. The best way to go about it is to introduce a voucher system which will help poor students enroll into a private institution while the latter would be suitably incentivised for the enrolment. This move will bring parity in the education system and create equal opportunities of employment and entrepreneurship for all aspirants, irrespective of whether they are rural or urban.

In the context of income and wealth disparity, India is one of the most glaring examples of the rich getting richer and the poor poorer. Let’s study this vicious loop though an example of three individuals with equal zest and zeal to make it big in life. However, they are given monetary help in varying amounts. The first is provided ₹ 1 lakh, the second is given ₹10 lakh, while the third is disbursed ₹1 crore.

Over time, all three make the most of their employment or entrepreneurship opportunities through a doubling of wealth. Although all three move up the value chain of affluence, the first person with ₹ 1 lakh initial capital can never catch up with the third person who had ₹ 1 crore to begin with and worse, the disparity widens.

If we don’t reverse this trend now, wealth will keep accumulating in the hands of the fewer and fewer individuals, a trend which we have been witnessing through the decades. Without the basic availability of minimum credit, the income gap is bound to widen and wealth concentration is going to increase.

Measures like the Microcredit revolution started by Grameen Bank under Mohammad Yunus and the direct cash transfer schemes are some attempts to relieve the world of the most important social security problem in front of mankind: Income Inequality.

Governments around the world have tried to resolve the issue of low income people with ventures like income redistribution, subsidies, reservation etc. but have been sceptical about the Direct Cash Transfers (DCT). The advantage of the Direct Cash Transfers is that the rich will continue having a great share of the world’s wealth but will help lift several poor individuals from poverty. The paper discussed the viability of the direct cash transfer mechanism to effectively tackle the issue of income inequality.

A credible way to escape this trap is the channelling of tax collections for purposeful redistribution of wealth to deserving people of deprived regions via a direct cash transfer. Done right, this initial cushion of funds will help them with a level playing field to improve their economic status. Consequently, India’s per capita income will rise, easing our path towards becoming a developed country.

Hope the budget will have some good news this time round.

—The author, Dr. B S Ajaikumar, is Executive Chairman, HealthCare Global Enterprises Ltd, India's leading cancer hospital chain. The views expressed are personal. (Edited by : C H Unnikrishnan)