Q1. Out of Pocket Expenditure has been consistently decreasing. In the light of this statement discuss the reasons behind the phenomena and state its significance. Elucidate on the loopholes that are present in the Indian public health system. What measures can be adopted to further strengthen the system? (15 marks, 250 words)
Topic- Public Health:
Introduction:
Public health and Sanitation is a subject under the State List in the VII Schedule of the Constitution. With no standard health system protocols across States, Out of Pocket Expenditure on health in India was considered one of the world’s highest. But of lately this is on a downhill slide. Out of pocket expenditure on health decreased from 62.26% in 2014-15 to 39.4% of the total health expenditure in 2021-22. Multiple reasons and efforts of multiple stakeholders can be attributed to the phenomena.
Body :
- Causal factors behind the decreasing Out of Pocket Expenditure
- Significance of decreasing Out of Pocket Expenditure
- Loopholes present in the present public health system
- Way forward
Conclusion :
It is said that “health is wealth”. It is also true that one needs wealth to safeguard health. This may keep out a large section of the Indian population. Along with affordability, quality of health care is also necessary lest India’s vision of becoming a $ 5 trillion economy only will sound good on paper not in reality. The above mentioned interventions will come in handy in ameliorating the systemic issues in the healthcare scenario and therefore must be rightly pursued.
UPSC Syllabus Public Health:
Why was this question asked?
Q. In order to enhance the prospects of social development, sound and adequate healthcare policies are needed particularly in the fields of geriatric and maternal healthcare. (UPSC CSE 2020)
Introduction
Public health and Sanitation is a subject under the State List in the VII Schedule of the Constitution. With no standard health system protocols across States, Out of Pocket Expenditure on health in India was considered one of the world’s highest. But of lately this is on a downhill slide. Out of pocket expenditure on health decreased from 62.26% in 2014-15 to 39.4% of the total health expenditure in 2021-22. Multiple reasons and efforts of multiple stakeholders can be attributed to the phenomena.
Body Status :
Causal factors behind the decreasing Out of Pocket Expenditure:
- Increasing Gross Health Expenditure as a percentage of GDP from 1.13% in 2014-15 to 1.84% in 2021-22.
- Expenditure on government-financed insurance rose from 4,757 crore in 2013-14 to 20,771 crore in 2021-22.
- 2.59 crore free dialysis sessions have been held under the PM National Dialysis Programme since 2016.
- Rs. 70,000 crore is being injected into the primary healthcare system in line with the XV Finance Commission recommendations.
- Rs. 28,000 crore has been saved through the disbursal of low cost generic medicines by 10,000 Jan Aushadhi Kendras since 2014.
Significance of decreasing Out of Pocket Expenditure:
- Demographic dividend: India’s demographic dividend was feared to turn into demographic disaster without a robust health system. Decreasing Out of Pocket Expenditure may bode well to reap the demographic dividend as India has the largest number of people below 35 years among the comity of nations.
- Geriatric care: India’s aged population is expected to increase from 10% in 2023 to 19% in 2050. The increasing prevalence of lifestyle diseases demands that the cost of cradle to grave care is kept under restraint. Thus low Out of Pocket Expenditure is a shot in the arm for India’s public health aspirations.
- Vicious circle: Poverty and high Out of Pocket Expenditure goes hand in hand. Low Out of Pocket Expenditure helps lift 20% of India’s population which is still reeling under chronic poverty.
- Employment: Good public health is an indicator of work productivity. Considering this low Out of Pocket Expenditure can improve productivity thereby sustaining employment levels in an economy.
- Population control: Low Infant Mortality Rate through institutional deliveries will be a reality only if Out of Pocket Expenditure is within reasonable limits. Thus, couples have greater incentives for family planning if infant mortality rate is kept at its lowest through low Out of Pocket Expenditure.
Loopholes present in the present public health system
- Despite the low Out of Pocket Expenditure seen recently, there are still loopholes gaping in the system.
- Non Communicable Diseases: Approximately 60 lakh deaths i.e. 60% of all the health related deaths in India are attributed to Non Communicable Diseases. As such, there is a low premium placed on non-communicable diseases in the present system where continuous care and access is still out of bounds for large sections of the population.
- Holistic: Traditional health systems like Ayurveda, Homeopathy and Naturopathy are seen as separate from Allopathy affecting holistic health care concept since the traditional health systems when integrated with Allopathy can improve the quality of life of patients with lifestyle diseases like diabetes, hypertension, obesity etc.
- Capacity: India has 1.3 hospital beds per 1000 population against the recommended 3 beds per 1000 population. This hinders comprehensive preventive and rehabilitative care complex surgeries apart from disincentivising institutional deliveries.
- Rural health: About 75% of the health infrastructure and manpower are concentrated in the urban areas where just 27% of the population resides. This deficit of healthcare in rural hinterlands has the potential to increase the Out of Pocket Expenditure and continuity of care.
- Tropical diseases: India accounts for 1/3rd of the world’s Neglected Tropical Disease burden. Poor Research and Development expenditure at 0.6 % of GDP has further posed obstacles to interventions like new drug development against Neglected Tropical Diseases.
Way forward:
- A comprehensive rural health policy covering primary, secondary and tertiary care focusing on non-communicable diseases is the need of the hour. Further, health education through ASHA workers may complement the above efforts to yield sustained results in the long run.
- An Indian Public Health Service can be conceptualized to improve standards across States and improve public health as a whole including sanitation and access to clean water.
- Integrated Health Care: Provision of holistic and preventive care through Ayurveda, Homeopathy and Naturopathy and other such systems to mitigate the spate of non-communicable diseases and the need for complex health interventions.
