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Abstract
the level of growth (8 or 9%) is. To quote J.R.D. Tata “I do not want India to
quality of human life has been the subject matter of much academic study and
public debate in India, but the focus has largely been on the performance of
the economy as a whole and not on the level of enhancement on the quality of
human life. An understanding of growth and the rationale for People Centered
Is creating wealth growth? For many years, since the birth of industrial
capitalism, growth has been a major economic goal of policy makers – and
political leaders - based on the deeply ingrained view that delivering larger
and larger quantity of goods and services is the best way to improve the
system did generate fabulous new wealth and the policy makers saw this
But in reality this wealth was concentrated in the hands of small elite groups in
a few rich countries. For many other people it was in the form of enslavement.
economists such as Adam Smith, Karl Marx, John Stewart Mill and Alfred
Marshall argued that “human beings should be the ends of development rather
than mere means”. It was only after the World War II, the world community
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human freedom and reasserting strongly and clearly that the principle
In India, it is often claimed that the current upsurge in the growth rate is the
resultant factor of the reform programme initiated by the government one and
half decades ago. Besides this, the rationale of the various economic reform
initiatives at the national level was that they would increase efficiency and
lead to higher factor productivity. Since these policies are generally applicable
to all states, there is a natural presumption that they would provide efficiency
So with the above back ground of improving the quality of human life as
growth and the rationale for examining it in the backdrop of economic reform
The objective of the study is to examine the impact of the economic reform
examining the structural changes in the three important health indicators (Life
Expectancy at Birth (years), Child and Infant Mortality rate) and to find out
the level of influence by the expenditures made by the GOI on health and the
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reform programme. The study also identifies the factors responsible for the
changes.
3. Methodology
indicators does not give statistically significant results. For instance the
percentage of people below the poverty line in 1983-84 was 44.48 percent,
though this is 10.4 percent less than the percentage of people below poverty
line in 1973-74, the absolute number of people below the poverty line has
The most popular and statistically significant regression model, the Chow test1
has been used to test for the existence of structural changes in the three
important health indicators between the two periods (Before and after the
practitioners over the each dependent variables (LEB, CMR and IMR) has
been attempted separately between the two periods to find out the impact of
where people develop their full potential and lead productive and creative
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lives according to their needs and interests. Development is expanding the
choices of the people for a long and healthy lives, access to the resources
needed for a decent standard of living and participate in the life of the
working age group of 15 – 64 years increasing steadily from 62.9 per cent in
2006 to 68.4 per cent in 2026. Tapping this demographic dividend to achieve
increased economic growth rate, India need to ensure proper healthcare to this
the quality of human life as growth and help the policy makers to enhance it
5. Research Gap
management aspect and very little on the social aspect that will improve the
quality of human life. Majority of the studies on the social aspect deal with the
educational aspect and relatively very few studies focus on the health aspect of
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improving the quality of human life. This is evident from the observation that
a search on “Quality of human life” in the JSTOR search engine listed out
many articles on education and very few on health. Even here the analysis was
quality of life across countries in the world and not on examining the impact
This study focuses on health aspect despite the fact that educational and
poverty indicators also determine the quality of human life. The study relies
while the health indicators fulfill this criterion, the educational indicators fails
6. Data Source
This paper relies on data from the authorized Indian statistical database - RBI
Bulletin, Economic Survey of India, and from the website of Indiastat.com and
The level of social sector expenditure at the state level and its quality and
between the Centre and State Governments, the bulk of the social services and
railways and major ports) lie in the domain of state government. Hence we
have taken the expenditure on health incurred on both the Revenue and Capital
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account by all the state governments in India as one of the independent
variable. The data has been culled out from the RBI bulletin that brings out the
practitioners per ten thousand populations has been taken from the various
The paper has been organized into four sections. Section – 1 deals with the
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Section – 1
Review of Literature
human life. Using cross-country data, Steve Dowrick, Yvonne Dunlop and
John Quiggin (1998) estimated an equation that explains that a cost reduction
Shirley Cereseto and Howard Waitzkin (1988) compared the Physical Quality
of Life (PQL) of 123 capitalist and socialist countries (97 percent of the
For a long time there prevailed an assumption amongst economist that the Per
capita GNP is the best index of economic well being of a country and the basic
needs such as health and education would be taken care as a by-product of the
growth in GNP. But the outcomes of many studies (Morris 1979, Ram 1982,
Burket 1985) have showed that this was not the case.
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According to Brundtland Report5 the economic growth rate that is forceful and
Daniel J. Slotjee devised an index that measures and compares the quality of
123 countries.
