Tag Archives: India

Why healthcare is so expensive for disadvantaged households in India

Anirudh Krishna of Duke University has been studying households escaping the trap of poverty in India. His analysis reveals that a large percentage of people crossing the poverty line tend to fall back below the line after some time. According to him, one of the principal contributing factors for such backward movement is the households’ expenditure on healthcare.

Food in-take patterns for below poverty line (BPL) households indicate that their food is highly deficient in protein and fats. As majority of their routine expenses of is on food they try to reduce the expenses by avoiding costly lentils- an important source of protein for Indian households, and cooking oil. This situation prevails in rural areas as well. In rural areas such households are either smallholder farmers or landless laborers. Smallholder farmers in order to maximize utility of their small farmlands mostly cultivate their staple food, such as wheat, paddy, maize and/or potato, to avoid episodes of hunger. Thus, even when a household owns a small patch of farmland, it still needs to purchase pulses and cooking oil from the market.

They generally admit cooking lentils only during festivals. They are happy if they get a chance to eat non-vegetarian food, a rich source of protein, even once a year. Consumption of milk, another source of protein and other nutrients is also almost absent. Even when a household possesses a milch animal, most of the milk is sold off to generate cash, leaving just enough for preparing tea. Protein deficiency in their diet is quite detrimental to mental and physical health of especially the children[1].

High levels of malnutrition along with physically risky occupations, unhygienic living conditions, and compulsion of defecating in the open render members of households, living in poverty, extremely vulnerable to various ailments and accidents. This requires them to spend a large proportion of their earnings to meet their medical expenses.

There are two additional reasons for the enormity of health expenses beyond the aforesaid factors. First reason relates to the general preference of the households in poverty for private medical practitioners to the public medical services. They find public health centers distant and unresponsive to their needs and conditions. They also find procedures within such centers time-taking, insensitive and intimidating. A large majority of such households reports having difficulty with understanding the written instructions. They are forced to spend a large amount of time without being attended to, whenever they go to public health facilities. They feel that the treatment from private medical practitioners is faster and more effective. They do not have to wait for long hours to get treated and the doctors are willing to see the patients at their homes. This way they do not have to lose their wages if somebody in the family is to be shown to a doctor. Moreover, according to them, the private doctors behave in a nicer way. That itself evokes a feeling of trust and they think they would be treated better by such doctors than at the government hospitals. Private doctors are also open to accept deferred payments, which suits the people not having ready cash at the time when medical contingencies arise.

They have to therefore spend a much larger amount on their healthcare than would have been the case if they were going to government health facilities. In addition, most of the private doctors they go to, are non-qualified or under-qualified. In villages most of such ‘doctors’ have no medical qualification. They generally learn their craft while working as unskilled medicine dispensers in medical stores (pharmacies) in nearby towns. While working in such stores they acquire knowledge of basic medicines, and most importantly, get to know the names of broad-spectrum and very potent antibiotics. After working there for about three months to one year they set up their practice in a village. There they take advantage of the villagers being largely illiterate and uneducated. They overmedicate their patients and charge heavily for those medicines. Some of them even dispense medicines without their wrappers and it becomes difficult to know what medicines they are dispensing, and whether expiry dates for such medicines are not over.

As they do not have knowledge or skill to diagnose a disease they invariably administer high doses of painkillers and broad-spectrum antibiotics in all the diseases which makes the patient feel better. This is also a reason why the villagers consider their treatment to be more effective than the government doctors. In all such cases, the private doctors charged heavy amounts. This however harms the patients much more than their diseases in most cases as highly potent antibiotics destroy their immunity and high dosage of pain killers are associated with several side effects. This creates a vicious cycle that further exacerbates their medical bills.

It is important to point out here that public health facilities are extensively used by the relatively influential people and local elite especially in rural areas, which reduces their medical bills substantially. This phenomenon of poor running much higher medical bills than relatively affluent in the same geographical spaces further exacerbates the prevalent inequality among different economic classes and misdirects the state spendings on health.

