Home » Articles » The Indian Government Spends 1% of Its GDP on Healthcare

The Indian Government Spends 1% of Its GDP on Healthcare

A doctor examines a patient during a general health camp in Mumbai. Yvdalmia/Shutterstock


India might have one of the world’s fastest-growing economies but it spends a fraction of its GDP on healthcare. Mainstream reporting invariably focuses on India’s technological potential, the growth of its workforce, or its recent GDP growth. Yet, healthcare remains a critical part of the nation’s infrastructure, and it is woefully lacking in funds to expand and cater to the country’s changing demographics.


According to a 2017 PwC report on India’s health sector, the Indian government spends roughly 1% of its GDP on healthcare. In 2014, the World Bank found that the global average for government expenditure on healthcare as a proportion of GDP was 9.8%. This means India has one of the lowest expenditures of any country globally but is not far off some of its neighbors. To put these numbers into perspective, the World Bank found that  Kenya spent 3.5% of its GDP on healthcare in 2014, Nigeria 0.9%, and Pakistan 0.9%.


The lack of funding, according to the Indian health ministry, pushes 7% of the population into poverty each year. The report says the inability of the private and public sectors to work together on desperately needed projects such as new hospitals and the maintenance of existing infrastructure is a major cause for this impasse.


Prime Minister Narendra Modi’s government announced an ambitious nationwide insurance scheme to combat healthcare challenges earlier this year. Dubbed “Modicare”, the central government has allocated $1.54bn to cover half of India’s population with health insurance. The government still hasn’t said exactly how it will combat the nation’s shortage of hospitals and doctors. This is, perhaps, where the private sector can find an opportunity.


Private hospital operators have moved into the Indian market aggressively in the last decade. According to Quartz, India’s healthcare market is worth $100bn and, given digital advancements in healthcare that will facilitate more patients in the system, is forecast to reach $280bn in 2022 and $373bn in 2022. What is the takeaway? The government’s measures, while helpful, will not solve the country’s healthcare burden alone. Along with the demonetization scheme or even the biometric identity programme launched under Modi, healthcare is a sector where private capital can have an immediate impact.