On the money

It’s not just the GDP. There’s also the mystery of 10% growth in consumption expenditure

In the quarter of demonetisation, India’s private final consumption expenditure hit a multi-year high. But no one really knows why.

Who do you believe? The Central Statistics Office which pegged India’s Gross Domestic Product growth for the third quarter (October to December) of financial year 2016-’17 at 7% and private final consumption expenditure growth at a whopping 10.1% over the third quarter of 2015-’16? Or what you see and read about the effects of demonetisation since November 8, 2016?

To put things in perspective, the released data shows that growth in private final consumption expenditure doubled during the quarter which saw higher denomination notes being withdrawn. This growth was 5% in the second quarter of July-September, which reached a multi-year high of 10.1% in the third quarter. Everything about this increase in growth rate is counterintuitive.

When the government froze 86% of India’s currency on November 8, one thing was sure – the economy would be hurt in the short term. Cash accounts for 40% of India’s GDP and 75% of employment. No one could, however, guess the exact magnitude of this short-term hit.

What the data showed

As data became available in the next few months, it seemed to bear out the above fears. Sample a few:

First, India’s non-food credit growth fell to a multi-year low of 5.3% for the fortnight ended December 23, 2016. While retail lending has been strong, there is nothing to indicate that consumers surged to borrow money from banks to spend during the third quarter – at least not on a large enough scale to propel private final consumption expenditure to 10%.

Second, consumer companies had indicated that the impact of demonetization would be negative in the near term. A presentation on consumer giant Hindustan Unilever Limited’s website outlines the impact of demonetization. Slide 4 titled “however temporary pain likely in the short term” summarises the impact on various sections as follows:

“Consumers: Impacted by lower cash on hand, cautious with their spend. Initially spend only on basic necessities.”

The impact was visible in the third quarter results. Hindustan Unilever, for example, reported a 4% decline in sales volumes for the quarter ended December 31, 2016. ITC, another consumer giant, had this to say in its press release for its third quarter results:

“The operating environment was extremely challenging during the quarter. FMCG sales were adversely impacted as a result of lower consumer offtake and reduction in trade pipelines particularly in the aftermath of the Government’s decision to withdraw specified high denomination currency notes.”

Even Asian Paints, considered a bellwether of sorts since demand for home decoration paints is fairly resilient, didn’t escape unhurt. In its press release for its third quarter results, the company stated,

“The decorative business segment in India registered low single digit growth in the quarter with demand impacted to a certain extent on the back of demonetization.”

Hindustan Unilever, ITC, and Asian Paints are among India’s largest fast moving consumer goods companies. If they visibly felt the hit of demonetisation, then where were the consumers who drove the surge in private final consumption expenditure?

Third, the impact of demonetisation was also visible on two-wheeler sales:

“During the demonetization period sales of two-wheelers slid 22 percent in December 2016 as compared to the figures, which came in December 2015, marking the highest monthly contraction since SIAM started recording the data since 1997.”

Admittedly, Maruti – India’s largest car manufacturer – did report a 3.5% increase in car sale volumes during the third quarter, but this was lower than the 18.4% growth in car sales volumes registered in the second quarter.

Can we trust the 7% GDP growth for FY17?

The private final consumption expenditure growth data was part of the Central Statistics Office’s press release on the second advance estimates of national income for the current financial year and quarterly estimates of GDP for its third quarter.

In its second advance estimate, the CSO maintained that India is on track to achieve 7.1% GDP growth in this financial year. This is the same number as the first advance estimate released by CSO in January. The difference between the first and second estimates is that the CSO had more data – primarily from the organised sector – on economic activity during the third quarter. The CSO will now announce provisional growth data in May, after it has data for the full financial year.

What is new in the second advance estimate?

The ministry of statistics and programme implementation says:

“The sector-wise estimates are obtained by extrapolation using various indicators like (i) Index of Industrial Production of last 9 months of the year, (ii) financial performance of Listed companies in the private corporate sector available upto quarter ending December (ii) 2nd Advance estimates of crop production, (iii) expenditure of Central & State Government for the last 9 months, (iv) growth rates of various indicators of service sector e.g. sales tax, deposits & credits, passenger and freight earnings of Railways, civil aviation, number of telephone connections, etc. available for last 9 months.”

With access to more data, experts expected that the first advance estimate of GDP growth would be lowered. Nothing of that sort happened in February. To be fair, India’s huge unorganised sector is notoriously difficult to measure. This sector is also the most vulnerable to the cash crunch. Perhaps the CSO will get a better idea by in the next three months of the impact of demonetization on this sector. Hopefully by then, the CSO might also relook at this suspiciously large jump in private final consumption expenditure growth that isn’t backed by too much evidence.

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Removing the layers of complexity that weigh down mental health in rural India

Patients in rural areas of the country face several obstacles to get to treatment.

