TAJ - Is it working?

The "TAJ" in the title is just an attempt to come up with something as interesting and trendy as "JAM" for an abbreviation.....don't know if you like it but its the best I could think of.

In case....it doesn't work for you...will try to make up for it with some better quality writing below. 😊
Hopefully it will be worthwhile for everybody reading.

So to start....TAJ....

T - Toilets
A - Ayushman Bharat (National Health Protection Mission)
J - Jan Aushadhi

It is no secret that out-of-pocket (OOP) health expenses are one the biggest reasons for people remaining poor....and some slipping from not being poor to becoming poor.

Govts have come and gone..... allocated some budgetary resources...spent some money....but that has not improved the ground situation much.
Economic growth has helped families come above the poverty line....but that still leaves them vulnerable to OOP expenses, which keep rising every passing year. All that is gained from growth can be lost to OOP medical expenses.
Back to square one.
Some estimates suggest that about 5 cr Indians are pushed below the poverty line EVERY YEAR because of OOP medical expenses.

Is TAJ any different from previous Govt schemes?

As a layman....approach towards reducing an expense can be looked at in 2 ways I think.

- How can the expense be prevented?
- When it has to be borne, how can it be minimised?

The way I see it .... TAJ follows that simple thought process.

TOILETS (T from TAJ):

Open defecation has multiple horrible effects on health of all, particularly kids, who are surrounded by or live in that environment.
Effects are both short term and long term.
I am not a medical professional...but a simple Google search will give enough insights on how open defecation is a horrible practise for the society to be following.
As the name itself suggests..... since its about defecation.... solution is obviously usage of decent toilets.

But this simple solution, while finding fleeting mention from all previous govts and ministers....hardly had enough focus from the same people.
No wonder.... more than 65 years after independence, household toilet coverage in rural India was only around 38%. More than 50 cr people (maybe 60 cr, almost half the population) were defecating in the open in 2014.

Since 2nd October 2014....when PM Narendra Modi sounded the bugle for Swachh Bharat.... toilet building has been under intense focus.
There has hardly been a forum from where PM does not talk about it.... state machinery till the Panchayat level has been included in the whole process.

Almost 4 years now.... more than 8 cr toilets have been built.... household toilet coverage has now gone to 92%. Another few weeks should see it reaching 100%.
Surveys have suggested that usage of the toilets is upwards of 90%....and as result more than 4 lac villages have been declared as Open Defecation Free (ODF). Verification and audit of the ODF status is a continuous process.
More than 50 cr people would have given up open defecation by the time we come to 2nd October 2019. It will have a positive impact on 50 cr+ human lives.

Essentially..... "prevention".... the first attempt at reducing any expense.... is at work when building toilets. Swachh Bharat itself can be called a big disease prevention program (probably biggest ever), toilets being a big part of it.

Ujjwala scheme, under which poor households are given LPG connections
(5.5 cr till now).... and Mission Indradhanush, for large scale kids immunisation.... are also part of the "prevention" mechanism.
(They are subjects of big write ups individually.)


JAN AUSHADHI (J from TAJ):

If Toilets and other programs are part of the prevention strategy.... Jan Aushadhi kendras are part of "minimising the expense" strategy.

India's pharma market has branded generics as big part of it. Medicine prices have big markups and margins.... increasing the medicine cost for people.
Medicine costs are estimated to form 60-70% of OOP medical expenses.

Jan Aushadhi program is to bring the generic medicine to the people at very low markups....and thus very low prices. Not all medicines maybe available through this Jan Aushadhi network.... but around 1000 of them are. Savings on buying these generic medicines are anywhere between 50-95% over the prices of branded generics.
There are over 4000 Jan Aushadhi stores as of now..... probably will touch 5000 by March 2019. All this has happened over last 3 years..... previous govt had tried the same program.... but never progressed to anything meaningful. It was a big flop then.

But has Jan Aushadhi started making a big impact?   No. Not yet.
But we do have seeds of something big..... most stores have opened in the last 2 years.... word of mouth and trust factors may take a little time.

Turnover is picking up exponentially..... albeit on a very very low base.
FY19 till 31st August...it has already crossed 100 cr.
So maybe we will see 300 cr type of number in FY19.
(There could be some issues of stock availability at shops and range of medicines etc.... but those can be ironed out with time.)

