India will establish itself as the world’s third largest economy by 2028, claims the British bank HSBC. However, continuing to shortchange public spending on health may stymie the country’s longer–term growth, its report says.
A report by the international banking titan says that India will overtake Germany and Japan in 2028, when its economy will be valued at an estimated 7 trillion USD. This is compared to just under $6 trillion for Germany and $5 trillion for Japan. India currently occupies the fifth spot in global rankings, having overtaken the United Kingdom at the end of 2016.
While HSBC’s estimates shine a positive light on the economic prospects of India, it points out there are severe issues in the government spending of India’s wealth that may harm the country’s prospects should they not be remedied. These issues primarily revolve around funding for both healthcare and education.
India’s healthcare expenditure is one of the lowest globally (as a percentage of its GDP). Currently its combined expenditure of both public and private spending is 4.7 percent. This value falls well below the percentage many countries spend publically alone, without taking into account private spending.
This has left India in a situation where the poorest in society often pay out of pocket and drive themselves further into poverty. Where public health services are available (some services and medicines being provided for free), it is often centralised in urban areas. This leaves those in rural communities faced either with expensive travel arrangements to urban healthcare providers, or cut off from affordable healthcare altogether.
The latest incarnation of the National Health Policy saw a promise of increasing public healthcare expenditure to 2.5 percent. Current spending levels are lower than this benchmark. The effect of this in terms of chronic understaffing of healthcare facilities are evident. In order to properly address healthcare issues within India, particularly amongst the poor, this spending level will need to increase considerably in the years to come.
The National Health Policy 2017 also pledged to reduce infant mortality significantly by 2019. Child mortality is a considerable issue in India, with a recent Lancet publication claiming India is the world leader in child mortality. In terms of absolute number of deaths, in 2016 India recorded 9 lakh (0.9 million) child deaths. A rise in the numbers of healthcare staff may help to alleviate the number of deaths in the under fives, capitalising on progress India has already made in this field. Recent data shows that the country has averted almost a million child deaths since 2005. Many of those children who survive face life–long impairment as the result of stunting or infectious diseases in childhood. As they grow to be adults, this affects productivity.
Increased healthcare spending, leading to the employment of more healthcare staff is a method HSBC suggests could further drive the improvement of the economy. By employing more people in the healthcare sector the quality of healthcare in the country could be greatly improved, whilst also reducing unemployment.
Reduced unemployment leads to more people with disposable income. This in turn drives up profits in the service industry, further improving the financial situation of many Indians. If India wishes to continue to climb the ladder of world-leading, developed economies, the health of its citizens must be a priority.