India’s New National Health Policy is Ambitious on Paper But Lacks Clarity

The policy has proposed institutional reform, and steps to improve and upgrade the quality of services. But there is no correlation between the ambition targets and the public investment proposed.

A nurse tends to a woman, who underwent a sterilization surgery at a government mass sterilisation "camp", at Chhattisgarh Institute of Medical Sciences (CIMS) hospital in Bilaspur, in the eastern Indian state of Chhattisgarh, November 13, 2014. REUTERS/Anindito Mukherjee

National Health Policy 2017’s weak commitment to regulations, disproportionate to the aggressive policy stance taken towards collaborating with the private sector, is worrisome. Credit: Reuters/Anindito Mukherjee

The growing perception of the healthcare system – both public and private – as being corrupt and uncaring, and the accompanying loss of trust in it, has created a crisis that no government can afford to ignore. The increasing cost of care and the failure of the recent initiatives in providing financial risk protection against catastrophic expenditures have impoverished people, widened inequities and created a dual system of care – one for those with ability to pay and access medical help of international standards and those who cannot and only access suboptimal care.

The sharp budget cuts and policy neglect witnessed over the past five years have further compounded the problem. It is in this backdrop of a universally felt dissatisfaction that the new National Health Policy (NHP) has recently been released, evoking a level of interest that corresponds with the level of people’s frustrations with the broken health system.

The new policy architecture

The are four reasons for formulating a new policy – the growing burden of noncommunicable diseases and infectious diseases, emergence of a vibrant health industry growing in double digits, increasing impoverishment due to high cost of care and an enhanced fiscal capacity due to economic growth. While the policy goal is to ensure universal access of comprehensive services (defined to consist of primary, secondary and tertiary and covering the full spectrum – preventive, promotive and curative) by enhancing access and improving quality and lowering costs, the key objective is to focus on preventive, curative and palliative care to be provided through ‘the public health sector with focus on quality’. The policy also lists out 30 targets to be achieved in a time bound manner.

Under the organisation of public healthcare delivery, the policy thrust is on comprehensive care, system of referrals for regulating patient flows, output-based purchasing of private services to fill gaps, supply of free drugs, diagnostics and emergency services in all public facilities, scaling up urban health, strengthening of infrastructure and manpower in underserved areas, and integrating all national health programmes and making Ayush services an option.

The NHP then elaborates the components of the policy architecture, which consists of a strengthened public sector capacity to be able to, in the long run, provide to all comprehensive services and an incentivised private sector to fill the gaps in the short run. To address the various implementation challenges, the policy has proposed the much needed and long overdue institutional reform such as the establishment of the National Institute for Chronic Diseases, National Health Standards Organization, National Allied Professional Council, medical tribunals, National Digital Authority, a system for health technology assessment and at the Centre and in states a multi-stakeholder institutional mechanisms in the form of autonomous societies or government-owned trusts to purchase services from the providers – government, not-for-profit and for profit, in that order –  and a Common Sector Innovation Council as a platform for a more effective collaboration with the departments engaged in medical research and discovery. In addition to institutional reform, the policy also recognises the need to strengthen the regulatory frameworks related to medical devices, clinical establishments and certification of public hospitals for ensuring adherence to quality benchmarks.

A clear departure from the previous two policies of 1983 and 2002 is the detailed elaboration of areas in which private sector services will be contracted: training, skill development, community training for mental health, disaster management, purchase of services to fill gaps and preferentially for Central Government Health Scheme members, and primary healthcare in urban areas. There will also be collaboration with the private sector for infectious disease control, immunisation services, disease surveillance and health information and manufacture of medical devices. The policy also seeks to take steps to improve, upgrade and incentivise the quality of services being provided by the private sector in rural and remote areas and among underserved populations and provisioning of diagnostic laboratory support.