The above literature shows that the indices developed are better indicators of
life
There are not many studies that link Economic reform programme with the
a) Many economists are of the view that reform programme is only a tool
b) there are no direct studies of the poverty effects of trade and trade
Despite the above reasons there are several highly visible and well-promoted
1995 and Sebastian Edwards,1998) that foster the 1990s conviction that
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But Rodriguez and Rodrik (2001) contradict that the above conviction rest on
serious econometric short comings. Moreover liberal trade is usually only one
of several indicators of openness used that often weighs rather lightly in the
Besides this, economists like L.Alan Winters, Neil McCulloch and Andre
McKay, 2004 are also of the view that trade liberalization harms poorer actors
in the economy in the short and even in the successful long run open regimes.
Though the reform programme in the last 20 years around the world has more
or less enhanced the economy stronger and delivered a huge change, it has not
(Michael Pussey,2003) that validate from 1980 onwards (when most of the
economies around the world have opened their economies) to the turn of the
millennium, the total wages share has fallen down from 60 per cent to 54 per
This was due to the fact that the demands of the capitalist classes for higher
rates of remuneration, especially higher dividends, force down the added value
distributed to wage earners as direct wages and social welfare benefits. The
government share has stayed at about the same low level, comparing with
other OECD countries, for a long time government spending had been at the
shows that the poor countries least open to globalisation have progressed most
in per capita income, whereas the most open countries have been victims of
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their openness6. Karl Marx, in his critique of merchandise in the first chapter
A study titled “Politics of Economic Reform in India” points out that the
changes introduced in the reform programme of the 90s were dramatic by the
past standards in India, but quite unremarkable by the standards of many other
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Section - 2
The most important health indicator that highlights the quality of human life is
conventionally calculated from the time of birth, but also can be calculated
from any specified age. Calculating life expectancy from birth emphasizes
did make it to the age of forty he has on an average another twenty years to
live in. Improvements in sanitation, public health, and nutrition have mainly
increased the numbers of people living beyond childhood, with less effect on
1991) and after (1991-2001) the reform shows that Life expectancy gap has
been closing in India. The reform programme has reduced the increment in
LEB nearly half of that witnessed before reform. It is to be noted that the
increment in life years of female is more than the male. In the last five years
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Table - I
Increment in the Life Expectancy years - Before (1981 – 91) and After
Reforms (1991 – 2001) in India
In the last 5
Before After Yrs
Health Indicators
(1981 - (1991 - (2001-
1991) 2001) 2006)
Life Expectation at Birth - Male 5.6 2.66 1.51
Life Expectation at Birth - Female 6.2 3.09 2.92
Source - Economic Survey, 2006
To add more value to our analysis, we have compared the increment in LEB
years of India with its neighbours (Pakistan, Bangladesh and Srilanka), the
BRIC7 and with some developed economies (USA, UK, France, Japan and
Germany). The analysis revealed India ranks last with an increment of just
0.12 years in the LEB among the countries selected for analysis.
Table - II
list followed by France (80), UK (79) and US (78). So an average person born
in Japan will live 18 years more than Indian. It is shame to know that
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Bangladesh is a head of India in LEB. Being born in the wrong street in global
The most sensitive indicator of human well-being is the Child Mortality Rate
(CMR). Perhaps more powerful than any other indicator, child mortality
human development. The encouraging trends at the global level are that child
mortality rates are falling: there were 2.1 million fewer deaths in 2004 than in
prospects in all regions, 10.8 millions child deaths in 2004 bear the testimony
Now, let us see what is happening in India. The magnitude of decline in CMR
has slow down after the implementation of the economic reform programme.
Before reform (1981-1991) the CMR reduced by 14.7 while after reform
(1991 – 2001) the CMR got reduced only by 9.5.deaths. India has
Bangladesh has out performed India in reducing child death rates, which is
Table – III
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Infant Mortality Rate (IMR)
The reform programme has not brought any impact on the infant mortality
rate. Comparing with 1981, the IMR has come down by 30 deaths per 1000
programme the IMR got reduced only by 22 deaths per 1000 live births.
