The human costs of tax avoidance: India

Lack of resources and a poor state of public health result in unnecessary deaths of children in one of India’s most populous regions.

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In the summer of 2017, 69 children—many of them infants—died over the course of four days after the supply of oxygen to the Baba Raghav Das Memorial Medical College & Hospital in Gorakhpur was disrupted 

Officials say the shortage of liquid oxygen was due to non-payment of dues to a vendor. 

Sadly, the 69 lost children are just the tip of the iceberg. Underinvestment in healthcare and other basic public services like sanitation and clean water has been killing children in Gorakhpur in Eastern Uttar Pradesh - and across India—for years.

India spends a paltry 1.4 percent of its Gross Domestic Product (GDP) on healthcare. Compared to the world average of six percent, India’s 1.4 percent is dismal and a disservice to its 1.2 billion population. India falls below many other poor and developing nations in the region including Sri Lanka’s 1.9 per cent, Nepal’s 2.3 percent, Bhutan’s 2.6 percent and China’s 3.1 percent. 

This underinvestment is due in part to corporations and wealthy individuals evading and avoiding their taxes. According to Oxfam’s estimates, India may lose $74 million each year due to tax avoidance by the four largest US pharmaceutical companies.

Almost three to four percent of the population [of India] every year gets pushed below the poverty line on account of unaffordability of … health services.

Sujatha Rao
Former Health Secretary, Government of India

Threat of encephalitis

In 2017, more than 1,300 children died at Baba Raghav Das Memorial Medical College & Hospital (known as BRD). The leading cause of death is acute encephalitis, including Japanese encephalitis, a mosquito-borne disease most often contracted because of poor sanitation, proximity to livestock, and lack of preventative public health services. Acute encephalitis can be prevented, but not easily cured. 

Sanitation and primary health facilities in the area are abysmal. Gorakhpur is located along the banks of the Rapti River near the Nepal border in the state of Uttar Pradesh in northern India. Uttar Pradesh has a population of over 200 million, of which 60 million live below the government-defined poverty line. If it were a country, Uttar Pradesh would be the 6th most populous nation in the world, but it has “…no water, no sanitation, none of these things exist,” says Rema Nagarajan, senior correspondent for the Times of India. 

Since 2002 Uttar Pradesh’s population has increased by 25 percent, but over the same period the number of primary healthcare centers has fallen by eight percent. Baba Raghav Das hospital is the only health facility that can handle serious cases of acute encephalitis in the Gorakhpur district, which has more than 4.4 million people and stretches over 1,200 square miles. BRD treats 60 percent of the acute encephalitis cases in India, but patients must travel sometimes for hours to reach the hospital. 

Local officials and employees at the hospital told Oxfam that while the hospital has the best facilities in the region, it is not adequately staffed and the number of beds is not enough. The real underlying problem, these officials say, is the absence of primary health care and sanitation facilities in rural areas. 

“When a child is falling sick, they diagnose it much too late, and then the travelling … further accentuates the suffering of the child, says K Sujatha Rao, former Health Secretary of India. “By the time you crowd into BRD, they are forced to put two to a bed, three to a bed, on top of the mismanagement of the hospital itself…So the whole Gorakhpur tragedy to me is really just because there is just one BRD hospital and there is a huge vacuum down below.”

The state budget for BRD Medical College was $2.3 million in 2016-17 and was cut to just $1.1 million from 2017-18.  In February of 2016, the Principal of BRD hospital wrote to the director general of Medical and Health Services of Uttar Pradesh seeking $5.5 million for the treatment of acute encephalitis cases. Neither the federal nor state governments managed to provide the requested funds.

Had the Indian government received the estimated $74 million the four US drug companies may avoid in tax annually, and allocated these funds to fighting encephalitis, it would be more than enough to buy Japanese encephalitis vaccines and bed-nets for every child born in the whole of India in one year. 

Below are examples of how encephalitis has affected the lives of people in Gorakhpur district.

Rinki

Rinki contracted acute encephalitis twice, first at the age of 5 and then again three years later. Her mother Ramavati told us her convulsions continue to torment her. “First she got a fever. After the fever she got convulsions,” says Ramavati. “After her brain convulsions we got her admitted to the hospital. The medicines went on for five years. After that, in the eighth year, she got another attack. She got admitted to the hospital again and has been on medicines. She keeps getting brain convulsions every now and then.”

