Name: Ausura Keshar Mayurbhai

Roll no:
Class: 12th comerce
Topic : Healthcare Expenditure of a
state
Subject:Economics
 || Acknowledgement ||
I am very thankful to my
school,VrajBhoomi International
School, for providing me with
the opportunity to do this
project. I would also like to
thank our teacher MR.Niraj
Punjani and MR.Ajeet Singh
who guided and supported me in
doing this project.
 || Certificate ||
Mr.keshar has completed this project
according to the guidance given to him

---------------- ------------------
Student name External Teacher’s sign

---------------- ---------------
Teacher’ s sign Principal’s sign
Healthcare Expenditure in India
 || INDEX ||
1 Introduction
2 Meaning
3 Health expenditure
4 Health care system
5 Three tier system of health infrastructure
6 Comparison with others
7 Re-emergence of traditional medical care
8 Per-capita healthcare expenditure
9 Challenges to indian
10 Strong growth in healthcare expenditure
11 Supportive policies drive FDI inflows
12 Growing in-patient and
out-patient
13 Stratagies adopted
14 conclusion
15 bibliography
 || Introduction ||
“Health is wealth” the adage is present in
India and is relevant to all countries of the
world. To enjoy everything in life, it is
essential to be healthy. Chronically ill people
who are unable to enjoy life and contribute
even a little bit to society despite having
higher income and education. Perhaps that is
why almost all countries in the world are
willing to spend significant resources on
healthcare. 2% of gross domestic product
(GDP)*. In the United Kingdom, they
account for 6.1% of GDP.In Canada,
Germany, France and France achieved 9.3%
and 8.6%, while South Korea and Indonesia
were at 3.1%, 6.4% and 2.5% respectively. In
India, they are expected to account for 0.9%
to 9% of GDP, depending on the nature of
these factors. Create a solid strategy.
 || Meaning ||
Health expenditure includes all expenditures
for the provision of health services in
emergency situations, family planning,
nutrition activities and health services, but
does not include
the provision of
drinking water
and clean water.
The national
health fund
provides various
measures based on expenditure data collected
in an internationally accepted system.

This money is a combination of budgets and

expenditures recorded in medical work, from
the budget and agencies to the distribution of
money among medical centers and projects.
 || Health expenditure ||
Healthcare spending in India is a major area
of concern, especially as the country grapples
with multiple health issues and a growing
population. According to the latest figures,
India spends around 3-4% of its GDP on
healthcare, a figure lower than many other
countries. This spending is split between the
public and
private sectors,
with the latter
accounting for
around 70% of
all healthcare
spending,
making out-of-
pocket spending
significant for
these people. A
program designed to provide health
insurance to over 500 million people. This
measure signals a shift towards more
healthcare services, targeting low-income
families who often face financial difficulties
in accessing basic services. between urban
and rural areas. Rural areas often lack
adequate healthcare and workforce
resources, contributing to poorer health
status. And the burden of noncommunicable
diseases, rising healthcare costs, and an
aging population are adding to the burden.
Like the COVID-19 pandemic, it has exposed
the weaknesses of the medical system.
Investments in technology and telemedicine
have also benefited, providing new ways to
reach the underserved. There’s a chance to
help. An effective approach that includes
preventive care, health education, and strong
insurance can improve overall health and
reduce the financial burden on families.
 || Health care system ||

India’s healthcare system is fundamentally

strong and functional, as is its large
population and diverse geography. The
system, which encompasses both public and
private sectors, faces many challenges but
also offers great opportunities for growth and
development. It is funded and managed by the
central and state governments. It is divided
into three levels:
Primary Health Care Centre: It includes
Primary Health Care Centres (PHCs) and
centres, which are the first point of contact for
medical treatment, especially in rural areas.
They provide basic services such as maternal
and child health, immunization and outpatient
care. These facilities cater to the needs of a
large population and provide more services
than the main facilities. These facilities are
usually located in urban areas and have the
capacity to handle complex medical issues.
Private hospitals and clinics often offer
shorter waiting times and a better range of
services. However, the costs associated with
personal care can be a significant problem for
many people, resulting in high out-of-pocket
expenses. As on 31 March 2014 there are
30,045 PHCs in India in which 24,855 are
located on rural areas and 5,190 are on urban
areas.
Healthcare expenditure:The majority of
healthcare expenditure comes from out-of-
pocket payments, which can push families
into poverty, especially during health
emergencies.Poor health leads to absenteeism
and reduced productivity, affecting the overall
efficiency of the economy. A well-functioning
health system can also attract foreign
investment by keeping workers healthy. Keep
growing. Expanding health insurance can
reduce the financial burden on families and
improve access to affordable health care.