The other main reason for high expenses on medical care on part of the deprived households relates to an almost complete absence of their relying on home remedies that have been an important part of Indian heritage. Such remedies are in fact demonstrably more effective than allopathic medicines especially in cases of relatively simpler diseases such as common fever, common cold, some pains and aches, and common stomach disorders. The remedies are generally food-based and herbal and have no side effects. It is a paradox that while more and more affluent Indians are getting back to home remedies due to increased awareness of limitations of allopathy, people from disadvantaged sections are almost totally discarding such options. Part of the reason for this is that home remedies take time in making their impact (although, as they mostly work on the causes of the ailments, they are more effective in completely getting rid of the medical conditions), while allopathic medicines very quickly subdue the symptoms of the disease.

There is also a sociological reason that goes back to the time when attractively packaged and seemingly miraculous allopathic medicines were accessible to only a small section of rich Indian households. A large section of deprived population had absolutely no access to this modern miracle. This is the reason why this section of population desperately grabbed the opportunity when there was a possibility of getting allopathic medicines. This is also the reason why there is always some pride associated with the assertion by the disadvantaged households that they never resort to home remedies and the patient is always shown to a doctor even when there was some fever, a minor cold or cough. Moreover, due to the similar reasons, injections and drips are always considered superior to oral medicines by such households even when these are much costlier. I have witnessed several medical practitioners who would put all the patients on glucose-sodium chloride intravenous infusion as soon as they enter their clinics irrespective of the ailments they are suffering from. Needless to say, they charge exorbitantly for this procedure.

[1] Malnutrition along with lack of quality education as discussed in an earlier blog-piece substantially reduces the value of demographic dividend for India.


India Post: A Story of Missed Opportunities [Part IV: Causal Factors Rooted in Structural Issues]

In the first three parts of this blog story I discussed three major opportunities that could have rejuvenated India Post and given a big boost to rural Indian economy while improving economic wellbeing of a large section of Indian people. India Post could not exploit those opportunities due to the structural issues that face the organization. Fourth and concluding part of this blog story focuses on some such relatively important structural issues.

Dynamics of policymaking within India Post

My own experience of working with India Post at various positions and the interviews with the higher officials suggest that much of the policy decisions within India Post are taken by the bureaucratic arm of the organisation contrary to the general theme of politics administration dichotomy in the literature on public administration. The dichotomy is premised on the idea that policymaking is the role of the elected politicians while the bureaucrats’ job is to implement the policies, and both the institutions should restrict themselves to their prescribed areas of activity. However as Bohte (2007: 811) points out that ‘a true dichotomy between politics and administration has always been and will most certainly continue to exist only as an idealised fictional construct’, and the bureaucrats are often required to take policy decisions. Bureaucrats have been observed to be having much bigger role in policymaking than the legislature in countries like Germany, Japan, and Russia (Moloney 2007). In India too, the bureaucrats at the topmost levels have been actively involved in policymaking (Maheshwari 2005). N. C. Saxena, a former top Indian bureaucrat, points out that ‘[in India] the civil servants have been given the task of initiating the policy and taking it through, whereas most politicians are totally indifferent to what the policy is’ (discussion quoted in Taylor 2005: 753).

Mosher, a much respected scholar on public administration, argues that a majority of policy decisions are initiated and influenced by the appointed officials and not by the elected politicians. He further argues that such decisions are shaped by ‘their capabilities, their orientations, and their values,… [and] these attributes depend heavily upon their backgrounds, their training and education, and their current association’ (Mosher 1982: 1). Maheshwari (2005) points out that the top bureaucracy in India is mostly drawn from urban middle and upper middle classes and from a certain number of universities, and is influenced by its own value system while designing policies. The feeder cadre for the top bureaucrats in India Post, Indian Postal Service (IPS) officers, is no exception to this observation. The IPS officers are also extensively trained with induction as well as in-service trainings. An analysis of the training modules (India Post undated) reveals that the training contents are largely technical with an overt emphasis on operational issues. The trainings appear to be more suited for India Post as a business organization rather than an important public institution. The training does not provide the officers with the information and tools to analyze the larger socio-economic issues facing the poorer segments of the population, and the contribution India Post as a public institution can make towards addressing some of these issues, especially in rural areas where it has an extensive presence.

