Health care industry in India

Health care industry is one of the important industry in any economy not only from GDP point of view but also from consumer point of view. Health care industry is expected to grow to $280 billion by year 2020 with spending on health care to grow 14% annually, according to a report by FICCI. However current scenario is not able to cater the consumer and it's contribution to overall GDP is also insignificant. Health care industry despite being the lowest contributor in overall percentage GDP (<1%), Finance Minister, Mr. Pranab Mukherjee has not given utter importance to reach the projected target of 2020.

Here are the statistics of India's health care industry:

1. India has just 60 doctors, 90 beds and 130 nurses per 100,000 population whereas world averages are 140 doctors, 270 beds and 280 nurses respectively. (Source: Ernst & Young).
2. Health care contributes to less than 1 percentage of GDP (2010-11).
3. India's 2.2% population goes into poverty every year because of catastrophic health expenditure.
4. Indian spend 66% percent of health care expenditure from their pocket.
5. There are 11,613 Hospitals, 5,40,328 Beds, 1,46,036 Sub-centres, 23,458 Primary health centres (PHCs) and  4,276 Community health centres (CHCs) in India. Source: National Health Profile (NHP) of India –2009,‖ Central Bureau Of Health Intelligence website.


India's health sector is already highly privatized; most health care services are delivered by private providers, and more than 3/4 of all health expenditure comes from private sources. Most of this spending goes to private providers. (Source: World Bank)


Source: WHO

With all such major problems in the industry, this year's (2011-12) budget has not done any good. Finance Minister has proposed tax on all services provided by hospitals with 25 or more beds with facility of central air conditioning. The condition explicitly mentioned by Finance minister stating that tax will be levied only from central air conditioning hospitals.

The ratio of number of private and public hospital is 3:1. Rural patients don't have many choice but to opt for public hospitals whereas Urban patients with high income group go for, better infrastructure and facility center, private hospitals. The left ones are middle income group people who live in urban area who will suffer the most because private player likely to pass the burden of service tax on to the patients. Hence people live in urban or semi urban area opting for private hospitals likely to suffer the most.


In the world of problems for the Health care industry in India, Finance Minister has added one more in the list.It would be interesting to see the impact of service tax in next year budget.