Healthcare: A Key Sector In The Service Industry

Q. Give an account of the Health Sector in India?

• The Indian healthcare sector constitutes of the following:

• Medical care providers: physicians, specialist clinics, nursing homes and hospitals;

• Diagnostic service centres and pathology laboratories;

• Medical equipment manufacturers;

• Contract research organizations (CRO’s), pharmaceutical manufacturers;

• Third party support service providers (catering, laundry).

Health sector is one of India’s largest sectors in terms of revenue and employment and the sector is expanding rapidly. During the 1990’s, Indian healthcare grew at a compounded annual rate of 16 percent. Today the value of this sector is contributing to 5.2 percent of GDP. By 2012, Indian healthcare sector is projected to grow to nearly $40 billion.

Health sector in India is the responsibility of the state, local and also the central government. But in terms of service delivery it is more concerned with the state. The centre is responsible for health services in union territories without a legislature and is also responsible for developing and monitoring national standards and regulations, linking the states with funding agencies, and sponsoring numerous schemes for implementation by state governments. Both the centre and the state have a joint responsibility for programmes listed under the concurrent list. About three-fourth of the expenditure on public health is incurred by the state or local governments
and the remaining one-fourth of the total expenditure is spent by the central government. The government (state, local or central) provides publicly financed and managed curative and preventive health services from primary to tertiary level, throughout the country and free of cost to the consumer. These account for about 18 percent of the overall health spending and 0.9 percent of the GDP. However, a fee-levying private sector that plays a dominant role in the provision of individual curative care through ambulatory services accounts for about 82 percent of the overall health expenditure and 4.2 percent of the GDP. Indian private healthcare sector emerged as the fastest growing service sector in the country. With medical tourism emerging as one of the hottest sector in India, Indian private sector is also making huge investments in the healthcare sector. Indian healthcare sector is producing large opportunities for the overseas investments.

There has been a significant development in the health sector in India in the recent years. The central government in association with the states is initiating various programmes and projects to improve efficiency in the allocation and use of health resources through policy and institutional development.

Q. Examine the growth in the Health Sector.

The health services sector’s sales was expected to grow by a healthy 25.6 percent in 2010-11 and 19.8 percent in 2011-12 driven by a healthy rise in sales. The sector’s PAT increased by a whopping 107.1 percent in the quarter ending September 2010-11 on account of a faster rise in income vis-a-vis expenses.According to a report, India’s healthcare sector is projected to grow at 23 percent annually to become a $77-billion industry by 2012 driven by various catalysts such as increasing population, rising income levels, changing demographics and illness profile. Healthcare services sector includes firms that are dependent upon and provide corollary services to hospitals, and is currently approximated at $1 billion. According to Yes Bank and Assocham, diagnostics would add $2.5 billion to the healthcare industry by 2012. A mounting number of public and private healthcare facilities are expected to push demand for the industry, accounting for another $6.7 billion in this period. With a rising demand for affordable quality healthcare, the penetration of health insurance is poised to experience an exponential growth to emerge as a $3-billion industry in the next three years. India has ample opportunities in healthcare because of skilled doctors, nurses and technical staff.

Q. Evaluate the Government Initiative in Health Sector.

The Union Ministry of Health and Family Welfare (MoHFW) is responsible for implementation of national programmes, sponsored schemes and technical assistance relating to the Indian healthcare industry. The task is taken up by the department of health, department of family and welfare and department of AYUSH. The Plan allocations to Department of Health and Family Welfare stepped up in 2011-12 by 20 percent which is Rs.26,760 crore. The important National Programmes are National Rural Health Mission, National Health Policy-2002, National Vector Borne Disease Control Programme (NVBDCP), National Filaria Control Programme, National Leprosy Eradication Programme, Revised National TB Control Programme, National Programme for Control of Blindness, National Iodine Deficiency Disorders Control Programme, National Mental Health Programme, National Aids Control Programme, National Cancer Control Programme, Universal Immunization Programme, National Programme for Prevention and Control of Deafness, Pilot Programme on Prevention and Control of Diabetes, CVD and Stroke, National Tobacco Control Programme. The Rashtriya Swasthya Bima Yojana has emerged as an effective instrument for providing a basic health cover to poor and marginal workers. It is now being extended to MGNREGA beneficiaries, beedi workers and others. In 2011-12, it is proposed to further extend this scheme to cover unorganized sector workers in hazardous mining
and associated industries like slate and slate pencil, dolomite, mica and asbestos etc.

The government is encouraging foreign/private investment in the healthcare sector. It has defined and enforced minimum quality standards for healthcare facilities. It had tried to stimulate the growth of private, social and community insurance. The National Health Policy, 2002, makes it clear that government policy supports medical tourism. The policy encourages the supply of services to the patients of foreign origin on payment. The rendering of such services on payment in foreign exchange is treated as `deemed exports’ and is made eligible for all fiscal incentives extended to export earnings. A new category of visa “Medical Visa” (`M’-Visa) has been introduced that can be given for a specific purpose to foreign tourists coming into India. Indian corporate hospitals are getting certified by international accreditation schemes so that they can project themselves as providers of quality healthcare. The government has some measures to promote one of its most important segment “Medical Device Market”.

The conditions for exporting to India have significantly improved since the economic reforms started in the middle of the nineties. Import license requirements have been cancelled, majority owned subsidiaries are possible, and dividends can be paid out abroad. There is a reduction in import duty and custom duties on medical equipment. To further make India a competitive player in the medical equipment manufacturing space, the government encouraged setting up of Special Economic Zones (SEZs).

Go Back To Main Page