Why India must now focus on healthcare sector to achieve self-sufficient economy

December 26, 2020


One of the less considered drivers of growth that would power India’s march to a self-sufficient economy is the healthcare sector. Despite the slow growth in the government’s health expenditure (1.3% to 1.6% of GDP from 2016 to 2020), the healthcare market is poised to increase three-fold to Rs 8.6 trillion by 2022. A majority of India’s urban poor residents live increasingly unhealthy and unhygienic lifestyles.

According to the central government’s ambitious Smart Cities Mission, an urban household is likely to spend five-times more on diagnostics, 2.6-times more on medicines and 2.4 times more on doctors’ fees than a rural household. The starting point of India’s renewed push for a higher share in GDP needs to be city-led. Cities must leverage their unique advantage of the availability of well-trained medical professionals and cost-competitiveness to provide accessible and affordable health care. There is a reason for hope as the penetration of private sector in Tier-2 and -3 cities has witnessed exponential growth.

With the rapid rise of major medi-cities in India, like Jalandhar, Gurugram, Hyderabad, Bengaluru, Chennai, $6.72 billion on FDI has come in the healthcare sector in the last two decades. This is just a part of the larger narrative as more cities benefit from the government’s focused approach at healthcare reforms. Amitabh Kant, CEO of NITI Aayog, contends that the effort should be at designing integrated and comprehensive programmes that can have a city-level focus.

The pandemic has stressed the need to strengthen primary healthcare systems. This can achieve rapid momentum through a city-wide implementation of Ayushman Bharat. The economic benefits that accrue from health investments and extension of the care model at city-level have been picking up in recent times. The demand for online consultations and tele-medicine services marked a 500% rise, with approximately 44% traffic coming from non-metro cities.

The adoption of digital solutions has been made possible by the growing clamour for data centre parks and cloud models. The potential of cities as hubs of high-quality data generation would improve healthcare services and serve as sandboxes for testing against new health exigencies.

Various cities have embraced the deployment of technology and other digital platforms to enhance quality. Notable examples, like Pune & Bangalore, identified local hotspots through integrated data analytics, monitored at their respective ICCCs for predictive success. Apart from the enablement of digital services in healthcare, the government is cognizant of the acute medical workforce shortage. The newly established National Medical Commission stipulates setting up of new district-level medical colleges, which would increase annual MBBS intake and reduce land regulatory requirements .

As noted economist Shamika Ravi observed ‘the healthcare sector can do for India what the IT sector has done over the past 25 years.’ Given the heightened need for a decentralised approach to healthcare services and infrastructure, cities are at the forefront of championing this goal. The recent big-bang reforms in healthcare and medical education suggests that India’s cities are best positioned to foster healthcare as an economic driver of growth. The Covid-19 pandemic has only accelerated this growing reality.