The Optimal Distribution Rule of Federal Funds to States in India: A Suggested Methodology

A federal country like India distributes centrally collected funds through certain distribution rules, framed by the finance commission every five years, which primarily aims at horizontal equity among the states, although the goal of vertical equity has also been accommodated lately. The distribution rules do change, but they are largely governed by population and taxable capacity in a static sense. As a result, this brings some horizontal equity in the stated time frame but misses the root cause of inequity among states. This highlights the importance of the dynamics of growth of per capita income of the states which depends on public capital formation since private investment is complementary to public investment. This also raises the issue of time preference along with the attitude towards inequality aversion on the part of individuals in different states in India, which determines the savings that set the limits to private capital formation. This helps one to estimate the optimal value of public capital in a state which would ensure certain predetermined growth target along with inclusivity. If the finance commission could accommodate in its distribution rule the development gap of each state in terms of actual and optimal public capital as mentioned, the horizontal as well as vertical equity can be pursued in a sustainable manner since this addresses both inequity among and within states over time.

Publicly Financed Health Insurance Schemes and Horizontal Inequity in Inpatient Service Use in India

Equity is a major policy objective of health care reforms across nations. Publicly Financed Health Insurance (PFHI) schemes are one major health care reform that have been adopted across developing countries to address inequity. Existing literature on the effect of PFHIs focuses on out-of-pocket expenditure and utilization of health services, while the effect of PFHIs on equity in health service use remains understudied, particularly in the Indian context. This study addresses this knowledge gap. In 2008 India launched a PFHI scheme with an aim to achieve horizontal equity, that is the equal treatment for equal needs, in the utilization of health services. Using data from the National Sample Survey Organization (NSSO), we analyze the extent of inequity in the utilization of inpatient services before (2004) and after (2014) the implementation of the PFHI. The annual hospitalization rate increased from 2.4 percent in 2004 to 4.4 percent in 2014 and the increase is higher for rural population. The proportion of population covered by any health insurance scheme increased from 0.5 percent to 15.3 percent post-PFHI implementation. The study finds that PFHIs were associated with reduced inequalities in inpatient service use, but the extent of reduction varied across states and across urban/rural areas. Our inter-state analysis shows that the States with a higher concentration of PFHIs among richer quintiles, a possible leakage and exclusion errors, have failed to ensure the needed access for their poor population. This failure reflects in their higher levels of income-based inequity in inpatient service use. This study has implications for the implementers of social security programs adopting targeted approach. There is a need for better strategies for the identification of beneficiaries and ensuring that they receive scheme benefits to have intended welfare effects.

Bus Service Level and Horizontal Equity Analysis in the Context of the Modifiable Areal Unit Problem

The modifiable areal unit problem is of great importance in geographic science. The use of a specific zoning impacts the social and economic imbalances that can be generated in the deployment of services, facilities, and infrastructure. In this article, GIS is used together with simulation and optimization tools to analyse the effects of bus frequency changes in the levels of service and horizontal equity derived from different types of territorial zoning. The city of Palma (Balearic Islands, Spain) was chosen as a case study for the method, for which different geographical areas are used: neighbourhoods, census sections, cadastral blocks, and a 400 x 400 m mesh. The results show significant variations of the optimal frequencies obtained, depending on the type of zoning used. In general, smaller zonings show much higher sensitivity for the detection of imbalances between the population and bus service level. Likewise, orthogonal zonings also prove useful for identifying service and population concentration over other zonings. The use of large spatial units could lead to the misdiagnosis of needs and the implementation of actions that do not actually improve the level of service or the equity of the transport service. It is recommended to consider combining zonings of different sizes simultaneously, in order to accurately highlight imbalances and to argue for transport service improvements.

