NHP-2015-II,SAMVEG IAS

Achievement of Millennium Development Goals:
India is set to reach the Millennium Development Goals (MDG) with respect to maternal and
child survival. The MDG target for Maternal Mortality Ratio (MMR) is 140 per 100,000 live
births. From a baseline of 560 in 1990, the nation had achieved 178 by 2010-12, and at this
rate of decline is estimated to reach an MMR of 141 by 2015. In the case of under-5 mortality
rate (U5MR), the MDG target is 42. From a baseline of 126 in 1990, in 2012 the nation has an
U5MR of 52 and an extrapolation of this rate would bring it to 42 by 2015. This is particularly
creditable on a global scale where in 1990 India‟s MMR and U5MR were 47% and 40% above
the international average respectively. While the narrowing of these gaps and closure,
demonstrate a significant effort we could have done better. Notably, the rate of decline of
still-births and neonatal mortality has been lower than the child mortality on the whole. In
some states there is stagnation on these two indicators.

2.2.Achievements in Population Stabilization:
India has also shown consistent improvement in population stabilization, with a decrease in
decadal growth rates, both as a percentage and in absolute numbers. Twelve of the 21 large
States for which recent Total Fertility Rates (TFR) is available, have achieved a TFR of at or
below the replacement rate of 2.1 and three are likely to reach this soon. The challenge is now
in the remaining six states of Bihar, Uttar Pradesh, Rajasthan, Madhya Pradesh, Jharkhand and
Chhattisgarh but even here rates are declining. However these six States between them account
for 42 % of the national population and 56 % of the annual population increase. In the
remaining small States and Union Territories except Meghalaya, the Crude Birth Rate (CBR), is
less than 21 per 1000. The national TFR has declined from 2.9 to 2.4. The persistent challenge
on this front is the declining sex ratio.

National Health Policy 2015-I

India today, is the world‟s third largest economy in terms of its Gross National Income

(in PPP terms) and has the potential to grow larger and more equitably, and to emerge to be

counted as one of the developed nations of the world. India today possesses as never before, a

sophisticated arsenal of interventions, technologies and knowledge required for providing

health care to her people. Yet the gaps in health outcomes continue to widen. On the face of

it, much of the ill health, disease, premature death, and suffering we see on such a large scale is

needless, given the availability of effective and affordable interventions for prevention and

treatment. “The reality is straightforward. The power of existing interventions is not matched

by the power of health systems to deliver them to those in greatest need, in a comprehensive

way, and on an adequate scale".

1.2.This National Health Policy addresses the urgent need to improve the performance of health

systems. It is being formulated at the last year of the Millennium Declaration and its Goals, in

the global context of all nations committed to moving towards universal health coverage.

Given the two-way linkage between economic growth and health status, this National Health

Policy is a declaration of the determination of the Government to leverage economic growth to

achieve health outcomes and an explicit acknowledgement that better health contributes

immensely to improved productivity as well as to equity. 

The National Health Policy of 1983 and the National Health Policy of 2002 have served us

well, in guiding the approach for the health sector in the Five-Year Plans and for different

schemes, Now 13 years after the last health policy, the context has changed in four major ways.

Firstly- Health Priorities are changing. As a result of focused action over the last decade we are

projected to attain Millennium Development Goals with respect to maternal and child

mortality. Maternal mortality now accounts for 0.55% of all deaths and 4% of all female deaths

in the 15 to 49 year age group. This is still 46,500 maternal deaths too many, and demands that

the commitments to further reduction must not flag. However it also signifies a rising and

unfulfilled expectation of many other health needs that currently receive little public attention.

There are many infectious diseases which the system has failed to respond to – either in terms

of prevention or access to treatment. Then there is a growing burden of non-communicable

disease. The second important change in context is the emergence of a robust health care

industry growing at 15% compound annual growth rate (CAGR). This represents twice the

rate of growth in all services and thrice the national economic growth rate. Thirdly, incidence

of catastrophic expenditure due to health care costs is growing and is now being estimated to

be one of the major contributors to poverty. The drain on family incomes due to health care

costs can neutralize the gains of income increases and every Government scheme aimed to

reduce poverty. The fourth and final change in context is that economic growth has increased

the fiscal capacity available. Therefore, the country needs a new health policy that is responsive

to these contextual changes. Other than these objective factors, the political will to ensure universal access to affordable healthcare services in an assured mode – the promise of Health

Assurance – is an important catalyst for the framing of a New Health Policy.

