Context: A stronger health system in a country can lead to better outcomes on the economic growth front.

More on News:

  • Dire predictions for the post-COVID-19 global economy have come from the International Monetary Fund, which called the present crisis the worst downturn since the Great Depression. 
  • Grim forebodings for the Indian economy have been sounded by many distinguished economists and the Governor of the Reserve Bank of India.


  • Over 1,01,000 Indians have so far become infected by the novel coronavirus.
  • We are not yet fully able to test and isolate efficiently, we are yet to find a protocol for cure and the vaccine is still in the distant future
  • Indian hospitals and 60,000 nursing homes in the private sector have looked after 68% of Indian healthcare needs
  • In the process, they have evolved into delivering world-class care and continue to attract patients from 145 countries
  • Even more remarkably — they do it at 1/10th of international costs
  • While we are fighting for survival, the economic impact of this virus is $8 trillion and growing as fast as the virus — which is why we need to desperately focus on a cure for the economy and a vaccine that protects the Indian healthcare system.

Different views over health expenditure:

  • One of the most influential economists of the modern era, William Baumol, described healthcare as a ‘cost disease’ where costs inevitably rise, outpacing the value of services rendered.
    • Therefore it is less rewarding than the industrial engines of economic growth after a certain point.
  • However the majority view is that the services rendered by public health are far too valuable to be dismissed as a cost disease. 
  • Indeed, both population-based public health and individual-centred healthcare are joint accounts in human development that yield rich returns for economic development, if invested wisely.
  • There is robust evidence that investments in public health and primary care pay rich economic dividends. 
    • A UN High Level Commission, headed by the Presidents of France and South Africa, reported in 2016 that investments for augmenting the size and skills of the health workforce yields economic growth through 
      • improved population health and productivity, 
      • reduced healthcare costs and 
      • job creation even in a gloomy global scenario of job loss
  • India's public expenditure on health now stands at 1.28 per cent of the GDP but even then, it is way lower than the average expenditure by the South-East Asian countries like Nepal, Sri Lanka, Bhutan, Indonesia, Thailand and the tiny island country of Timor-Leste.
  • Many public health specialists have expressed disappointment over the Centre’s declared pledge to invest 2.5 percent of its GDP into healthcare by 2025, when the global average will be about 6 per cent.

India’s Gain by investing in Health:

  • Productivity boost promised by a demographically young population can be protected.
  • Education and skilling of a diversified health workforce can uplift health services for health protection at both population and individual levels. 
  • When domestic needs are met, this expanded health workforce can also meet global health needs, both as a rapid action force for health emergency response and as a unit taking care of the chronic care needs of aged societies. 
  • Innovative health technologies and inexpensive pharmaceutical products can be created at scale, for domestic use and global export.
  • Hence Government has made some provisions for healthcare under the Atma Nirbhar Package.

Analysing the Atma Nirbhar Package for Healthcare:

  • The ₹20-lakh-crore package recently announced includes proposals to prevent and respond to future pandemics. 
  • These include -
    • Aid of 15000 crore
    • strengthening of health and wellness centres, 
    • establishment of infectious diseases hospital blocks in all districts, 
    • increasing the viability gap funding from 20% to 30%
    • expansion of the laboratory network and 
    • ‘One Health’ research on zoonotic diseases under the Indian Council of Medical Research (ICMR) 
    • 50 lakh insurance cover for doctors and frontline workers

Criticism :

  • The creation of a well-balanced health system is not the objective of this crisis response, despite the fact that the southern States have shown how efficient and equitable health systems are our best defence against public health emergencies.
  • Further, a selective investment in some components of infectious disease control will not meet the many other essential demands on the health system.
    • Even during the COVID-19 response, attention has been diverted from maternal and child health, and care for other infectious diseases and non-communicable diseases. 
  • Also, where will the additional health workforce needed even for this limited expansion come from, without a planned investment in education, skilling and employment.
  • Moreover India’s private health care system needs more than the ₹15,000 crore aid recently offered.
    • This amount will not be able to bring this sector, small, medium and large nursing homes and corporate hospitals.

Way Forward:

  • What is needed is adequate investment in creating a health system that can - 
    • withstand any kind of public health emergencies, 
    • deliver universal health coverage and other targets of the Sustainable Development Goals 
    • Create mutually beneficial synergies between health and the economy. 
  • Strengthening the supply chain : Till we have a strong Indian supply chain, we continue to import and use the best because every patient is worth it. 
  • Make inputs GST-exempt : Uncomplicate the cost structure by zero-rating GST or exempt all services and goods that are supplied to the hospital so as to establish synergy between services/goods used by the hospital and rendered by it.
  • The essential support system for COVID-19, hospitals need liquidity. 
    • Beyond bank borrowings, the government should set up a three-year fund that will enable sustainability of the sector and fortify the system from any such future outbreak and offer subvention of interest. 
  • Incentivise rather than penalise the healthcare institutions that have invested in the future, in Tier II hospitals and technology by allowing companies to retain MAT (Minimum Alternate Tax) credit as they continue to pay 25% corporate tax.
  • Moreover to augment the sector in real sense -Right to Health must be made a fundamental right for every citizen, the launch of Ayushmann Bharat scheme is a positive step in this regard. 


  • South-East Asian countries invested in health and universal health coverage during and soon after the Asian Financial Crisis of the 1990s. 
    • The United Kingdom adopted universal health coverage soon after the Second World War. 
    • Both of them recognised that greater investment in health is a winning bet for economic development. 
    • India too must choose that path to boost the trajectory of its economic growth.
  • This is the time for us to show that we are not here for just this fight alone — we are here for the future, a future where every Indian is unafraid because they are strong and protected by a vibrant healthcare system.
  • The crisis has underlined the need to nurture healthy individuals and maintain healthy balance sheets. 
  • It is with this hope that we will live another day. It is with this hope that we can exhale with confidence and courage, for there is no light brighter than this human spirit.


Image Source: The Hindu