GDP of Healthcare Sector
In a vast country like India healthcare has been neglected since ages. There were other problems which were to be tackled first. But now times are changing and so is health care sector. In fact, it has become one of India’s largest sectors in terms of revenue as well as employment.
What is Healthcare Sector?
Healthcare sector consists of all businesses that provide medical services and goods and services related to this field. Hospitals, medical equipment, drug manufacturing, clinical trials, healthcare facilities and management of these facilities, outsourcing, telemedicine, health insurance and medical equipment are part of this sector.
Indian healthcare providing system is divided into two major categories – public and private.
- The government or public sector – This healthcare system consists on limited secondary and tertiary care institutions in major cities. Priority of this sector is to provide basic healthcare facilities in the form of primary healthcare centers (PHCs) in rural areas.
- The private sector – Majority of secondary, tertiary and quaternary care institutions come under this sector. Most of them concentration in metros, tier I and tier II cities.
The private healthcare sector accounts for almost 74 percent of India’s total healthcare expenditure.
The trend of telemedicine is growing rapidly in the country. Major highly reputed hospitals have adopted telemedicine services and partnered with public sector to form public-private partnerships (PPP).
It has been predicted that Indian healthcare will touch US$ 372 Billion by 2022. Both public as well as private players are working towards this goal.
What can be the reason behind this sudden boom in the healthcare sector?
One of the reasons is rise in the income of people. With increase in the literacy rate of the country more people are becoming experts in their respective fields. India has become a home of many well-trained medical professionals. This has resulted in higher income for people.
Another reason is greater health awareness among the masses. Earlier knowledge about health care sector was limited to few people. But with the arrival of digital media everything related to health care is readily available that too at a very cheap price. So many people are becoming aware of health care sector as information is just a click away.
Increasing access to insurance can be one of the reason that healthcare sector is expanding rapidly. Many people are now able to access healthcare insurance. The major reason behind this is government’s involvement. It has launched many insurance schemes like Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (PMJAY).
This scheme aims at providing provide health insurance worth Rs 500,000 (US$ 7,124.54) to over 100 million families every year. As of September 2019, about 50 lakh people have received free treatment under this scheme. This scheme has enrolled 16,039 hospitals out of which 8,059 are private hospitals while the rest are public hospitals. This had made treatment affordable for lacks of Indians. Earlier they had no access to healthcare facilities because of lack of funds but now everything has changed.
Other initiatives by the government like e-health and tax benefits are giving healthcare market a boost in the country. Government is also giving high incentives on healthcare services which have made people aware of this sector and they are investing in it.
Public as well as private players are increasing the expenditure on this sector. This is because they know that in coming years this sector will have immense growth potential. Both these sectors are collaborating to form public- private partnerships.
Magnitude of the Market
Magnitude of the healthcare sector can be judged from the prediction that it will increase three fold to Rs 8.6 trillion by 2022.
India has seen a growth of 22-25 percent in the medical tourism industry. It is estimated that there will be further growth in the coming years as cost of medical treatments in India is very low as compared to the American, Western European and Asian countries.
The healthcare services are expected to improve as the healthcare spending in the form of Gross Domestic Product (GDP) is rising. The government spending on the health sector has increased from 1.2%in Fiscal year 2014 to 1.4% in Fiscal year 2018. The government is further planning to increase the spending to 2.5% of the country’s GDP by 2025.
It is estimated that this sector will create 4 crore jobs in India by 2030. 1 lack jobs are expected to be created by the government’s ambitious project, Ayushman Bharat.
Gross Domestic Product (GDP) of the healthcare share is expected to rise 19.7 per cent by 2027.
Future of Healthcare Sector
In India there are immense opportunities in the healthcare sector as it is country’s one of the fastest growing sectors. Service providers, medical equipments and technology and payers are part of healthcare system. India has also become one of the leading destinations for high tech diagnostic services. In the coming years, huge investments both from domestic as well as foreign market will be made for advanced diagnostic facilities. Besides, masses have become more conscious towards their health so they well invest more in this sector.
It is predicted that medical tourism as well as the hospital industry will see a steep rise. The former is expected to touch US$ 9 billion by 2020 while the later is expected to increase from Rs 4 lakh crore (US$ 61.79 billion) in fiscal year 2017 to Rs 8.6 lakh crore (US$ 132.84 billion) by fiscal year 2022 at a Compound Annual Growth Rate (CAGR) of 16-17 percent. This will be a huge boost to the healthcare sector as hospital industry makes up 80% of the total healthcare market.
In a nutshell, India has a lot to offer in healthcare sector. It provides vast opportunities for investment in both rural and urban areas.