1.4.The primary aim of the National Health Policy, 2015, is to inform, clarify, strengthen and

prioritize the role of the Government in shaping health systems in all its dimensionsinvestment

in health, organization and financing of healthcare services, prevention of diseases

and promotion of good health through cross sectoral action, access to technologies, developing

human resources, encouraging medical pluralism, building the knowledge base required for

better health, financial protection strategies and regulation and legislation for health. 

Birth of a new institution

In line with the Government of India’s approach of less government and a move away from centralised planning, the NITI Aayog with a new structure and focus on policy will replace the 64-year old Planning Commission that was seen as a vestige of the socialist era. The new body, conceived more in the nature of a think-tank that will provide strategic and technical advice, will be helmed by the Prime Minister with a Governing Council of Chief Ministers and Lt. Governors, similar to the National Development Council that set the objectives for the Planning Commission. The NITI Aayog seeks substitute centralised planning with a ‘bottom-up’ approach where the body will support formulation of plans at the village level and aggregate them at higher levels of government. In short, the new body is envisaged to follow the norm of cooperative federalism, giving room to States to tailor schemes to suit their unique needs rather than be dictated to by the Centre. This is meant to be a recognition of the country’s diversity. The needs of a State such as Kerala with its highly developed social indicators may not be the same as that of, say, Jharkhand, which scores relatively low on this count. If indeed the body does function as has been envisaged now — and the jury will be out on that — States will, for the first time, have a say in setting their own development priorities.

One significant change of note is that one of the functions of the body will be to address the needs of national security in economic strategy. Nowhere is this more relevant than in the area of energy security where India, unlike China, has failed to evolve a coherent policy over the years. Similarly, networking with other national and international think-tanks and with experts and practitioners, as has been envisaged, will add heft to the advice that the NITI Aayog will provide. To deflect criticism that this will be a free-market institution that ignores the deprived, the government has taken care to make the point that the body will pay special attention to the sections of society that may not benefit enough from economic progress. How this operates in practice will bear close watching. Interestingly, though it will not be formulating Central plans any more, the NITI Aayog will be vested with the responsibility of monitoring and evaluating the implementation of programmes. Thus, while the advisory and monitoring functions of the erstwhile Planning Commission have been retained in the new body, the executive function of framing Plans and allocating funds for Plan-assisted schemes has been taken away. But who will now be responsible for the critical function of allocating Plan funds? Hopefully, there will be greater clarity on this aspect in the days ahead.

A step in the right direction,ias mains

Yet another bold initiative was taken on the last day of 2014 when the Union government made public the draft National Health Policy 2015. The policy is a first step in achieving universal health coverage by advocating health as a fundamental right, whose “denial will be justiciable”. While it makes a strong case for moving towards universal access to affordable health-care services, there are innumerable challenges to be overcome before the objectives become a reality. The current government spending on health care is a dismal 1.04 per cent of gross domestic product (GDP), one of the lowest in the world; this translates to Rs.957 per capita in absolute terms. The draft policy has addressed this critical issue by championing an increase in government spending to 2.5 per cent of GDP (Rs.3,800 per capita) in the next five years. But even this increase in allocation falls short of the requirement to set right the dysfunctional health-care services in the country. Citing the health-care system’s low absorption capacity and inefficient utilisation of funding as an alibi for not raising the spending to 3 per cent of GDP is nothing but a specious argument. Insufficient funding over the years combined with other faulty practices have led to a dysfunctional health-care system in the country. Undivided focus is an imperative to strengthen all the elements of health-care delivery. The failure of the public health-care system to provide affordable services has been the main reason that has led to increased out-of-pocket expenditure on health care. As a result, nearly 63 million people are driven into poverty every year. The Ebola crisis in Liberia, Guinea and Sierra Leone, which underlined the repercussions of a weak public health-care system, should serve as a grim reminder of this.

