Rejuvenating India’s health sector
Arvind Gupta, Director, VIF

Doctors and healthcare workers are the heroes of our battle against COVID 19. It is, therefore, painful to see that many of them contracted the infection because of lack of personal protective gears. The country faces an acute shortage of essential equipment like hospital beds, ventilators, testing kits, masks, et cetera. Efforts are being made to meet the shortages but these are at best short term measures.

The coronavirus endemic has also highlighted that health security is an essential part of national security.

The coronavirus crisis has provided a once in a lifetime opportunity for a complete overhaul of India’s health sector. The rejuvenation of the health sector can provide the nucleus for remaking of India Post Coronavirus.

The following features of India’s health sector standout1:

  • India spends a little over 1% of GDP on the health. This is the lowest amongst the BRICS countries. US spends 8.5%, Germany 9.4% and UK 7.9% of GDP on health. Even our neighbouring countries spend more.
  • The health budget of the Ministry of Health and Family Welfare, at about Rs. 65,000 crores in 2020-21, is too low to provide basic health care to Indian citizens, let alone to deal with ferocious pandemics of the COVID-19 type.
  • Public to private health expenditure ratio is 3:7 in India, as compared to 9:10 in the UK.
  • According to the World Bank figures, India spends one of the lowest amounts (USD 23) in per capita. Public health expenditure in India at US Dollars 23 is one of the lowest in comparison to other developing countries like Indonesia (USD 38), Sri Lanka (USD 71), and Thailand (USD 177). On the World Bank’s Index of universal health coverage, India ranks 143 among 190 countries in terms of per capita expenditure on health.
  • A large section of India’s population has no health coverage, although the situation is changing with the government’s flagship health insurance scheme PMJAY, Ayushman Bharat health insurance scheme for the vulnerable sections of the society.
  • As per the National Sample Survey 2015, most hospitalisation cases were seen in private hospitals (68% in urban and 58% in rural areas), these hospitals are mostly unregulated which is one of the factors leading to high costs of treatment. Policy measures are needed to regulate the private healthcare sector.
  • The government will need to spend approximately 3.8 % of the GDP for universalising healthcare.
  • India spends too little on health Research and Development. The Department of Health Research got Rs 1,900 crore in 2020-21 budget, which is only 3% of the Ministry of Health and Family Welfare’s total budget.This is approximately US dollars 250 million. This is highly inadequate for health R&D needs of the country of the size of India.
  • The country faces acute shortages of doctors. As of 2015, there was a shortfall of 83% of surgeons, 76% of obstetricians and gynaecologists, 83% of physicians and 82% of paediatricians. In 2018 there were only 1.14 lakhs allopathic doctors in the country. Similarly, there are shortages in other categories of healthcare professionals, like nurses, technicians etc. Recently, some steps have been taken to increase the seats in undergraduate and postgraduate courses. This is welcome but needs to be followed up with more steps in all categories of the health profession.
  • Healthcare infrastructure in India is in poor condition and needs to be upgraded. As of 2018, India had 5624 community health centres, 25,743 primary health centres and 1,58,417 sub-centres. Most of these are in extremely poor conditions.
  • Medical devices sector: According to the Association of Indian Manufacturers of Medical Devices(AIMED) the medical devices sector in India is worth over US Dollar 10 billion at retail & Institution sales level. India has a wide range of low-cost design and development capacity in disposables and consumables, electro-mechanical diagnostic and therapeutics devices, stents and pacemakers.
  • However, the sector is dominated by foreign companies wanting to capture the vast Indian market. Although India has over a thousand indigenous manufacturers, they are too small to stand in competition against foreign MNCs and cheap Chinese imports. Many of them are turning from being manufacturers to becoming importers. They need incentives and protection, like preference in prices, rational import duty structures, et cetera. Many countries provide such protection to indigenous industry.
  • The government has not yet come out with a strong policy to support indigenous manufacture despite many industry suggestions. The sector is overseen by the Department of Promotion for Industry and Internal Trade (DPIIT) and not the Health Ministry. Pharmaceuticals are dealt with by a different department altogether. Fragmentation creates a lack of synergy between the different government departments.
  • Pharmaceuticals: India is a leading producer and exporter of pharmaceuticals. According to Indian Pharmaceutical Alliance (IPA) The Indian pharmaceutical industry is aspiring to touch USD 120-130 billion by 2030 from the current USD 38 billion.2 However, numbers can be misleading. India used to manufacture bulk drugs and APIS of a wide variety. Soon, domestic companies shut shops due to competition from subsidised cheap Chinese imports. India has now moved to formulations. As a result, it has developed debilitating dependencies on China for the imports of Active Pharmaceutical Ingredients (APIS) and other raw materials. The share of China in bulk-drug and intermediates imports, at $2.4bn, was 67% in FY19. Supply chain disruptions due to coronavirus issues will hamper the Indian Pharma industry. About 19 plants received official action-indicated status and warning letters from the US FDA.

