Unskilled labour-intensive industries like tourism will suffer a loss of up to 18 per cent and the annual GDP growth rate will fall by 1 per cent in the next 14 years if the present rate of HIV infections continues, a study conducted by the National Council of Applied Economic Research has said.
The study, commissioned by the National Aids Control Organisation of the health ministry and the United Nations Development Programme, has tried to study the probable impact of HIV/AIDS on Indian industry in a period of 14 years from 2002-2003 to 2015-2016. The country is estimated to have 5.2 million HIV-infected people, according to the health ministry.
The NCAER study assumes that in the 14-year period these numbers will "quintuple to between 20 million and 25 million by 2010."
With that kind of jump, it says "there is bound to be a visible impact on the national economy with the average annual GDP growth rate falling by about 1 per cent. And conversely speaking, the rate will jump by 1 per cent "if Aids is effectively countered."
The study analyses the macro-economic and sectoral impact of HIV and Aids in the country using a five-sector computable general equilibrium model.
It says the CGE model will help in assessing the aggregate economic impact of HIV/Aids in the growth of real GDP per capita and other real macro variables and also allows a detailed insight into the happenings of various sectors of the economy.
The CGE model has five production sectors - agriculture, tourism, manufacturing, services and healthcare and three factors of production - land, capital and composite labour, the latter comprising unskilled, semi-skilled and skilled labour.
The five-sector CGE model is used to generate a "no Aids" reference scenario and a "with Aids" scenario for the 14-year period wherein a comparison of the latter with respect to the former yields an estimate of the macro-economic and sectoral impacts of the HIV epidemic in the country.
The slowdown in economic growth is manifested in a decline in the growth of real aggregate GDP as well as in the growth of per capital GDP, it says. The former decreased on an average, by 0.86 percentage points while the latter declined on an average by 0.55 percentage points in the "with AIDS" scenario.
Hence, the survivors of the epidemic are not indifferent or better-off, they are, in fact, worse-off as the lower per capita incomes show, the study says.
In sectoral terms, the HIV epidemic hits harder those sectors that use unskilled labour intensively.
It says tourism, which is the second most unskilled-labour-intensive sector, suffers maximum loss of 18 per cent value added terms in the "with Aids" scenario in the final year 2015-16.
It is followed by the manufacturing or industry sector, occupying the third position in the unskilled-labour-intensity ranking, and having a value addition, which is 12 per cent smaller in the "with Aids" scenario.
The study also does a detailed analysis of the sectoral impact of the epidemic on industry, including 11 service-providing sectors, 16 industrial sectors and agriculture.
For agriculture, industry and services, the adverse impact is virtually the same as that obtained by the five-sector study.
Within industry, the major contributors to a loss in industrial GDP as a result of Aids are construction, chemicals, mining and quarrying, capital goods, and textiles.
The study concludes that any action against Aids is an action enhancing economic growth and stresses the need to "first and foremost dedicate adequate resources for this purpose."
Naco Director Sujatha Rao, in her foreword to the study called Macroeconomic and Sectoral Impact of HIV/Aids in India: a CGE study, says that the macro model prepared in this study suggests that the long-term impact of HIV and AIDS is likely to be severe on both aggregate and per capita GDP.
"Naco will use these findings to mobilise the private sector, media and non-health government ministries and to add momentum to ongoing efforts."