The national programmes provide universal coverage only with respect to certain interventions such as maternal ailments, that account for less than 10 per cent of all mortalities. Over 75 per cent of the communicable diseases are outside their purview and only a limited number of non-communicable diseases are covered. It is, therefore, crucial for the Union government to undertake proactive measures to upgrade the health-care services of poorly performing States such as Bihar and Uttar Pradesh. As it stands, health will be recognised as a fundamental right through a National Health Rights Act only when three or more States “request” it. Since health is a State subject, adoption by the respective States will be voluntary. Though a different approach has been taken to improve adoption and implementation by States, the very objective of universal health coverage that hinges on portability will be defeated in the absence of uniform adoption across India.

Municipal bonds: FinMin asks urban development ministry to identify cities

Days after the Securities and Exchange Board of India (Sebi) proposed new rules for issuance of municipal bonds, thefinance ministry has asked its urban development counterpart to identify five or six cities, and specific infrastructure projects in those cities, for which those civic bodies could issue such bonds.

Municipal bonds are instruments issued by municipal bodies, or by states on these bodies’ behalf, to raise capital for infrastructure projects. After Finance Minister Arun Jaitley in the Union Budget for 2014-15 announced the intention to develop 100 smart cities, the government deliberated on various ways to finance the infrastructure for such cities and decided reviving the dormant municipal bonds could be one of the ways.

“The urban development ministry has been asked to identify five to six cities and specific projects within these cities for which the municipal bonds will be issued. This will only be the start. There will be more cities identified for infrastructure funding, to develop those into smart cities,” a senior government official told Business Standard.

According to the plan, these will be Tier-II and -III cities and include smaller state capitals and satellite towns around larger metros. The official added the urban development ministry was expected to come up with specific names within a week.

On December 30, Sebi had released a concept paper on the issue and trading of such bonds on exchanges and invited comments from the public. The concept paper said the civic body issuing these bonds would have to obtain ratings from credit rating agencies and would have a minimum tenure of three years.

The market for municipal bonds has existed in India since 1998, when Ahmedabad became the country’s first city to issue such bonds. But 25 municipal bond issues in the past 16 years have garnered only about $300 million, according a report by Mukul Asher, professor at the National University of Singapore, and Shahana Sheikh of New Delhi’s Centre for Policy Research. The amount raised so far is only a fraction of those raised by developed markets like the US, where the municipal bond market is worth more than $3 trillion.

Analysts and policy watchers say the market for such bonds has not picked up in India for a number of reasons. These include the lack of interest among investors, the sorry state of finances at many municipal bodies, shoddy accounting of their books, bureaucratic hurdles, lack of interest at the central and state levels, and the issue of who will guarantee these bonds. Besides, there also is local political interference in these civic bodies.

Govt raises solar investment target to $100 bn by 2022 Solar energy contributes less than 1% to India's total energy needs currentl

Prime Minister Narendra Modi has ramped up his target for solar energy as he bets on renewables to help meet rising power demand and overcome the frequent outages that plague Asia's third largest economy, a senior official told Reuters.

India gets twice as much sunshine as many European countries that use solar power. But the clean energy source contributes less than 1% to India's energy mix, while its dependence on erratic coal supplies causes chronic power cuts that idle industry and hurt growth.

Modi now wants companies from China, Japan, Germany and the United States to lead investments of $100 billion over seven years to boost India's solar energy capacity by 33 times to 100,000 megawatts (MW), said Upendra Tripathy, the top official in the Ministry of New and Renewable Energy.

That would raise solar's share of India's total energy mix to more than 10%. In Germany, a leader in renewable energy, solar accounted for about 6% of total power generated in 2014.

India had earlier set an investment target of $100 billion for the next five years for all types of renewable energy, with wind taking up two-thirds of the total. In an interview, Tripathy said Modi's new solar target was ambitious, "but if you do not have a higher goal, you will not achieve anything".

Canadian Solar and China's JA solar told Reuters they are looking at making cells or modules - used in solar panels - in India. JinkoSolar Holdings said recent announcements have also raised their interest.

US-based First Solar and SunEdison Inc have sizeable businesses in India, and together with local firms will invest $6 billion in India for the fiscal year to March 31. Tripathy expects new and existing companies to invest about $14 billion annually starting next fiscal year through to 2022.