In light of the above situation, the following suggestions may be considered:

  • Increase the health budget to at least 3% of the GDP. A health cess, like education cess, may be considered to generate the funds. Eventually, India should move to universal health coverage in the next 5 years.
  • Increase the health R&D budget from the present Rs. 1900 crores to at least ₹ 10,000 crores per annum. The focus should be on top-end research on vaccines, drugs and treatment of disease which inflict India.
  • Industry 4.0 and new technologies like big data analytics, artificial intelligence et cetera are revolutionising drug research. These need to be incorporated by Indian Pharma manufacturers.
  • Identify and address the shortages of doctors, nurses, paramedics staff, technicians and healthcare workers. Come up with a five-year time-bound programme with targets.
  • Medical education in the country needs to be restructured urgently. Every district primary health centre in the country should have a medical college attached to it.
  • The government should come out with a comprehensive policy on medical devices and diagnostics sector to encourage indigenous production. Preferential pricing of 15% to indigenous medical devices and diagnostics should be provided to domestic manufacturersso that they can meet the challenge of cheap imports from China. The duty structures, tax incentives et cetera should be rationalised.
  • The government of India should develop its mandatory Indian standards and not insist on foreign standards like US FDA. This creates a disincentive for domestic manufacturers.
  • Healthcare sector skills and training should be given high priority. The Skills Development Council of India should create a Special Program in this regard.
  • Telemedicine should become a norm rather than remain an oddity. The government should come out with policies and guidelines to promote telemedicine. Hospitals should be decongested.
  • Primary health centres, community health centres and hospitals should follow certain minimum standards of hygiene, medicine and medical equipment and doctors and other staff. Minimum standards for different categories of healthcare infrastructure should be developed in consultation with the states and adequate resources should be provided.
  • Private health care sector in India should be properly regulated to ensure minimum standards, quality and affordability.
  • Preventive healthcare should be on a top priority of the government as its benefits are immense. The CGHS and other such schemes should provide advice and assistance to prevent lifestyle diseases and to maintain hygiene, diet and nutrition and exercise.
  • A strong and robust cadre of health workers, like Asha workers, should be raised so that they can reach to every panchayat and household. Healthcare services should be provided at the doorstep to the extent possible. Mobile health clinics could also be considered. Doctors and professionals should reach the grassroots level rather than the other way round.
  • Research on traditional medicine and health systems should be stepped up. Yoga and meditation, for example, should be integrated with allopathic systems.
  • Disease surveillance mechanisms should be strengthened so that alerts are generated when an epidemic begins to form.
  • Collaborations in the health sector can be beneficial provided they are carefully designed. India should build mutually beneficial cooperative arrangements in the health sector with the neighbouring countries whose demands are very similar to that of India. The health sector can help strengthen India’s neighbourhood policy.

A holistic policy, cutting across the numerous ministries and departments, centre and the states, government and the public sector, NGOs, educational institutions, industry and several other stakeholders will be required to rejuvenate the health sector in India. Policy space is highly fragmented and needs to be consolidated.

End notes
  1. These points have been taken from an analysis of the health budget 2020-21 by the Parliamentary Research Service India and other sources. A few health care professionals have also been consulted in preparing this note. See, on 7.4.2020
  2. on 8.4.2020.

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