If program can be sustained and scaled up to Rs. 1000 cr+.... we are talking big numbers...because 1000 cr of Jan Aushadhi turnover here could mean 
Rs 4000-5000 cr of branded generic turnover.
That is not small for a branded generic market size of ~Rs 80000 cr.
(Please correct me if this wrong.... this is my understanding of what the size is) 
Its 3000-4000 cr saving per annum....potentially more in future years.

Ayushman Bharat (A from TAJ):

Firstly.... Ayushman Bharat will start soon.... so part of the title "is it working" does not apply.
But it essentially forms a big part of the "minimising the expense" strategy.
Providing insurance cover for hospital expenses.
More than 10 cr families....around 50 cr families are supposed to be covered as per the plan. Some selective trials are going on.


Coming to second part - "Is it working?"

Two legs of "TAJ" have been in works for 3 or more years now.
Since it is still work-in-progress.... tough to conclude whether it is successful or not. But do we have some initial signs which may indicate some trend?

Just sharing some indicators....not concluding on any direct "cause and effect" correlation. (I have neither the capacity nor enough data to do it)

- Disease outbreaks - under Integrated Disease Surveillance Program (IDSP) weekly disease outbreaks are reported. If we look at sanitation/cleanliness related disease outbreaks like cholera/diarrhoea etc.
Average number of weekly outbreaks reported in various years:
                 2014: 24.9
                 2015: 29.6
                 2016: 37.3
                 2017: 24.2
                 2018: 19.6 (first 24 weeks)

The number of outbreaks were on uptrend from calendar year 2014 to 2016. 
Toilet building after starting in 2015, picked up pace in 2016 and 2017.
At same time, other parts of Swachh Bharat also picked up. 
So yeah... all our cities have not become spick and span.... but some have done very well.... others have lot to learn and cover up. Its a continuous process.

Disease outbreaks reported a decline in 2017 and first part of 2018.
(Outbreaks numbers do not give number of cases reported....but clustered break out of a disease. Individual cases will be far more. Here I am just using it as a rough indicator.
The website... idsp.nic.in .... is unfortunately not working last few weeks.)
Lesser outbreaks, lesser diseases....lesser medical expenses obviously.

- Indian Pharma Market Growth (Medicines only, FY) - 
                        2012  15%

                   2013  10%

                   2014  10%

                   2015  12%

                   2016  14%

                   2017  9%

                   2018  6%

Pharma market growth has shown a downturn.... somewhat in sync with disease outbreak decline.

Small news item from Indore.... which has been ranked the cleanest city 2 years in a row. (More related to broader Swachh Bharat than toilets)

This says last year medicine sales in Indore fell by 25 cr!!

 - Hospital Occupancy -

Am using Apollo Hospitals data.... listed for a long time.... so data also available for a longer term.

From 2006 to 2014.... Apollo reported occupancy of 70-75%+ even as it kept adding bed numbers throughout the period.

But since then...occupancy has dropped off and stabilised around 65%.

This may have more to do with demand-supply equation of hospitals beds itself.... and lesser with Swachh Bharat or related things.

But has had positive side effect of hospital charges having stagnated for few quarters.

This inflation in hospital charges had been 7-8% per annum for more than a decade.

From.... disease outbreaks to medicine sales.... there are some signs which are pointing in the right direction. If the momentum and focus on the programs continue....impact could be bigger.... and a stronger case for the "cause and effect" correlation could be made.

Some localised anecdotes of "prevention" having a positive impact....

- Result after UP Govt ran a big sanitation and immunisation campaign

- Effect in a district in Jharkhand

- Village in Adilabad

- Effect of efforts of Municipal Corp on Indore

To add to all this.... If Ayushman Bharat is implemented well... we could be watching the most significant positive change in public health as it unfolds.

And with that... it will also be a big help in reducing the number of people who slip into poverty due to health related expenses.

That it will add to productivity of those, who otherwise would suffer from diseases, is positive economic side effect.

I am neither a medical professional nor public health expert, so article is numerical type with data.... and not philosophical type with nuances.

Obviously it cannot be comprehensive either. There is lot more to the subject than I can even start to comprehend.

Its just a layman attempt to collate few things that came to notice.... in the form of a blog.

Thank you for reading through!!

"Pulse" of Food Inflation

       People trying to hide their pain or expressing their disappointment/disgust through satire or jokes is not new. It has happened before....no need to add...will continue in future as well.

      The hottest such topic in India are dal (pulses) prices. In a matter of few months, price have gone up, depending upon which type of dal we are talking about by about, by say 50-100%. Maybe more...just giving a rough sense. No wonder they have become a point of discussion, satire and jokes.
    Pulses production may falter in India due to poor monsoon. We were already an importer. Internationally too prices have gone up. All of this means, it has to get reflected in Indian markets as well. Broadly that is the story of pulses.

