Will Health Insurance in India Increase?

Less than 20% of India’s 1.3 billion people are covered by health insurance. Public spending on healthcare in India is approximately 1% of GDP. In comparison, the Chinese government spends 3% of GDP on healthcare and the U.S. spends over 15% of GDP on healthcare. India also has a heavy disease burden, due to increasing lifestyle diseases alongside inadequate public health and sanitation systems.

Prime Minister Narendra Modi has promised to double public spending on health as a percentage of GDP and to provide basic universal healthcare for all Indians. However, the recently released 2015-2016 budget allocates about $5 billion for healthcare –roughly the same as the 2014 budget.

The budget includes a reduction in the corporate tax rate over the next 4 years, from 30% to 25% — which should lead to increased investment in India’s healthcare sector. The budget also plans for 6 new public hospitals. Furthermore, the budget increases the allowed tax deduction for health insurance premiums, which should raise health insurance penetration in India.