quality of human life-final-2
TRANSCRIPT
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Impact of the Economic Reform Programme on the quality of
human life in India - a study on the Health Indicators
(Dr. Srinivasa Rao Gangadharan and C.A. Yoonus)
Abstract
This paper examines the impact of the economic reform programme in
enhancing the quality of human life in India. The focus is on testing the
existence of structural changes on three crucial health indicators – Life
Expectancy at birth (LEB), Child and Infant Mortality rate (CMR &
IMR) before and after reform. The paper also attempts to find out the
level of influence of the expenditure on health by the GOI and thenumber of registered medical practitioners available to provide medical
treatment on the above three health indicators. The Chow test has been
used to test the existence of structural changes and the regression analysis
to find out the level of influence.
The result of the Chow test showed existence of structural changes in
CMR & IMR and not in the case of LEB after the reform programme.
The regression analysis indicated the expenditure on Health by the GOIand the number of medical practitioners available to provide medical
treatment had no impact in improving the three health indicators.
The paper concludes that the reform programme in India had no
significant impact in enhancing the quality of human life. In fact the
indicators show better performance before rather than after reform. The
reform programme concentrated more on the fiscal, structural and trade
adjustment rather than the social sector development. The reform
programme would have helped us reach our development goals if it was
oriented towards aspects of human development (education, health, child
nutrition, drinking water, women’s welfare and autonomy etc).
Key Words – Economic Reform Programme, Economic Growth, Quality
of Human life, Life Expectancy at Birth, Child Mortality Rate, Infant
Mortality Rate, Gross Domestic Product, Chow Test, Expenditure on
Health
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1. Introduction
The economic growth rate of a country would be meaningful only if it is
accompanied by an improvement in the quality of human life, no matter what
the level of growth (8 or 9%) is. To quote J.R.D. Tata “I do not want India to
be an economic power. I want India to be a happy country”. Enhancing the
quality of human life has been the subject matter of much academic study and
public debate in India, but the focus has largely been on the performance of
the economy as a whole and not on the level of enhancement on the quality of
human life. An understanding of growth and the rationale for People Centered
Development (PCD) is imperative before examining the impact of the
economic reform programme on enhancing the quality of human life.
Is creating wealth growth? For many years, since the birth of industrial
capitalism, growth has been a major economic goal of policy makers – and
political leaders - based on the deeply ingrained view that delivering larger
and larger quantity of goods and services is the best way to improve the
quality of human life. The revolutionary methods of production used by this
system did generate fabulous new wealth and the policy makers saw this
increase in wealth as a way to eliminate scarcity and poverty.
But in reality this wealth was concentrated in the hands of small elite groups in
a few rich countries. For many other people it was in the form of enslavement.
However the focus of philosophers such as Aristotle and the political
economists such as Adam Smith, Karl Marx, John Stewart Mill and Alfred
Marshall argued that “human beings should be the ends of development rather
than mere means” . It was only after the World War II, the world community
adopted the universal declaration of Human Rights, celebrating the victory of
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human freedom and reasserting strongly and clearly that the principle
objective of development was human well-being. In subsequent years there
followed a series of UN conventions and conferences establishing the
contention that improvement in the quality of human life as growth.
In India, it is often claimed that the current upsurge in the growth rate is the
resultant factor of the reform programme initiated by the government one and
half decades ago. Besides this, the rationale of the various economic reform
initiatives at the national level was that they would increase efficiency and
lead to higher factor productivity. Since these policies are generally applicable
to all states, there is a natural presumption that they would provide efficiency
gains that increases the growth potential.
So with the above back ground of improving the quality of human life as
growth and the rationale for examining it in the backdrop of economic reform
programme, this paper examines the impact of the economic reform
programme in improving the quality of human life in India.
