The healthcare industry in India is urging the government to increase its expenditure on healthcare to 2.5% of the GDP in the upcoming Budget 2024-25. This call to action comes as the nation grapples with economic development challenges and the need to provide essential services to a growing population.
Enhancing social insurance, expanding healthcare facilities in tier 2 and 3 cities, and advancing digital healthcare services are among the key areas of focus.
Currently, India's public health expenditure stands at 2.1% of the GDP as of FY23.
Industry stakeholders believe that increasing this investment is crucial for strengthening the healthcare infrastructure and addressing both demand and supply-side challenges.
Abhay Soi, President of NATHEALTH and Chairman and Managing Director of Max Healthcare Institute, highlighted the necessity for substantial healthcare infrastructure, estimating the need for two billion square feet of advanced facilities.
NATHEALTH, the Healthcare Federation of India, submitted its recommendations for the Budget 2024-25 to the government on July 9. These recommendations emphasise the importance of increasing government spending on healthcare to enhance social insurance, improve facilities in smaller cities, and promote digital healthcare services.
Soi stressed that the upcoming budget should prioritise healthcare infrastructure, innovation, skill development for medical professionals, and public-private partnerships to ensure better access and quality across the nation. He also pointed out that focusing on research and development is essential for driving medical innovation and addressing emerging health challenges.
According to the Economic Survey 2022-23, the combined budgeted expenditure on healthcare by the central and state governments reached 2.1% of GDP in FY23, up from 2.2% in FY22.
Data from the National Health Accounts (NHA) revealed that the government's healthcare expenditure as a proportion of GDP increased by 63% between 2014-15 and 2021-22. In comparison, the health expenditure to GDP ratio was significantly higher in other countries, with the US at 16.6%, Germany at 12.7%, and France at 12.1% in 2022. For India, this ratio stood at 2.9%.
Industry representatives also advocate for increasing the acceptance of schemes like Pradhan Mantri Jan Arogya Yojana (PM-JAY) and the Central Government Health Scheme (CGHS) among private sector healthcare providers. This could unlock private capital and help achieve universal health coverage.
PM-JAY, the world's largest health insurance scheme, provides coverage of ₹5 lakh per family per year, fully financed by the government. Gautam Khanna, CEO of P.D. Hinduja Hospital & Medical Research Centre in Mumbai, suggests introducing a similar scheme for the middle class to provide health coverage for additional households.
He believes that allocating 2.5-3.5% of GDP to healthcare would offer economic protection from healthcare costs. Khanna also notes that India's elderly population is expected to reach 347 million by 2050, which will increase pressure on the healthcare system.
Suneeta Reddy, Managing Director of Apollo Hospitals Enterprises, has called for the healthcare sector to be granted 'National Priority' status, similar to the IT sector in the 1990s. She argues that healthier populations drive economic growth by reducing disease burden and increasing productivity.
Government support could catalyse the creation of critical care facilities, ambulatory services, and home care infrastructure, potentially elevating healthcare's GDP share to 4-5% within five years.
Various hospital chains, including Fortis and Apollo, and industry bodies agree that prioritising the healthcare sector can establish India as a global healthcare powerhouse. They also suggest that policies encouraging private sector investments should be implemented to ensure sustained and accelerated growth.
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