     Aim here is not to look at pulses alone....but just to zoom out...try to get a bigger macro sense.
     We all are well aware, of how deeply related, agriculture in India is to the monsoon. We should have done better than the condition it is in, after 60 years, but that is a separate discussion altogether. Will not go there.

     To start with, just putting some data on monsoon and food inflation (Wholesale Price Index) numbers over the last few years.

    Over the last 14 seasons, last two years seems to be first time that we have had back to back deficient monsoons. In between, these two seasons, we also had heavy unseasonal rains, which had caused damage to winter crops.

    In fact this is what IMD has to say in it's report on 2015 Southwest Monsoon

   "Last year (2014) was also a deficient monsoon year with actual rainfall of 88% of LPA. Thus years 2014-2015 are the fourth two consecutive deficient monsoon years during the last 115 years. Earlier 3 cases were 1904-05, 1965-1966 & 1986-1987."
 
    This is only the 4th instance in the last 115 years that we have had 2 consecutive deficient monsoons. Almost half the districts in the country are in drought situation, as of now. Quite a few of them, for second consecutive year.
    
   Now have a look at Average Food inflation numbers (WPI) over the years.

   Since 2006 till 2013, food inflation (For the whole basket) is almost consistently ranging from high single digits to double digits. And in all these years, there was only one, 2009, where there was a genuine crisis of monsoon. All other years we had normal monsoons, also good crops.

   With this in back ground, consider what has happened in 2014 and 2015. In face of back to back deficient monsoon, food inflation first averaged down to ~6.3% in 2014 and now very close to ZERO.

   Am sure, lot of people will want to contest that "zero". Please do (even I am doing it), but let us just go through numbers once.

  The following is the September release on WPI inflation.

   Sept 2015 WPI

   Looking at the food break up, onion prices seem to have been accounted for, in terms of rise. Pulses dont seem to reflect the complete price rise in these numbers. If they are, would probably add ~3% point to the overall food inflation, which will then start looking closer to 4%.
   I do not actively track prices of all commodities mentioned here... so, as of now, taking them as given.

        So essentially, what it means is that food inflation (whole basket) over last two year has moderated in face of 2 consecutive poor monsoons.         In 2009, when there was a single year of bad monsoon....food inflation was of order of 15%.       

       Whether this is compared with the food inflation trends over previous 5-7 years, which came with all, except one, good monsoons, or if this is looked at just in standalone absolute terms... is it as bad as dal prices make us feel?
     

       Will, obviously, have to leave that to you.

       

        The other question is whether Govt could have done better, acted more proactively, particularly in case of dal? Perhaps yes. But would it have stopped the rise? To some extent yes, but not completely.


  Possible conflict points:

-       Some may want to debate whether the latest food price data, as presented, is itself correct. I cannot vouch for 100% data correctness, but am using it as broad indicator. There are likely to be discrepancies. Regional discrepancies or time lags in accounting for prices of commodities.
   If there are pricing discrepancies, it will take significantly high discrepancies to move the needle significantly on the food inflation. If those exist, obviously arguments will not hold fully.

(basing arguments on Govt inflation data can be a very risky proposition, but for lack of any other database, have to take this. Will have to take lot of flak, if data is highly misaligned from the market)

-       Consumer faces retail prices, not wholesale. Consumer Price Index (CPI) based inflation tends to be little higher than WPI. But that would be the case for all years, and thus would broadly negate, at least, in case of comparison with previous years.

-       Have sourced data from Economic Surveys and other Govt releases. But sometimes they get updated with a lot of lag. So some numbers may change a little, here or there.

-      There could be some, maybe quite a few, who are of the opinion...that no matter what the situation... Govt has to stop food prices from rising. These are personal opinions, nothing wrong. Well....in such case, I can only humbly withdraw from the debate.

Is the Indian Exports performance that bad??

          Some numbers and data on recent Indian exports...and whether they are           really as bad as the reported numbers suggest they are.




         Indian Exports - is situation that bad?

          

When 65 is not equal to 65!!

     My take on currency situation

       When 65 is not equal to 65!!


      

From Crude Oil market to the Petrol Pump...

Readers will be well aware that crude oil prices have tanked in the last 2 months....domestic prices at the petrol pump level have also declined.

