In absence of an AIDS policy action, the potential economic cost of HIV epidemic could be substantial, says a new UN Development Programme (UNDP) report.
"The potential costs to the economy arising from the continued and unchecked march of the HIV epidemic could be quite high," according to the report released here Thursday, based on a study in India by the National Council of Applied Economic Research (NCAER) with the support of state-run National AIDS Control Organisation (NACO) and the UNDP.
India has an estimated 5.21 million HIV positive people, second highest after South Africa. The government is in the process of revamping its HIV/AIDS control and awareness programme while striving to ramp up the treatment programme in an effort to improve the life of the infected people.
Examining the likely impact over a 14-year period till 2015-16 if steps are not taken to check the spread of the epidemic, the study 'The Macroeconomic and Sectoral Impacts of HIV and AIDS in India' states: "Economic growth could decline by 0.86 percentage points over the period and per capita gross domestic product (GDP) by 0.55 percentage points."
The slowdown in economic growth is expected to be a fallout of increase in health spending by both households and the government, leading to a fall in savings rate and thereby crowding out investment in infrastructure and social development sectors.
The study estimates government savings as percentage of GDP are likely to fall by 0.67 percentage points, household savings by 1.15 percentage points and investment by 1.16 percent.
"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," the report urges.
The major impact of HIV epidemic is expected on the labour front with AIDS related deaths and poor health of HIV infected people impacting supply of both skilled and unskilled workforce.
"Under the impact of AIDS, poverty will inevitably increase since the real wages for unskilled labour will fall the most among the three labour groups - skilled, semi-skilled and unskilled."
The epidemic hits the sectors that used unskilled labour intensively harder, the study notes, with the tourism sub-sector of the services sector suffering the highest loss in value-added - 18.31 percent - by 2015-16.
Within industry, five segments have been identified as particularly vulnerable: construction, chemicals, mining and quarrying, capital goods and textiles.
The manufacturing sector comes second with a 12.48 percent fall in value-added, followed by the services sector, which will lose 10.13 percent in value-added. Agriculture is affected to the extent of 9.08 percentage points in value-added.