2. Objective of the Study
The objective of the study is to examine the impact of the economic reform
programme in enhancing the quality of human life. The focus is mainly on
examining the structural changes in the three important health indicators (Life
Expectancy at Birth (years), Child and Infant Mortality rate) and to find out
the level of influence by the expenditures made by the GOI on health and the
number of registered medical practitioners available to provide medical
treatment before (1980-81 to 1989-90) and after (1990-91 to 1999-2000) the
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reform programme. The study also identifies the factors responsible for the
changes.
3. Methodology
The most common methodology used in examining the impact of a
programme is by comparing the key performance indicators before and after
the implementation. But a mere comparative analysis of the absolute figures
on the magnitude of progress (increase or decrease) in the performance
indicators does not give statistically significant results. For instance the
percentage of people below the poverty line in 1983-84 was 44.48 percent,
though this is 10.4 percent less than the percentage of people below poverty
line in 1973-74, the absolute number of people below the poverty line has
increased by 1.56 million people.
The most popular and statistically significant regression model, the Chow test 1
has been used to test for the existence of structural changes in the three
important health indicators between the two periods (Before and after the
reform programme). After ascertaining the changes, the level of influence of
the independent (explanatory) variables - expenditure on health by the general
government (State and Centre) and the number of registered medical
practitioners over the each dependent variables (LEB, CMR and IMR) has
been attempted separately between the two periods to find out the impact of
economic reform programme in improving the quality of human life.
4. Motivation for undertaking the study
Quality of Human life is more than economic growth. It is an environment
where people develop their full potential and lead productive and creative
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lives according to their needs and interests. Development is expanding the
choices of the people for a long and healthy lives, access to the resources
needed for a decent standard of living and participate in the life of the
community they value. So, human development is enlarging people’s choices.
Without these choices many opportunities in life remain inaccessible.
Ensuring quality health care to its citizen is one of the constitutional
commitments of the government in power. Quality health care reflects the
quality of human life. This is especially important in a country where the
manifestation effect of the “demographic dividend 2” is on the increasing trend.
According to the Technical Group study on population projections constituted
by the National Commission on Population, the proportion of population in the
working age group of 15 – 64 years increasing steadily from 62.9 per cent in
2006 to 68.4 per cent in 2026. Tapping this demographic dividend to achieve
increased economic growth rate, India need to ensure proper healthcare to this
age group of the population.
So, it is highly motivating to undertake a study that stress the importance of
the quality of human life as growth and help the policy makers to enhance it
by making suitable amendments in the health policy.
5. Research Gap
Many studies on Growth, Globalisation and Economic reform programme
(Levitt, 1983, Xabier, 1995, Wade, 2001) focused on the financial
management aspect and very little on the social aspect that will improve the
quality of human life. Majority of the studies on the social aspect deal with the
educational aspect and relatively very few studies focus on the health aspect of
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improving the quality of human life. This is evident from the observation that
a search on “Quality of human life” in the JSTOR search engine listed out
many articles on education and very few on health. Even here the analysis was
on the construction of new quality of life index or a comparative analysis of
quality of life across countries in the world and not on examining the impact
of any reform programme on the quality of human life.
This study focuses on health aspect despite the fact that educational and
poverty indicators also determine the quality of human life. The study relies
on a time – series data that requires availability of data on a continuous basis,
while the health indicators fulfill this criterion, the educational indicators fails
on this as they (literacy rate) are decennial in nature.
This study fulfills this research gap.
6. Data Source
This paper relies on data from the authorized Indian statistical database - RBI
Bulletin, Economic Survey of India, and from the website of Indiastat.com and
the Ministry of Human resources, Government of India.
6.1. Independent variables
The level of social sector expenditure at the state level and its quality and
effectiveness has a direct bearing on human development outcomes and over-
all well-being. Because under the constitutional division of responsibility
between the Centre and State Governments, the bulk of the social services and
most infrastructure services (except for telecommunication, civil aviation,
railways and major ports) lie in the domain of state government. Hence we
have taken the expenditure on health incurred on both the Revenue and Capital
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account by all the state governments in India as one of the independent
variable. The data has been culled out from the RBI bulletin that brings out the
Finances of the State Governments 3 every year. To mitigate the inflationary
pressure we have used the proportion of expenditure on Health to GDP.
