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The Covid-19 pandemic crisis is a reminder of the importance of investing in the health sector for any country. Mint examines how India has fared on this front and what it can do to increase its health spending as a percentage of its gross domestic product (GDP).
How much does India spend on health?
Total government spending per capita on health care has nearly doubled ₹1,008 per person in fiscal year 2015 a ₹1,944 in FY20, but it’s still low. Total spending by the Center and the states for fiscal year 2016 was ₹2.6 trillion, or 1.29% of GDP, including establishment expenses comprising wages, gross budget support to various institutions and hospitals, and transfers to states under centrally sponsored schemes like Ayushman Bharat. Of the total public spending, the Center’s participation is 25%. Over the past five years, total public spending on health has increased by 15% CAGR, much of it due to wage increases.
Where does India appear in front of the others?
India’s total health spending (pocket and public), which represents 3.6% of GDP, according to the OECD, is much lower than that of other countries. The average for OECD countries in 2018 was 8.8% of GDP. Developed nations, the United States (16.9%), Germany (11.2%), France (11.2%), and Japan (10.9%), spend even more. India spends less among BRICS countries: Brazil spends more (9.2%), followed by South Africa (8.1%), Russia (5.3%), China (5%). With stretched public health infrastructure, out-of-pocket spending in urban centers is high in India. The Center spends less since public health and sanitation are on the State’s list.
Why is India’s health spending so miserable?
India has traditionally spent less on health, with 90% of government spending going to revenue. In the first five-year plan, 3.4% of the plan’s total investment was for health expenses. This increased to 6.5% in the Eleventh Five Year Plan. In fiscal year 20, capital expenditure per capita was less than ₹200 per person, with 12 states spending less than 1% of GSDP on health care.
Can investing in health boost the economy?
The IMF has said in its Article IV annual reports that India can increase the productivity of its human capital by investing in education and health care. In 2018, he identified poor public health as the 12th biggest obstacle to ease of doing business, ahead of crime, tax regulations, and political instability. Health and working conditions are a key recommendation in your suggestions for labor market reforms. The healthcare sector creates high and low qualification jobs and can be used to pump prime the service and manufacturing sectors.
What do we need to do in the post-covid era?
India can raise its supply – 8.5 hospital beds and 8 doctors for every 10,000 people – to the standards of Japan and South Korea: more than 100 beds for every 10,000 people. For this, a specially designed fiscal stimulus can be channeled towards public health and eliminate policy bottlenecks so that the sector becomes the engine of GDP growth. Subsidized loans, assigned land, single window approvals, tax exemptions, etc. They can be used to make medical devices and medicines and to establish hospitals.
Puja Mehra is a journalist based in Delhi.
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