Numbers in Perspective - II: Wages & Taxes

 

I was struck by this chart which appeared in a report published last week, titled, "The New India", by Morgan Stanley Research. 

The tapering bars represent manufacturing wages inAsia, and India figures at the right extreme, with a wage-rate per employee that is among the lowest in the world. At US$0.8/hour, India's wage-rate was lower lower than Indonesia at US$1, China at US$7.1 and South Korea at US$22.3. 

These might seem like random numbers until your place them in perspective. An hourly wage of USD 0.8/hour is about INR 64/hour. For an eight-hour work-day, the wage is just INR 512, or INR 13,412 for a 26-day-month. This leads us to an annual income of about  INR 1,60,944 for the whole year (~USD 2,000)! 

So the average manufacturing wage in India is not far from its latest per-capita GDP, which according to the World Bank, is now USD 2277 , or INR 1.82 lakhs. One just has to remember the average wages of a semi-skilled worker in Delhi NCR to realise that these depressing numbers are factual - a housemaid earns about INR 12,000 a month, a security guard about INR 15,000, and the sweepers & cleaners, or those employed by the unorganised sector, far, far lesser.

This also holds the answer to a related question - Why are the direct taxes collected by the Government of India so disproportionate to the population of the country?

Consider these facts:

• The largest employer of wage-earners is the farming sector, and agricultural income is tax-exempt in India
• A measly 5% of Indians actually pay tax. A maximum of around 80 million people out of 1.30 billion Indians (6.1%)
• India has only seven income taxpayers for every 100 voters, among the lowest of all G20 democracies
• Only about 40% of India’s population is currently employed or looking for work. So that cuts the 1.3 billion figure by more than half
• Only 3% of Indians take home an annual salary of more than ₹ 500,000 -  the government exempts all those who earn less than this.
• The threshold of ₹ 500,000 is actually over three times the per capita GDP of the country. For context, it’s just 1.1x in Indonesia, 0.9x in Mexico, and 0.4x in the Philippines.

It is possible for the government to capture more people in its tax net, if it really wants to, but it may not be the humane or even politically expedient option, given the current state of affairs of the average wage-earner in New India.

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REFERENCES & LINKS

* India - GDP per capita - https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=IN- USD 2277 = INR 1.82 L

* * (15Mar2022) - https://www.livemint.com/news/india/how-many-indians-pay-tax-in-a-country-of-1-3-billion-govt-answers-11647352021053.html

* (20Feb2017) - Decoding India’s Low Tax Base Conundrum - BQ Prime- https://www.bqprime.com/opinion/decoding-indias-low-tax-base-conundrum

Let There Be Light

Are high pressure sodium vapour lamps more efficient than LEDs?

The key to answering this question is "Luminous Efficacy", a measure of how well a light source a Watt of electricity into Lumens, a measure of light intensity visible to the human eye.

Today, while clearing some litter at a nearby park, I came across this box -

It was lying on the grass, right below a high-mast lamp. Even though I knew that these sodium vapor lamps consumed a lot of electricity, what struck me was the quantum of light produced by these bulbs. A 400W bulb produces more than 44,000 lumens!

If this makes little sense, just compare it to the standard LED lamps being distributed by the government, in its efforts to being down household electricity  consumption -

In terms of luminous efficacy, one would have thought that the LED lamps are a lot more efficient that any incandescent, power-guzzling bulb. However, in terms of light output (lumens), the sodium vapour lamp produces 110 lumens/W while the LED lights prouduce 114 lumens/W, which is hardly any difference.

If there is not much difference in the efficiency of LED bulbs and sodium-vapour lamps, is there a big difference in cost? The sodium-vapour lamp costs INR 675 per unit while an (unsubsidized) LED lamp costs anywhere between INR 150 and 250. This means that the cost of luminous efficacy is INR 0.16 lm/W/INR for the sodium-vapour lamp and 0.57 lm/W/INR for LEDs.  

This simply means that you are getting 3.5 times more bang for your buck with LEDs, compared to sodium-vapour lamps. So it does make sense to switch to LEDs.

Now, what is the difference is cost between LEDs meantand SVs for high-mast lamps? That would berhaps perhaps be a better comparison of oranges with oranges!

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LINKS

* Energy efficiency of LEDs - http://apps1.eere.energy.gov/buildings/publications/pdfs/ssl/led_energy_efficiency.pdf

* https://en.wikipedia.org/wiki/Luminous_efficacy

* 2009 - Toshiba releases 93 lm/W bulbs - http://ledsreview.com/news/367/

Why is Albumin Expensive?

Almost every egg has two parts -- a yellow yolk, and a clear, viscous liquid that turns into Egg White when heated. Egg white also goes by the name Albumin.

The human version is called human serum albumin, and it normally constitutes about 50% of human plasma protein. It is made up of water-soluble globular proteins, and it is unusual in the sense that it is not attached to any sugar molecule (not glycosylated), because of which it degrades easily.

Inside our blood, Albumin serves as molecular "taxis" ferrying hormones, salts, fatty acids, and a long list of drugs to their target sites. It also helps regulate the colloidal osmotic pressure of blood, controlling the amount of water in our bodies.

If the albumin molecules are so plentiful in nature (plants, animal tissue, eggs, milk), why is it so expensive in packaged form? Is it the manufacturing process that makes it so expensive? Or the Intellectual Property Rights?

There is no shortage of manufacturers, nor is there a shortage of demand. Albumin Serum is necessary to treat shocks, liver disorders, kidney disorders, and a host of diseases that result in an imbalance of body fluids.

Yet, a locally manufactured product like Alba-20% costs Rs.3900 / 100ml infusion. According to a recent report human albumin is currently scarcely available with prices ranging between Rs.3897 and Rs.4092 respectively.

A part of the problem is policy and regulations. Last year, the government brought out an order (DPCO-2013) which stipulated a price control formula for a list of "essential drugs", including Albumin. This brought the cost of 1ml (20% albumin infusion) to Rs. 36.6.

Considering the prevailing sales price, this does not seem like a huge cut (Rs.39- Rs.36), but many drug companies responded by just stopping the manufacture of Albumin for the domestic markets.

So, thanks partly to a well intended policy, we now have a huge artificial shortage of an essential drug.

The road to hell is indeed paved with good intentions... :(

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LINKS:

* http://www.britannica.com/EBchecked/topic/535912/serum-albumin
* MJ (2002) - The role of albumin in critical illnesses - http://bja.oxfordjournals.org/content/85/4/599.full

* The Drug Price Control Order 2013 - http://www.nppaindia.nic.in/DPCO2013.pdf
* Blood Banks supply plasma to sustain supply of Albumin - http://pharmabiz.com/NewsDetails.aspx?aid=85989&sid=1

- http://en.wikipedia.org/wiki/Human_serum_albumin
- http://en.wikipedia.org/wiki/Glycosylation