The second independent variable namely, the number of registered medical
practitioners per ten thousand populations has been taken from the various
issues of Economic survey 4.
7. Organisation of the Paper
The paper has been organized into four sections. Section – 1 deals with the
Review of literature; Section - 2 examines the objectives of the study;
Section – 3 brings out the statistical examination of the hypothesis developed
and Section – 4 Summaries the paper with a conclusion.
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Section – 1
Review of Literature
The review of literature for the study is focused on two aspects:-
I. Studies that measures the quality of human life
II. Economic reform programme and the quality of human life.
I. Studies that measures the quality of human life
Economists, Academicians and Development experts have devised several
indices based on health and education indicators to measure the quality of
human life. Using cross-country data, Steve Dowrick, Yvonne Dunlop and
John Quiggin (1998) estimated an equation that explains that a cost reduction
in age-specific mortality rates is sufficient to save the life of one person in
terms of the prices of specific goods and services.
Shirley Cereseto and Howard Waitzkin (1988) compared the Physical Quality
of Life (PQL) of 123 capitalist and socialist countries (97 percent of the
world's population) taking into account the level of economic development.
Gary S. Becker, Tomas J. Philipson and Rodrigo R. Soares (2005) computed
a "full" growth rate that incorporates the gains in health experienced by 96
countries for the period between 1960 and 2000.
For a long time there prevailed an assumption amongst economist that the Per
capita GNP is the best index of economic well being of a country and the basic
needs such as health and education would be taken care as a by-product of the
growth in GNP. But the outcomes of many studies (Morris 1979, Ram 1982,
Burket 1985) have showed that this was not the case.
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According to Brundtland Report 5 the economic growth rate that is forceful and
at the same time socially and environmentally sustainable as an indicator of
the quality of human life.
Daniel J. Slotjee devised an index that measures and compares the quality of
life as comprehensively as possible using 20 attributes of the quality of life for
123 countries.
The above literature shows that the indices developed are better indicators of
the quality of human life in a country as compared to economic growth.
II. Economic Reform Programme (Openness) and the Quality of human
life
There are not many studies that link Economic reform programme with the
quality of human life due to the following reasons:-
a)
Many economists are of the view that reform programme is only a tool
to correct the macro economic instability in the economy and has no
link with the quality of human life.
b) there are no direct studies of the poverty effects of trade and trade
liberalization and no general comparative static results about the level of
influence (increase or decrease) of trade liberalization on poverty;
c) there are no historical instances in which liberalization could be
identified as the main economic shock.
Despite the above reasons there are several highly visible and well-promoted
cross-country studies (David dollar,1992, Jeffrey Sachs and Andrew Warner,
1995 and Sebastian Edwards,1998) that foster the 1990s conviction that
openness is good for economic growth.
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But Rodriguez and Rodrik (2001) contradict that the above conviction rest on
very weak empirical foundations such as faulty measures of openness and
serious econometric short comings. Moreover liberal trade is usually only one
of several indicators of openness used that often weighs rather lightly in the
overall result (Ann Harrison, 1996).
Besides this, economists like L.Alan Winters, Neil McCulloch and Andre
McKay, 2004 are also of the view that trade liberalization harms poorer actors
in the economy in the short and even in the successful long run open regimes.
Though the reform programme in the last 20 years around the world has more
or less enhanced the economy stronger and delivered a huge change, it has not
resulted in enhancing the quality of human life. This is reflected in a study
(Michael Pussey,2003) that validate from 1980 onwards (when most of the
economies around the world have opened their economies) to the turn of the
millennium, the total wages share has fallen down from 60 per cent to 54 per
cent despite an increase in the profit share (17% to 24%).
