Kick-starting the economy amidst COVID-19!

With the advent of COVID-19, the focus on health and safety has increased, and greater investments are expected in healthcare services and infrastructure. The healthcare industry is at a decisive point in its journey toward Health For All, and it is time to make the next step change in the pace of reform. Current spending on healthcare in India is 3.5 percent of GDP, with the public share of healthcare spending at 28 percent. And healthcare access is very uneven across the country, with a gap of more than 30 points in the Healthcare Access and Quality Index between Goa (64.8) and Assam (34.0). India could aspire to nearly double healthcare spending to 6.4 percent of GDP and the government share of healthcare spending to 56 percent, in line with the average in other outperforming emerging economies like Korea, Brazil, Vietnam, Thailand, Malaysia, and South Africa.

Both, the USD 1.5 trillion National Infrastructure Pipeline-Project India, that includes healthcare infrastructure and the Reserve Bank of India’s annual report, stress that since the shock to consumption is severe and will take quite some time to mend and regain the pre-COVID-19 momentum, it is government consumption that will continue pandemic-proofing of demand.

Shifting gears, McKinsey expects the Indian healthcare services for India and the world to contribute USD 55 million
to the economy by 2030. Achieving such goals requires reforms. Deployment of models such as public-private partnerships and further clarification of regulations announced in telehealth are two such instances. Technology-enabled e-hospitals, equipped with internet connectivity and communication equipment, could provide access to a network of doctors. The number of medical tourists alone could rise 4.5 times to about three million in 2030, provided steps are taken to keep costs affordable and visa approvals and patient processes simple. India needs to be able to move back to a fast-growth track and secure its place in the ranks of emerging economies that have outperformed their peers in recent decades.

Excellent logic, but where will the government cough up money from? The recent GST fiasco, where the states expect the center, and the center expect the states to borrow money, failing which, both look at the GST Council to do so, does not augur well. Not forgetting the Rs. 15000 crore NITI Aayog is contemplating to spend for 680 million doses of the vaccine, once it is developed!