Continued colonial traditions within the management of organization further ensure that the higher management never has an opportunity to learn actual operations that take place in a post office. Indian Postal Service officers are always positioned at an arm’s length from day-to-day operations. They are trained to ‘inspect’ and ‘visit’ actual postal operations but not to participate in managing their actual delivery. This results in their not entirely understanding the potential of this great institution and failing it whenever opportunity arrives to bring it to development mainstream of the country.

 Neo-liberal discourse, NPM and Post-NPM

Predominance of neo-liberal discourse in the government after the 1991 reforms in Indian economy is also a contributory factor for excessive focus on the profit-making and treating India Post more of a business entity rather than a State institution. When organisations such as the World Bank advocate larger role of the post-office and make suggestions for India Post to come out of the red, it invariably involves strengthening India Post’s capabilities to provide infrastructural support to other sectors of the economy (World Bank 2005; 2002). Such prescriptions do not consist of measures aiming to engage it towards the pro-poor development of rural areas and promote the government agenda for the rural areas, for which it is one of the most suitably located organisations among all the State agencies.

The neo-liberal discourses are also accompanied by the efforts to reform public administration across much of the democratic world, collectively referred to as the New Public Management (NPM) and its successor post- NPM. Such reforms seek ‘managerial and economic solutions to complex problems’ within public administration (Jun 2009: 161). However as Denhardt and Denhardt (2003) point out that such solutions are inadequate to address the larger issues involving the people such as public good, social justice and ethical considerations. These solutions are also found wanting while dealing with ‘[s]ocial factors, such as delivery and access hurdles as a result of caste-based discrimination’ in Indian context (Jayaram 2009: 784). Argyriades (2007: 18) is severely critical of ‘one size fits all’ approach of NPM, among other things, and argues that the NPM has failed to adequately deliver on its promise. The NPM however largely informs policymaking within India Post as is evident by the response of India Post to the changing realities around it.

 Urban bias and the bias towards business and corporate sector

Mainstreaming of neo-liberal discourses explains another bias towards the business and corporate sector while developing premium products and value additions on the existing products, ignoring the competitive disadvantage facing the organization while serving such a set of clients. This is perhaps based on the assumption that the additional revenues to reduce the recurrent losses can be generated through the business community only. This approach tends to ignore the business opportunities requiring the utilization of about 89% of its network available in rural areas. Such business opportunities may not only generate additional revenues for India Post, but may also help reduce rural-urban and rich-poor divide in Indian society as is testified by various social enterprises across the world. Although it is important to tap the business potential in urban areas where a large part of India Post’s capital investment is concentrated, there needs to be a balance between the urban and rural-centric efforts within its business strategy. Such a need is particularly acute in view of the fact that India Post does not enjoy a competitive advantage in urban sectors.

Aforementioned dynamics of policymaking within India Post also explains the overt urban bias in decision-making within India Post. In addition, the recruitment procedures do not provide an opportunity to the IPS (and Indian Civil Service, in general) aspirants to be tested on subjects such as social work, development studies, international development, rural management and rural development, study of which could have given them an understanding and the sensitivity to explore and engage their organization towards serving the poorer population in rural areas.

The urban-bias is further explained by the fact that due to their work conditions, the top bureaucrats have very little functional exposure to rural areas, rural economy, social and business networks, and power structures in rural areas. A sizeable portion of top bureaucrats has never had any opportunity to work beyond metropolitan cities.

 Leveraging rural and semi-urban networks

Due to a pronounced urban bias in the policymaking within India Post, a majority of new and premium services introduced by India Post in financial as well as non-financial sector can have their clientele in urban areas only. They cannot be introduced in rural areas, as they do not have rural market. The semi-urban and rural networks cannot support new sophisticated products or value additions on existing mail products due to the fact that such needs do not exist in the rural and semi-urban areas. It can however support appropriate products in retail and financial sectors where there are vast amounts of unmet needs and demands. Due to this reason, new products and services that have been relatively successful in generating revenues for India Post have been the ones that have leveraged the rural and semi-urban networks (Priyadarshee, 2015).

