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AIDS could retard India's economy

This could be caused by decline in labour supply, says a UN report.

india Updated: Jul 20, 2006 17:21 IST

India's economy, which is growing at more than eight per cent, could suffer a setback if the country does not check the spread of HIV/AIDS, the United Nations Development Programme warned on Thursday.

A UNDP report released in New Delhi studied the likely impact of the infection, which affects more than five million Indians, over a 14 year period starting 2002.

"Economic growth could decline by 0.86 percentage points over the period and per capita gross domestic product by 0.55 percentage points," said the report, entitled "The Macroeconomic and Sectoral Impacts of HIV and AIDS in India".

According to the study, the country's GDP could decline by Rs 11,097 billion (Rs 237 billion) in 2015-16 at the 2002-03 prices, while the per capital GDP could go down by Rs 7,610 billion.

The UNDP said increases in spending on health by both individuals and the government lead to a decline in savings, which in turn affects investment thus slowing down growth.

Economic slowdown, it said, was brought about also by a decline in population growth, labour supply and labour productivity of HIV-affected people.

Labour supply was likely to fall by 0.31 per cent, with unskilled labour the worst hit.

The government savings as a percentage of GDP were likely to fall by 0.67 per cent, household savings by 1.15 per cent and investment by 1.16 per cent, the study said.

"It is time to see policy action against AIDS as a growth-enhancing policy endeavour, and, first and foremost, dedicate adequate resources for this purpose," UNDP urged.

It identified industries using unskilled labour as likely to be hit the hardest by the spread of infection. Construction, chemicals, and mining and quarrying, capital goods and textiles were the most vulnerable.

An estimated 74 per cent of people with HIV/AIDS did not disclose their status at their workplace. Around 10 per cent of those who did so faced discrimination in the form of denial of job, loans, benefits and promotion.

The infection also had a bearing on education of children from HIV families. "Children from HIV households not only have a lower rate of enrolment than those from non-HIV households, but the dropout rates are higher and school attendance lower for those who have not dropped out."

It said most HIV-affected people were not only in their prime working age, but also the parents of young children, whose education was likely to be hit.

The study covered six southern and eastern states, some of the worst hit in India and more than 8,000 households.

In May Geneva-based UNAIDS said India had 5.7 million people living with HIV/AIDS -- the highest figure in the world, ahead of South Africa where the figure stands at 5.5 million.

The government says the number is 5.2 million.