Healthcare Expenditure in India

The Union Health Minister, while addressing the Rajya Sabha, highlighted the shift in India’s healthcare approach from a curative model to a comprehensive healthcare system under the National Health Policy (2017).

Healthcare Expenditure in India

Despite increased government spending on health infrastructure, insurance coverage, and public health initiatives, India’s total healthcare expenditure remains below the 2.5% of GDP target set by the policy.

Healthcare Expenditure in India: Key Statistics

Government Healthcare Spending: India’s public health expenditure is 1.9% of GDP, still short of the 2.5% target by 2025 under the National Health Policy, 2017.
Budget Allocation for Healthcare: ₹90,958 crore was allocated for healthcare in the 2024-25 Budget, reflecting a 12.96% increase over the previous year’s revised estimate of ₹80,517 crore.
High Out-of-Pocket Expenditure (OoPE): Households bear nearly 47% of total medical costs, with OoPE accounting for 2.3% of GDP, leading to financial stress (National Health Accounts, 2023).
Gaps in Insurance Coverage: Nearly 400 million Indians remain uninsured, and financially vulnerable to medical emergencies (NITI Aayog).
Urban-Rural Healthcare Disparities: While urban India sees improved healthcare access, rural areas continue to lack essential services, with a doctor-population ratio of 1:2,000 in many states, far from the WHO-recommended 1:1,000.

Credit: Observer Research Foundation

Reasons for Low Healthcare Expenditure in India

Inadequate Public Investment: Despite increasing budget allocations, India’s healthcare spending remains below the global average of 6% of GDP, limiting public hospital capacity and workforce expansion.
Fragmented Healthcare Delivery: A lack of integration between public and private sectors, leading to inefficient resource utilisation and inconsistent quality of care.
Limited Focus on Preventive Healthcare: While policies like the Fit India Movement & Poshan Abhiyan exist, preventive healthcare initiatives still receive only 10-15% of total health spending, increasing long-term disease burdens.
Medical Workforce Shortage: India has one government doctor for every 1,511 people (Health Ministry, 2023), resulting in overburdened hospitals and delayed treatments.
Weak Public Health Infrastructure: Over 70% of India’s healthcare facilities are in urban areas, leaving rural populations underserved and heavily reliant on expensive private providers.

Current Affairs

Challenges in Increasing Healthcare Expenditure in India

Budgetary Constraints: Healthcare competes with education, defense, and infrastructure for funding, with defense alone receiving 13% of the total budget in 2023.
Low Tax-to-GDP Ratio: India’s 11.7% tax-to-GDP ratio (2022) is far below the 34% average in OECD countries, limiting government revenue for healthcare.
Inadequate Healthcare Infrastructure: A shortage of hospitals, doctors, and medical equipment affects service delivery, with India having only 1 doctor per 1,511 people against the WHO norm of 1:1000.
Slow Policy Implementation: Bureaucratic delays and poor digital infrastructure slow reforms, as seen in the Ayushman Bharat Digital Mission’s (ABDM) slow adoption.
Corruption and Mismanagement: Fund leakages and fraud reduce efficiency, such as hospitals in Uttar Pradesh falsely claiming reimbursements under Ayushman Bharat.

Government Initiatives to Increase Healthcare Expenditure in India

Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY): Provides free health insurance up to ₹5 lakh per family per year for economically weaker sections, benefiting over 23 crore individuals.
National Health Mission (NHM): Strengthens primary, secondary, and tertiary healthcare, with a focus on maternal and child health, communicable and non-communicable diseases.
Pradhan Mantri Swasthya Suraksha Yojana (PMSSY): Reduces regional healthcare disparities by establishing new AIIMS institutes and upgrading government medical colleges across states.
Ayushman Bharat Health Infrastructure Mission (ABHIM): Aims to develop critical healthcare infrastructure, improve pandemic preparedness, and establish integrated public health labs in all districts.
Increase in Public Health Budget: The government plans to raise healthcare spending to 2.5% of GDP by 2025, focusing on infrastructure, workforce, and service delivery improvements.
Expansion of Health Insurance Coverage: Initiatives like AB-PMJAY and state-specific health schemes are expanding to increase financial protection for vulnerable populations.
Digital Health Initiatives: The Ayushman Bharat Digital Mission (ABDM) aims to create a unified digital health ecosystem, including electronic health records and telemedicine services.
Affordable Medicines & Diagnostics: Programs like PMBJP and AMRIT pharmacies provide low-cost medicines and affordable diagnostics, reducing out-of-pocket expenses.

Way Forward

Increase Public Health Spending: Raise government healthcare expenditure to 2.5% of GDP to improve infrastructure, service delivery, and affordability.
Expand Health Insurance Coverage: Strengthen Ayushman Bharat and state schemes to cover the “missing middle” and reduce out-of-pocket expenses.
Strengthen Primary & Preventive Healthcare: Focus on disease prevention, maternal and child health, and vaccination programs to lower long-term costs.
Develop Rural & Tertiary Healthcare Infrastructure: Expand AIIMS-like institutions, rural hospitals, and medical colleges to bridge the urban-rural healthcare gap.
Sustainable Healthcare Financing: Leverage PPP models, CSR investments, and taxation on tobacco, alcohol, and sugar to generate additional healthcare funding.
Digital Health & Telemedicine: Scale up Ayushman Bharat Digital Mission (ABDM), telemedicine, and AI-driven diagnostics for remote healthcare access.
Strengthen Healthcare Workforce & Regulation: Increase medical professionals in underserved areas and ensure strict governance to curb fund mismanagement.

India must shift from an illness-focused to a wellness-oriented approach by strengthening primary care, digital health, and public investment, ensuring affordable and holistic healthcare for all.

Reference: The Hindu | PMFIAS: Health Archives

UPSC Mains PYQs – Theme – Health

[UPSC 2021] “Besides being a moral imperative of Welfare State, primary health structure is a necessary pre-condition for sustainable development.” Analyze.
[UPSC 2020] In order to enhance the prospects of social development, sound and adequate health care policies are needed in the fields of geriatric and maternal health care. Discuss.
[UPSC 2018] Appropriate local community-level healthcare intervention is a prerequisite to achieve ‘Health for All’ in India. Explain.
[UPSC 2015] Public health system has limitations in providing universal health coverage. Do you think that the private sector could help in bridging the gap? What other viable alternatives would you suggest?

PMF IAS Pathfinder for Mains – Question 121

Q. India spends very little on public health compared to its large population and healthcare needs. What are the reasons for this low spending, and how does it affect the country’s overall health? (250 Words) (15 Marks)

Approach

Introduction: Provide the current status of India’s healthcare expenditure with the latest data, highlighting its comparison with global benchmarks and the implications for public health.
Body: Write the reason for low spending and its impact on the country’s overall health infrastructure.
Conclusion: Write a holistic conclusion highlighting the need for a holistic approach.