Govt Needs to Increase Healthcare Outlay in Budget: ICRA Report

Public sector investment on healthcare accounts for less than 1.5% of GDP, which is one of the lowest globally.

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Public sector accounts for only 30 percent of the total healthcare expenditure in the country, and investment in building and maintaining public health infrastructure needs priority in the forthcoming Budget for FY 2018-19, a report says.

Public sector investment on healthcare accounts for less than 1.5 percent of GDP, which is one of the lowest globally, and the government intends to increase the expenditure to 2.5 percent of GDP by 2025.

The outlay on healthcare increased by a healthy 28 percent in the last Budget and the allocation is likely to see a similar increase in the forthcoming Budget as well, according to a report by rating agency ICRA.

In line with National Health Policy (NHP) 2017, the expenditure is expected to be directed towards setting up of new hospitals to increase the number of beds in the country, and for transformation of existing district and town-level health centres to provide better healthcare facilities across geographies while using the existing infrastructure.

Public sector accounts for only 30 percent of the total healthcare expenditure in the country, as compared to 42-58 percent in Brazil, 58 percent in China, 52 percent in Russia, 50 percent in South Africa, 48 percent in USA and 83 percent in UK, as per the WHO reports.

ICRA believes that investing in building and maintaining public health infrastructure should be given priority in the Budget as these facilities are lagging and vast majority of the population has to bear their own healthcare costs due to low penetration of health insurance.

Besides, along with the setting up of new hospitals, the report recommends setting up of medical colleges and nursing academies to address the shortage of beds and skilled medical professionals in the country, it said.

The Budget is also likely to increase the allocation for addressing the increasing burden of non-communicable diseases (NCDs) such as diabetes, cardiovascular diseases, hypertension, and to increase the outlay for providing free drugs, diagnostics and emergency services across all public hospitals, in line with NHP 2017.

ICRA suggested that new infrastructure developed through incentives can also be utilised for catering to the growing medical tourism in the country, which is expected to continue to grow by 20 percent over the next five years generating export revenues and employment.

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