Report of the National Commission on Macroeconomics and Health


The National Commission on Macroeconomics and Health (NCMH) was established in March 2004 to strengthen disease control and primary healthcare in India. Its overall objective was to assess how increased investments in the health sector impact poverty  and economic development. 

In this report, the Commission discusses the economic basis for investing in health and how public financing can be most effectively utilised. It discusses the critical issues plaguing the health sector, such as inequitable access to basic services, inefficiencies in the system, and an absence of patients’ rights.

The report states that liberalisation of the economy increased employment opportunities and incomes, thus reducing poverty levels. These developments also introduced changes in lifestyles, increased urbanisation and connectivity, and enhanced access to information. Together, this has had a profound impact on the epidemiologic and health-seeking behaviour of people.

The rising demand for health services has revealed the inadequacies of the current healthcare system, both in the public and private domains. It is the responsibility of the government to provide an efficient healthcare system, along with health education, preventive programmes, curative services, and affordable health services for the poor. This report reviews the public and private healthcare systems, and provides policy makers with a framework to improve the funding of public health.


  1. India’s life expectancy has doubled from 32 years in 1947 to 66 years in 2004; the infant mortality rate has fallen by over 70 per cent between 1947 and 1990; malaria has been contained at 20 lakh cases; smallpox and guinea-worm disease have been eradicated; and leprosy and polio are nearing elimination. 

  2. Although India accounts for 16.5 per cent of the global population, it contributes a fifth of the world’s share of diseases – a third of the world’s diarrhoeal diseases, tuberculosis, respiratory and other infections, parasitic infestations and perinatal conditions; a quarter of the world’s maternal conditions; a fifth of the world’s nutritional deficiencies, diabetes and cardiovascular diseases; and the second largest number of HIV/AIDS cases after South Africa.

  3. National Sample Survey data for 1995-96 indicates that income losses from severe illness amounted to nearly 15 per cent of the total annual consumption expenditure per capita of the poorest one-tenth of the population, compared to 7.7 per cent for the richest one-tenth.

  4. Decreasing public investment, liberalisation-privatisation since the 1990s, the emergence of non-communicable diseases and an effective demand have steadily corporatised medical care. Non-Resident Indians and industrial/pharmaceutical companies have set up super-speciality hospitals in India to provide world-class care at a fraction of the cost in the West. This makes India a potential hub for medical tourism. However, this will raise the overall cost of healthcare in the country and create pressure for increased budgetary allocation for government hospitals.    

  5. A National Commission on Macroeconomics and Health survey in eight districts – namely, Khammam (formerly in Andhra Pradesh, now in Telangana), Nadia (West Bengal), Jalna (Maharashtra), Kozhikode (Kerala), Ujjain (Madhya Pradesh), Udaipur (Rajasthan), Vaishali (Bihar) and Varanasi (Uttar Pradesh) – shows a highly skewed distribution of health resources: 88 per cent of towns have a health facility compared to 24 per cent of villages; the private sector has 75 per cent of all specialists and 85 per cent of all the technology in their facilities; 75 per cent of services for non-communicable diseases and about 40 per cent of services for communicable diseases are provided by the private sector.

  6. Public spending on health gradually accelerated from 0.22 per cent in 1950-51 to 1.05 per cent during the mid-1980s, and then stagnated at around 0.9 per cent of the GDP. In terms of per capita expenditure, it increased from less than Re. 1 in 1950-51 to about Rs. 215 in 2003-04. The Commission recommends increasing public spending from 1.3 per cent to 3 per cent of GDP in the next few years.

  7. From 1990 to 2001, the Centre reduced the funds for health released to the states from 60 per cent to 40 per cent. It spent less than 0.5 per cent of the total public health budget on preventive and promotive health, and underfunded the National Health Programmes, which led to their suboptimal functioning and huge out-of-pocket expenses for services guaranteed by them.

  8. The NCMH recommends a gradual shift towards a mandatory and affordable Universal Health Insurance System for secondary and tertiary care.

    Focus and Factoids by Aditi Chandrasekhar.

    PARI Library's health archive project is part of an initiative supported by the Azim Premji University to develop a free-access repository of health-related reports relevant to rural India.


National Commission on Macroeconomics and Health


Ministry of Health and Family Welfare, Government of India


01 Aug, 2005