This was due to the fact that the demands of the capitalist classes for higher
rates of remuneration, especially higher dividends, force down the added value
distributed to wage earners as direct wages and social welfare benefits. The
government share has stayed at about the same low level, comparing with
other OECD countries, for a long time government spending had been at the
low levels and a small public sector.
The UNCTAD report of the UN conference on trade and development also
shows that the poor countries least open to globalisation have progressed most
in per capita income, whereas the most open countries have been victims of
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their openness 6. Karl Marx, in his critique of merchandise in the first chapter
of Das Kapital, predicted that Liberalization is incapable of giving any
meaning to life other than consumerism, waste, hijacking natural resources
and economic income and worsening inequality.
The Indian Scenario
A study titled “Politics of Economic Reform in India” points out that the
changes introduced in the reform programme of the 90s were dramatic by the
past standards in India, but quite unremarkable by the standards of many other
developing countries, particularly in East Asia and Latin America.
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Section - 2
Economic reform programme and the quality of Human life
Life expectancy at birth - a long and healthy life
The most important health indicator that highlights the quality of human life is
the Life expectancy at Birth (LEB) – measured in terms of years. Life
expectancy is the average number of years a human has before death,
conventionally calculated from the time of birth, but also can be calculated
from any specified age. Calculating life expectancy from birth emphasizes
contributions to improvement in health at lower ages; low pre-modern life
expectancy is influenced by high infant and childhood mortality. If a person
did make it to the age of forty he has on an average another twenty years to
live in. Improvements in sanitation, public health, and nutrition have mainly
increased the numbers of people living beyond childhood, with less effect on
overall average lifetimes.
An examination of the increment in the life expectancy years, before (1981 –
1991) and after (1991-2001) the reform shows that Life expectancy gap has
been closing in India. The reform programme has reduced the increment in
LEB nearly half of that witnessed before reform. It is to be noted that the
increment in life years of female is more than the male. In the last five years
the increment is almost twice that of male.
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Table - I
Increment in the Life Expectancy years - Before (1981 – 91) and AfterReforms (1991 – 2001) in India
Health IndicatorsBefore(1981 -1991)
After(1991 -2001)
In the last 5Yrs
(2001-2006)
Life Expectation at Birth - Male 5.6 2.66 1.51
Life Expectation at Birth - Female 6.2 3.09 2.92
Source - Economic Survey, 2006
To add more value to our analysis, we have compared the increment in LEB
years of India with its neighbours (Pakistan, Bangladesh and Srilanka), the
BRIC 7 and with some developed economies (USA, UK, France, Japan and
Germany). The analysis revealed India ranks last with an increment of just
0.12 years in the LEB among the countries selected for analysis.
Table - II
According to the latest available data, Japan with a LEB of 82 years tops the
list followed by France (80), UK (79) and US (78). So an average person born
in Japan will live 18 years more than Indian. It is shame to know that
Country 2001 2002 2003 2004 2005 IncrementUnited Kingdom .. 77.59 78.40 78.75 78.95 1.36Bangladesh .. 62.58 .. .. 63.90 1.32China .. 70.66 .. 71.44 71.83 1.18Pakistan .. 63.82 64.98 64.92 64.86 1.04Brazil .. 70.30 .. .. 71.24 0.94France 79.11 79.31 79.26 80.16 80.21 0.90Sri Lanka .. 73.92 .. .. 74.67 0.75Germany 78.33 78.23 78.48 78.48 78.93 0.70
Japan 81.42 81.56 81.76 82.03 82.08 0.51United States 77.03 77.24 77.14 77.43 77.71 0.47Russian Federation 65.49 65.09 65.01 65.42 65.47 0.38India .. 63.38 .. .. 63.50 0.12
Source - World Development Indicators, The World Bank Group
Life expectancy at birth, total (years)
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Bangladesh is a head of India in LEB. Being born in the wrong street in global
village carries with it a large risk in terms of survival prospects.