Table - IV
Before After
Reform Reform
1981 1991 2004
Infant Mortality Rate
110 80 58.0
Per 1000 live births
1981 - 1991 1991-2004
The magnitude of
decline in Infant
30 22.0
mortality rate per 1000
live births
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Section - III
impact of the reform programme on LEB,CMR and IMR rather than a mere
comparative analysis of the above nature. Hence, the following hypothesis has
H0 (Null Hypothesis) = the expenditure on health by the GOI and the number
The above hypothesis has been tested using the Chow Test regression model –
an econometric test that examines any structural changes in the three crucial
health indicators (LEB, CMR & IMR) between the two periods (Before and
After Reform). It is nothing but the F test, where the observed value is more
First we have used Life expectancy at birth (LEB) as the dependent variable
population available to provide medical treatment and the dummy (0,1) as the
Our results showed that the observed F value is less than the Critical value and
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they do not hold any significance. In other words there are no changes in the
Since LEB did not yield any significant result our next attempt was to use
Child Mortality rate as the dependent variable with the same independent
variables to test for structural changes between the two periods. The results
showed significant outcome (observed “F” value > critical) thereby establishes
the fact that there exists structural changes in the Child Mortality Rate (CMR)
before and after the programme. A similar attempt has been made with respect
to Infant Mortality rate (IMR) which also showed significant outcome. In short
the chow test conducted for the three health indicators showed that except
LEB, in the other two health indicators (CMR & IMR) there exist structural
changes.
Table -V
Chow Test
Descriptions CMR IMR LEB
Residual Sum Squares (S1) Combined Observations 97.08 164.46 148.74
Residual Sum Squares (S2) Period 1 17.96 18.58 59.08
Residual Sum Squares (S3) Period 2 16.41 27.94 43.99
S4 = (S2+S3) 34.38 46.52 103.07
S5 = (S1 - S4) 62.70 117.94 45.67
No.of.Parameters Estimated (k) 4 4 2
No.of.Obsevations (n1) 10 10 10
No.of.Obsevations (n2) 10 10 10
S5/k 15.68 29.49 22.83
(n1+n2-2k) 12 12 16
S4/(n1+n2-2k) 2.86 3.88 6.44
S5 /k
Observed F - Value = 5.47 7.61 3.54
S 4 /( n 1 + n 2 − 2 k )
F - distribution (k, n1+n2-2k) (4,12) (4,12) (2,16)
F- Critical Value @ 5% level 3.26 3.26 3.63
Not
Inference = Observed F< Critical F Significant Significant
Significant
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After establishing the existence of structural changes in the CMR and IMR
which means the reform programme has brought some changes in the CMR
and IMR. The next level of analysis was to determine the level of influence by
The adjusted R2 in the regression analysis explains the level of influence of the
independent variables on the dependent variables. Our analysis reveals that the
provide medical treatment) on the dependent variables (CMR and IMR) has
come down after the reform programme. These two independent variables that
were influencing 88 per cent of changes in CMR and 80 per cent of changes in
IMR before reform, their level of influence has come down to 54 per cent and
57 per cent respectively after the reform. This is further validated by the F
value that explains the significance of the whole model shows that the model
Table - VI
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The next level of analysis is to find out whether the changes in CMR and IMR
have been due to Intercept or Slope or both. The P value of the Intercept of
CMR and IMR are significant before reform and not after reform. This has
from 59 to 1800 in the case of CMR and from 590 to 4700 in IMR. The above
the increase has been due to sharp increases in the wages of the health service
Shariff and others (2002) points out that in some states the wage bill tops 90
per cent of the total costs. The increase in the wage bill following the
commission’s decision led to increase in pay rates and not in the numbers of
doctors and nurses. This increased spending was not likely to improve health
outcomes.
The positive aspects of the health indicators CMR and IMR is explained by
reduction in these indicators. The variable X2 (the number of RMPs) had good
influence in bringing down the CMR and IMR. The beta co-efficient shows
negative sign that explains an increase in the RMP brings down the CMR and
IMR. But here also the reform program has no impact. The beta co-efficient
got reduced to one fifth of that of the before reform for CMR and one fourth
for IMR.
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We would like to further strengthen the above analysis by combining the data
into one single set and run a regression analysis for 20 data points instead of
the one analyzed above with respect to before and after reform as it may give a
biased results since the data set takes into account only 10 data points.
The regression analysis showed similar results of the one analysed with split
up data set. The P values of the beta co-efficient of the dependent variable X2
services are significant as their value is less than 0.05 with the three
medical practitioners increases the Life Expectancy at birth and decreases the
Child and Infant Mortality rate. On the other hand the P values of the beta co-
Besides this the beta coefficient for LEB shows positive sign which signifies
increment in LEB goes with increment in the number of RMP. Similarly the
beta co-efficient for IMR and CMR shows negative sign that imply decrease in
Child Mortality and Infant mortality rate coincide with increase in RMP.