Among First Solar's top projects are two plants with Kiran Energy Solar Power and Mahindra Solar One totalling 50 MW in Rajasthan. SunEdison is working on a 39 MW project in India and hopes to participate in the solar expansion plan, said regional managing director Pashupathy Gopalan.

COST CHALLENGE

Solar energy in India costs up to 50% more than power from sources like coal. But the government expects the rising efficiency and falling cost of solar panels, cheaper capital and increasing thermal tariffs to close the gap within three years.

Modi promised on high-profile visits to Japan and the United States last year to help solar companies overcome barriers to entering the Indian market.

"Their basic problems are who is the buyer, where is the land and can India have a regime where they can raise low-cost capital?" Tripathy said. "These three issues have to be addressed and we are addressing them."

To create sufficient demand, power distributors will have to raise renewable energy purchases to 8% from 3% by 2020. There is also a plan to require new thermal plants to have a 10% renewable mix, which they can generate or buy from solar companies as credit.

India recently signed a $1 billion agreement with the Export-Import Bank of the United States for companies willing to ship equipment from that country. India is also thinking of solar bonds and helping foreign firms raise rupee bonds to cut costs.

Foreign companies say they are enthused by Modi's personal interest, but red tape is still an issue.

"The policy framework needs to be improved vastly. Documentation is cumbersome. Land acquisition is time-consuming. Securing debt funding in India and financial closures is a tough task," said Canadian Solar's Vinay Shetty, country manager for the Indian sub-continent.

Why the road sector ccould see a pickup in project finance

Transport minister Nitin Gadkari addressed a press conference in Mumbai on Thursday where he said that all new roads laid by the central government will be of concrete. He added that target of increasing the speed of highway construction to 30 km a day will now be achieved within 18 months against an earlier estimate of 24 months as work on 95% of 190-odd stuck road projects stuck has re-started.

The minister, however, did not elaborate how he intends to finance new road construction. Most of the older projects which were stuck had lined up their finances and were held up on account of various clearances. But on the new ones, the government does not have any clarity on how they will be financed.

Reports say that the Road Transport Ministry needs at least Rs 2 lakh crore for expanding at least 20,000 km national highways (NH) in the next few years. However, there are no private funders for these projects. The Transport Minister has raised the issue with the finance ministry. But with the fiscal deficit already touching 99% of its targeted limit in the first eight months of the fiscal year, it is unlikely that Arun Jaitley will be able to help Gadkari.

Given the tight situation in which the government finds itself, the road ministry is now contemplating using a hybrid modelto fund highway projects. Under this mechanism, government will fund 40% of the value of the project through viability gap funding (VGF).

In India road projects are awarded through one of three models: Build Operate and Transfer (BOT) – Toll, BOT –Annuity, and Engineering Procurement and Construction (EPC). The key differential in each of these is the risk profile of the developer. In the BOT-Annuity case, the risk of the developer is to construct the road and maintain it. In BOT – Toll the developer not only has to construct and maintain the road but also has to recover his money by collecting tolls; here an additional traffic risk has to be borne by the developer. In an EPC contract, only the construction risk is with the developer.

The Hybrid model proposed by the road ministry is for BOT-Toll mode, where the traffic risk component of the project will be largely borne by the government and will thus act as a quasi BOT-Annuity model. Reports say that three highway projects – one each in Odisha, Bihar and Karnataka will adopt the hybrid model.

In a note, Morgan Stanley has said that the hybrid model will be a win-win for developers as well as the government. In the current situation where developers lack capital, a move to lower the upfront costs is significant. Given the certainty of cash flows in the annuity model – the government will be in charge of toll collection – developers can obtain more leverage from banks, thus reducing their equity requirements quite significantly. This model helps the government, which is relying mainly on the EPC model, as it lowers their upfront contribution for the project.

The model has the potential of reviving the road sector as the risk element of pricing based on traffic movement on the roads will be taken over by the government. Morgan Stanley feels that while this move actually benefits the weaker (read funds-starved) players in the industry, it is a continuation of the impetus the government is putting on the roads industry.

In the same model, the government is also allowing players to completely exit from the project two years after the start of toll collection. This would help the companies free up their capital for investment in other projects.