Spending on healthcare is down by 15% in the wake of demonetisation, reports the Times of India.
This does not refer to government expenditure on healthcare – which amounts to just 1.2% of the country’s GDP in 2013, among the lowest levels of health spending in the world. It refers to out-of-pocket expenditures by India’s people. As the ToI points out, this exceeds 70% of total healthcare spending in the country.
The policy of demonetisation was announced by Prime Minister Narendra Modi last year on November 8. Under the policy, Rs 500 and Rs 1,000 banknotes are no longer legal tender.
The sudden nature of the announcement caused widespread disruption in India. Cash shortages were widespread, as citizens struggled to exchange their demonetised notes for legal tender. Demonetisation also meant that some were denied medical treatment because they were unable to pay for it with the demonetised notes. One highly publicised incident saw a newborn baby die after a hospital in Mumbai would treat him because his father only had the demonetised notes to pay with.
The impact of demonetisation on health has been more pronounced in rural areas, the ToI adds. The newspaper notes that private hospitals in urban areas have not felt the effects of demonetisation as much because of “cashless payment channels including credit/debit cards/ e-banking and electronic payment platforms.”
Rural Indians are far more dependent on cash, as the Indian Express noted last year. As a result, demonetisation left many unable to pay for essential goods and services, including medical treatment. This problem arises from private hospitals being unable to accept demonetised notes, unlike government-run hospitals. 58% of Indians living in rural areas use private healthcare, according to Firstpost. This means that those who the digitised economy has yet to reach have no way to pay and must go without.