The Performance of South Asian Economies for Achieving the Health Sustainable Development Goals (SDGs): From an Outlook of the Indian Economy

Whenever we consider the good health and well-being of an Economy, ever since 2015, taking the Sustainable Development Goals formulated by the United Nations into account has become very important. All 17 goals are worked out to transform our world by taking a Universal call to improve the lives and prospects of everyone, everywhere, with a shared vision and accelerate responses to the world's gravest challenges of personal well-being, starting from eradicating poverty and hunger to reversing the ill-effects of climate change. The respective goals are strongly correlated to the issue of personal well-being. SDG3 emphasizes on ensuring healthy lives and promoting well-being at all ages is essential to sustainable development.

South Asia has experienced significant progress in improving human and physical capital over the past few decades. Within the region, India has become a global economic powerhouse with enormous development potential ahead. To foster human and economic development, India has shown a strong commitment to the Sustainable Development Goals (SDG) Agenda. This article focuses on the medium-term development challenges that South Asia, and in particular India, faces to ensure substantial progress along the SDGs by 2030. We estimate the additional spending needed in the critical area of human capital in health. We document progress in the health sector for India relative to other South Asian countries and discuss implications for policy and reform. South Asian countries have experienced significant progress in improving human development over the past few years. With sustained income growth and strong policy efforts, the region, which accounts for one-fifth of the world’s population, has contributed to over 200 million people exiting poverty in the course of the last three decades (Goretti et al., 2019). Nonetheless, some South Asian countries' human capital index is lower than what their GDP per capita would predict. And South Asia, on average, still lags behind East Asia and the Pacific in access to key health infrastructure.

Unlocking this potential requires investment in human and physical capital. In this regard, India has made astonishing progress along several dimensions. Hundreds of millions have lifted themselves out of poverty over the past decades. Infant mortality rates have been halved since 2000. Access to water and sanitation, electricity, and roads has greatly improved. Nonetheless, to further capitalize on economic growth, India should continue to close gaps in human and physical capital—gaps that have recently widened as a result of the Covid-19 pandemic. Indeed, after years of steady progress, during the COVID-19 pandemic health system has been disrupted, poverty has increased, and the prevalence of undernourishment has risen (UN, 2021 and FAO, 2021). However, South Asia is projected to have the strongest improvement in poverty reduction of any region in 2021, with only a minor deterioration relative to pre-pandemic projections (Mahler et al., 2021).

To foster human and economic development, India has shown a strong commitment to the Sustainable Development Goals (SDG) Agenda. The government has aligned its development priorities with the SDG framework. India recently underwent two Voluntary National Reviews (Government of India, NITI Aayog, 2017 and 2020), and carried out the third round of stocktaking of progress in meeting the SDGs (Government of India, NITI Aayog, 2021) providing SDG metrics, including at the state level. Numerous national flagship programs that seek to connect villages to roads, launch initiatives to provide universal health coverage and sanitation, and aim at other ambitious development objectives are intimately linked to the health SDGs. States and union territories are taking proactive steps to implement the goals, underpinned by national and regional consultations, although more can be done to reduce wide sub-national disparities (Government of India, NITI Aayog, 2021).

All countries in South Asia have seen a steady improvement in health outcomes over the past 50 years. Sri Lanka and the Maldives outperform other South Asian countries as well as the world’s average in health outcomes, with Sri Lanka having the lowest under-one-year-old infant mortality in South Asia since the early 1970s (Figure 1), and the Maldives catching up with Sri Lanka in recent years. Other countries—in particular, Pakistan since the 1990s, and Afghanistan— lag behind peers and, albeit exhibiting continued improvement, have infant mortality levels that double the current world average.

India has also made noteworthy strides in health outcomes. Infant mortality stands at around 27 deaths per 1,000 live births, similar to the world average, compared to about 140 deaths per 1,000 live births in the early 1970s. Mortality rates of children under five years old dropped from 95 to 32 deaths per 1,000 live births from 2000–2022, and in 2022 infant mortality is also much less than half the rate of 25 years ago. Significant progress has also been made in maternal mortality, which declined by 77 percent from 1990 to 2016 (Government of India, Ministry of Health and Family Welfare, 2018).