Child Mortality Rate (CMR)
The most sensitive indicator of human well-being is the Child Mortality Rate
(CMR). Perhaps more powerful than any other indicator, child mortality
demonstrates that increases in income are not equivalent to improvements in
human development. The encouraging trends at the global level are that child
mortality rates are falling: there were 2.1 million fewer deaths in 2004 than in
1990 (Pranab Bardhan, 2007). Despite these improvements in survival
prospects in all regions, 10.8 millions child deaths in 2004 bear the testimony
to the basic of all life chances – the chance of staying alive.
Now, let us see what is happening in India. The magnitude of decline in CMR
has slow down after the implementation of the economic reform programme.
Before reform (1981-1991) the CMR reduced by 14.7 while after reform
(1991 – 2001) the CMR got reduced only by 9.5.deaths. India has
outperformed Bangladesh in economic growth and average income, but
Bangladesh has out performed India in reducing child death rates, which is
more meaningful than growth in GDP and average income.
Table – III
Child Mortality in India
1981 1991 2001Child Mortality Rate (0-4Yrs) Per 1000 children
41.2 26.5 17.0
Before Reform After Reform
1981 - 1991 1991-2001
The magnitude of decline inchild mortality rate (0-4) yrs 14.7 9.5
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Infant Mortality Rate (IMR)
The reform programme has not brought any impact on the infant mortality
rate. Comparing with 1981, the IMR has come down by 30 deaths per 1000
live births in 1991. After the implementation of the economic reform
programme the IMR got reduced only by 22 deaths per 1000 live births.
Table - IV
BeforeReform
AfterReform
1981 1991 2004Infant Mortality RatePer 1000 live births 110 80 58.0
1981 - 1991 1991-2004The magnitude of decline in Infantmortality rate per 1000live births
30 22.0
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Section - III
Statistical Analysis on the impact of the economic reform
programme on LEB, CMR and IMRA statistically significant analysis will give more validation in examining the
impact of the reform programme on LEB,CMR and IMR rather than a mere
comparative analysis of the above nature. Hence, the following hypothesis has
been developed to test the level of significance:-
H 0 (Null Hypothesis) = the expenditure on health by the GOI and the number
of registered medical practitioners during the reform programme have
enhanced the crucial health Indicators
H 1 (Alternative Hypothesis) = the expenditure on health by the GOI and the
number of registered medical practitioners during the reform
programme have not enhanced the crucial health Indicators
The above hypothesis has been tested using the Chow Test regression model –
an econometric test that examines any structural changes in the three crucial
health indicators (LEB, CMR & IMR) between the two periods (Before and
After Reform). It is nothing but the F test, where the observed value is more
than the critical value.
First we have used Life expectancy at birth (LEB) as the dependent variable
and the Proportion of General government’s (Centre and State) expenditure on
health to GDP, the number of Registered Medical practitioners per 10000
population available to provide medical treatment and the dummy (0,1) as the
independent (Explanatory) variables to test for structural changes in the LEB.
Our results showed that the observed F value is less than the Critical value and
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they do not hold any significance. In other words there are no changes in the
Life expectancy at birth both before and after reform.
Since LEB did not yield any significant result our next attempt was to use
Child Mortality rate as the dependent variable with the same independent
variables to test for structural changes between the two periods. The results
showed significant outcome (observed “F” value > critical) thereby establishes
the fact that there exists structural changes in the Child Mortality Rate (CMR)
before and after the programme. A similar attempt has been made with respect
to Infant Mortality rate (IMR) which also showed significant outcome. In short
the chow test conducted for the three health indicators showed that except
LEB, in the other two health indicators (CMR & IMR) there exist structural
changes.