- Increasing the number of hospital beds to WHO recommended 3/1000 is a sine qua non to improve access to underprivileged sections of the society.
- NITI Aayog has remarked of the missing middle in the health insurance scenario where the middle class is in need of an affordable health insurance scheme. Such a scheme with contributory model must be conceptualized at the earliest along the lines of Ayushman Bharat Programme
Conclusion
It is said that “health is wealth”. It is also true that one needs wealth to safeguard health. This may keep out a large section of the Indian population. Along with affordability, quality of health care is also necessary lest India’s vision of becoming a $ 5 trillion economy only will sound good on paper not in reality. The above mentioned interventions will come in handy in ameliorating the systemic issues in the healthcare scenario and therefore must be rightly pursued.
Q2. “India’s gross Goods and Services Tax collections hit a record high of Rs 2.10 lakh crore in April 2024.” In light of the above statement, discuss the factors responsible for strong GST collections. Critically analyze the functioning of the Goods and Services Tax regime in the country. Suggest measures to make it more effective. 15 marks (250 words)
Topic- Goods and Services Tax :
Introduction
Goods and Services Tax which was introduced on July 1, 2017 heralded a new integrated and technology intensive indirect tax regime replacing the complex Value Added Tax regime that was in vogue till then. Recently, monthly average GST revenues have gone from Rs. 82,294 crores in 2017-18 to Rs. 1.68 lakh crore in 2023-24 due to various factors.
Body
- Factors driving strong GST collections
- Achievements of the GST regime
- Issues in the GST regime
- Way forward
Conclusion
Goods and Services Tax despite its drawbacks has brought structural changes in the indirect tax regime in the country. Further it has induced a behavioral shift among tax payers towards greater compliance. A still more robust GST can address the concerns of wide spectrum of stakeholders. Cooperative federalism along with inter-state cooperation is necessary to reform the GST regime to make if more effective, efficient and economic.
UPSC Syllabus Goods and Services Tax:
Why was this question asked?
Q. Discuss the rationale for introducing GST in India. Bring out critically the reasons for the delay in the rollout of the regime. (UPSC CSE 2013)
Introduction:
Goods and Services Tax which was introduced on July 1, 2017 heralded a new integrated and technology intensive indirect tax regime replacing the complex Value Added Tax regime that was in vogue till then. Recently, monthly average GST revenues have gone from Rs. 82,294 crores in 2017-18 to Rs. 1.68 lakh crore in 2023-24 due to various factors.
Body
Factors driving strong GST collections:
- Anti-fraud mechanism: Fake invoicing has been countered by using Business Intelligence and Fraud Analytics mechanisms that uses Artificial Intelligence and Big Data Analysis to counter frauds.
- Technology: E-way bill has made it nearly impossible to evade taxes during the interstate movement of goods. Through tracking and destination based taxation, there has been a consistent 10% growth in revenues year-on-year.
- Composition scheme: Composition scheme has reduced compliance burden amongst the MSME’s while improving revenue collections.
- Stricter compliance norms: Linking of PAN cards, digitization of economy and time stamping of bills have tightened the compliance norms driving better collections.
Achievements of the GST regime:
- Record collections: In April 2024, GST collections went past Rs. 2 lakh crore. This is one of the achievements of the GST regime compared to the previous regime where tax evasion gave rise to a strong parallel economy.
- Constitutional promise: Article 301 promises freedom of trade, commerce and intercourse across the length and breadth of India. E-way bill under GST has streamlined inter-state flow of goods by eliminating checks and long queues at inter-state borders.
- Consumer: Through input tax credit mechanism, GST has ensured customer centricity by minimizing the final price of goods for consumers and enforcing it through the National Anti-Profiteering Authority. Its functions have now been taken over by the Competition Commission of India.
- Technology: The GST Network forms the Information Technology backbone of the GST regime mitigating corruption in the collection system, reducing cost of collection and aiding informed policy making.
- Global standard: GST like system has been followed by many countries across the world like New Zealand, Singapore, Australia etc. Thus, it aligns with the global taxation standards.
Issues in the GST regime:
- Glitches in the tax portal has more than often come under criticism notwithstanding cyber security concerns that lurks the public service systems world over.
- There have been reproaches against the 4 tax slabs that the present system has, affecting the simplicity of the tax regime.
- How the regime can tax the large informal economy with a host of shell companies is still a mystery.
- States have time and again voiced their concerns about the GST Compensation Scheme as the Centre failed to compensate States during the COVID contingency.
- Crucial items like petrol, diesel, liquor and real estate have been kept out of the GST regime driving inflation and jeopardizing the holism that is a characteristic feature of the regime.
Way forward:
- Simplifying the tax portal to improve the compliance among the brick and mortar businesses and startups is a dire necessity.
- Number of tax slabs should be reduced to two to reduce the complexity and improve compliance of the tax regime.
- Essential items should invite zero rate to reduce burden on the under privileged sections of the society. For example, items like sanitary pads had invited 12% tax before 2018. It was tax exempted only after it drew widespread criticism.
- Exempted items like petrol, liquor and real estate must be brought under the GST net to keep inflation under check in the long term.
- A part of the GST must be shared with the local bodies as they too contribute to the growth of our economy and address people’s problems at the cutting edge level.
Conclusion
Goods and Services Tax despite its drawbacks has brought structural changes in the indirect tax regime in the country. Further it has induced a behavioral shift among tax payers towards greater compliance. A still more robust GST can address the concerns of wide spectrum of stakeholders. Cooperative federalism along with inter-state cooperation is necessary to reform the GST regime to make if more effective, efficient and economic.