Another interesting and positive feature of the policy is the acceptance of the need for differential financing in three ways: per capita funding for primary care services, performance based funding to facilities and fiscal allocations to states on a differential bias guided by fiscal ability, development needs and number of high priority districts. A very interesting feature is also the proposal to institute financing mechanisms for incentivising innovation and fundamental research in diseases like TB and malaria that are highly relevant to us.

The policy concludes with an admission that the health system is too dysfunctional on the supply side to declare health as a right. Hence, it prefers to treat these policy commitments as an assurance with government being held accountable on the basis of an implementation plan containing milestones and targets.


On a quick reading, the NHP does seem to be a revved up version of the 2002 policy. A closer reading, however, indicates, as detailed above, several new opportunities and approaches. The NHP is grounded on the existing situation and is to that extent more realistic. A welcome feature is that for the first time, government policy has taken its oversight functions beyond government facilities to encompass the private players also.

However, there are many concerns. First, there is no correlation between the ambition in the text and public investment proposed – from the current level of 1.15% of GDP to 2.5% of GDP by 2025. This level of public investment is inadequate for achieving the goals, targets and approaches proposed to achieving them. In neither sequencing the reform process nor in prioritising the investment decisions is there any clarity on what is proposed to be done with this little bit of money. For example, the policy liberally mentions the word ‘comprehensive’ throughout the text without any clarity in terms of what it must imply.

Somewhere it is said that primary care, as defined in health literature and the Alma Ata-declaration of 1978, implies basic healthcare and its social determinants. Elsewhere, it seems to include secondary and tertiary care as well. In the primary healthcare space, the policy commits itself to strengthening the public health infrastructure in underserved areas in accordance with the Indian Public Health Standards (IPHS). Estimates of the ministry indicate a financial requirement of 1.4 lakh crores (2014 prices) for meeting the gaps in IPHS. Of this, over 75% is required in just the 300 districts that would qualify as underserved. Against such a huge deficit in capital investment, over the last ten years not more than Rs 10,000 crores may have been incurred and that too by the better off states.

Secondly, the health sector has faced chronic underfunding. Be it in times of 3% or 9% growth rate, public health spending has always been in the range of 0.9-1.2% of the GDP. These meagre funds are then responsible for the under performance and dysfunctionalism of the public health sector that struggles with poor infrastructure, obsolescent equipments, understaffed and overworked personnel and so on. Optimising this infrastructure to achieve the quality standards that the policy proposes will require substantial investments again.

Thirdly, and more significantly, international experts have estimated a requirement of $85 or 5% of GDP for providing the comprehensive primary care as envisaged in the Sustainable Development Goals. Against that, our current spending is about $17. Due to this underfunding, estimates of PGI, Chandigarh, show that the public sector provides a mere 15% of the services that primary care ought to ideally be providing. This is backed by an exercise done for the ministry in 2014 that showed that of the 30 and more set of services that ought to be available in any primary care facility, hardly 12 are being provided partially.

The question then arises that if comprehensive primary care, which must be the foundation of a health system in order to, in the long term, contain costs and ensure a healthy population itself, requires a five-fold increase in investment, how do the rest of the policy aspirations get funded?

A fourth concern is the liberal use of strategic repeatedly in the context of purchasing services from the private sector to fill gaps in the public healthcare service delivery chain. This is a concept co-opted from the High Level Expert Group report of 2012. The issue that arises is the propriety of the word in an environment where private sector provides 80% of out patient care and 60% of inpatient care. Gap filling is a term used only when the deficit is about 20%.

An added concern is that the policy envisages that such purchasing will be in the short term, though it nowhere defines how short the term is likely to be. Evidence shows that public and private sector cannot coexist in the same space given the highly competitive environment. Evidence also shows that in such environments, the public sector has always lost out, more in the area of perception and non-provision of level playing fields. We have seen this in all sectors of development where the private sector has been co-opted under the public-private partnership mode. In all these frameworks, the risk is borne by the government with little liability on the private provider and necessitating action for non-compliance entailing elaborate litigation.

