A comparative analysis of the healthcare investments made by Indian states

To catch up with the developed world, India needs to raise its public expenditure on healthcare

With nearly five million coronavirus cases around the world till now, normal life has been thrown out of gear everywhere because of the global Covid-19 pandemic. According to the website worldometers.info, more than 325,000 people have already lost their lives to Covid-19. In India, the number of those infected has already crossed the 106,000 mark and the growth rate continues to be steady.

This unprecedented global health crisis has brought our healthcare systems into sharp focus. Healthcare expenditure, availability of hospital beds and ventilators and healthcare systems have been widely discussed by policy makers across the world.

Healthcare expenditure

According to World Bank, India’s health expenditure as per cent of GDP was a lowly 3.53 per cent in the year 2017. The same figure for the US was 17.06 per cent while Sri Lanka, India’s southern neighbour spent 3.81 per cent of its GDP on healthcare. China’s expenditure stood at 5.51 per cent while for Japan it was 10.94 per cent.

This expenditure includes public health expenditure (done by the government, both state and centre) and out of pocket expenses incurred by people. 

As per the National Health Profile 2019 (produced by the Central Bureau of Health Intelligence, Ministry of Health & Family Welfare), per capita public expenditure on health in nominal terms has gone up from Rs 621 in 2009-10 to Rs 1657 in 2017-18. India spends only 1.28 per cent of its GDP as public health expenditure according to NHP, 2019. While the Centre incurs 37 per cent of this expenditure, 63 per cent is borne by states. 

According to National Health Accounts-Estimates for 2016-17 (released in November 2019), India saw 3.8 per cent of its GDP as Total Health Expenditure (THE) with a per capita THE of Rs 4,381. About 32.4 per cent of THE was Government Health Expenditure (GHE) (in other words public health expenditure which amounted to only 1.2 per cent of India’s GDP). 

Out of a per capita THE of Rs 4381, Out of Pocket Expenditure (OOPE) was Rs 2,570 (or 58.7 per cent of THE). 

According to National Health Policy 2017, India was to strive to increase public health expenditure to 2.5 per cent of its GDP by 2025, but this target seems far off from the current allocation of around 1.6 per cent (Economic Survey 2020). Lower public health expenditure leads to higher OOPE and this in turn leads to higher incidence of poverty amongst lower income groups.

How are India’s states placed?

Researchers at Centre for Disease Dynamics, Economics & Policy and Princeton University did a study of India’s hospital capacity in the backdrop of the Covid-19 crisis and its findings are as below:

• There are estimated 1.9 million hospital beds in India, 95,000 ICU beds and only 48,000 ventilators. Of these 1.9 million beds, 713,986 are in the public sector while the rest are in the private sector.
• Most beds and ventilators are concentrated in seven states viz Uttar Pradesh, Kerala, Karnataka, Maharashtra, Tamil Nadu, West Bengal, and Telangana.
• Bed capacity at government hospitals is mostly saturated.

According to the study, there are 69,625 hospitals in India (25,778 in the public sector and 43,487 in the private sector).

The southern state of Kerala has earned a good reputation for its handling of the Covid-19 crisis. How does hospital capacity in Kerala compare with other states?

Hospital beds per 1,000 people across 11 states 

State	Population (million)	Public hospital beds	Pvt hospital beds	Beds per 1,000 people
Kerala	34.80	38,004	61,223	2.85
UP	204.20	76,260	205,142	1.38
Haryana	25.40	11,240	24,901	1.42
Punjab	28.00	17,933	43,064	2.18
Maharashtra	114.20	51,446	180,293	2.03
Tamil Nadu	67.90	77,532	77,843	2.29
Bihar	99.00	11,664	19,193	0.31
Gujarat	62.70	20,172	44,690	1.03
Rajasthan	68.90	47,054	46,122	1.35
Karnataka	64.10	69,721	192,388	4.09
West Bengal	90.30	78,566	34,969	1.26

We find that when it comes to hospital beds per 1,000 people, Karnataka leads with 4.1 beds while Kerala comes second at 2.9 beds. The same number is 1.4 for Uttar Pradesh while it is a paltry 0.3 for the state of Bihar.

If we compare these figures with countries in India’s neighbourhood, we find that Sri Lanka had 3.6 beds per 1,000 people in 2012 according to World Bank data. Bangladesh had 0.8 beds per 1,000 people (2015). In South East Asia, Vietnam (2014) had 2.6 beds while Malaysia (2015) had 1.9 beds per 1,000 people.

Beds per 1,000 people in other countries

Country	Beds per 1,000 people	Year
Bangladesh	0.8	2015
Pakistan	0.6	2014
Vietnam	2.6	2014
Malaysia	1.9	2015
Sri Lanka	3.6	2012

According to the same World Bank report, India had only 0.7 beds per 1,000 people in 2012.

What are state-wise allocations for healthcare in their annual budgets? PRS Legislative Research analyses state budgets and here is the allocation for health for some of India’s states for FY21.

Following is the budgetary allocation for health made by these states in their Budget for FY21.

How 11 key states have been spending on health care 

State	Budgetary Allocation (Rs cr)	Population (million)	Per capita spend (Rs)
Haryana	6,512	25	2,564
Punjab	4,532	28	1,619
Kerala	7,186	35	2,065
West Bengal	11,280	90	1,249
Rajasthan	14,700	69	2,134
UP	26,266	204	1,286
Bihar	10,602	99	1,071
Tamil Nadu	15,773	68	2,323
Maharashtra	17,288	114	1,514
Karnataka	10,296	64	1,606
Gujarat	11,225	63	1,790

This allocation covers only the public health expenditure component of THE. According to a PHFI study on state health accounts for 2013-14, Kerala had a per capita health expenditure of Rs 7,636 (public expenditure Rs 1,765) which was the highest in the country. Kerala spent 6.5 per cent of its GSDP on healthcare according to this study.

2,564   1,619