Public services to cost India Rs 3.2 tn

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SummaryIndia could save as much as Rs 3.3 trillion in annual expenditures by 2025: report

The demand for public services will cost the Indian government an additional Rs 3.2 trillion by the year 2025, according to an Accenture report.

According to the report, costs primarily associated with increased spending on citizens for healthcare and growth of the ageing population are estimated to require the Indian government - at the central, state and local levels - to spend an additional Rs 3.2 trillion (1.5 per cent of GDP) by 2025.

"More than Rs 3.2 trillion in projected additional costs for Indian public services by 2025 presents government leaders - at all levels - - with a new reality," Accenture's global Health and Public Service business in India Krishna Giri said.

The report further noted that India could save as much as Rs 3.3 trillion in annual expenditures by 2025 by increasing public-sector efficiency by 1.11 per cent a year - enough to close the gap.

"Increasing public-sector efficiency gives government leaders an option beyond just the traditional choices of cutting services and raising revenue and, our research showed, citizens want government to provide services in a more cost-effective way," Giri said.

The report 'Delivering Public Service for the Future: Navigating the Shifts', said that the cost is projected to total Rs 22.9 trillion, 11 per cent of GDP, by 2025.

According to the survey, public service expenditure of the 10 countries in US dollar terms are Australia USD 50 billion, Brazil USD 70 billion, Canada USD 90 billion, France USD 100 billion, Germany USD 80 billion, India USD 70 billion, Italy USD 30 billion, Singapore USD 10 billion, United Kingdom USD 170 billion and United States USD 940 billion.

The report analysed the impacts of projected economic and demographic changes on the costs of delivering all public services, including central, state and local spending (except debt interest payments).

One of the factors behind the increase in the projected expenditure of the government is that as the countries get richer, governments spend proportionally more per person on public health services such as healthcare.

Another primary driver is growth of the ageing Indian population. The United Nations project a 76 per cent growth in the population aged 65 or older by 2025, with 7.3 per cent of the population aged 65 and over by 2025.

According to another survey by Accenture conducted across the same 10 countries by Ipsos MORI, showed that 56 per cent of India respondents are confident that government will be able to deliver public services that meet people's needs and expectations over the next five years, well above the global average of 37 per cent.

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