Such outcomes naturally follow from the structure of the postal network particularly in rural areas. The postal personnel for rural post offices are largely drawn from the local communities and therefore enjoy trust of the people. Post offices are suitably located to deliver financial services and social protection measures due to their proximity to the rural people, and their personnel being known to the local people. Additionally, India Post, being a government department, is in a better position than similarly placed agencies such as banks and telecom companies to coordinate with other government departments offering social protection. By involving post offices, state governments and the government of India may also be in a position to avoid extra expenditure on creating new financial service channels or new delivery mechanisms for social protection programmes.

This will however need post offices to reach out to the deprived households, which will be far easier for them than any other network due to their geographical proximity with such households. This will, in turn, require postal management to be trained in the methodology of community engagement, and understand the necessity to  do the same. Significant public resources have already been invested in creating and sustaining such mammoth organizational capital and it will not be in the interest of Indian people to let India Post remain under-utilized.


  1. Argyriades, D., 2007. ‘Resisting change’: Some critical remarks on contemporary narratives about reform. In: D. Argyriades, O. P Dwivedi, and J. G. Jabbra, eds. Public administration in transition: Essays in honor of Gerald E. Caiden. London: Vallentine Mitchell, 1-23.
  2. Bohte, J., 2007. Governmental efficiency in our time: Is the “What” really more important than the “How”? Public Administration Review, 67 (5), 811-816.
  3. Denhardt, J. and Denhardt, R.B., 2003. The new public service: Serving, not steering.E. Sharpe: Armonk.
  4. Jayaram, S., 2009. Postreform India. Public Administration Review, 69 (4),783-785.
  5. Jun, J. S., 2009. The limits of post-New Public Management and beyond. Public Administration Review. 69 (1), 161-165.
  6. Maheshwari, S. R., 2005. Public Administration in India: The higher civil service. Delhi: Oxford University Press.
  7. Moloney, K., 2007. Challenges in growth and development: Lessons from comparative bureaucracy: Today as yesterday. Public Administration Review, 67 (6), 1083-1086.
  8. Mosher, F. C., 1982. Democracy and the Public Service. 2nd edition. New York: Oxford University Press.
  9. Priyadarshee, A., 2015. Towards reducing poverty in India: A case for mutually leveraged and reinforced delivery of microfinance and social protection. Saarbrucken, Germany: Lambert Academic Publishing.
  10. Taylor, M., 2005. Bridging research and policy: A UK perspective. Journal of International Development, 17 (6), 747-757.
  11. World Bank, 2005. Report on seminar, transformation of India Post for Vision 2020, June 15-16 [online]. Available at: http://www.worldbank.org.in/WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/INDIAEXTN/0,,contentMDK:20568412~menuPK:295589~pagePK:141137~piPK:141127~theSitePK:295584,00.html [Accessed 28 December 2009].
  12. World Bank, 2002. India Post 2010. Conference on harnessing the outreach infrastructure of India’s postal network [online]. Available at: http://www.iief.com/Consulting/13march.pdf [Accessed 12 July 2009].

Fraud and Cheating Due to Lack of Financial Infrastructure in Rural India

While exploring the need for financial services in the villages of Uttar Pradesh (UP) and Gujarat in India, I came across several cases of systematic cheating and fraud that need to be urgently addressed by the policymakers. This is largely due to lack of financial infrastructure and continued existence of unsatisfied demands for financial services, particularly the savings, and to some extent insurance services, which encourages unscrupulous companies and people to take advantage of the situation and cheat the villagers. As a strategy, such companies employ local people as their agents. These agents influence the people in the area to deposit money, using their easy access to the communities in their own as well as in surrounding villages.

In the villages of Kanpur Dehat district, a company called Asma offered the villagers various savings products both in Recurring as well as in Term Deposit categories. The company appointed local agents, who would collect the deposits at the doorsteps of the customers. When time for maturity of the instruments arrived, the company simply vanished, vacating its office premises in Kanpur. The people could not recover their money from the agents as the agents themselves did not have many assets and belonged to their own larger communities. Their complaints to the authorities did not result even in a proper investigation, and of course the company and its management remained untraced.

