[thread] The #Coronavirus crisis is both a health crisis and an economic crisis. It is now clear that the economic crisis will be prolonged for at least a year directly, and more than one year indirectly. What could Indian policy makers do to address this? A suggestion. 1/n ...
Demand has fallen across sectors, production and supply networks have been disrupted, employment has collapsed and livelihoods have been destroyed. The rural areas have been particularly affected. In agriculture, sectors like dairy have seen a major fall in demand and prices. 2/n
Clearly, the government has to raise public expenditure in the economy to protect jobs and livelihoods. But there is one opportunity in this crisis, which if realised could be a major advance in a country like India. I refer here to the health sector itself. 3/n ...
Currently, India invests 1.5% of its GDP in health. By 2021-22, this should be raised to at least 2.5% of the GDP. That is, about ₹1.5 to 2 lakh crore should be invested to expand and deepen India’s public health in the next two years. 4/n ...
This amount should be raised primarily by the central government through borrowing. If the state governments are involved, their borrowing capacity should be concomitantly expanded to enable them raise resources. 5/n ...
Such an expansion of public health will create jobs for healthcare personnel directly (doctors, nurses, admin/care staff), and in other related sectors with strong linkages to the health sector. A study says India has a shortage of 600,000 doctors and 2 million nurses. 6/n ...
It will also create a healthy workforce over time. By reducing out-of-pocket expenditures, it will also free up money for spending by households, which in turn will raise demand. Currently, out-of-pocket expenditures form at least 70% of total health expenditure. 7/n ...
For hospitalisation in a year, an Indian household spends ₹6,120 in a public institution, but ₹25,850 in a private institution. Imagine, if households are able to save on part of this expenditure and spend it in the market. It would be a major boost to demand. 8/n ...
Studies also show strong economic association between health investment and GDP growth in India; for instance, the Lancet Commission in 2013 estimated that a $1 investment in health will yield $10 increase in GDP by 2035. 9/n ...
So, will #Coronavirus-induced economic crisis inspire India to make this affordable investment in public health? Or will it remain subservient to powerful corporate interests in health care? What I have outlined is one idea for a productive investment in this time of crisis. n/n
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