India must increase development spending for better healthcare outcomes

by Naina Subberwal Batra

Healthcare has become one of the largest sectors of the Indian economy, in terms of both employment creation and revenue generation. There are several factors driving the growth of Indian healthcare such as an aging population, growing middle class, increasing prevalence of lifestyle diseases, and accelerated adoption of digital technology, apart from heightened interest from investors over the past couple of years.

While budgetary allocations for healthcare were diverted towards managing COVID-19 in 2020-2021, other health issues have been neglected. As a result, India continues to lag on the attainment of sustainable development goal (SDG) 3, “ensuring healthy lives and promoting (sic) well-being for all at all ages.” Today, we are faced with a range of global challenges, with rising inflation, geo-political tension, and many countries are still suffering from the aftermath of the covid-19 pandemic; this context compounds an already challenging pre-pandemic environment. SDG financing gap is currently estimated to be 4.2 trillion dollars in emerging economies, this has increased over the past three years and the world is now even further away from achieving the SDG goals. It is in this context that private capital can play an important role in supporting government efforts to address critical development challenges, of which building resilient healthcare systems is central. Sources of private capital, including philanthropy, impact investment and blended finance instruments, all have an important role to play to support governments to build the robust healthcare systems of the future.

Challenges in the healthcare sector and how we can navigate these
India is on its way to becoming the third largest economy in the world. With an ever-increasing population, there is a dual burden of diseases that require urgent redressal. Efforts need to be directed towards digital and financial inclusivity, and primary, secondary, and tertiary healthcare management.

As per World Health Organization’s projections, the total annual number of deaths from Non-Communicable Diseases (NCDs) will increase to 55 million by 2030, if timely interventions are not done for prevention and control of NCDs. By the year 2035, as many as 109 million Indians are expected to suffer from diabetes. Non-communicable diseases (NCDs) such as heart disease, diabetes, and obesity currently account for 60 percent of deaths in the country. Further, according to the Economic Survey of 2022, India’s public expenditure on healthcare was 2.1 percent of GDP in 2021-22, up from 1.8 percent in 2020-21 and 1.3 percent in 2019-20. The industry faces several challenges including inadequate infrastructure, personnel, fund crunch for technological advancements, an affordability crisis, and insufficient preventive care.

These challenges can be navigated through a strong policy ecosystem. Partnerships from other stakeholders like private philanthropies and private investors, who are equipped with the latest technologies and R & D budgets, can be of great help. Given India’s prominence in South Asia, it is vital to establish the country’s influence over the region and unpack the role of the private and social sectors in contributing to not just India’s development narrative but also fuelling the growth narrative of the South Asia region. We need forums that champion transformative collective action and catalyse charting of a strong, resilient, and just recovery path from the effects of the pandemic. At AVPN we bring together social investors, innovators, and government on one platform – The AVPN South Asia Social Investment Summit 2023 which was held from 19 to 20 January 2023, in Mumbai. Through this event, we aim to forge collective action for social development and unpack the role of the private and social sectors in contributing to just social development across South Asia. Running parallel with India’s G20 Presidency, the Summit aims to push critical conversations on strategically mobilizing capital to create and scale transformative impact.

Investment opportunities in the Indian healthcare sector
A NITI Aayog report released in 2021 highlighted key sectors in healthcare in India and the investment opportunities therein. According to the report, there is a colossal scope of investment in health insurance, pharmaceuticals and biotechnology, medical devices, medical value travel, home healthcare, and most importantly, in hospitals and infrastructure.

This leads us to re-emphasise targeted investments in government programs. Investments that focus on addressing the unmet needs of marginalized populations and geographies can address the challenges. Greater investment in health, nutrition, education, the training in professional skills, and the creation of employment opportunities will help India position itself as a global leader and set an example for not just Asian countries but also for the Global North.

At AVPN, our work also greatly revolves around innovative measures to close the financing gaps. We back blended financing to support social development. Blended finance strategically funnels public and private investment to create long-lasting impact. As a case study, Christ Medical College in Vellore has implemented strategic blended financing to provide primary healthcare to the rural population of Vellore. Such initiatives now need to be expanded on a grander scale.

Expectations from Union budget 2023-24
The upcoming Union Budget will be critical for the healthcare sector. The social investment community looks forward to engaging with the central government in support of shared healthcare priorities. The government is expected to increase CAPEX allocation towards infrastructure, reduce defence spending, and increase allocation for rural spending and welfare measures, particularly all levels of healthcare.

Rural India is at a disadvantage in terms of access to basic primary healthcare. While the government has initiated several schemes to address this, there is a lot that can be achieved through investment from private actors. AVPN has previously worked on a project to strengthen Comprehensive Primary Healthcare in partnership with the state governments in NISHTHA (The National Initiative for School Heads' and Teachers' Holistic Advancement) implemented states to raise resources from the private sector. We also endeavoured to support all states to develop their own funding strategies and plan for sustainability.

Unless and until there are sustainable strategies for Public-Private Partnerships, schemes such as Pradhan Mantri Jan Arogya Yojana (PMJAY) and infrastructure creation measures will fail to gain traction among private investors. The healthcare sector will be looking keenly at the Union Budget for clarity on viability gap funding schemes and AVPN’s community of social investors stand ready to mobilise the resources to support these initiatives. It is in all our interests to collaborate to build the strong, resilient healthcare future that all our citizens deserve.

Naina Subberwal Batra, CEO, Asian Venture Philanthropy Network

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