How much do Indian households spend on healthcare every month?

In this CEDA-CMIE bulletin, we look at how much money Indian households spend on healthcare and related services. We examine these patterns by region (urban-vs-rural), state, and household income.

Key highlights:

• Indian households spent an estimated INR 120 billion on health and healthcare-related services in Nov 2022.
• On average, a rural household spent INR 309 on healthcare while an urban household spent INR 460 in the month of Nov 2022. These varied further by household income. 
• Medicines and health enhancement services comprise a bulk of healthcare expenditure.

Indian households spent over INR 120 billion on healthcare-related expenditure in Nov 2022, estimates based on data from the Centre for Monitoring Indian Economy’s Consumer Pyramids Household Survey (CMIE-CPHS) suggest. Urban India accounted for 42.3 percent of the total healthcare-related expenditure in this period, while the remaining 57.7 percent of the expenditure came from rural India (Figure 1).

Figure 1

CMIE-CPHS is a continuous fast-frequency survey conducted on a panel of households. Its sample consists of 178,677 households and over 875,000 household members as of 2022. The total expenditure figures are weighted estimates based on the survey sample data. 

The survey includes expenditure incurred by households on medicines, doctors, hospitalisations, health insurance, medical tests, medical aids, and health enhancement services under healthcare-related expenditure.

Figure 2

Health enhancement services, which include fitness services, hygiene products, parlours and spas, accounted for the largest share of healthcare expenditure (Figure 2). In Nov 2022, 45.5 percent of all the money spent on households on healthcare-related services was spent on these services/products. Medicines came in next and accounted for 42.3 percent of all expenditure on health. The CPHS estimates 6.7 percent of the Indian population to be taking regular medication, with this share being higher in older age groups.

Doctors’/physiotherapists’ fees accounted for 5.6 percent of the total healthcare-related expenditure in Nov 2022, and health insurance premium made up 2 percent of all healthcare-related expenditure. There was no major relative gap between the trends for most categories of expenses among rural and urban areas, except health insurance premiums, where the share was 3.6 percent in urban areas, and just 0.8 percent in rural areas. 

The average Indian household spent INR 3,632 on healthcare-related expenditure in FY 2018. This was up marginally to INR 3,638 in FY 2022. However, as Figure 3 shows, this is due to the fluctuations in the expenditure caused in the interim which includes the pandemic years. While on average, households reported a 23.3 percent increase in spending on health between FY 2018 and FY 2019, there was a marginal drop of 0.5 percent in the subsequent year. Reported spending on healthcare dropped by 29.8 percent in FY 2021, the first year of the Covid-19 pandemic, before increasing by 16.3 percent in FY 2022.

Figure 3

Figure 4

Looking at spending by month reveals that the total money spent on healthcare by households saw the sharpest decline in Apr 2020 (Figures 4 and 5), when the country was under a stringent lockdown brought in to check the spread of the Covid-19 pandemic. From over INR 94 billion in Feb 2020, healthcare expenditure declined to INR 79.3 billion in Mar 2020, and then plunged to INR 43.8 billion in Apr 2020, the first full month when the country was locked down. Spending across different components of healthcare was impacted. While expenditure on medicines decreased by almost 19 percent in Apr 2020 vis-a-vis Mar 2020, expenditure on health enhancement services dropped by 66.4 percent in the same time period.

Figure 5

Since Apr 2020, healthcare expenditure has been largely on an upward trend and it witnessed a small spike in Apr 2021, when India saw a fatal wave of Covid-19 that infected millions, leaving behind a trail of destruction. The total estimated expenditure on healthcare increased from INR 97.9 billion in Mar 2021 to INR 104.5 billion in Apr 2021, with expenditure on medicines, doctor fees, hospital charges and medical tests driving this increase.

It is important to note that some of these trends could be an outcome of possible confounding effects, and the numbers need to be read with context: on the one hand, for many, healthcare expenditure increased due to Covid-19 related illness, on the other hand, many individuals had to defer non-essential procedures during the pandemic. 2020 was an extraordinary year – lockdowns led to reduced mobility, and the year saw reduced air pollution and fewer accidental deaths. As the pandemic began to recede, while Covid-19 related expenditure could have fallen, expenditure on deferred treatments could have contributed to the increase in healthcare-related expenditure.

Figure 6

Household expenditure also varied by income groups (Figure 6). Rural households with monthly income under INR 8,000 spent INR 304 on average on healthcare in Nov 2022, while those in the highest income group (monthly income above INR 80,000) spent INR 447 in the same month. Among urban households, this difference was much wider. Those earning less than INR 8,000 per month spent an average amount of INR 344 on health in Nov 2022, and the richest households spent an average amount of INR 1,275 in the same period.

Additionally, there was significant variation in healthcare expenditure by state. Households in Haryana spent INR 873 on healthcare on average in Nov 2022 – 2.4 times the national average, and the highest among all states and union territories (UTs) surveyed by CPHS. On the other hand, households in Assam spent INR 223 on healthcare in this period, the least among all states and UTs.

Further, there was also some variation in the share of household expenditure that was incurred on health. In Tripura, healthcare-related expenditure comprised 5.3 percent of the total household expenditure in Nov 2022, followed by Haryana and Goa where it comprised 4.4 and 3.9 percent respectively. On the other end of the spectrum was Rajasthan, where healthcare-related expenditure comprised only 1.3 percent of the total household expenditure in Nov 2022, followed by Jammu and Kashmir where healthcare-related expenditure made up 1.5 percent of total household expenditure on average, and Jharkhand where this share was 1.6 percent (Figure 7).

Figure 7

India’s healthcare industry was estimated to reach USD 372 billion in 2022, as per a report of the NITI Aayog published in 2021. Healthcare had emerged as one of the largest sectors of the Indian economy, both in terms of employment generation and revenue, the report had noted. However, as CEDA has noted previously, government spending on healthcare remains low in India as compared to global standards, resulting in high reliance on the private sector and high proportions of out-of-pocket expenditures by households. Almost 55 percent of all expenditure on health in India is financed out-of-pocket, data compiled by the World Bank (as of 2019) shows. This was significantly higher than the global average of 18 percent in the same year.

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