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Healthcare in India: Issues and Challenges

, June 10, 2014, 0 Comments

Healthcare- India's Challenges-MarketExpress

After sixty years of Independence and experiencing almost two decades of economic growth, India’s healthcare system is far behind those of other emerging economic powers. It is widely acknowledged that health is pivotal for human development and nation’s future.

Most importantly access to healthcare is critical for improving labour productivity, resulting in increase of household incomes, further breaking the vicious cycle of poverty. India which is home to 1.2 billion people has made important progress, as average life expectancy at birth has risen to 65 years for male and female combined which is twice the time at late 1940’s. In addition India is also free from polio. However large section of population doesn’t have reliable and affordable access to good quality healthcare. Moreover there is a widespread perception that “health care has not been a political priority in India”.

Today the major concern of India is to fight with infection for reducing the burden of chronic diseases and living healthily in later life. The country is already facing difficulties with regard to the prevention and treatment of non-communicable conditions. This threatens health in middle life and beyond. It is also worth stressing the tragedies such as families being driven into poverty because of high healthcare costs. Unlikely infections still cause some 40% of deaths in India, as compared to 60% in 1990. Also, until 1980s life expectancy at birth was higher for males as compare to females.

Albeit both the genders are enjoying longer lives, but the burden imposed by non-communicable diseases (NCD) such as Type 2 diabetes are being more apparent. Mental illness is also one such area of concern, India has a record number of suicides i.e. 140,000 each year. Considering the shape of health care in India, there are only 613 district hospitals in the country’s 640 district and roughly 1000 sub-district hospitals. Surprisingly there is only one primary healthcare per 50,000 people.

Healthcare public spending has always been a challenge for India. Interestingly public spending on medical, public health and family welfare have had remained much below than what is required. It will be odious to know that India is only spending 1.2% of GDP on Healthcare system, which is significantly lower than Srilanka and Thailand. From last one decade the level of public spending as a percentage of GDP has almost been constant i.e. 1.1% to 1.2% from 2000 to 2010.

As a result India is losing more than 6% of its GDP annually due to premature deaths and preventable illness. While public spending on healthcare is low, the out-of-pocket (OOP) expenditure by households constitutes about 70% of overall health spending. The total expenditure (public and private) on health is about 4.1% of GDD in 2010 (World Bank Report, 2012). This high OOP expenditure has put an additional financial burden on people, which also results in poverty.

It is also important to note that social services are the predominant responsibility of States. Paradoxically the source of revenue for the State is very limited, among which large part of it comes from sales tax, which creates high degree of fiscal imbalance among Indian State’s. Further, disparities between revenue capacities among States results in marked inter-state inequality.

Ironically India’s health achievement is remarkably low as compared to its income level. According to UNDP’s Human Development Report 2013, out of 187 countries, India is ranked 136th on human development index. It also ranked 143rd in infant mortality rate, 124th in maternal mortality rate, 132nd in life expectancy at birth, and 145th in under-five mortality rate.

Looking at the present situation of India’s healthcare affordability, accessibility and accountability are the three key challenges. The barriers to improve healthcare in India are plural and substantive. India has taken several initiatives in the policy area to overcome the challenges, that includes National Health Policy (1983): National Policy on Indian System of Medicine and Homeopathy and Drug policy (2002); Health Insurance Scheme for Poor (2003); National Rural Health Mission (2005). These schemes had positive impact on the ground, albeit the problem of affordability and accessibility still persist. Another important reform initiative was from Union Labour Ministry in 2008 i.e. Rashtriya Swasthya Bima Yojana (RSBY), as a health insurance scheme.

Given the issues and challenges of health and healthcare in India, an additional expenditure has to be channelized through central government for two reasons:
a) As the source of revenue for States is very limited.
b) Significant externalities implicit in health expenditure.

In 2011, Dr. Manmohan Singh announced that health will be given priority in 12th five year plan, furthermore he also sets a goal of public spending to reach 3% of GDP by 2022. Recently Planning Commission of India Constituted a High Level expert Group (HLEG) on Universal Health Coverage (UHC). It defines UHC in terms of:
• Ensuring equitable access to all Indian Citizen.
• Affordable, accountable, appropriate health services of assured quality.
• Public health services addressing wider determinant of health.

The idea of UHC is not new, the Bhore Committee report (1946), sought to create the same system. Forbye since 1990s economic reform, public spending on healthcare was cut back significantly. The introduction of neo-liberal reforms accelerated the process of privatization in healthcare system of India. As a result India became the most privatized health financing system in the world.

With all the efforts by the government for better access to health, one of the primary challenges is how to reduce OOP expenditure and to provide low price generic medicines. Furthermore finding an additional fiscal space for public spending will be a formidable challenge for India. Moreover Health outcomes are not only dependent on inventions by the health sector, but there are other factors including malnutrition; poor sanitation; lack of safe drinking water; and gender issues.

However, the battle to rebuilt public sector in healthcare approach cannot be fought in isolation. In current context of neo-liberalism possibilities of public health services are really bleak.


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  2. Chatterjee, P., 2013, “India’s Healthcare: Building on Gains, Facing Challenges”, ORF Seminar Series, Volume 1, Issue 12.
  3. Indranil., 2013, “Health Financing in India”,
  4. Health and Healthcare in India., 2013, UCL School of Pharmacy,