|| Three tier system of health

infrastructure ||

India’s healthcare system follows a three-

tiered system designed to provide healthcare
services to both urban and rural populations.
These structures include primary, secondary
and tertiary levels, each with a different role.

1. Primary Health Care

At the primary level, primary health care

focuses on prevention and basic medical
care. These levels include:

Human Health Centres (PHCs): In rural

areas, PHCs are the first point of contact for
the community and provide essential services
such as maternal and child health,
immunization and traditional health services.
Each health centre typically serves 20,000 to
30,000 people

2. Secondary Health care

Secondary Health Services provide additional

specialized services and include:

Community Health Centers (CHCs): Serving

approximately 80,000 to 1,20,000 people,
CHCs have a range of services including
general services, pediatrics and obstetrics.
They make referrals to primary care
providers.
3. Tertiary Health care

At the highest level, tertiary health services

include advanced medical care and
specialized care. This includes:

Specialty Hospitals: These municipal

hospitals provide comprehensive services for
complex conditions and are often affiliated
with medical schools. They provide critical
care, advanced diagnostics and surgical
procedures.
 || Comparison with others ||

India’s healthcare
expenditure, which
hovers around 3-4% of
its GDP, places it
among the lower
spenders globally
compared to many developed and developing
nations. This expenditure is primarily
financed through out-of-pocket payments,
leading to significant financial burdens for
households, especially during medical
emergencies.
Comparison with Other Countries
1. Developed Countries: Nations like the
United States and Germany allocate about
16-18% of their GDP to healthcare. The
U.S., for example, spends more than
$10,000 per capita, focusing on advanced
technologies and extensive healthcare
services. In contrast, India’s per capita
spending is significantly lower, around
$200-300, which limits access to quality
care.
2.Emerging Economies: Brazil and South
Africa, with healthcare expenditures
around 8-9% of GDP, showcase a more
substantial investment in health
infrastructure compared to India. These
countries benefit from a combination of
public and private spending, enhancing
access and quality of services.
 3. Southeast Asia: Countries like
Thailand and Indonesia spend
approximately 4-6% of their GDP on
healthcare. Thailand, in particular, has
successfully implemented universal health
coverage, which has improved access and
outcomes.

Implications of Low Expenditure

India's low healthcare expenditure impacts
several areas:
• Access and Quality: Limited funding
results in inadequate healthcare facilities,
especially in rural areas, leading to
disparities in health outcomes.
• Public Health: With a growing burden of
both communicable and non-
communicable diseases, the need for
increased investment is crucial to
improving health indicators.
• Economic Growth: Low healthcare
investment can hinder economic
productivity, as poor health directly affects
workforce efficiency.
 || Re-emergence of traditional
medical care ||
The resurgence of traditional medical care in
India, particularly practices like Ayurveda,
Siddha, and Unani, has gained significant
traction in recent years. This phenomenon can
be attributed to a blend of cultural pride,
economic necessity, and a growing preference
for holistic health approaches.

1. Cultural Heritage and Trust

India has a rich tapestry of traditional healing
practices that have been integral to its culture
for centuries. Many people trust these
methods, as they are rooted in indigenous
knowledge and passed down through
generations. The revival of interest in
traditional medicine is fueled by a desire to
reconnect with cultural heritage, making it a
preferred choice for many, especially in rural
areas. As people seek treatments that resonate
with their values, traditional practices are
experiencing renewed acceptance.

2. Economic Accessibility
Traditional medical care often proves to be
more economically accessible than modern
healthcare. With a large segment of the Indian
population living in poverty, the high costs
associated with allopathic medicine can be
prohibitive. Traditional healers typically offer
affordable alternatives, allowing low-income
individuals and families to receive necessary
medical attention without incurring
significant financial burden. This accessibility
is particularly crucial in remote areas, where
modern healthcare facilities are scarce.

