We can’t afford spending less than 6% of GDP on healthcare

In a country like India where ethical, quality, affordable and accessible health facilities remain a challenging proposition even after almost eight decades of Independence, we need to start spending more on making the public sector healthcare inclusive and resilient. Less spending on healthcare is proving counterproductive.

For want of resources and poor savings, people are compromising with their health, which adversely impacts their output. They visit hospitals only when their ailments worsen. The condition of primary and secondary health facilities remains atrociously baffling. We are talking more about extending insurance facilities to the poor than streamlining the basic infrastructure and delivery mechanism at the grassroots level. Priority should be on stemming this rot.

What Union Minister of State for Health and Family Welfare Anupriya Singh Patel said in a written reply in the Rajya Sabha on December 3, gives us a fair idea about who we are working to upgrade and expand the healthcare infrastructure in the country. She said that as per the National Health Policy- 2017, public investment on health is envisioned to reach 2.5 per cent of GDP by 2025. As per the available National Health Accounts Estimates for India, she put the Government Health Expenditure (GHE) since 2017-2018 at Rs. 2,31,104 crore in 2017-18; Rs. 2,42,219 crore in 2018-19; Rs. 2,71,544 in 2019-20; Rs. 3,16,554 in 2020-21 and Rs. 4,34,163 crore in 2021-22.

She also stated that the National Health Policy-2017 recommends availability of two beds per 1000 population. As per the data contained in ‘Health Dynamics of India (Infrastructure and Human Resources) 2022-23, around 8,18,661 beds are available at PHCs and community health centres (CHC), sub-division hospital (SDH), district hospital (DH) and medical colleges in rural and urban areas as on December 31, 2023. She said the Central government has also provided substantial support for strengthening of healthcare infrastructure, including beds under National Health Mission (NHM).

According to Patel, PHC with six indoor or observation beds have to be established to cover 20,000 to 30,000 population, CHC with 30 beds to cover population of 80,000-1,20,000, SDH with 31-100 beds to cover population of one lakh- five lakh and DH with 101-500 beds to cover population up to 30 lakh.

Are these numerical norms in tune with the socio-economic realities of the country where a large chunk of population suffers from high rates of malnutrition arising out of chronic poverty and lack of healthcare access? Certainly, not! Will higher spending make a difference? Certainly, yes, provided the allocated funds are spent in their totality, and a next to amount nil is lost to rampant corruption. It is a serious challenge but is yet to be addressed effectively for better results.

The hype apart, the realities about the condition of healthcare machines, equipment, sanitation, toilets, beds, wards, emergency sections, and overcrowded OPDs, among others, are in the public domain. For want of transparency and accountability on the part of key stakeholders, the public sector healthcare itself has been ailing for long with some top institutions being an exception.Should we start spending six per cent of GDP on improving public healthcare? Perhaps, yes but can we afford it as a nation?

Let us take a look at some critical data. Real GDP or GDP at Constant (2011-12) Prices in 2023-24 was estimated at Rs. 172.90 lakh crore, against the First Revised Estimates (FRE) of GDP for the year 2022-23 of Rs. 160.71 lakh crore. The growth in real GDP during 2023-24 was pegged at 7.6 per cent as compared to seven per cent in 2022-23. The nominal GDP or GDP at Current Prices in the year 2023-24 was estimated at Rs. 293.90 lakh crore, against the FRE of GDP for the year 2022-23 of Rs. 269.50 lakh crore. The growth in nominal GDP during 2023-24 was pegged at 9.1 per cent as compared to 14.2 per cent in 2022-23. If we take the GDP figure of Rs. 293.90 lakh crore, its six per cent comes to Rs. 17.63 lakh crore. Even spending three per cent of GDP on healthcare seems to be a tall order. The Economic Survey 2023-2024 said that the growth in gross tax revenue (GTR) was estimated to be 13.4 per cent in FY24. It added that broadly 55 per cent of GTR accrued from direct taxes and the remaining 45 per cent from indirect taxes.

The increase in indirect taxes in FY24 was mainly driven by a 12.7 per cent growth in Goods and Services Tax (GST) collection. The capital expenditure for FY24 stood at Rs. 9.5 lakh crore, an increase of 28.2 per cent on a year-on-year basis. Spending in sectors such as road transport and highways, railways, defence services and telecommunications certainly delivers higher and longer impetuses to growth by addressing logistical bottlenecks and expanding productive capacities but we cannot ignore the health needs of our human capital.

If India’s public sector healthcare spending continues to hover around 1.5-2 per cent of the GDP, then the socially and educationally marginalized sections of society will remain vulnerable to multiple problems, as they rely heavily on government healthcare services. For socially marginalized groups, the lack of accessible healthcare exacerbates existing inequities. Women, children, and tribal populations often face greater barriers due to geographic isolation, cultural stigma, and poverty. Poor health outcomes not only deepen financial vulnerabilities but also hinder educational and employment opportunities, perpetuating cycles of poverty. Furthermore, the financial burden shifts to individuals as out-of-pocket expenses for private healthcare services increase. In India, over 60 per cent of healthcare costs are borne by households, pushing millions into poverty each year. For marginalized groups, this means choosing between basic necessities and healthcare, worsening their already precarious situation. Improving public sector healthcare spending is critical to addressing a gamut of socio-economic challenges.

An enhanced investment can strengthen primary care infrastructure, ensure equitable access to preventive and curative services, and reduce reliance on costly private healthcare, thereby fostering greater social equity and long-term economic growth.