Table – VII
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Section - IV
The study reveals that the reform program had little or no impact on the
quality of human life despite the fact that the reform programme is one of the
reasons that had unleashed the entrepreneurial forces from the shackles of
The health sector has been kept off from the Government’s (Centre and State)
¾ the problems of the foreign trade regime, fiscal deficits and the
high priority in the minds of the reformers with the believe that once
these are handled right, trickle-down will take care of the issues that
¾ The policy makers did not give much importance to the regular
ceremonies.
Recommendations
21
the quality of human life on many economic parameters (Employment, Free
jobs are created through economic growth. But the current scenario is an era of
jobs faster than growth is creating them. The new jobs being created are often
insecurity throughout society that deeply stresses the social fabric. Similarly in
Today the gains from comparative advantage are not real. More than half of all
comparative advantage.
control of basic public services like primary education, public health and
ushered in most of the states raising the hope for better delivery of public
services sensitive to local needs, the progress in this respect has been
22
Mahi Pal (EPW, September 8, 2001) reveals that except Kerala,
devolved to the panchayts. Even in the relatively successful states like West
Bengal the major role of the panchayts has been in identifying the
projects like roads and irrigation, funded by tied grants from the State and
Central government.
Apart from this the reformers paid little attention to the crucial problems of
inexorably there even if trade, fiscal and industrial policy reforms were
most states, chances of constructing a minimum social safety net are low, and
with out such a safety net any large scale program of economic reform will
economic security.
Another area where the reform programme in the social sector could enhance
services, not in terms of fostering business development, and yet if this link
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popular, as local informal-sector industries touch the lives of many more
people than the corporate sector. The Chinese success in the phenomenal
The current administrative set-up in our country for many years has been
based and not merit or performance based. There is also strong disincentive to
take bold and risky decisions. In such a situation any type of reform
programme aimed on the social sector would not enhance the quality of human
government machinery that does not allow them in itself is hypocritical of that
the reform programme focused on the social sector that aim in enhancing the
Conclusion
The reform programme would have been more popular if it was oriented
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maximum benefits out of international trade and investment. It should fulfill
choices for all people rather than many choices for few people.
Future Research
Future Research of this paper will focus on developing a health index for India
taking into account all economic and social aspects that could play a
significant role in determining the quality of human life.
---------------0-------------
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END NOTES
Economic Analysis and Policy based on the budgets of all the state
Government of India.
Press, Oxford, 1987. This report was the basis for the UN conference
2004.
paper argues that the economies of the BRICs are rapidly developing
and by the year 2050 will eclipse most of the current richest countries
of the world.
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Annex - I
t = 1,2,………..n1
t = 1,2,………..n2
in the two equations, and n1 and n2 are the number of observations in the two
periods. The number of observations in the two periods can be the same or
different.
Now a structural change may mean that the two intercepts are different, or the
two slopes are different or both the intercepts and slopes are different or any
(i.e structural stability) we can combine all the n1 and n2 observations and just
Combining all the n1 and n2 observations we estimate equation 3 and obtain its
residual sum of squares (RSS), say S1 with df = (n1 + n2- k) where k is the
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Equation (1) and (2) are estimated individually and obtained their RSS, say S2
and S3 with df = (n1 – k) and (n2 – k) respectively and these two RSS say
Then we obtain S5 = S1 – S4
S5 k
F=
S 4 (n1 + n2 − 2k )
The parameters are not the same and they are different between the two
periods. We introduce dummy variable to find out whether the difference has
been due to Intercept or slope or both. Here we have introduced the dummy
variable “0” for before reform and “1” for after reform.
28
References
29
13. Rodrik Dani and Subramanian Arvind (2004), “ From “Hindu Growth”
to Productivity Surge: The Mystery of the Indian Growth Transition”,
National Bureau of Economic Research, Cambridge, Working paper
No. 10376.
14. Sachs, Jeffrey (2005), “The End of Poverty”, The Penguin Press. New
York
18. Steve Dowrick, Yvonne Dunlop and John Quiggin (1998), The
673-691
21. Williamson, Jeffrey (2002), “Winners and Losers over Tow Centuries
of Globalization” National Bureau of Economic Research (Cambridge,
MA) Working Paper No.9161
22. Wade, Robert Hunter (2001), “The Rising Inequality of World Income
Distribution”, Finance and Development, Vol 38, No 4
30
23. Winters. L. Alan, Neil McCulloch and Andre McKay, “Trade
Liberalisation and Poverty: the Evidence So far”, Journal of Economic
Literature, March, 2004.
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