Proposing an integrated accessibility-based measure to evaluate spatial equity among different social classes

Fair spatial distribution of services has always been a challenge for urban planners to supply sufficient accessibility for individuals and to consider the needs of vulnerable social groups. Nevertheless, equity assessment literature has mostly focused on measuring the accessibility through distance-based variables, and social stratification based on just income, as well. Accordingly, this study intends to employ an accessibility measure that considers non-distance-based variables along with distance-based ones. It uses multi-criteria decision-making to propose an accessibility index to assess vertical and horizontal equity of residents’ accessibility to a range of public facilities, in the district 6 of Tehran, Iran. Therefore, using the integration of geographical information system-based spatial analysis, wider people specification, and the Gini coefficient, this measure proposes a novel framework to examine the equity level of individuals belonging to the lower, middle, and upper social classes. Results imply a 0.228 Gini index for horizontal equity, which indicates a low level of inequity among residents. Besides, for vertical equity evaluation, Gini index of 0.097, 0.249, and 0.167, respectively, for lower, middle, and upper groups show people in the lower class experience very low levels of inequity, therefore higher accessibility is well distributed among groups with higher social needs. This approach can help planners to choose the right analysis method and prioritize urban decisions toward the equitable distribution of facilities.

Health Care Utilization by Older Adults in Nepal: An Investigation of Correlates and Equity in Utilization

This study aims to evaluate factors associated with health care utilization (HCU) and to assess vertical and horizontal equity in utilization among Nepali older adults. Data are from an existing cross-sectional study involving systematic random sampling of 260 older adults in Far-Western (Sudurpaschim) Province of Nepal. Andersen’s theoretical framework was used to assess predisposing, enabling, and need factors that have the potential to influence health care utilization. Multivariable logistic regression analyses were conducted to examine potential correlates of HCU. Horizontal and vertical equity were assessed using concentration curve and index. More than one-third of participants had not visited a health facility in the prior 12 months. Nine in 10 participants did not know about the government’s free health service for older adults. Joint/extended family type, Ayurvedic/Homeopathic health care preference, higher-income tertile, and presence of chronic conditions were associated with higher odds of health care utilization in adjusted analyses. The concentration curve for HCU lies below the line of equity, and the subsequent index is positive, indicating that HCU was concentrated among richer individuals. If the government of Nepal is to achieve its goal of universal health care, the existing pro-rich inequity in HCU needs to be addressed.

Capital, an Elusive Tax Object and Impediment to Sustainable Taxation

Sustainable taxation requires stability and predictability. Sustainable taxation is a tax or taxes that collect sufficient revenue to support the governmental goods and services the society needs and wants. The taxes must provide for: 1) even-handedness—something akin to horizontal equity; 2) distributional fairness—aconcept emerging from notions of vertical equity; 3) transparency in application so that the populace understands and accepts the tax and the need for it; and 4) collection mechanisms that do not favor some societal groups, especially those with resources to secure creative tax advisors, over others who lack the resources. Narrow base taxes—fuel, alcohol, tobacco—cannot meet these criteria and the broad base taxes currently applicable—value added, payroll, and income—alsofail to meet one or more of the criteria. While specialized taxes like environmental taxes and sin taxes—alcohol, tobacco—serve useful regulatory functions and may achieve their behavioral objectives in part, they do so primarily by increasing the cost of engaging in the undesirable behavior and pricing some actors out of the activity. Using a pricing rather than a direct regulatory mechanism, the specialized taxes change the conversation from social rejection of the behavior to acceptance as long as the actor is willing and able to pay the high price. Is it all right to pollute if one pays to do so? Direct regulation might prove less regressive and less likely to be viewed as simply a matter of price and more as a matter of societal mainstream and commitment to addressing a problem. To secure sustainable taxation this Article recommends a non-preferential income tax on a comprehensive income tax base. While by no means a new idea, the growing resource disparity between affluent individuals and individuals with limited resources renders the idea of a non-preferential income tax on all income including realized and unrealized gains all the more compelling. This Article outlines a method for transition to the recommended tax base from the current realization-based tax base and suggests that in limited cases a taxpayer might defer payment of tax on some items of income but not defer inclusion of the items in the tax base. As it describes its tax plan, this Article reflects on the objectives and shortcomings of the targeted taxes and purposive tax base modifications that have proliferated during the 20th century. This Article concludes that a non-comprehensive tax base may accomplish narrow objectives successfully but is unlikely to become functionally sustainable to support essential governmental goods and services. Neither are targeted taxes and purposive tax base modifications fully justifiable. They are likely to distribute tax burdens unevenly among taxpayers without any compelling reason for preferring some taxpayers to others. The narrowness of the base of such taxes frequently leads to regressive tax incidence.