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Demand side dynamics of rural health in India

, January 1, 2019, 0 Comments

The concerns on health issues is grave in rural India. Though average amount spent on health in rural India (₹ 16,956) is at least 40% less than that of urban India (₹ 26,455) but number of days lost in work is at least 2 times more than that of urban India (NSS, 2013). The loss in work further leads to loss in productivity.

However, there is no simple one-to-one relationship between measured productivity losses per worker and the social losses to firms and to workers that we would expect to observe in the market place (Ghatak & Madheswaran, 2011). Rural India which is largely dominant of daily wage earners is at a risk of losing their earnings for the day due to illness. Casual labourers again dominant in rural India are at a risk of a shrink in their wages due to low productivity on account of illness.

This brings to the bigger question. Is the need for health care in rural India fully met? In an environment where the ‘health related’ and ‘economic’ implications of having bad (or good) health are not well understood by the larger population, a low ‘felt need’, and therefore, a low inclination to visit a doctor is natural fallout. This article aims at emphasizing the importance of increasing the demand for health care services.

For the purpose of the study, effective demand is measured in terms of ‘Children who received health care within 2 days of birth’ and latent demand is measured in terms of the outcome, i.e., ‘Infant Mortality Rate (IMR)’ that could be averted if health care was demanded. For comparability and assessing the relative performance of states in these two measures, the two indicators are converted in a scale of 0 to 1.rural-health

Evidently, in states like Bihar, Assam, MadhyaPradesh, where ‘latent demand- IMR’ is amongst the highest, ‘effective demand- children receiving health care at an early age’ is exceedingly low. At the other end, in states, like, Tamil Nadu, Maharashtra, where ‘latent need-IMR’ is amongst the lowest, ‘effective demand-children receiving health care is the highest’. At both ends, the gap between effective demand and latent demand is very wide. However, the extent by which this gap varies differs from state to state. Therefore, it is not one factor but a combination of factors that result in low effective demand.

Read Also: Gender Wage Gap in Rural Labor Market

The first and foremost factor of the deficit in effective demand is affordability. People will spend more on health care only when they have spent on the essential needs for survival. In the figure below per household income measures the ‘ affordability of households ’ and children receiving health care at an early age as stated above as ‘ effective demand for health ’. Clearly, higher the affordability, higher is the effective demand for health. For instance, in states like, Tamil Nadu, Maharashtra, Telangana with higher per capita household income, higher is the effective demand for health care services. On the other hand, in states, like, Bihar, Madhya Pradesh, low affordability leads to low effective demand in health care services.

Correlation between Per Capita Household Income (Affordability) and Children Receiving Health Care (Effective Demand)rural-health

However, there are also instances like, Haryana, where per household rural income is amongst the highest but demand for health care is relatively low. On the contrary, West Bengal, Andhra Pradesh with significantly low per capita income compared to Haryana shows higher demand for health care services. Clearly, affordability is not the only condition of increasing demand for health care.

This leads us to the second and the most significant aspect of demand, i.e., awareness . Public health awareness in Rural India is a key challenge. Despite several initiatives taken by the government and non-government organisations, people lack the basic education of health care needs. Failure of health awareness programmes is the direct outcome of low level education in many parts of rural India. Percentage of women with 10 or more years of schooling is used as a proxy to measure the level of awareness in a state.

Evident from the figure below, high level of awareness will lead to high demand for health care services, illustrated by states like, Tamil Nadu, Maharashtra and Telangana. The opposite, i.e., low level of awareness leading to low demand is illustrated by Bihar, Madhya Pradesh. In addition, West Bengal and Andhra Pradesh with low affordability but high demand for health care compared to Haryana is explained by the higher level of awareness.

Receiving Health Care (Effective Demand)


To conclude, the combined effort to improve the two facets of demand, i.e., affordability and awareness, and ground level implementation efforts will automatically begin a swing in the momentum towards a more aware and informed population seeking health care services.

1-Ghatak, Amrita & S. Madheswaran (2011), ‘Burden of Income Loss Due to Ailment in India : Evidence from NSS Data’, Institute for Social & Economic Change.