Answered: Mains Marathon – UPSC Mains Current Affairs Questions – February 24

Suggested Answer

Background:-

• Research data available showed that there was irrational use of medical technologies, including cardiac stents and knee implants.So recently the Indian government cut prices of coronary stents by up to 85 per cent by capping them at Rs 7,260 for bare metal ones and Rs 29,600 for drug eluting variety.

Coronary stent:

• Coronary stent is a tube-shaped device placed in the arteries that supply blood to the heart. It keeps the arteries open in the treatment of coronary heart diseases.
• A bare metal stent is an older generation device that consists only of the scaffolding. The newer drug-eluting stent has a coat of medicine, which it releases in the artery after its insertion.The drug prevents further blockage in the artery of the heart.

Price control for coronary stent is essential for healthcare in India:

• Economic:
  • Capping of the stent price will result in saving ofRs 80,000 to 90,000 per piece and gross relief of Rs 4,450 crore in a year for cardiac patients.
• Ethical:
  • Huge unethical mark—ups are charged at each stage in the supply chain of coronary stents resulting in irrational, restrictive and exorbitant prices in a failed market system driven by information asymmetry between patients and doctors.This can be avoided now.
• Social:
  • Regulated prices can, therefore, be expected to make stents more accessible to patients who really need them, helping them avoid using up the weak insurance cover available, while also reducing the incentive for unethical hospitals to use them needlessly.
• Technological:
  • It would serve the cause of medical innovation if costing is transparent, and a system of risk pooling is introduced to help patients get expensive treatment without high out-of-pocket spending.
• The overall dominance of private, commercial, for-profit health institutions, and the asymmetry confronting citizens, correctives to bring about a balance are inevitable.This move shall break the Industry-Doctor nexus and will force hospitals to be transparent with the prices of Stents.

No:

• It will reduce the options available for the Indian patient for their specific medical condition or deprive them the satisfaction of choosing from the most advanced and cutting edge technologies.
• Putting all drug-eluting stents into one category undermines the progress made in innovative device development over the years and could lead to equating less tested devices or devices not approved for use in complex patient cases or coexisting conditions, at par with innovative devices with large clinical evidence and due approvals for complex cases and coexisting conditions.
• The industry has been very unhappy with the price cap and the fact that there were just two categories into which the entire gamut of coronary stents were put.
• Since this order is being enforced from immediate effect without provision of a transitory period, Indian stents industry is going to face enormous operational challenges in the coming time.
• The quality of products and clinical outcomes do not seem to have been given a priority. Singular focus on capping prices of stents by way of their inclusion in NLEM will not help improve access to medical devices for patients, as it will not impact the overall procedure cost and limit the introduction of innovative products.
• A patient will not be able to access stent therapy in spite of lower prices, in the absence of an adequate number of trained physicians and paramedical staff to effectively use these devices. This has been supported by the IMS Health study which concluded that while the majority of the population resides in rural and tier-2/3/4 towns, infrastructure to provide healthcare services including hospitals, hospital beds per patient, pathology labs and trained doctors is limited.

Fact:

• As per various reports, the current Indian market is around 5.50 lakh Stents per annum out of which more than 90 percent are Drug Eluting Stents (DES). 
• The Stent market is growing at a speed of around 15 percent every year and is expected to become the second largest market in the World after China by 2020. 

Way forward:

• Government should develop standard treatment guidelines for cardiovascular interventions with the help of expert doctors, free from conflict of interest, and implement medical audits of procedures.
• There is a clear obligation under the Constitution for the government to fulfil the fundamental right to health and ensure the affordability of devices such as stents.The Centre should monitor expenditures jointly in partnership with the community, use regulation where needed, and raise public spending on health.
• There should be differential pricing for different kinds of drug-eluting stents based on the generation of stents.
• There is a need for more data available to the Indian stents.Government should further support the “Make in India” idea of these high end devices which shall bring long term self-reliance in this important sector which is currently dominated by imports.

Suggested Answer

Fiscal democracy:

• Fiscal democracy refers to the freedom available to the government to spend and tax.In the present economic situations very little is left  to decide in the present because much has already been decided in the past.
• Since fiscal democracy is essentially about the flexibility of fiscal resources, it is possible to measure it by the proportion of tax revenue that is not needed to coverobligations entered into in the past.

Yes there is a gap between India’s political and fiscal democracy :-

• The recent Economic Survey has highlighted this.For instance it shows that in Norway, for every 100 voters, there are 100 taxpayers. In India for every 100 voters, there have been only seven taxpayers.
• The minimum threshold below which no income tax is paid is Rs2.5 lakh. This is 250% of India’s per capita gross domestic product (GDP). That makes India one of the most generous exemptors in the world.

o   In most countries, income tax becomes payable when your income is about one-half or one-fourth of the average income in your country. Indeed, in Russia, you pay income tax from the very first rouble that you earn.

o   This tax-paying class is so vociferous and politically active that the exemption slabs keep creeping up every year.