Yet, most countries in the South Asia region have a long way to go towards the health SDG. To assess this, we examine performance in terms of an index published in the annual Sustainable Development Report (e.g., Sachs et al., 2019) for each of the 17 goals, where index values of 0 and 100 indicate worst- and best-possible performance, respectively. We also assess India’s health outcomes against those in emerging markets and in particular against other BRICS countries (Brazil, Russia, India, China, and South Africa), deemed emerging economic powerhouses. As Figure 2a shows, only the Maldives and Sri Lanka have an SDG3 index above the world average and above the median of emerging market economies. In India, and despite past progress, health outcomes measured with the SDG3 index (or other indicators displayed in Figure 2b) are below the median of emerging economies and still behind the country’s targets. For example, current under-five mortality, at 32 per 1,000 live births, is almost three times as large as the country’s goal to have a mortality rate of 11 by 2030.

Enhancing health outcomes in India in line with achieving the health SDGs would require a sizable increase in health spending. Health spending in India currently stands at 3.2 percent of GDP and falls short of levels spent in the BRICS and EMEs. This level of spending reflects a lag in doctors and hospital beds per 1,000 inhabitants. (For India to achieve substantial progress towards the SDGs by 2030, it will need to more than double health sector spending relative to its GDP. Such additional spending of around 3.5 percent (summing up to over 6.7 percent) of GDP would allow India to expand the number of medical staff, while moderately slowing the growth of personnel compensation, containing the ratio of doctor salaries to GDP per capita from 7.8 to 6.6—the current ratio is higher than for economies in the same income group that can achieve strong health outcomes. Meanwhile, capital and recurrent spending other than on the health-workers wage bill should increase as a percent of total health spending. The expansion in health spending would need to be undertaken mostly by the public sector as the country currently relies heavily on private outlays (around 65 percent of total health spending). The spending increase could help cover an expansion of India’s health protection scheme, PMJAY, to prevent non-included but vulnerable individuals from falling into poverty due to illness and private health costs. As stated earlier and illustrated, India will need to not only spend more on its health system but spend more efficiently. Institutional changes and strengthening public financial management could contribute to increasing the efficiency of outlays. Providing greater autonomy to facility managers could foster greater efficiency in the sector. Rigidities imposed on the clinic and hospital managers limit their ability to allocate funding in their facility in the most appropriate way for service delivery (Barroy et al., 2019). Strengthening health budgeting preparation will also improve health units’ absorptive capacity and mitigate the problem of these units often having to return unused funds.

The analysis for India presented in the previous section is based on an in-depth case study, involving extensive discussions with the authorities and based on the most up-to-date data. For other countries, the estimates follow the same methodology but have not been validated through discussions with the latest data from the respective country counterparts. Given these estimates are preliminary, spending to meet the health goals in India is somewhat comparable to those in the rest of South Asia. The additional expenditures to perform well on the health SDG in India outstrip the corresponding costs associated with any of the other four selected SDGs. This estimate is quite similar to that of other South Asian countries, on average.

Health expenditures (as a percent of GDP), E, can be expressed as an identity:

where w refers to doctors’ annual wages as a ratio to GDP per capita, D and M are the numbers of doctors and other medical personnel, respectively, per 1,000 population, and Eother pertains to all spending besides the health workers’ wage bill as a percent of total expenditures in education. The number 0.5 in the equation reflects an assumption that the wages of other health service providers are about half that of doctors, based on cross-country data on wages of specialists, general practitioners, and nurses (this assumption is also used in Gaspar et al., 2019). The rationale behind this equation is that total expenditures are a function of the health service providers’ wage bill (i.e. wages times the supply of personnel) divided by the share of the wage bill in total spending.

The spending needed in 2030 by India to perform well in the health SDG is derived from the level of expenditures that India would incur in light of its projected demographics (in particular, the projected population share of infants and the elderly) in 2030 and today’s levels for the health cost-drivers observed in the high performing countries in the health sector among India’s peers (which include emerging markets, as noted in the main text). These cost drivers include doctors’ wages, the number of doctors relative to the population size, the number of other medical personnel relative to the population size, and health spending other than the health workers’ wage bill (as a share of total health spending). The estimates assume that India and South Asian countries would be able to combine different inputs efficiently to deliver across the health sector. This would require some important reforms. For example, in education, expanding enrollment in pre-primary and tertiary levels as well as reducing class sizes would require increasing the number of qualified teachers. In health, in addition to raising the number of qualified health workers, it is critical to address the financial vulnerability to health care shocks.

So, to conclude, I can say that concerning the health infrastructure, raising institutional and technical capacity remains a major key, particularly in largely rural states. Broader public financial management reforms in the health sector are also called for to strengthen the efficiency of spending. For example, while some states have begun to produce medium-term health spending projections as part of the budget, the central government and all states could do so too, as well as strengthen the performance orientation of health budgeting and develop more forward-looking strategies to attain optimum health coverage objectives.