The money not spent

How can states be made to increase spending on education, health?

There are several costs associated with elections in India. There is the tangible cost of administering them and then there is the opportunity cost of what is not achieved because politically expedient mandates and rhetoric manage to mask policy priorities that could transform the lives of millions. Topmost on this list, but yet to be integrated in any major political party8217;s national campaign and mandate, is a one-time, 8220;all out8221; focus on adequately funding the social sector 8212; health and education. Indeed, here, India8217;s politicians and policy-makers have thus far not been forced to answer on either absolute outlays or on relative outcomes. That time is now. Further delay will ensure India8217;s so-called demographic dividend will not be redeemed and our population will continue to be a liability rather than an asset. At 1.3 billion, can this risk be taken?

As far as the matter of outlays is concerned, comparative statistics have consistently shown that India ranks low in terms of per capita health and education spending than peers with similar gross domestic product GDP, that India8217;s 1.1 per cent of GDP spent on health is way below the world average of 5.5 per cent and, similarly, also way below the 6 per cent of GDP recommended by the Organisation of Economic Cooperation and Development. The story is mirrored on education spending.

In terms of outcomes, these statistics translate into depressing facts. On the education front, it implies that less than 40 per cent of Indian adolescents presently attend secondary schools and by 2015 projections are that 29 million children will be out-of-school children. Teacher absenteeism and phenomenally high drop-out rates are now an accepted part of the situation. On the health front, this policy blind spot translates into yet another set of horrifying realities. According to UNICEF, in 2006, India8217;s infant mortality rate was 57 per 1,000 live births, comparatively a very high figure, and an estimated two-thirds of all infant deaths were neonatal deaths, occurring within the first 28 days of life!

The only silver lining so far is the two Centrally-sponsored schemes: National Rural Health Mission and the Sarva Shiksha Abhiyan. But these schemes are being built on a house of hay crumbling primary health and education facilities now asking to deliver even more and still fail to answer the problem of chronic under-budgeting of health care and education at the national and the state levels.

One of the main problems in addressing this under-funding is that health and education is a state subject. Therefore, most of the financial outlays up to 85 per cent of government spending are made by state governments. But there are no national laws to make a state government spend a certain minimum amount on health or education. As far as health is concerned, while studies show that there is no exact correlation between per capita health spending and some basic indicators life expectancy, infant mortality rate and under-5 mortality rate there exists a broad relationship along expected lines. Evidence also suggests that higher per capita spending prevents the spread of communicable disease. Despite this evidence, states choose to spend as they wish on health, and not as they must.

The story is similar with education. Here too, there is no checks-and-balances mechanism to ensure a certain minimum per capita spending. It should come as no surprise then that states8217; expenditure on education dropped by two percentage points in the last decade. Furthermore, the gap between the high spenders and low spenders has widened. Unexpectedly, states like Kerala, which had thus far recorded the highest literacy level, have also reduced spending in recent years.

Perhaps one of the reasons that neither health nor education takes budget priority and/or electoral priority is because benefits from investment in a social infrastructure do not become evident over one election cycle. But it would be a mistake to assume that the multiplier effect of these investments is not huge. In fact, it is the only thing that will matter in the long run. We have already paid dearly for not spending on physical infrastructure. We can well imagine how much epidemics and chronic malnutrition or unemployed and uneducated youth will cost us.

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This is the richest phase of India8217;s economic history. It is time our federal system answered some tough questions on the chronic under-funding and downward trend of the health and education sectors. After all, both health and education are promised, if not guaranteed, in the Constitution and future generations will ask why, when our coffers were full, we were not able to feed and teach our children adequately.

The writer is a Delhi-based political economy researcher

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