19 October 2015

What Ails India?

The Financial Times, while reporting on the announcement of Angus Deaton, as winner of the 2015 Noble Prize for Economics stated that: “He thinks there is a lot more to poverty than just cash and cites India as an example of a country that has grown substantially in terms of per capita income but where education and health outcomes can often be dismal.”1

This got us to investigate India’s record on the healthcare. We took the WHO data on life expectancy (LE) as a simplified measure of quality of healthcare. First, we looked at all the countries, where the LE in the year 1990 was lower than that of India for the same year. Then, we mapped the improvements in LE reported in the 1990-2013 period. The chart below shows the quadrant analysis for the selected countries.

LE in 1990 and improvements in 1990-2013 period for countries with LE 1990 < India

Source: WHO

The above chart clearly shows that even among the global laggards in the health-care in 1990, India continued to underperform in 1990-2013. Countries like Ethiopia, Cambodia, Bhutan, Nepal, Eritria showed better improvements in this period, as compared to India. Only, countries like Ghana, PNG, Senegal, among others did worse than India during this period. Thus, in spite of having benefit of having strong economic growth since 1991 reforms, India has not been able to outperform many other countries with lagging health care system.

This presents a great opportunity for investors. India will need to focus on and invest in sanitation, safe drinking water, primary health care, and other areas to healthcare in next decade or so to catch up with other fast growing economies.

1 http://www.ft.com/intl/cms/s/0/b60c2e76-70f0-11e5-ad6d-f4ed76f0900a.html?siteedition=uk#axzz3oRMBrOfS