Appendix 4 Importance of the Private Sector in Health and Education in India

Health Sector in India - Long history of private provision, still expanding

Only 12% of health expenditure in India is public, 78% goes to private enterprises.[1] India has an estimated 450,000 private doctors, 1.25m rural clinics and 12 million chemists. Traditional healers assist for minor complaints: 70% of anti-diarrhoea medicine is sold by them[2]. In a poor area of 2,000 families visited by the author there were 5 'clinics' + 3 dai (traditional mid-wives) - 1 practitioner per 250 families.

Public provision is focused on the rich. The richest 20% receive 32% of public health expenditure, the poorest 20% receive 12%. In poorer states such as UP the bias is more extreme; 41% compared to 10%. 30% of women in the richest 20% deliver in public hospitals, while only 7% of the poorest 20% do so[3].

As a result, the poor do not have access to public healthcare. They say "it takes too long to go to the govt. hospitals - they are too far away and there are too many forms to fill in. We do not have money to travel, we cannot take time off work. The private clinic is close." The average distance to a medical facility for the poorest fifth in India is 2.5km, 3.5 times further than for the richest fifth[4]. And where there is provision in poor areas, service is bad. In spot checks in rural areas the medic was absent 43% of the time[5].

The major gaps in healthcare in India are in sectors where the private sector is not active. For example, there is little private vaccination. As a result, the level of immunisation is falling and infant mortality rates are not falling[6]. 74% of antenatal care is provided by the public sector[7], but 3/4 of births take place at home and maternal mortality rates are very high.[8]

In future, it is likely that private provision will increase. The private sector is increasing its share of pharmaceutical procurement.  Traditional healers are becoming more professional and offering more health services. The government increasingly supports private sector provision[9].

A major challenge will be the private sector's ability to treat HIV/AIDS, the likely next health crises in India. It is estimated that there will be 110m HIV/AIDS cases in India by 2025[10] (from the current 5.2m) and HIV/AIDS is likely to be the leading cause of death.

Education Sector in India - Communal and private provision taking up the slack

Private education in India is significant. Official statistics say 10% of rural and 26% of urban primary education is private. Yet expenditure surveys indicate official figures underestimate; 30% of rural households with children and 50% of urban households use private education[11]. One third of education spending goes to private institutions. In a peripheral area of Delhi visited by the author, 60% sent their children to private schools. There were 5 private schools and only 1 state school in the area.

Public provision is directed to the wealthy. More state money goes into secondary and tertiary education, which caters to the rich.  Private schooling is most common in primary and junior education, where poor children are more represented.

The poor are forced into private schools as the public sector is failing. Parents regularly complain that "Teachers do not care at the government school, class sizes are too big. Private schools are more modern. Government school is too far"[12]. Government surveys show major problems in public schools. 50% have no drinking water available. There is frequently no sanitation, especially for girls. Few have additional teaching facilities or books - all money is spent on teacher salaries. Yet many teachers do not turn up, absence rates vary from 15% in Gujarat to 39% in Bihar[13]. Where public schools are worst (Bihar, Uttar Pradesh), the private sector is strongest, even though these states are also the poorest[14].

State schools are failing due to a lack of funds and misallocation. The proportion of GDP spent on public education in India has fallen over the past 15 years, and an increasing proportion of funds have gone on teacher salaries, rather than equipment or infrastructure. State governments are unwilling to confront strong teachers unions and salaries in public schools are now up to ten times higher than in private schools.

As a result, the poor pay for private education. It is common for very poor people in shanties in Delhi to pay Rs100/mo for private schools ($2, or approx 15% of household income for a family of 4). Education is seen as the best way to lift the whole family out of poverty.