Health expenditure in India - statistics & facts
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The healthcare industry in India is one of the biggest contributors to the Indian economy in terms of employment and revenue generation. Various factors contributed to the growth of this sector, notably the growing health coverage schemes, an increase in spending by both public and private sectors, and improved healthcare services. Even still, the per capita health expenditure is the lowest among OECD member countries.
It is indeed a challenge to provide inexpensive and accessible health care to the world’s most populous country, not to mention the complexity from its diverse demographics. The public and private healthcare system make up the country's healthcare infrastructure, with its own set of pros and cons.
Even if expensive, Indians who can afford to, choose private healthcare due to the quality and efficiency of medical services. Interestingly, the country is a popular location for medical tourism, thanks to skilled professionals and cost competitiveness compared to other countries.
In 2024, the government allocated an interim budget of nearly a trillion Indian rupees focusing on universal health coverage plans such as medical education, healthcare infrastructure, and the pharmaceutical industry. Currently, only one-third of all health expenditure is covered by government funding, i.e. both by central and state governments.
Government health expenditure increased by about one percent since the fiscal year 2014 and is likely to continue increasing in the coming years due to the penetration of government health insurance schemes. This is significantly lower than what it should be. In comparison, the United States spent over 16 percent of its GDP on healthcare resources.
Despite the increasing trend in public health expenditure in recent years, out-of-pocket payments still make up a large portion of the healthcare spending in India. Data available on these subjects further complicates the comparison as estimates of out-of-pocket expenditure are derived from an outdated census and survey from the pre-demonetization period, while government budgets are reported annually.
It is indeed a challenge to provide inexpensive and accessible health care to the world’s most populous country, not to mention the complexity from its diverse demographics. The public and private healthcare system make up the country's healthcare infrastructure, with its own set of pros and cons.
Even if expensive, Indians who can afford to, choose private healthcare due to the quality and efficiency of medical services. Interestingly, the country is a popular location for medical tourism, thanks to skilled professionals and cost competitiveness compared to other countries.
Fallacy of the government health expenditure
Recent estimates put household expenses on health at 1.2 billion Indian rupees, most of which came from rural areas. A large chunk of these expenses went to medicine and doctors' fees. Likely due to the low GSDP (gross state domestic product) and poor public healthcare, Uttar Pradesh had the highest out-of-pocket spending in 2020.In 2024, the government allocated an interim budget of nearly a trillion Indian rupees focusing on universal health coverage plans such as medical education, healthcare infrastructure, and the pharmaceutical industry. Currently, only one-third of all health expenditure is covered by government funding, i.e. both by central and state governments.
Government health expenditure increased by about one percent since the fiscal year 2014 and is likely to continue increasing in the coming years due to the penetration of government health insurance schemes. This is significantly lower than what it should be. In comparison, the United States spent over 16 percent of its GDP on healthcare resources.
Out-of-pocket payments in India
An efficient public health system ideally provides affordable and accessible health care along with adequate investments. A lack of funding and disproportionate allocation of funding in India has resulted in out-of-pocket expenditure being the primary source of healthcare expenditure. This has a direct financial impact on over 45 million lower-income households, who are often neither covered by health insurance nor are provided with cost-effective treatment in a government health facility. OOP health expenses have been reduced by 20 percent since 2001, indicating a steady but slow success in increasing public health coverage.Despite the increasing trend in public health expenditure in recent years, out-of-pocket payments still make up a large portion of the healthcare spending in India. Data available on these subjects further complicates the comparison as estimates of out-of-pocket expenditure are derived from an outdated census and survey from the pre-demonetization period, while government budgets are reported annually.