Two individuals, with sombre faces, are immersed in conversation in a sunlit classroom. This image is the theme across WHO’s 2017 campaign ‘Depression: let’s talk’ that aims to encourage people suffering from depression or anxiety to seek help and get assistance. The fact that depression is the theme of World Health Day 2017 indicates the growing global awareness of mental health. This intensification of the discourse on mental health unfortunately coincides with the global rise in mental illness. According to the latest estimates from WHO, more than 300 million people across the globe are suffering from depression, an increase of 18% between 2005 and 2015.

In India, the National Mental Health Survey of India, 2015-16, conducted by the National Institute of Mental Health and Neurosciences (NIMHANS) revealed the prevalence of mental disorders in 13.7% of the surveyed population. The survey also highlighted that common mental disorders including depression, anxiety disorders and substance use disorders affect nearly 10% of the population, with 1 in 20 people in India suffering from depression. Perhaps the most crucial finding from this survey is the disclosure of a huge treatment gap that remains very high in our country and even worse in rural areas.

According to the National Mental Health Programme, basic psychiatric care is mandated to be provided in every primary health centre – the state run rural healthcare clinics that are the most basic units of India’s public health system. The government provides basic training for all primary health centre doctors, and pays for psychiatric medication to be stocked and available to patients. Despite this mandate, the implementation of mental health services in rural parts of the country continues to be riddled with difficulties:

Attitudinal barriers

In some rural parts of the country, a heavy social stigma exists against mental illness – this has been documented in many studies including the NIMHANS study mentioned earlier. Mental illness is considered to be the “possession of an evil spirit in an individual”. To rid the individual of this evil spirit, patients or family members rely on traditional healers or religious practitioners. Lack of awareness on mental disorders has led to further strengthening of this stigma. Most families refuse to acknowledge the presence of a mental disorder to save themselves from the discrimination in the community.

Lack of healthcare services

The average national deficit of trained psychiatrists in India is estimated to be 77% (0.2 psychiatrists per 1,00,000 population) – this shows the scale of the problem across rural and urban India. The absence of mental healthcare infrastructure compounds the public health problem as many individuals living with mental disorders remain untreated.

Economic burden

The scarcity of healthcare services also means that poor families have to travel great distances to get good mental healthcare. They are often unable to afford the cost of transportation to medical centres that provide treatment.

After focussed efforts towards awareness building on mental health in India, The Live Love Laugh Foundation (TLLLF), founded by Deepika Padukone, is steering its cause towards understanding mental health of rural India. TLLLF has joined forces with The Association of People with Disability (APD), a non-governmental organisation working in the field of disability for the last 57 years to work towards ensuring quality treatment for the rural population living with mental disorders.

APD’s intervention strategy starts with surveys to identify individuals suffering from mental illnesses. The identified individuals and families are then directed to the local Primary Healthcare Centres. In the background, APD capacity building programs work simultaneously to create awareness about mental illnesses amongst community workers (ASHA workers, Village Rehabilitation Workers and General Physicians) in the area. The whole complex process involves creating the social acceptance of mental health conditions and motivating them to approach healthcare specialists.

Participants of the program.
Participants of the program.

When mental health patients are finally free of social barriers and seeking help, APD also mobilises its network to make treatments accessible and affordable. The organisation coordinates psychiatrists’ visits to camps and local healthcare centres and ensures that the necessary medicines are well stocked and free medicines are available to the patients.

We spent a lot of money for treatment and travel. We visited Shivamogha Manasa and Dharwad Hospital for getting treatment. We were not able to continue the treatment for long as we are poor. We suffered economic burden because of the long- distance travel required for the treatment. Now we are getting quality psychiatric service near our village. We are getting free medication in taluk and Primary Healthcare Centres resulting in less economic stress.

— A parent's experience at an APD treatment camp.

In the two years TLLLF has partnered with APD, 892 and individuals with mental health concerns have been treated in the districts of Kolar, Davangere, Chikkaballapur and Bijapur in Karnataka. Over 4620 students participated in awareness building sessions. TLLLF and APD have also secured the participation of 810 community health workers including ASHA workers in the mental health awareness projects - a crucial victory as these workers play an important role in spreading awareness about health. Post treatment, 155 patients have resumed their previous occupations.

To mark World Mental Health Day, 2017, a team from TLLLF lead by Deepika Padukone visited program participants in the Davengere district.

Sessions on World Mental Health Day, 2017.
Sessions on World Mental Health Day, 2017.

In the face of a mental health crisis, it is essential to overcome the treatment gap present across the country, rural and urban. While awareness campaigns attempt to destigmatise mental disorders, policymakers need to make treatment accessible and cost effective. Until then, organisations like TLLLF and APD are doing what they can to create an environment that acknowledges and supports people who live with mental disorders. To know more, see here.

This article was produced by the Scroll marketing team on behalf of The Live Love Laugh Foundation and not by the Scroll editorial team.