Draft Report of the High Level Group on Services Sector

Chapter 5

Healthcare Services

5.1 Overview of Healthcare Services in India
5.1.1 Public Health System
Public institutions played a dominant role in the Indian Healthcare sector in the past, in the urban as well as in the rural areas. The vast network of public health institutions in the country comprises 3910 Community Health Centres (CHCs), 22,669 Primary Health Centres (PHCs), and 144,988 Sub Centres (SCs) , in the rural areas and 7663 Government Hospitals, mainly in the urban areas. However, the public healthcare has been on a serious decline during the last two or three decades because of non-availability of medical and paramedical staff, diagnostic services and medicines. The situation in availability of specialist manpower in CHCs is particularly bad as against the sanctioned posts about 59.4 % surgeons, 45% obstetricians and gynaecologists, 61 % physicians and 53 % paediatricians were not in position (in March 2006). Equally distressing is the fact that essential therapeutic drugs are not supplied in most public health institutions with the exception of some States. Consequently there has been a pronounced decline in the percentage of cases of hospitalized treatment in Government hospitals and a corresponding increase in the percentage treated in private hospitals. According to the NSSO (1986-2004) data the utilization of government hospitals declined from 59.7% in 1986-87 to 41.7 % in 2004 in rural areas and from 60.3 % in 1986-87 to 38.2 % in 2004 in urban areas. The XI Plan document sums up the situation that prevails over a large part of the country (but not including some States) as follows:
‘Despite higher costs in the private sector, this shift shows the people’s growing lack of trust in the public system. Critical shortage of health personnel, inadequate incentives, poor working conditions, lack of transparency in posting of doctors in rural areas, absenteeism, long wait, inconvenient clinic hours, poor outreach, time of service, insensitivity to local needs, inadequate planning, management, and monitoring of service/facilities appear to be the main reasons for low utilization’.
Public healthcare expenditure, which accounts for less than 1 per cent of GDP compares unfavourably with developed countries, which is 5 per cent of GDP, and even with developing countries as a group, which is 3 per cent of GDP. Another significant feature of India’s healthcare is that public healthcare accounts for only 25 per cent of the total healthcare expenditure in the country, and out-of-pocket expenditure, private health insurance, employers etc account for the remaining share. This contrasted with the situation in the developed economies. In the EU for instance, the share of private health spending was in the range of 23-24 per cent during 2000-2003 (Yuen, Compendium of Health Statistics 2005-06, Radcliffe Publishers, 2005, cited in Rupa Chanda, India-EU Relations in Health Services: Issues and Concerns in an India-EU Trade and Investment Agreement, ICRIER, 2008).