Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

[op-ed snap] Paradise Papers, Gorakhpurop-ed snap


Mains Paper 2: Governance | Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.

From UPSC perspective, the following things are important:

Prelims level: Not Much

Mains level: Connection between tax avoidance and Health Budget of India


Two important incidents

  1. Paradise Papers: the new set of documents on offshore finances being investigated in collaboration with the International Consortium of Investigative Journalists (ICIJ) and Suddeutsche Zeitung, Munich
  2. These documents show a link to 714 Indian names
  3. Recent tragedy in Gorakhpur: 30 children die in 48 hours at Gorakhpur’s BRD Hospital, six due to encephalitis

Relation between the two incidents

  1. While the two stories seem to be unrelated, they are intimately linked
  2. As, revenue lost due to corporate tax avoidance(as shown in the paradise papers) could fund universal healthcare

Need of a Higher Health Budget

  1. A major reason for India’s health care crisis is that it spends only about 1.3 per cent of its GDP on health when the global average is 6 per cent
  2. The High Level Expert Group (HLEG) on universal health coverage (UHC) submitted its report in November 2011
  3. It estimated that financing the proposed UHC system will require expenditure on health to be stepped up to at least 2.5 per cent of GDP by 2017 and 3 per cent by 2022
  4. The National Health Policy 2017 also intends on gradually increasing public expenditure to 2.5 per cent by 2025

How can we improve our health budget?

  1. It will probably not be possible to do so until India’s tax to GDP ratio(which at 1.7 per cent is one of the lowest in the world) is raised
  2. This could be done if India had the political will to stop hemorrhaging its tax revenues due to the legal and illegal ways employed by the corporate sector

‘Revenue loss’ around the world

  1. Revenue losses due to tax avoidance are around $500 billion globally (Alex Cobham and Petr Jansky, March 2017)
  2. In addition, the studies show that the intensity of losses is substantially greater in low and lower middle-income countries
  3. So at one end we have countries such as Guyana and Chad, that are likely to be losing a staggering 7 per cent of GDP to tax avoidance and at the other end we have the UK losing only 0.02 per cent

India’s Position on revenue loss

  1. India falls somewhere in between. It is estimated to be losing 2.34 per cent of GDP due to corporate tax avoidance
  2. This is significantly more than the 1.3 per cent of GDP that it currently spends on healthcare and more than enough to help it reach its target of 2.5-3.0 per cent to achieve universal health coverage

The way forward

  1. Tax havens are at the heart of the inequality crisis, enabling corporations and wealthy individuals to dodge paying their fair share
  2. This prevents countries from funding vital public services and combating poverty and inequality, with especially damaging effects for developing countries like India
  3. The corporate sector needs to stop discussing whether these tax minimising schemes are legal or illegal
  4. Schemes that are causing revenue losses that could prevent two children younger than five dying every minute in India are at least highly unethical
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