By Barnik Chitran Maitra
As India charts its course to become a developed nation, healthcare will have to emerge as a fundamental cornerstone of progress. The Covid-19 pandemic was a stark reminder of our fragile healthcare infrastructure, highlighting the need for a robust, responsive system. While the public sector has been the traditional custodian of national health, a quiet revolution driven by private enterprise is reshaping India’s healthcare capabilities.
We must fully value the role of the private sector in healthcare at this stage and build around it. Not doing so will mean misdiagnosing the ailment and prescribing wrong cures for building a “Swasth Bharat, Viksit Bharat” (healthy, developed India).
India’s public healthcare spending, languishing at 2% of GDP, falls significantly short of the global average and trails behind fellow developing nations, creating a chasm between demand and supply. This chronic underinvestment in public healthcare has left a void that the private sector has been bridging. Private providers account for a staggering 70% of all healthcare services, 80% of outpatient care, and nearly 60% of inpatient care. These aren’t just statistics; they represent millions of lives touched and families secured.
Private capital boosted healthcare
The post-pandemic landscape, marked by heightened health awareness, rising incomes, and wider insurance penetration, has only amplified the demand for quality care. The market is responding with vigour, with the hospital sector projected to grow at a robust 10-11% annually over the next three-five years. The engine for this expansion is primarily private capital. Forecasts from agencies like CRISIL and ICRA, which anticipate over `44,000 crore in investments to add nearly 35,000 beds in the coming years, signal a nation-building exercise financed by private capital, and driven by local entrepreneurial spirit.
The dynamism in the sector has attracted capital where it’s needed. Healthcare investments from private equity and venture capital hit a record $5.5 billion in 2023. Foreign direct investment (FDI) in hospitals has surged to half of all healthcare FDI in FY24, more than doubling its share from three years prior.
This capital is not just building brick-and-mortar hospitals; it is financing innovation, technology, and new economic models pushing boundaries of what is possible in Indian healthcare. Private enterprise is adding skilled workforce, by hiring and training millions every year. The value proposition of the private sector is as much about better medical outcomes as it is about better infrastructure and quality of professionals employed.
This value proposition has placed India on the global map as a premier destination for medical tourism. By leveraging a pool of world-class, Indian-trained medical professionals, state-of-the-art technology, and internationally accredited facilities at competitive prices, it has built an industry that is a significant source of foreign exchange and national soft power. By attracting patients from the UK, Canada, West Asia, and Africa, India is showcasing the best of its medical talent and ingenuity to the world.
Problems beyond the top tier
This wave of investment is not evenly distributed. While metropolitan hubs attract significant capital, expanding healthcare infrastructure into tier-II and -III cities and beyond is a formidable challenge. The financial viability of new hospitals in these regions is constrained by lower average revenue per patient, difficulty in attracting and retaining specialist medical talent, and inconsistent patient volumes for advanced procedures. For investors, the risk profile is simply higher and often financially unviable.
To unlock the potential of these underserved regions, the sector needs innovative models where the government derisks private investment. This can take the form of providing land at concessional rates, offering viability gap funding to bridge initial profitability shortfalls, or guaranteeing a certain volume of patients through government schemes. In return, the private sector brings operational efficiency, clinical excellence, and quality control.
A well-structured public-private partnership framework is key to ensuring the healthcare revolution reaches all corners of India.
Of course, the path of public-private (PPP) collaboration is not without friction. Take the government’s visionary Pradhan Mantri Jan Arogya Yojana (PMJAY). While the scheme is a revolutionary step towards universal health coverage, its implementation has created operational hurdles for private providers. PMJAY reimbursement rates are often lower than actual costs, rendering the treatment of patients financially unviable for many hospitals, with payment delays compounding the problem. In an effort to address the issues, a green channel was started to clear 50% of the payments. It has not yet fully solved the problem as the enrolment numbers have reduced significantly, from 316 a month in 2024 to about 111 in 2025 (till April). For PMJAY to achieve its true potential, it must evolve into a true partnership with viable rates and swift, predictable payment cycles.
The path forward is not a binary choice between public and private healthcare but a strategic partnership between both that acknowledges the strengths and addresses the challenges of either. The challenge of delivering quality healthcare to 1.4 billion people is too vast for any single entity. The government’s role is manifold — a prudent regulator, an enabler, a viability gap funding provider. It is also a strategic purchaser of services, ensuring quality standards and equitable access for the most vulnerable. The private sector’s role is to be the engine of growth, innovation, and service delivery, expanding capacity and pushing the frontiers of medicine.
With long-term structural forces like increasing urbanisation, a rising middle class, and the growing burden of lifestyle diseases propelling demand, the private sector’s agility, access to capital, and relentless focus on quality make it uniquely positioned to meet this challenge. The burgeoning growth of private healthcare is not just an investment opportunity; it is a national imperative. By fostering a collaborative ecosystem — one that builds effective PPPs for regional expansion (particularly in semi-urban and rural areas) and refines programmes like PMJAY to be truly synergistic — India can unleash the full potential of its private healthcare providers. Only then can it build a system that is not only prepared for the next crisis but can deliver world-class care to every Indian, realising the vision of a healthy and developed India well before 2047.