3.Integration with Modern Healthcare

The Indian government has recognized the
importance of integrating traditional medicine
into the national healthcare system. Initiatives
such as the establishment of the Ministry of
AYUSH (Ayurveda, Yoga & Naturopathy,
Unani, Siddha, and Homeopathy) aim to
formalize and promote these practices. This
integration not only enhances the legitimacy
of traditional medicine but also provides
economic opportunities through job creation
in the healthcare sector.

4. Growing Global Interest

There is a rising global interest in alternative
and complementary therapies, with many
people seeking out natural and holistic
approaches to health. This trend presents an
economic opportunity for India to position its
traditional medical systems on the global
stage. By exporting Ayurvedic products and
wellness practices, India can tap into the
lucrative global health market, promoting
economic growth and creating jobs.

5.Challenges and Regulation

Despite its resurgence, traditional medicine in
India faces challenges, including concerns
about standardization, efficacy, and safety.
The lack of regulatory oversight can lead to
inconsistent quality of care. Addressing these
challenges is essential for building trust and
ensuring the safety of patients. Implementing
proper regulations and training for
practitioners can enhance the credibility of
traditional medicine.
|| Per-capita health expenditure ||
Per capita health expenditure is a key
indicator of the per capita health expenditure
of a given population. In India, this number
has been steadily increasing in recent years,
driven by government initiatives and private
sector growth. The payment is around US$70
to US$100, depending on location and
calculation. This figure is lower than many
countries, especially when compared to
developing countries where an individual
spends more than US$4,000. This disparity
reflects the challenges India faces in
providing adequate health services to its large
and diverse population. Health expenditure:
The National Health and Ayushman Bharat
Mission aims to improve access to health
services and insurance for low-income
families. Health expenditure in the federal
budget is increasing, reflecting a commitment
to expanding health and services. The
majority of healthcare spending comes from
out-of-pocket payments, and families often
turn to private hospitals and clinics. Reliance
on private healthcare can be a financial
burden for many families, especially in rural
areas where public services may be limited.
There is growth, but challenges remain.
 || Challenges to indians ||
Healthcare spending in India faces many
major challenges that impact access, quality,
and affordability. Understanding these issues
is important for formulating stronger policies
for healthcare.

1.High out-of-pocket expenses

One of the biggest challenges is the high out-

of-pocket expenses (OOP) incurred by
families. Due to the lack of public facilities,
many Indians rely on private healthcare. This
dependency can lead to significant financial
problems, pushing families into debt or
poverty, especially during emergencies.
2.Limited Insurance Coverage

Despite the implementation of programs like

Ayushman Bharat, a large section of the
population remains uninsured. This apathy
limits access to appropriate medical and
treatment services, as people may delay
seeking care due to financial constraints.
Expanding insurance coverage is important to
reduce this problem.
3.Regional desparities

Healthcare services and expenditures vary

between urban and rural areas. While most
urban areas have well-developed medical
facilities, rural areas face a dearth of services
and professionals. This inequality leads to
unequal health outcomes and contributes to
social inequality.
4. Inadequate Public Health Infrastructure

India’s public health system is often

underfunded and increasingly disorganized.
Underinvestment has led to a lack of basic
services, long waiting times, and insufficient
medical staff. This decline is causing many
people to turn to expensive personal care,
which further contributes to financial
hardship.
5. Lack of awareness and knowledge about
health

Many people lack knowledge about

healthcare and financial options. Lack of
health literacy can lead to delayed treatment,
increased morbidity, and ultimately higher
costs when seeking care.
 || Strong growth in healthcare
expenditure ||
India's healthcare expenditure has
experienced robust growth in recent years,
driven by various factors including rising
income levels, increasing health awareness,
and government initiatives. This growth is
critical for improving health outcomes and
achieving universal healthcare coverage
1. Government Initiatives and Investments