• India achieved political democracy by Universal adult suffrage,Fundamentalrights,Independent judiciary but there is lack of fiscal democracy as seen in the following:-

o   Lack of fiscal jurisprudence:- Government utilises public funds for fulfilling short term goals, populist measures etc and doesn’t go for capital asset building and long term benefits

o   Tussle between Centre and states over revenue share:-.

• Lack of devolution of funds at the lowest level like Panchayats.

o   Unspent Fund:- Funds allotted to various government departments for welfare remained unspent due to lax attitude of political leadership and officials.

o   Fiscal deficit:- India always remained a fiscal deficit nation it shows the govt functions on borrowing which in turn reflects towards debtness of the future generations.

o   Lack of proper financial inclusion.

o   Populist measures such as lower taxes and more exemptions also lead to reduced revenues, hampering fiscal democracy.

By reducing fiscal deficit,Replacing FRBM act with a debt ceiling and fiscal responsibility legislation fiscal democracy can be achieved.Integrated market under GST, simplified and predictable tax structure, GAAR, incentivising tax payments, can go a long way to promote fiscal democracy.

Demonetisation changed the earlier view about fiscal constraints and with this measure the government had the freedom to bring in latest initiatives to make India cashless.

Suggested Answer

Importance of agricultural insurance :-

• Insurance has become more of a necessity for framers today,especially after the growing instances of farmer suicides after a crop failure. The main culprit behind this is the failure of the famer to come out of the debt trap that he had taken for cultivating his fields. A crop insurance plan could prove a life saver by providing financial assistance when it is required the most.
• Farmers:-

o   Farmers who take insurance policies protect their crops, livestock, farming and harvesting practices from setbacks.

o   It aids in fighting poverty when natural disaster occurs and farmers who have invested heavily in agriculture gets their investment recovered.

o   It also assists farmers in regulating cash flows and provides a financial buffer with which to rehabilitate damaged enterprises.

• Agriculture insurance taken against the crops and livestock allow farm managers to open up for new technologies in the market.By protecting the economic interest of the farmers against possible risk or loss, it accelerates adoption of new agricultural practices.
• It also strengthens the position of co-operatives and other institutions that finance, agriculture to the extent it enables the farmer members to repay their loans in years of crop failure.
• It minimizes the problem of rural indebtedness, which is traceable to the frequent failure of crops.
• Pradhan MantriFasalBhimaYojana:

o   This scheme is dedicated to bring in more than 50% of the farmers under its wing within the next 2–3 years. Around 25% of the claims will be sent to the farmer’s direct account.

o   This means that there will be no cap on coverage. Also there won’t be any cap on the reduction in the insured sum.

o   This insurance scheme, unlike the previous ones, covers local calamities too, such as landslide, hailstorm, inundation, etc. inundation was not covered by the previous schemes.

Reasons for its low penetration :-

• The coverage in terms of area,number of farmers and value of agricultural output is very small
• Payment of indemnity based on area approach miss affected farmers outside the compensated area
• Most of the schemes have not been viable.

o   Even extremely poor farmers are expected to pay the premium.

o   If the farmer gets trapped in a cycle of debt and defaults on his agricultural loan to which his crop insurance scheme is linked farmer’s policy becomes inoperative.

o   Thousands of farmers who have opened insurance plans through the Kisan Credit Card (KCC) scheme for instance find that they cannot claim insurance because of unpaid dues on their bank loan.

• Expanding the coverage of crop insurance would therefore increase government costs considerably.
• Most of the farmers are illiterate and do not understand the procedural and other requirements of formal financial institutions and therefore shy away from them
• In many cases farmers have written to banks saying they do not want insurance .The banks have complied with such requests to meet targets although insurance is a compulsory feature of agricultural loan schemes.
• Political influence has also played a role in the acceptance of multiple claims over the same plot of land, which is the most common form of fraud.

Way forward:-

• Insurance products for the rural areas should be simple in design and presentation so that they are easily understood.
• There is lot of interest in private sector to invest in general insurance business.This opportunity can be used to allot some target to various general insurance companies tocover agriculture.

o   If private insurers are to be spurred to enter the rural insurance market in a significantmanner, the business targets have to be raised substantially by IRDA.

• Remote sensing is the emerging technology with potential to offer plenty ofsupplementary, complimentary and value added functions for agricultural insurance.
• The government needs to legislate on the subject, making insurance cover compulsory The government should pay the premium for small farmers

o   Holding agricultural as well as bank officials accountable for process pertaining to crop insurance should also be a part of the legislation .

• Also, well-to-do farmers should not get any subsidy for premiums as this will also help curtail frauds pertaining to repeat claims on the same plot of land.
• Most importantly crop insurance policies should not come to a halt when a farmer defaults on account of the stress on him.

Fact:

• The farming community in India consists of about 121 million farmers of which
  only about 20 per cent avail crop loans from financial institutions and only three fourth ofthose are insured.