Table -V
Descriptions CMR IMR LEBResidual Sum Squares (S1) Combined Observations 97.08 164.46 148.74Residual Sum Squares (S2) Period 1 17.96 18.58 59.08Residual Sum Squares (S3) Period 2 16.41 27.94 43.99S4 = (S2+S3) 34.38 46.52 103.07S5 = (S1 - S4) 62.70 117.94 45.67No.of.Parameters Estimated (k) 4 4 2
No.of.Obsevations (n1) 10 10 10No.of.Obsevations (n2) 10 10 10
S5/k 15.68 29.49 22.83(n1+n2-2k) 12 12 16
S4/(n1+n2-2k) 2.86 3.88 6.44Observed F - Value = 5.47 7.61 3.54F - distribution (k, n1+n2-2k) (4,12) (4,12) (2,16)F- Critical Value @ 5% level 3.26 3.26 3.63
Inference = Observed F< Critical F Significant SignificantNot
Significant
Chow Test
)221 /(4
/ 5k nnS
k S
−+
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After establishing the existence of structural changes in the CMR and IMR
which means the reform programme has brought some changes in the CMR
and IMR. The next level of analysis was to determine the level of influence by
the independent variables on these two indicators.
The adjusted R 2 in the regression analysis explains the level of influence of the
independent variables on the dependent variables. Our analysis reveals that the
level of influence by the independent variables (expenditure on Health by the
government and the number of Registered Medical practitioners (RMP) to
provide medical treatment) on the dependent variables (CMR and IMR) has
come down after the reform programme. These two independent variables that
were influencing 88 per cent of changes in CMR and 80 per cent of changes in
IMR before reform, their level of influence has come down to 54 per cent and
57 per cent respectively after the reform. This is further validated by the F
value that explains the significance of the whole model shows that the model
was significant before reform and not after reform.
Table - VI
CMR IMR CMR IMR
Adjusted R2 0.88 0.80 0.54 0.57Significance of F Value 0.0003 0.0003 0.0281 0.0001P - Value of the Intercept 0.0001 0.00002 0.43 0.182Coefficent X1 - Propn.of Expenditure on Health to GDP59.26 589.99 1801.37 4721.83Coefficent X2 - Registered Medical Practitioners/ 10000Population
-16.39 -21.90 -3.61 -5.76
t- value of X1 - Propn. Of exp.on Health 0.031 3.00 1.55 3.13t- value of X2 - RMP -6.89 -9.06 -3.18 -3.89
Before Reform After ReformStatistical indicators
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The next level of analysis is to find out whether the changes in CMR and IMR
have been due to Intercept or Slope or both. The P value of the Intercept of
CMR and IMR are significant before reform and not after reform. This has
been due to high variation in the co-efficient of the variable X1 (proportion of
expenditure on health to GDP) after reform. The beta co-efficient increased
from 59 to 1800 in the case of CMR and from 590 to 4700 in IMR. The above
statistical inferences show that the expenditure on Health by the Government
had no impact in improving the health indicators.
This is because public expenditure on health are labour-intensive, the bulk of
the increase has been due to sharp increases in the wages of the health service
providers, following the fifth pay commission’s recommendations in 1997.
The impact of the Commission’s recommendations on spending was
somewhat higher in education and health than in other sectors. A study by
Shariff and others (2002) points out that in some states the wage bill tops 90
per cent of the total costs. The increase in the wage bill following the
commission’s decision led to increase in pay rates and not in the numbers of
doctors and nurses. This increased spending was not likely to improve health
outcomes.
The positive aspects of the health indicators CMR and IMR is explained byreduction in these indicators. The variable X2 (the number of RMPs) had good
influence in bringing down the CMR and IMR. The beta co-efficient shows
negative sign that explains an increase in the RMP brings down the CMR and
IMR. But here also the reform program has no impact. The beta co-efficient
got reduced to one fifth of that of the before reform for CMR and one fourth
for IMR.
