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Challenges in Indian Healthcare Industry

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The Indian Healthcare industry is one of the largest sectors of the country. It is huge in terms of revenue and employment. Healthcare comprises hospitals, medical devices and systems, clinical trials, medical research, outsourcing, telemedicine, medical tourism, health insurance and medical equipment. The Indian healthcare sector is one of the fastest growing sectors with a rising coverage for disease, services and increasing expenditure by the public. But the rising population and the increase in the occurrence of chronic diseases is proving to be a big hurdle for the healthcare industry.

What is the market size of Indian Healthcare industry?

The healthcare industry in India stood at US$ 61.79 billion in 2017 and is expected to reach US$ 132.84 billion by 2023. The healthcare market can increase three fold to US$ 133.44 billion by 2022. India is experiencing 22-25 per cent growth in medical tourism and the industry is expected to double its size from the present (April 2017) US$ 3 billion to US$ 6 billion by 2018. Medical tourist arrivals in India increased to 1.07 million in January 2018 from 0.98 million in January 2017. There is a significant scope for enhancing healthcare services considering that health care spending as a percentage of Gross Domestic Product (GDP) is rising. Rural India, which accounts for over 70 per cent of the population.

Under financing of public health

Indian public health care is severely under-financed, short-staffed, particularly rural areas particularly affected. The majority of the Indian population is living below the poverty line (BPL)–the ability to spend Rs 47 per day in urban areas and Rs 32 per day in rural areas. Besides, the majority of healthcare professionals happen to be concentrated around urban areas where consumers have higher paying power, leaving rural areas underserved. Moreover, fund allotment for the public health sector continues to rely on the under-financed and short-staffed.

Low per capital expenditure

India’s public health expenditure is amongst the lowest in the world. According to an official data release from National Health Profile 2018, the amount India spends on public health per capita every year is Rs 1,112, less than the cost of a single consultation at the country’s top private hospitals. That comes to Rs 93 per month or Rs 3 per day. At 1.02 percent of its gross domestic product (GDP)–a figure which remained there for several years (since 2009). India’s public health expenditure is amongst the lowest in the world, lower than most low-income countries which spend 1.4 percent of their GDP on health care. Sri Lanka spends about four times as much as India per capita on health, and Indonesia more than twice. India spends 1.02 percent of gross domestic product (GDP) on public health care, compared to 1.4 percent of low-income countries.

Problems in health infrastructure

The existing health infrastructure is not enough to serve the needs of the growing population of the country. The doctor-patient ratio in India is 1:1,700 which is very low. According to a study conducted by a private body, India will need to invest a minimum of Rs 8 lakh crore over the next 20 years to establish two million new beds. If the country needs to reach 4 beds per 1000 persons, it needs a huge fund.

Government initiatives

Some of the major initiatives taken by the Government of India to promote Indian healthcare industry are

  • The Intensified Mission Indradhanush (IMI) which aims to improve coverage of immunization, reaching every child under two years of age and all the pregnant women who have not been part of the routine immunisation programme.
  • Launching of LaQshya, for Labour Room Quality Improvement, a mobile application for safe delivery, and operational guidelines for obstetric high dependency units (HDUs) and intensive care units (ICUs).
  • Union Cabinet of India approved the continuation of National Health Mission with a budget of Rs 85,217 crore (US$ 13.16 billion) from 1st April 2017 to 31st March 2020.
  • Approval to sign Memorandum of Understanding (MoU) with the medical agencies of BRICS countries for cooperation in the field of medical products.
  • Approval of Rs 1,103 crore (US$ 170.14 million) for setting up All India Institute of Medical Sciences (AIIMS) in Deoghar, Jharkhand.


Though government aims to increase the total health expenditure to 2.5 per cent of Gross Domestic Product (GDP) by 2025 from the current 1.15 per cent, many healthcare experts feel more is need to done. The participation of private sector is very vital for healthcare sector, government should come up with investor friendly policies in the health sector.

Another major problem in India, is the lack of transparency in healthcare services and products. Government of India must ensure pharmaceutical and medical companies are committed to transparency and refrain from frequent price increases in order to help rebuild trust with patients, consumers, physicians, and health care insurers. With various health care experts pointing out of the sudden price rise in health equipments and government trying its best to control the price, still more needs to be done. Tax free regimes, land bank for building hospitals, special interest rates and loans from banks, should be initiated and can change the face of healthcare infrastructure in India. In terms of rules and regulation, the government officials should make plans to remove or replacing, if required modifying the current health care laws. Such changes will form a standardized, consistent approach to compliance in the current global healthcare scenario.

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