I observed similar phenomena in various forms in Dahod, a largely tribal district of Gujarat. Here different private finance companies lure the villagers to purchase automobiles financed by them. As the people in the area are mostly uneducated and are not very methodical in tracking the instalments being due, they usually default on the payment of the regular instalments. The companies have hired goons who then confiscate the vehicles, thus making the people poorer by their down-payments and the paid loan instalments. These vehicles are then used or further sold by such companies. In one case in Andhari village, the client could not repay his third instalment and his vehicle, which was bought to be used for public transport, was snatched away from him. He had earlier sold off his fields to make a down-payment of INR 52,000. Worse still, the vehicle was put to use by the finance company where it met an accident killing a man. As the vehicle documents were in the respondent’s name, he got a court notice enclosing a demand of INR 1.2 million as compensation by the family of the deceased.

Illiterate villagers, particularly women, in several rural areas allege that agents, representing both public and private sector companies, also indulge in cheating the people. Taking advantage of the lack of literacy among their clients, they either provide receipts of lower amounts than deposited, or give them forged receipts. The companies also refuse to entertain them on the ground that they will honour the commitment only if they have received the money as per the companies’ official records.

The agents also misinform the clients about the products and the status of their companies. The agents of M/s PACL India Ltd. were found to be selling their investment products in the villages of Dahod district as Recurring Deposits maintaining that their company was a bank. Although their paper instruments contained the details of the products (which involve allotting a land plot to the client and the payment on maturity depends on the appreciation of the value of the land plot after the company develops it), the clients were not able to read them as the instructions were in English. Thus the clients were vulnerable to be misinformed and misguided. The agents of PACL were also alleged to be under-reporting the deposits[i].

Migrant labourers of Dahod district keep their savings with their employers only. While coming back to their villages they leave the money, surplus of their needs, with their employers. This mechanism makes them vulnerable to the risk of losing their money. Being illiterate, they can be easily manipulated while rendering the accounts for their money, especially when the larger amounts are accumulated than they are used to. Moreover, their families are also deprived of their savings at the time of their untimely deaths as nobody, other than them, knows the exact amount being kept with their employers. Many instances were reported when people felt that they had not got back the entire amount either belonging to them or to their deceased relatives.

Whenever a wage labourer gets her wages she attempts to save some amount for future use after providing for immediate consumption and repayments. As the inflow is highly uncertain she has to frequently dig into her savings to keep afloat. Poor households therefore need savings mechanisms that allow frequent transactions with very small amounts. For want of such mechanisms, the villagers who do not have bank accounts keep the money in their houses, attracting the risk of thefts and destruction due to fire or collapse of their mud houses during rains. Even the households having bank accounts, as a result of financial inclusion drives or other programmes of the government, do not use these accounts for saving their money. This is because travelling to the bank to deposit or withdraw money encroaches upon their working hours. The post-office hours of functioning also clash with their working hours. That is why they always welcome people who deliver the savings products at their doorsteps.

This partly explains the success of deposit collecting organisations as well as that of Life Insurance Corporation (LIC) employing local agents to collect deposits, or insurance premia in case of LIC. These local agents attend to their clients when they are back from their work and are at their homes. The needs for savings must be very strong as the villagers keep using these savings mechanisms in the face of the risk of being cheated in the manner described above. There is also a tendency to treat life insurance premia of the LIC as a kind of savings mechanism, but there is again a risk of defaulting on the rigid payment schedules of LIC and losing out the entire deposit, if the insurance policy is discontinued before the completion of a minimum lock-in period. In most cases, such period is three years, and I did not find even one LIC client in my interactions in several villages who was successful to hold an LIC policy beyond that period. An enterprising young man in Dahod district plying a small vehicle for public transport defaulted on his policy and lost INR 2,700 paid for three premia, as his brother fell sick and he did not have money to pay the next premium. He has however acquired another LIC policy after about a year, which strongly demonstrates his need for savings instruments that do not impinge on his working hours.


[i] PACL, headquartered at Jaipur, is currently facing several court cases on multiple charges of fraud and embezzlement of people’s money.