Lending Institutions, Healthcare and Human Capital
India is a developing country which has enjoyed an important economic growth in the past decades. Lending institutions, such as the World Bank or IMF have supported the country’s development by funding different program meant to reduce the poverty rate and promote stronger economic development. International lending institutions have recorded success in many countries, where the long-term loans provided by these institutions were able to support countries’ development. While the World Bank and other lending institutions continue to support India, researchers have identified several drawbacks to its policies, which may support economic growth, but do not necessarily promote economic development.
One prominent example in this respect is the popular program of microfinance, where the poor population could easily access microloans for the purpose of opening small business in their communities, which would allow them to escape poverty. However, Bateman (2012) showed, “while of some immediate use to the poor, the fact still remains that there is almost no long-term transformational content associated with such microloans: it is all about managing poverty, and the dissuading of any social/political mobilization of the poor, not resolving it” (p.1388). Furthermore, one important danger of microfinance is that the poor are forced to spend large amounts of money on high interest rates, which may increase the poverty rate, rather than diminishing it (Bateman 2012). Furthermore, the World Bank’s programs of development sometimes promote poverty, instead of reducing it. For example, the Mumbai Urban Transport Project, led to the displacement and relocation of thousands of families along two highways (Modi 2011). The relocation of the household triggered protest by the affected family owners, who accused the Bank of forced resettlement, and denounced the failure of the authorities to provide information, to present alternatives to the people living there, and to provide adequate resettlement conditions (Modi, 2011). The commercial structures’ owners reported a diminishment of their income following the displacement (Modi 2011). On the other hand, D’Costa (2012) claimed that India’s economic growth was largely a result of an attitudinal shift on the part of the government in 1980 in favor of private business. This shift impacted investors’ psychology positively. Therefore, while the World Bank’s contribution to the development of India, by means of numerous projects cannot be denied, this involvement may have been less efficient, and important than it is generally seen.
The economy of a country is to a great extent related to the heath of the population. Thus, Suhrcke et al. (2006) found that there is an important link between health and economy of developed countries and found that healthier workers are more productive, earn more and spend more time at work. Thus healthier workers are likely to work faster, spend less time in medical leave, and be more focused and efficient, which increases productivity. On the other hand, people who have good health are more likely to invest in their personal growth and development, rather than being concerned about their own health problems, which allows them to grow professionally and earn more. Finally, healthy workers are more likely to work for longer hours without feeling exhausted or having to take breaks.
On the other hand, a healthy population needs less medical care, thus reducing the costs associated with healthcare. Accordingly, a U.S. study showed that, as the cost of healthcare is going up, it becomes increasingly important to reduce the burden of illness, the costs associated with care (Special Committee on Health, Productivity, and Disability Management 2009). Preventive health measures and programs to increase the population’s health education, and to keep the workforce healthy, is essential in order to maintain a strong economy (Special Committee, 2009).
In India, funding institutions have aided the healthcare system, although to a limited extent, as compared to other sectors. As Bliss (2010) showed, in 1983, the Indian Ministry of Health came up with a plan to promote universal access to health services by 2000. However, in 2000, many of the measures comprised in this plan had not been accomplished (Bliss 2010). As Bliss (2010) further argued, India is a major recipient of funds from multilateral donors, “including the World Bank and the Global Fund to Fight AIDS, Tuberculosis and Malaria” (p.25). International sources make up for 1.7 % of the total funds that the country uses for healthcare promotion, including educational programs.
One important achievement for the Indian healthcare system was the creation of the Public Health Foundation of India in 2006, with founding from the Indian government, international donor institutions, as well as private sources. This foundation launched a network of public health schools, which are connected with leading public health institutions in the United States and Great Britain. However, India continues to face great challenges at home, as Indian physicians choose to practice overseas, and the authorities continue to work in order to implement the “National Rural Health Mission” launched in 2005 (Bliss 2010). The purpose of this measure was to provide effective healthcare to the vulnerable population in the rural areas. This measure, implemented as a way of justifying the increase in its public health spending from 0.9 to 3 %. As India’s economy continued to grow, it partially renounced international aid, and began to rely more on its own sources. Consequently, as Bliss showed, in 2004, when devastated by a powerful earthquake, India declined international relief aid, and delivered extensive aid to neighboring countries. This shows that India is ready to assume a leadership role in international health and to take a more responsible role in improving the healthcare system in its own country.
References
Bateman, M. How lending to the poor began, grew, and almost destroyed a generation in India. Development & Change 43(6):1385-1402.
Bliss, K. (2010) Key players in global health: how Brazil, Russia, India, China, and South Africa are influencing the game. Washington, D.C.: Center for Strategic & International Studies.
D’Costa, A, ed. (2012). A new India? Critical reflections in the long twentieth century. London &New York: Anthem Press.
Modi, R. (2011) The best and the worst of the World Bank: Involuntary resettlement and he Mumbai Urban Transport Project (MUTP). Development Supplement Sustainable Cities 54(3):400-406).
Special Committee on Health, Productivity, and Disability Management, (2009). Healthy Workforce/Healthy Economy: The Role of Health, Productivity, and Disability Management in Addressing the Nation’s Health Care Crisis. Journal of Occupational and Environmental Medicine 51(1):114-119.
Suhrcke, M. et al. (2006). Healthy population is good for the economy. British Medical Journal 333(1017-1019).