For this family, the burden is heavy. Rinki is now 13 and has four sisters and two brothers. Her parents are construction workers. Since Rinki’s illness, Ramavati has not been able to work. Her father and one of her brothers work as daily wage laborers. On average the family of eight earns only INR1000 ($15) a day. The parents also have to take loans for medical expenditure. In the month of July when we last visited them, they had a standing loan of INR20,000 ($185). At the time of the first attack the family spent INR 10,000 ($95) on her treatment. Over the years, the family has spent INR 50,000 ($716) and is still under the burden of local lenders. None of the girls in the family have attended school because of this financial burden. The school fees of INR 350 ($5) per month per child is too high. Food and medicines win over education.

Medical costs, time spent traveling for treatment and caring for sick loved ones instead of working, lost education and earning potential, these are costs borne by families. Most often, it is women and girls like Ramavati and her daughters who lose out on work and school to care for a sick child or sibling.

Nasil & Kiran

Nasil is a construction worker. In 2017 he broke his leg while working and the family was surviving on petty loans. The family has lost three children, including a girl who died at the age of 10 due to severe fever. They also lost two sons who suffered convulsions and high fever and died before they got to the hospital. Sandhaya, 6, is the only surviving child of the family. Her mother—Kiran—told us they had no idea when the fever first came. They assumed it was viral fever and their daughter would be fine in a few days. They took their daughter to a private doctor and slowly her limbs stopped working. After an incorrect diagnosis by an unqualified doctor, the family just did not know what to do. They told us because they had no idea about encephalitis that they never got their children vaccinated. Mosquito bed nets are essential to prevent Japanese encephalitis, but not a single family has a bed net in their entire village.

Sushmita

Sushmita’s family was financially better off than some in their village. But the emotional impact of encephalitis was deeply etched in Sushmita’s mind. Sushmita was 3 when she suffered from acute encephalitis. Sushmita was lucky, she survived. She’s 13 years old now, but she can't walk properly and has partly lost use of her hands, making it very difficult for her to write.  Her will to study and do well is so strong but her inability to write emotionally traumatizes her. Sushmita did not want to speak to us about her experiences but her mother did. Lalti Devi has five children—two more girls aged 16, and 18, and two boys—aged 10 and 1. Lalti Devi was sure of one thing: All her children will be educated. Her eldest daughter is graduating while the rest of the children are in school. Their father Gopal is a construction worker while Lalti Devi milks the cows they own and cuts grass in a neighbor’s farmland next to her house and earns a daily wage. 

After Sushmita contracted encephalitis, the family wanted to ensure that no other child becomes victim of it. They used money from a land sale on Sushmita’s treatment at a private hospital as the parents did not trust the facilities at the government-run BRD Medical College. After Sushmita’s illness all the children were vaccinated against Japanese encephalitis. The family says it hasn't received any support or even a penny from the government, and their village has no clean water. They buy their own mosquito nets. 

Govind

Shimli and Chotelal have four children—two girls and two boys. One of their sons Govind is now 13. He contracted encephalitis when he was 7. Just remembering the days of the sickness sends shivers down the spine of the family. While narrating the incident, Shimli broke down and tells us that for one year she wasn't sure whether her son would survive or not. Govind spent a month in the hospital and took a year to fully recover. The family took a loan of INR 20,000 ($286) for his treatment. Govind dropped out of school for a year, but is now well and studies in 8th standard. But the financial burden on the family meant that the girls of the family were taken out of school. The family cannot pay fees of INR 300 ($4.30) per month for four children. Girls are considered a burden in rural India. Patriarchy is so strong that boys are considered earning family members and girls a liability. Shimli’s husband is the only bread winner in the family and the monthly earning of INR 8,000 ($115) is barely enough. Education, she says, is a luxury they can’t afford. 

Meanwhile, Govind’s treatment continues in private hospital and the family continues to spend INR 1,000 ($14.32) per month. 

Encephalitis has very low rate of recovery. If the child survives, 40 percent are disabled. The families then cannot leave the child alone and lose money-earning members of the family to take care of the patient. When companies fail to pay their share of taxes and governments fail to invest in adequate public services, families like these, particularly the girls and women, pay the price.

Demand that companies pay their fair share of taxes to prevent the unnecessary deaths of children.

Demand that companies pay their fair share of taxes to prevent the unnecessary deaths of children.

Additional credits: Lead photo: Zacharie Rabehi/Oxfam. The Baba Raghav Das Memorial Medical College & Hospital in Gorakhpur is the best-equipped in the region, but still suffers from lack of resources and budget. Due to lack of payment, the hospital’s oxygen supply ran out in 2017, leading to the death of 69 children over several days.

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