The Indian government has significantly

increased its focus on healthcare, especially in
light of the COVID-19 pandemic. Initiatives
like Ayushman Bharat aim to provide health
insurance coverage to economically
vulnerable populations, enhancing access to
healthcare services. The Union Budget has
also seen increased allocations for health
infrastructure, reflecting a commitment to
improving facilities, expanding services, and
ensuring better health outcomes.
2. Rising Income Levels and Health
Awareness
As India’s economy grows, so does the
disposable income of its citizens. This
economic growth has led to increased demand
for better healthcare services, including
preventive care and wellness programs.
Citizens are more willing to spend on health-
related services, contributing to higher overall
healthcare expenditure. Additionally, growing
health awareness among the population has
led to a proactive approach towards health,
with individuals seeking routine check-ups,
preventive measures, and specialized
treatments.
3. Private Sector Expansion

The private healthcare sector in India has also

seen significant expansion, with a surge in the
number of hospitals, clinics, and diagnostic
centers. The quality of care in private
facilities often attracts patients who prefer
quicker access and more personalized
services, despite the higher costs. This growth
has been supported by increasing investments
from both domestic and foreign players,
resulting in enhanced facilities and advanced
medical technologies.
4. Health Technology and Innovation
The healthcare sector is witnessing a
technological revolution, with innovations in
telemedicine, health apps, and digital health
records.
These advancements not only improve service
delivery but also expand access to care,
particularly in underserved areas
The integration of technology into healthcare
is driving up expenditure as hospitals invest
in modern equipment and infrastructure to
meet the demands of a tech-savvy population.
|| Supportive policies drive FDI
inflows ||

Healthcare spending in India faces many

challenges and prospects that will impact its
future. Currently, India’s healthcare spending
is around 3% of GDP, below the global
average. This lack of investment has led to
poor infrastructure, a shortage of doctors, and
inequalities in access to care, especially in
rural areas.
 This is
exacerbated
by high out-of-
pocket
spending,
pushing many
families into
poverty due to medical expenses. Quality and
access vary depending on the mix of public
and private providers. The public sector faces
incredible challenges resulting in
overcrowding and long waiting times. In
comparison, the private sector, while often
better, is still expensive and operates mostly
in cities. This disparity highlights the need for
a more holistic approach to healthcare. As
lifestyles change, and diseases like diabetes
and heart disease become more prevalent,
treatment strategies need to change.

The government has implemented measures

such as Ayushman Bharat to improve
insurance coverage and access, but
performance remains poor. The government
has pledged to increase healthcare financing,
with plans to reach 2.5% of GDP by 2025,
demonstrating that the government is aware
of these challenges. Investments in
technologies such as telemedicine and digital
health records can increase efficiency and
effectiveness, while encouraging public-
private partnerships can improve economic
distribution and innov
|| Growing in-patient and out-
patient ||
The healthcare landscape in India has
witnessed significant transformations over the
past decade, with both in-patient and out-
patient care experiencing remarkable growth.
This evolution is driven by various factors,
including population dynamics, rising health
awareness, advancements in medical
technology, and government initiatives aimed
at improving healthcare access.

1.In-Patient Care Growth

In-patient care, which refers to treatments
requiring hospitalization, has surged due to
the increasing incidence of chronic diseases,
such as diabetes, cardiovascular conditions,
and cancer.
The aging population is another contributing
factor; as life expectancy rises, the demand
for specialized medical interventions
escalates. According to recent data, the
number of hospital admissions has risen
substantially, leading to a greater need for bed
capacity and healthcare facilities.

Moreover, the private sector has played a

pivotal role in this growth. With rising
disposable incomes, many families now
prefer private hospitals for their perceived
quality of care, shorter wait times, and
advanced technology. Public hospitals,
though crucial, often suffer from
overcrowding and resource constraints,
prompting patients to seek private
alternatives. The governments efforts, such as
the Ayushman Bharat scheme, aim to expand
insurance coverage and promote access to in-
patient services, thereby alleviating financial
burdens on families.