The further incentivising of an already highly privatised system within a weak regulatory framework that is incapable of enforcing the private sector compliance to rules, regulations and standards set by the government, will undoubtedly entail long term adverse consequences both in terms of denial of care and huge fiscal implications for government as is being witnessed in the US. For example, under the Rajiv Aarogyasri programme, 133 procedures were delisted for private contracting as the government hospitals had that capacity and were performing them at a fifth of the rates being paid to the private sector, particularly corporate. The concerned officer got transferred and the proposal shelved. In such an environment, further incentivising the for profit sector is like riding a tiger it will not be able to dismount. In fact, it is already too late and retrieval of the government in the secondary and tertiary spaces itself quite difficult. It is in this context that the proposal to actively collaborate and encourage the for profit private sector in the primary care space also is worrisome. AP has already handed over 135 centres in urban town to the Apollo group. If this example is followed by all states and hospital chains begin to take over all the urban (profitable) centres, not only will the cost of care go up but making them accountable to rational and cost effective care will also be impossible. The treatment of all submarkets in the health sector as homogenous units needs to be reviewed. Given the huge market failures and the multiplayer system, the policy seems to be skirting the issue of a strong interventionist role of the government. This is worrisome.

A fifth concern is the NHP’s weak commitment to regulations, disproportionate to the aggressive policy stance taken towards collaborating with the private sector. There are serious omissions. For example, there is no mention of reforming and restructuring the Medical Council Of India (MCI) or the Nursing and Dental Councils to be more accountable and less corrupt. Despite the scathing report of the Standing Committee of Parliament on Health on the functioning of the MCI and the government constituting an expert committee tasked to suggest reform, it is strange that the NHP does not even mention this issue.

Likewise, the silence of the NHP on establishing an autonomous, independent drug regulator and more importantly dealing with the long pending and contentious issue of bringing drug regulation under the central control. State drug controllers are playing havoc with the licensing and drug quality assurance aspects and in oversight of pharmacies, contributing to the rampant misuse of antibiotics.

A third serious omission is the strengthening of the Clinical Establishment Act to make it mandatory for the display of prices by private hospitals. The National Pharmaceutical Pricing Authority has recently done yeoman service in capping the price of stents. How does this get enforced? In other words, making regulations is one aspect, enforcement is another that calls for substantial expenditures in establishing trained inspectorates and close monitoring. Similar regulations and enforcement are required for ensuring the proper maintenance of the diagnostic equipment, timely calibrations and utilisation. This too requires frequent inspections and monitoring by trained manpower and the co-option of technical institutions. The NHP is silent about this aspect as well, focusing only on the domestic manufacture of medical devices.

A sixth concern is the neglect to incentivise and promote operational research that is now called ‘implementation science’. Health is a knowledge intensive sector. And midcourse correction can only come with feedback loops bases on research studies. India barely has a handful of health economists and persons equipped with skills for concurrent evaluation. It continues to be dependent on international experts and agencies. Without such capacity at all levels of implementation, policies will continue to flounder with inconsistencies. Such research capacity is even more needed in an approach that seeks to decentralise and have states steer the implementation process.


Ernesto Zedillo, former president of Mexico, defines health system policy to stand on four pillars – clarity in objective, clarity in design, clarity in financing and clarity in incentives. The new NHP sadly fails on all these fronts. Being a ‘please all’ document, the challenge will now lie with the technical and administrative bureaucracies to develop implementation plans teasing out the steps and sequencing the change process. This will be a challenge but not one that can’t be overcome. It all depends on the commitment of the leadership to bring in the transformative change, the evidence it will choose to utilise and the consultative processes it will adopt and giving priority to the change agents working at the field level rather than Delhi-centric consultants in drafting the operational plans.

The politicians have spoken. The thrust on the further privatisation of health is in line with the right wing liberal philosophy of the party in power. How to tame the tiger to meet welfare objectives and turn it away from unethical profiteering will now be the challenge for policymakers. These are certainly challenging times and the people will wait to see what happens next and whose interests will be protected – the hapless patients or the private investors in the medical industry.