Wall Street Journal - July 21, 2006
Peter Wonacott

NEW DELHI -- India, on pace to become the nation with the largest number of HIV-positive people, risks paying a steep economic price if the virus is allowed to spread unchecked, according to a new report.

The cost of an epidemic could trim an average 0.86 of a percentage point off annual economic growth over the next decade, according to the National Council of Applied Economic Research, a think tank in New Delhi that conducted the study commissioned by the United Nations Development Program.

The report, the first to measure the broad economic impact of HIV/AIDS in India, suggests the country's otherwise vibrant economy could become weaker as the illnesses affect industry and spread among the labor force. It also highlights the risks India faces as the government and other groups attempt to roll back the numbers of HIV-positive citizens.

India and South Africa both have more than five million HIV-positive people, although estimates vary as to which nation has more. The new study estimates the number of HIV-infected people in India could quintuple to between 20 million and 25 million by 2010.

Some critics immediately questioned the report's conclusions. "There are so many diseases in India," said C. Rangarajan, who is chairman of both the government's Economic Advisory Council and the Commission on AIDS in Asia and the Pacific, a group of economists in the region who are studying HIV/AIDS issues. "If you add all of them up, will you have any growth rate left?"

Indeed, even with five million people now infected, India remains a comparatively low-prevalence country for HIV/AIDS because of its population of more than one billion people. For adults between 15 and 49 years old, the prevalence rate stands at 0.9%. By contrast, South Africa -- with the sixth-highest prevalence of HIV in the world -- has 18.8% of its population infected, according to a global 2005 U.N. AIDS report.

As the number of HIV-positive people increases in India, "a very grim scenario in the next few decades" could play out, the report warned. More household and government income will go to medicines to fight the virus, crowding out investment in other areas, the report predicted. Meanwhile, more workers will be forced to drop out of or be excluded from the labor force because of sickness or the need to care for family members who fall ill.

India's outsourcing industry, already pinched for talent, could be hurt, said Suman Bery, director-general of the National Council of Applied Economic Research, which conducted the study. "If you shock the labor market, how does the rest of the system react?" he said.

The report, which measured actual and expected annual gross-domestic-product growth between India's fiscal years 2002-03 to 2015-16, estimated that the impact would become more severe in later years, as the number of HIV/AIDS cases increased. In the last four years covered by the study's projection, India could see growth cut by 1.5 percentage points a year.

Mr. Bery said the report was intended, in part, to peel away some of the complacency around the illnesses in India and spur a government response. He had expected the report's figures and conclusions to be challenged. "By all means let others examine it, shoot it down," he said. "The time to address these issues is right now."

Write to Peter Wonacott at peter.wonacott@wsj.com
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