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Section - IV
Summary, Recommendations and Conclusion
The study reveals that the reform program had little or no impact on the
quality of human life despite the fact that the reform programme is one of the
reasons that had unleashed the entrepreneurial forces from the shackles of
controls and regulations.
The health sector has been kept off from the Government’s (Centre and State)
reform programme due to the following reasons:-
the problems of the foreign trade regime, fiscal deficits and the
constraints on industrial investments in the factory sector occupied
high priority in the minds of the reformers with the believe that once
these are handled right, trickle-down will take care of the issues that
concern the masses.
The policy makers did not give much importance to the regular
monitoring of the health facilities (hygiene, mosquito control) provided
as they do not bring much political mileage. Building facilities carries
the political benefits of being very visible and having opening
ceremonies.
Recommendations
Restructure the Conventional Wisdom
A growing number of economists, independent thinkers, and citizen
organizations concerned with economic justice and environmental issues stress
for an urgent need to restructure the conventional wisdom as they deteriorate
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the quality of human life on many economic parameters (Employment, Free
Trade, Market allocation of resources and Government interference) - David
Korten,1996. For instance the conventional wisdom about employment is that
jobs are created through economic growth. But the current scenario is an era of
jobless growth in which technology and reorganizations are eliminating good
jobs faster than growth is creating them . The new jobs being created are often
low paying and temporary without benefits creating an underlying sense of
insecurity throughout society that deeply stresses the social fabric. Similarly in
trade, the conventional wisdom is that free (unregulated) trade increases
economic efficiency (better use of resources) through comparative advantage.
Today the gains from comparative advantage are not real. More than half of all
international trade involves exchanges of the same goods with little or no
comparative advantage.
Devolution of power to Local Bodies
There is no serious involvement of the local bodies in the management or
control of basic public services like primary education, public health and
sanitation or in raising local resources. As per 73rd amendment of the
Constitution, the Panchayat Raj Institutions (PRIs) are required to be endowed
with adequate responsibilities and powers to enable them to function as the“Institutions of self-government”. Though in the early 1990s (around the same
time economic reforms were launched) decentralization of governance was
ushered in most of the states raising the hope for better delivery of public
services sensitive to local needs, the progress in this respect has been
disappointing both in terms of actual devolution of authority and outcome
variables. A general evaluation study on devolution of powers to panchayts by
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Mahi Pal (EPW, September 8, 2001) reveals that except Kerala,
Madhyapradesh, Tripura and West Bengal nothing worthwhile has been
devolved to the panchayts. Even in the relatively successful states like West
Bengal the major role of the panchayts has been in identifying the
beneficiaries and the management and implementation of local infrastructure
projects like roads and irrigation, funded by tied grants from the State and
Central government.
Governance in Human Development
Apart from this the reformers paid little attention to the crucial problems of
governance in matters of achieving human development, which will be
inexorably there even if trade, fiscal and industrial policy reforms were
successful. If the administrative mechanism of delivery of public services in
the area of human development remains seriously deficient, as it is today in
most states, chances of constructing a minimum social safety net are low, and
with out such a safety net any large scale program of economic reform will
remain politically unsustainable, not surprisingly in a country where the lives
of the overwhelming majority of the people are brutalized by the lack of
economic security.
Foster the Rural Industrialization
Another area where the reform programme in the social sector could enhance
the quality of human life is fostering the small-scale rural industrialization. In
India decentralization is usually visualized only in terms of delivery of welfare
services, not in terms of fostering business development, and yet if this link
could be established, economic reform programme would have been more
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popular, as local informal-sector industries touch the lives of many more
people than the corporate sector. The Chinese success in the phenomenal
growth in rural industries is often ascribed to decentralization, by which
Central and provincial governments gave “Positive” incentives to local
government-run village and township enterprises.
