Socio-economic Issues

Model Answer

Challenges in Rural Healthcare

Rural India, home to 72% of the population, struggles with only 34% of hospital beds and limited access to medical professionals, as 67% of doctors are urban-based. Low public healthcare expenditure (2.1% of GDP) and high out-of-pocket costs (over 55% of total healthcare spending) force 55 million Indians into poverty annually .

Enhancing Accessibility Through PPPs

1. Extending Reach of Services
   • Impact: PPPs bring healthcare services to remote regions, bridging the urban-rural divide.
   • Example: The Haryana government partnered with Medanta Hospital to deploy mobile diagnostic vans, tripling tuberculosis detection rates in underserved areas.
2. Innovative Delivery Models
   • Impact: Telemedicine and digital platforms overcome geographical and logistical barriers.
   • Example: Apollo TeleHealth’s telemedicine network, developed through PPPs, delivers specialist consultations to rural communities without travel burdens.
3. Optimizing Resources
   • Impact: PPPs maximize existing infrastructure, ensuring broader and more efficient service coverage.
   • Example: Uttar Pradesh’s tele-radiology partnership with Apollo Hospitals improved diagnostic services at Community Healthcare Centres.

Improving Affordability Through PPPs

1. Cost-Effective Solutions
   • Impact: PPPs reduce healthcare costs, making services more accessible to rural populations.
   • Example: Andhra Pradesh’s PPP model for radiology, supported by IFC, delivers affordable diagnostic services to low-income groups.
2. Financial Risk Sharing
   • Impact: Shared risk models reduce the economic burden on patients.
   • Example: The Yeshasvini Scheme in Karnataka provides farmers with surgery coverage up to ₹1.25 lakh, improving access to critical healthcare.
3. Efficiency and Innovation
   • Impact: PPPs integrate private sector efficiency and innovative practices to enhance service delivery and lower costs.
   • Example: The World Bank-supported Uttarakhand Health Systems Development Project utilized PPPs to deliver cost-effective healthcare solutions.

Conclusion

By leveraging PPPs, India can transform rural healthcare, making it more accessible and affordable. Establishing long-term, mutually beneficial collaborations will be essential to sustain these efforts and address the rural healthcare crisis comprehensively.

Model Answer

1. Nature of the Scheme

• NPS: A defined contribution pension scheme where both employees and employers contribute to the fund, and the returns are market-linked.
• OPS: A defined benefit pension system where government employees receive a fixed pension based on their last drawn salary, along with dearness relief adjustments twice a year.

2. Eligibility and Risk

• NPS: Open to all Indian citizens between the ages of 18 and 65. The pension amount depends on market performance, so it involves a degree of investment risk.
• OPS: Exclusively available to government employees. It guarantees a fixed pension, with no associated risk.

3. Tax Benefits

• NPS: Contributions of up to ₹1.5 lakh annually are tax-deductible under Section 80C, with an additional ₹50,000 under Section 80CCD(1B).
• OPS: No specific tax benefits are applicable to OPS subscribers.

4. Pension Amount

• NPS: 60% of the pension corpus can be withdrawn as a lump sum at retirement (with 60% being tax-free), while the remainder must be invested in annuities.
• OPS: Provides a fixed pension amount of 50% of the last drawn salary, along with regular dearness relief adjustments.

Rationale Behind the Introduction of NPS

The New Pension Scheme (NPS) was introduced in 2004 to address the growing financial strain caused by the Old Pension Scheme. Several key factors led to this shift:

• Increasing Pension Liabilities: The government’s pension obligations were escalating rapidly, especially due to rising life expectancy and improved healthcare. By 2020-21, the central government’s pension bill had increased by 58 times compared to 1991ustainable Nature of OPS:** OPS posed a financial burden, with pension liabilities threatening the fiscal health of state governments. For example, Himachal Pradesh‘s pension bill accounted for nearly 80% of the state’s own tax revenues .
• Poand Flexibility: NPS introduced a system of portability, allowing employees to carry their pension across different jobs and locations, unlike OPS. This was designed to encourage retirement savings and provide a more sustainable financial solution .