Public goods need a big boost

Quality public healthcare and education will ensure that the poor, who cannot afford them privately, are not left behind

By Author D Samarender Reddy   |   Published: 2nd Sep 2020   12:10 am Updated: 1st Sep 2020   11:51 pm

A “Public Good” is any product or service that is both non-excludable and non-rivalrous. Non-excludable means individuals cannot be excluded from using the good or benefiting from it even without paying for it. Non-rivalrous means the use of the good does not reduce its availability to others or the good can be used simultaneously by more than one person. Note that this is slightly different from a “Common Good” such as wild fish stocks in the ocean, which is non-excludable but is rivalrous to a certain degree, since if too many fish are harvested, the stocks will be depleted, which is the classic case of the “Tragedy of the Commons”.

Some examples of public goods are clean air, clean water, national defence, police and fire protection, street lights, sanitation, stop signs, emergency call service, disaster relief, legal system, food and drug safety, children’s playgrounds and bank deposit insurance. These are but a few of the many goods and services that a government provides and that benefit the population every day. Streets, law enforcement, museums, libraries, public healthcare and education are technically speaking quasi-public goods because excludability is possible to a certain extent.

Free-rider Problem

Public goods may lead to the “free-rider” problem because individuals can enjoy the good without paying for it due to its non-excludability — they can “free ride” on those who pay for it and “shirk their duty” to pay without losing the good. The “free-rider” problem further implies that a public good is often under-provided in a free market because firms may have difficulty charging people for their use.

If too many consumers decide to “free-ride”, private costs exceed private benefits, and the incentive to provide the product or service through the market disappears. The market thus fails to provide a good or service for which there is a need, the so-called market failure. When market failure happens, less welfare is created than is potentially possible given the available resources. The social task then becomes to correct the failure.

Highly developed countries have higher levels of both public goods provision and the associated public spirit essential for public goods provision, operation and maintenance. Also, the provision of public goods in a society depends on the quality of effective concern shown by more powerful groups and majorities for their weaker fellows. Amartya Sen and others have documented the enormous continuing neglect of basic public goods for the poorer half of the population in India.

Getting Beyond Reach

These days in India when education and healthcare are being increasingly privatised, there is a threat that the common man may soon be unable to afford them. Given that the government is spending less on education and health, the common man will not have access to quality education and healthcare.

The healthcare allocation in the Union Budget 2020-21 is Rs 69,000 crore, which is only 1% of the GDP. As per the WHO, India ranks a woeful 184th out of 191 countries in terms of GDP% spend on healthcare. The average healthcare spend per person is higher even in countries like Sri Lanka and Thailand compared with India.

Compare India’s situation to the National Health Service (NHS) in the UK. The NHS is a publicly funded national healthcare system in the UK and provides a comprehensive service, available to all legal UK residents. The NHS was established in 1948 as one of the major social reforms following the Second World War, and is funded by general taxes and not specific taxes. The three core founding principles of the NHS were that services should be universal, free at the point of delivery, and be based on clinical need and not ability to pay.

The NHS was born out of the ideal that good healthcare should be available to all, regardless of wealth. This means that people generally do not pay anything for their doctor visits, nursing services, surgical procedures or appliances, consumables like medications and bandages, plasters, lab tests, and investigations, such as x-rays, CT or MRI scans or other diagnostic services. Private healthcare exists parallel to the NHS, but it is used by only about 8% of the population, generally as an add-on to NHS services. So, it is time India paid heed to the NHS model and tried to replicate its success.

Neglected Learning

In the Union Budget 2020-21, Rs 99,300 crore was allocated to the education sector. The expenditure on education as of now is only 4.6% of the GDP, whereas according to Niti Aayog, it should go up to 6% of the GDP in the next two years. Amongst South Asian countries, India ranks second-lowest in education quality, with only Afghanistan behind it. Industry experts point out that the lack of soft skills, theoretical approach, less research-based studies and poor or lack of adequate infrastructure are some of the lacunae in our education system. Hence, public education needs a greater inflow of finance to attract talented teachers, build better labs and innovate.

The quality of education is a strong predictor of a country’s economic well-being. The provision of quality public education is essential in this age of increasing income inequality. As education specialist Dana Mitra opined in the US News & World Report, “People who have access to quality education are more likely to be gainfully employed and be productive citizens, less likely to commit crimes and place demands on governments’ social safety programs. Healthy government spending in public education can reduce a society’s income inequality.”
Given the above considerations, it is time the Indian government thought seriously about providing quality public healthcare and education. This will ensure that the poor do not get left behind on account of being unable to afford them privately, or access it privately at a great cost to their families that requires unreasonable sacrifices on their part.

(The author is a writer and poet; preview his poetry at https://a.co/fyEOQFa)

 


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