Restructuring the Administrative set-up
The current administrative set-up in our country for many years has been
static, subjective, clumsy, shady and ambiguous. Promotions are seniority
based and not merit or performance based. There is also strong disincentive to
take bold and risky decisions. In such a situation any type of reform
programme aimed on the social sector would not enhance the quality of human
life. Economic reform programme is about competition and efficiency, and
government machinery that does not allow them in itself is hypocritical of that
message. So public administration reforms accompanied by changes in
information system, organizational structure, budgeting and accounting
systems, task assignments and staffing policies should be an integral part of
the reform programme focused on the social sector that aim in enhancing the
quality of human life.
Conclusion
The reform programme would have been more popular if it was oriented
towards aspects of human development (education, health, child nutrition,
drinking water, women’s welfare and autonomy etc). So we conclude that in
an environment of growing globalization, economic and human development
must be pursued together by evolving an appropriate framework to wrest
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maximum benefits out of international trade and investment. It should fulfill
choices for all people rather than many choices for few people.
Future Research
Future Research of this paper will focus on developing a health index for India
taking into account all economic and social aspects that could play a
significant role in determining the quality of human life.
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END NOTES
1. Developed by Gregory Chow.
2. Rise in the rate of economic growth due to a rising share of working
age people in a population
3. prepared in the division of Fiscal analysis of the Department of
Economic Analysis and Policy based on the budgets of all the state
governments and the National capital territory of Delhi,
4. An annual publication brought out by the Ministry of Finance,
Government of India.
5. Gro Harlem Brundtland, Our common future, report of the World
Commission on Environment and Development, Oxford University
Press, Oxford, 1987. This report was the basis for the UN conference
in Rio de Janeiro in 1992.
6. 2004 Unctad Report on least developed countries, quoted by Babette
Stern in "Pour les pays les moins avancés, la libéralisation
commerciale ne suffit pas à réduire la pauvreté", Le Monde, 29 May
2004.
7. terms used in a thesis of the Goldman Sachs investment bank (2003)
to refer to the combination of Brazil, R ussia, India, and C hina. The
paper argues that the economies of the BRICs are rapidly developing
and by the year 2050 will eclipse most of the current richest countries
of the world.
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Annex - I
Chow test for the LEB Function
The LEB function for the two periods is as follows:-
Before Reform - ……………….. (1)t U x xYt 12311 ++2+= α α α
t = 1,2,………..n 1
After Reform - ……………….. (2)t U Yt 23 x x 211 ++2+= β β β
t = 1,2,………..n 2
Where Y (Dependent variable) is the Life Expectancy at Birth (Years),
Independent Variables - X1 is the proportion of expenditure on health to GDP,
X2 the number of registered medical practitioners U is the disturbance terms
in the two equations, and n 1 and n 2 are the number of observations in the two
periods. The number of observations in the two periods can be the same or
different.
Now a structural change may mean that the two intercepts are different, or the
two slopes are different or both the intercepts and slopes are different or any
other suitable combination of the parameters. If there is no structural change
(i.e structural stability) we can combine all the n 1 and n 2 observations and just
estimate one LEB function as
Structural stability = t t u X y ++=121 λ λ …………………. (3)
Combining all the n 1 and n 2 observations we estimate equation 3 and obtain its
residual sum of squares (RSS), say S 1 with df = (n 1 + n 2- k) where k is the
number of parameters estimated, 2 in our case.
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Equation (1) and (2) are estimated individually and obtained their RSS, say S 2
and S 3 with df = (n1 – k) and (n 2 – k) respectively and these two RSS say
S4 = S 2 + S 3 with df = (n 1 + n 2 – 2k)
Then we obtain S 5 = S 1 – S4
Given the assumptions of Chow Test, it can be shown that
F =)2( 214
5
k nnS
k S−+
The parameters are not the same and they are different between the two
periods. We introduce dummy variable to find out whether the difference has
been due to Intercept or slope or both. Here we have introduced the dummy
variable “0” for before reform and “1” for after reform.
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