But I came across several question marks as to whether the complete pass through of the falling crude oil prices has happened to the retail petrol pump level in India. It is natural for any layman to ask these question particularly given that crashing crude is in media focus and thus awareness levels are reasonably high.

Having said that I also think some of these questions are loaded with incorrect and incomplete data...and thus could be just plain illogical question or are an attempt to give it a certain mischievous colour to INTENTIONALLY mislead people, when actually it should just be simple mathematics.

So while I am no expert on the matter, I thought it's worthwhile to put things in perspective, for the layman. Attempt is to have a rough guideline to understand how retail pricing works in conjunction with international crude prices, whether going up or down.

Will try to keep it as "layman" as possible.

(If anyone who reads this and has better understanding, pls correct/add/modify)

- When comparing Dollar prices of crude oil across timeframes...please do look at the changes that have happened in the exchange rate for USD to INR, in the same timeframe. Indian Rupee price of crude oil is what we end up paying for. Difference caused can be huge, when USDINR moves from 44 to 62, even if the Dollar price is the same. After all, it's (CRUDE IN $ multiplied by USDINR rate).

- TIMING DIFFERENCE. This becomes VERY IMPORTANT in the present context of crashing oil prices. Retail prices are changed, mostly, on fortnightly basis. The price for a forthcoming fortnight is decided on the average crude price of the preceding fortnight. 

Thus, as an example, the pricing for, say, 1-15 Dec 2014 will be based on average pricing of the 16-30 Nov 2014 fortnight.

As this is being posted, pricing for first fortnight of Dec 2014 is 76$. Thus while TV screens are flashing crude oil price in low $60s, it will get reflected in the Indian crude basket price a little later. And correspondingly retail price will also change later.

- Retail prices of some petro products have only recently started to become market price linked. Before this almost all products were subject to Govt controls and thus could involve subsidy elements and under recoveries. 

When one says there is under recovery of Rs 2 per litre on petrol, that means price of petrol at the pump is Rs 2 lower than what it should be to recover costs.

So when you compare prices across years, if there was any under recovery or subsidy element involved, it needs adjustment for comparison.

Example: If I say crude oil price in 2009 was 70$ and petrol price was, say, 57 Rs. Why is it 70 Rs now with crude oil at the same price in $. As mentioned above, first adjustment for currency has to be done. 

But if in 2009, there was an under recovery, say, 5 Rs. Then actually price then in 2009 should have been 62 Rs and not 57 Rs. And thus comparison between 70 and 57 is incorrect. It should be between 62 and 70.

Under recovery might have been zero as well, am just saying it needs to be taken into consideration before reaching a conclusion.

- Products like petrol and diesel are taxed at various levels, Central and local. And they may vary state to state. And thus prices vary from city to city.

Thus when prices are compared, it will be useful to check whether prices being compared are from the same city.

Taxes add another angle, which is they can be changed, mostly upwards.

And thus prices can move even while crude has not!! And thus taxes also need to be compared while comparing retail pump prices.

- Dealer margins and logistics cost also change with time. But they form part of the price that is paid at the pump. That also need to be compared.

Big chunk of taxes, dealer margins, logistics cost etc are fixed in nature...and thus they do not go down even when the basic petrol price (before taxes and margins) goes down. Thus the basic price of petrol will broadly follow crude oil price, but other components of retail price don't move (taxes can, in fact, go up).

That's why, mathematically, percentage drop in retail petrol/diesel price doesn't match percentage drop in crude oil price even if drop in crude oil price is completely passed into the basic petrol price.

One can complain about taxes, but that's been a constant feature of petroleum sector for decades, unlikely to change.

So has recent crude oil price crash been completely passed on to retail prices?

As noticed above, present pricing is with average of 76$, so as that average goes down, prices should change.

Till date, by my rough calculation, basic petrol price ( at 76$) may have roughly come down by 15 Rs, but retail price has come down by around Rs 11.

The remaining has been kept by Govt by increasing Excise Duty.

That's the rough break up of how the advantage of lower crude price has been shared between consumers and Govt, as of now.

What happens in future is anybody's guess.

Pizza Mania - 4

Here is the updated piece on "Pizza Mania"!!

Pizza Mania - 4


(Standard Disclaimer - The probability of the analysis going horribly wrong is closer to 1 than zero!!)

India Consumption Story = "FICTION"?

While the consumption story in India has been celebrated by investors and companies have been awarded rich valuation multiples, is there a case to be cautious of the drivers of the story??


India Consumption Story = "FICTION"?  


(Standard Disclaimers apply....:-))