2.Out-Patient Care Expansion

Simultaneously, out-patient care,

encompassing services where patients do not
require overnight hospitalization, has also
expanded.
Factors such as increased health
consciousness, availability of specialized
clinics, and convenience of telemedicine have
contributed to this trend. Patients are now
more proactive in seeking preventive care and
early diagnosis, leading to a rise in routine
check-ups, consultations, and diagnostic
services.
 || Strategies adopted ||
India’s healthcare expenditure has become a
focal point of policy reform, especially as the
nation strives to improve access and quality
for its vast population. Several key strategies
have been adopted to enhance healthcare
funding and efficiency.
1. Increased Public Investment

Recognizing the need for enhanced public

spending, the Indian government aims to raise
healthcare expenditure to 2.5% of GDP by
2025. Current spending hovers around 3%,
but a significant portion is out-of-pocket.
Increased public investment aims to
strengthen healthcare infrastructure, improve
facilities, and expand service availability,
particularly in underserved rural areas.
2. Ayushman Bharat Scheme

The Ayushman Bharat initiative is one of

India’s most ambitious healthcare reforms,
targeting over 500 million vulnerable citizens.
This scheme provides health insurance
coverage of up to ₹5 lakh per family per year
for secondary and tertiary care. By mitigating
high medical costs, it promotes access to
essential healthcare services, reducing
financial burdens and enhancing equity in
healthcare.
3. Public-Private Partnerships (PPPs)
Public-Private Partnerships have gained
traction as a strategy to improve healthcare
delivery. By combining public oversight with
private sector efficiency, India aims to
enhance infrastructure and service quality.
Initiatives such as building new hospitals,
diagnostic centers, and telemedicine services
under PPP models enable better resource
utilization and access to advanced
technologies.
4. Focus on Preventive Healthcare

Preventive healthcare has become

increasingly important in India's healthcare
strategy. The government has launched
campaigns to promote healthy lifestyles and
routine health check-ups, especially targeting
non-communicable diseases (NCDs) like
diabetes and hypertension. Investing in
preventive measures not only helps reduce the
incidence of chronic diseases but also eases
the burden on in-patient care, ultimately
lowering overall healthcare costs.
5. Technological Integration
Embracing technology is a critical strategy
for enhancing healthcare expenditure
efficiency. The rise of telemedicine and
digital health records allows for better patient
management, improved access to care, and
reduced operational costs. The government
supports the development of digital health
infrastructure, enabling healthcare providers
to streamline processes and enhance patient
engagement.
6. Strengthening Regulatory Frameworks

To ensure accountability and quality in

healthcare spending, India is focusing on
strengthening regulatory frameworks. This
includes establishing standards for healthcare
facilities, ensuring transparency in pricing,
and monitoring quality of care. By enforcing
regulations, the government aims to optimize
resource allocation and ensure that public
funds are effectively utilized.
 || Conclusion ||
India's healthcare system is at a pivotal
juncture, characterized by both significant
challenges and immense potential for growth.
The current healthcare expenditure, hovering
around 3-4% of GDP, underscores a critical
need for increased investment to bridge the
gap in access and quality of services. Despite
the substantial reliance on out-of-pocket
expenses, government initiatives like the
Ayushman Bharat scheme are crucial in
promoting equitable access to care for
vulnerable populations.
The three-tiered healthcare infrastructure—
comprising primary, secondary, and tertiary
care—serves as a framework for improving
health outcomes, but disparities between
urban and rural areas persist, highlighting the
urgent need for targeted policies.
Emphasizing preventive care, expanding
insurance coverage, and fostering public-
private partnerships are essential strategies to
enhance the healthcare landscape.
Moreover, the resurgence of traditional
medical practices alongside advancements in
technology presents unique opportunities for
integration, enabling a more holistic approach
to health. Addressing challenges such as
inadequate public health infrastructure,
limited insurance coverage, and health
literacy will be vital in achieving universal
healthcare.
By adopting a multi-faceted strategy that
combines increased public investment,
regulatory improvements, and technological
innovation, India can pave the way toward a
robust healthcare system that not only
promotes better health outcomes but also
supports economic growth. Ultimately, a
healthier population will contribute to a more
productive society, reinforcing the adage that
indeed, health is wealth.
|| Bibliography ||
1. https://www.who.int › india
2. https://www.wikipedia.org
3. https://www.india.gov.in
4. https://mohfw.gov.in