Demonetisation and the Casualty of Social Sector: Lopsided Governance and Lack of Vision

Ravi Kumar

Expenditure on education as percentage of GDP in India is around 3.1% (2014-15 BE) and the same for health has been around 1.2% (2014-15 BE). BJP’s election manifesto (2014) said that it would increase this figure for education to 6% of GDP. The same Manifesto said, “Highest priority would be given to address the acute shortage of teachers and researchers, quality of education and research…” Nothing seems to have moved on that front either. On health BJP in its Manifesto said that it would like to “initiate the ‘National Health Assurance Mission’, with a clear mandate to provide universal healthcare that is not only accessible and affordable, but also effective, and reduces the out of pocket spending for the common man…” These arguments for increasing access to education and health and for improving the quality of education as well as Health should have been paramount priority for the BJP government.

NSSO reports on education published in 2015 point out that in 2014 the Net Attendance Ratio for secondary education has been as low as 52% and 51% for male and female respectively. The same figure at higher secondary level is 38% and 37%. The drop out/discontinuation from formal education system in the age group of 5-15 has been around 60 % in rural areas and 43% in urban areas. While the cost of education for individuals has gone up as indicated by the massive increase in the private expenditure on education the government schooling system is not the most popular one. Only 37.5% of students at secondary and higher secondary education level attended government schools in urban areas. The average annual private expenditure has more than doubled for general as well as technical education from 2007-08 to 2014. If one combines the ‘financial constraints’ and ‘engaged in economic activities’ as the reasons for the drop out one finds that over 50% male and 20% female drop out because of these reasons. Around 30% female drop out because they are engaged in domestic activities.


And this is happening in a situation when Economic Survey 2015-16 says that around 91% workers are in informal sector which faces immense insecurity as has become evident in the initial days of demonetisation. A huge chunk of workers are rendered unemployed or underpaid. There are evidences from reports of NSSO as latest as 2014, which indicate that the poor and the marginalised castes and girls are deprived of education in terms of access to start with. The 2014-15 data of MHRD puts drop out rate among Scheduled Castes at secondary level at around 18.6% and among Scheduled Tribes at around 27.2%. Now if a government which wants to launch Digital Literacy Mission it has to consider that providing good quality education and good health services to everybody is the first step in development of a society and nation. No substantial step has been taken in this direction. Instead of directing all attention to this agenda it launches new schemes and rather directs the higher education institutions to ensure that they implement the Vittiya Saksharata Abhiyan through the students and faculty members. Even if the Prime Minister had looked at the statistics by his own ministry (NSSO statistics) which says that only 12.4% of population aged 14 years and above are able to use internet for sending emails he could have made out the need to first address the basic questions of education and health.


An August 2016 report by the consultancy firms KPMG and OPPI pointed out the dismal health scenario in the country. There end-argument is obviously that private sector needs to play a greater role but the facts that they gave was startling: Number of hospital beds in India per 1,000 population is 0.9; India has lowest number of physicians per 10,000 population among BRIC nations; infant mortality rate of 38/1000 live births and Maternal Mortality Rate (MMR) of 174/100000 live births in 2015 was quite high compared to other BRIC partners; deaths due to non-communicable diseases are nearly 60% of the total deaths annually; around 63 million Indian are in debt trap due to health expenditure whereas a third of population is driven below poverty line due to out of pocket expenditure on health and so on and so forth.


Demonetisation has unleashed a huge debate on its impact on economy, one being how the focus of the government has shifted from black money to ‘cashless’ economy. In the initial phases some demonetisation supporters were expressing hopes about possible increase in spending on social sector by Government of India once RBI reclaims all the black money. Though that debate is not to be heard anymore as Government’s claims of black money seem untenable and the intent is more about how to bring every penny stored with an Indian into circulation in market and add to the strengthening of finance capital.


Irrespective of what would happen in next few months and may be years it is amply clear that a lot of money is being wasted on this whole process. Initial calculations by Centre for Monitoring Indian Economy had put the transaction cost of the Government of India and the RBI at staggering Rs. 16,800 crores. On 15th December the NITI Ayog announced that nearly Rs. 340 crores would be spent on different kinds of awards to be offered through two schemes, namely the Lucky Grahak Yojna, which will be for the consumers, and the Digi-dhan Vyapar Yojna, meant for the merchants. Given that the cost borne to ensure that the demonetisation campaign works would be huge one often wonders if it was really important to prioritise it over the other much serious needs of the society such as education and health. The Government, it is obvious, is not too keen to address the inequality in access to a good education or health system. In a nation with such massive poverty and such immiseration good governance would meant that a system of education and health is created which is at par with the private education and health system and which can address the issues of unequal access, low quality and improvement to meet global standards. As pointed by facts above the current move by the government, which puts all its energy into one programme to ensure that the face and grace of a government is saved, will only lead to aggravation inequality in social sector.


The priorities of the government seem lopsided. It seems least bothered that its declining performance in agricultural production, food grains, manufacturing, personal income, exports etc., need much more attention because they affect the everyday lives of individuals and therefore the ability to access basic facilities like education and health. Its intent is also in question here because while it has shown at one level that it can mobilise resources for things that are its priority such as the drive to push demonetisation on the other hand it has shown little or no interest to address the fundamental issues that affect the millions in this country. While talking of education and health the argument is always about lack of resources but nobody questions how in the middle of a budget year without any provision in the budget the NITI Ayog would come with Rs. 340 crores to give awards to people or how does MHRD create budget heads for its Vittiya Saksharata Abhiyan. In order to further the individualised priority of the Prime Minister all sections of state machinery have been put to work to meet his vision which reveal how he is least interested in improving the educational and health condition of masses but more inclined to divert state resources, bend rules and do everything possible for a policy decision that is his ‘own’. In that sense, education and health are not his priorities and close to heart initiatives.