A top priority for Viksit Bharat: Govt and firms should prioritise evidence-based approaches on workforce health

By Ali Mehdi & Rajiv Kumar

In her Budget 2024-25, the finance minister listed nine key priorities for a Viksit Bharat (developed India) by 2047.We were surprised that health was not one of them.

Harvard professor David Bloom and his co-authors have argued that “higher life expectancy creates incentives to invest in education, innovation, and physical capital”, even as “better health increases labour market participation and worker productivity” . Robert Fogel, the 1993 Nobel laureate in economics, highlighted that rapid economic growth in Asia and Latin America “first became evident in the improvement in life expectancy. In the case of India, for example, life expectancy at birth increased from 29 years in 1930 to 60 years in 1990” .

However, we wonder how India could become viksit with a life expectancy that converges with that of low-income countries with age, while the gap with high-income countries remains high.

Labour force participation rate of our working-age population (15-64 years, modelled International Labour Organization estimates) was 55% in 2022, lower than other BRICS — South Africa (61%), Brazil (70%), Russia and China (76%) — as well as low- and high-income countries (66% and 75% respectively). Worker productivity (value added per worker, constant 2015 $) in services (8,898), which contributes most to India’s GDP, was only better than low-income countries (2,693), but much lower than the rest — Brazil (17,261), Russia (17,403), South Africa (22,295), China (25,588), and high-income countries (61,346) (World Development Indicators, The World Bank). Improving workforce health will surely have a positive impact on our labour participation and productivity.

In an earlier paper, professor Bloom and his co-authors argued that “in addition to this effect of health on worker productivity, increases in health and prospective longevity can also drive increased savings for retirement”. A healthy workforce would not only be more participative and productive, but financially and functionally less dependent on families and governments post-retirement. India already has the world’s second-highest elderly population (65 years or older), it would be higher than Europe’s in 2047 (World Population Prospects 2024). Workforce health becomes critical from this perspective as well, particularly with ongoing debates on rising insurance premiums, pension reforms, and covering the elderly under Ayushman Bharat.

There is a growing threat from public health emergencies and climate change. Covid-19 reversed decades of progress. The mortality rate for the 15-60 age group during 2019-21 increased in India (55) much more than in low-income countries (15), or even the US (35) (WPP 2024). Air pollution in India is estimated to have led to 1.7 million or 18% of all deaths in 2019, causing a loss of $36.8 billion or 1.4% of its GDP .

Prime Minister Narendra Modi called on business leaders to work with the government for a Viksit Bharat. “Our promise is that we will reform, you promise that you will perform,” he told them. The reforms that the government undertakes should include the following:

The Centre and state governments should prioritise expenditure on health. India’s government health expenditure (as a percentage of its general expenditure) was 3.7% in 2021, very low compared to BRICS — China (8.9%), Brazil (10.9%), Russia (15.1%), and South Africa (15.3%) — let alone high-income countries (18.8%) whose league we wish to join. Among states/Union Territories with legislature, it ranged from 3.2% in Jammu and Kashmir to 18.7% in Delhi in 2019-20 (National Health Accounts 2023).

Invest in research and information systems for evidence-based policies and strategies to improve workforce health.

Adopt multisectoral and multistakeholder approaches to tackle the wider determinants of health at the domestic level, and coordinate multilateral policy and action for the global determinants.

Prioritise health promotion and disease prevention to reduce the burden of death, disease, disability, and treatment expenditures. With low health expenditure levels and the catastrophic potential of treatment expenditures, such a focus is indispensable. Even health insurance, because it is offered as a hospitalisation risk cover, does not ensure a healthy workforce. It kicks in when our health is at its worst end. We have to try our best to keep health on the best side of the spectrum.

Incentivise employers to improve the health of their employees (for example, by sharing costs) and employees to adopt healthy lifestyles.

Companies should adopt an evidence-based approach for a measurable impact on employee health and productivity rather than doing things that seem nice, but whose impact is unclear. Among numerous examples are the employee health programmes of Johnson & Johnson, which helped the company save $250 million on health care costs over a decade, with a return of $2.7 for every dollar spent Strategic investment in employee health and productivity is an imperative for companies wishing to stay ahead of the curve. They should develop a workplace well-being policy and strategy, which should include an early warning system for timely detection and response to health risks. Personal well-being strategies should be developed with employees.

The government and firms should prioritise evidence-based approaches to workforce health and productivity to stay competitive in an increasingly uncertain global economic environment.

Ali Mehdi is the founder and CEO of UHC360, while Rajiv Kumar is the chairman of Pahle India Foundation and the former vice chairman of NITI Aayog.

Disclaimer: Views expressed are personal and do not reflect the official position or policy of Financial Express Online. Reproducing this content without permission is prohibited.