Economic Survey-2021: Inequality and Growth: Conflict or Convergence?

The relationship between inequality and socio-economic outcomes vis-à-vis economic growth and socio-economic outcomes, is different in India from that in advanced economies.
Both inequality and per-capita income (growth) have similar relationships with socio-economic indicators in India, unlike in advanced economies
Economic growth has a greater impact on poverty alleviation than inequality
India must continue to focus on economic growth to lift the poor out of poverty
Expanding the overall pie – redistribution in a developing economy is feasible only if the size of the economic pie grows

Healthcare takes centre stage, finally!

COVID-19 pandemic emphasized the importance of healthcare sector and its inter-linkages with other sectors – showcased how a health crisis transformed into an economic and social crisis
India’s health infrastructure must be agile so as to respond to pandemics – healthcare policy must not become beholden to ‘saliency bias’
National Health Mission (NHM) played a critical role in mitigating inequity as the access of the poorest to pre-natal/post-natal care and institutional deliveries increased significantly
Emphasis on NHM in conjunction with Ayushman Bharat should continue
An increase in public healthcare spending from 1% to 2.5-3% of GDP can decrease the out-of-pocket expenditure from 65% to 35% of overall healthcare spending
A regulator for the healthcare sector must be considered given the market failures stemming from information asymmetry
- Mitigation of information asymmetry will help lower insurance premiums, enable the offering of better products and increase insurance penetration
- Information utilities that help mitigate the information asymmetry in healthcare sector will be useful in enhancing overall welfare
Telemedicine needs to be harnessed to the fullest by investing in internet connectivity and health infrastructure

JAY Ho! PM‘JAY’ Adoption and Health outcomes

Pradhan Mantri Jan Arogya Yojana (PM-JAY) – the ambitious program launched by Government of India in 2018 to provide healthcare access to the most vulnerable sections demonstrates strong positive effects on healthcare outcomes in a short time
PM-JAY is being used significantly for high frequency, low cost care such as dialysis and continued during the Covid pandemic and the lockdown.
Causal impact of PM-JAY on health outcomes by undertaking a Difference-in-Difference analysis based on National Family Health Survey (NFHS)-4 (2015-16) and NFHS-5 (2019-20) is following:
- Enhanced health insurance coverage: The proportion of households that had health insurance increased in Bihar, Assam and Sikkim from 2015-16 to 2019-20 by 89% while it decreased by 12% over the same period in West Bengal
- Decline in Infant Mortality rate: from 2015-16 to 2019-20, infant mortality rates declined by 20% for West Bengal and by 28% for the three neighbouring states
- Decline in under-5 mortality rate: Bengal saw a fall of 20% while, the neighbours witnessed a 27% reduction
- Modern methods of contraception, female sterilization and pill usage went up by 36%, 22% and 28% respectively in the three neighbouring states while the respective changes for West Bengal were negligible
- While West Bengal did not witness any significant decline in unmet need for spacing between consecutive kids, the neighbouring three states recorded a 37% fall
- Various metrics for mother and child care improved more in the three neighbouring states than in West Bengal.
Each of these health effects manifested similarly when we compare all states that implemented PM-JAY versus the states that did not