Niti Aayog: View: Step back, strategise, build, Covid-19 may be the black swan of 2020s.


By Amitabh Kant & Arnab Kumar

Covid-19 may well be the black swan of 2020s. Such events have severe consequences and are inherently painful. And, yet, they can also provide a rare opportunity to evaluate the status quo, and challenge the assumptions and practices of ‘business-as-usual’.

First, there’s an imminent need to create more doctors and frontline health workers who can bridge the huge imbalance in supply, and manage our primary health and wellness centres. India has made rapid strides in availability of quality medical education — 37 new medical colleges have been sanctioned (25 government, 12 private), and about 20,000 MBBS (bachelor of medicine, bachelor of surgery) seats have been added last year. Much more needs to be done for India to align with the World Health Organisation (WHO) norm of a doctor-population ratio of 1:1,000.


Due to the lack of medical seats, our students have been studying medicine in China, Russia, Italy, etc, while there is a severe shortage of doctors at the primary health centre level. Expanding district hospitals to become medical colleges, set up in the public-private partnership (PPP) mode, could help address the shortage of qualified doctors in the mid-term.

These newly established medical colleges could also be encouraged to adopt community health centres (CHCs) and primary health and wellness centres in the vicinity. Taking a conservative estimate of adding 100 seats across 500 district hospitals, 50,000 new seats could be added — more than a 60% increase in our existing capacity.

Private hospitals also need to be leveraged, and the cost of medical education radically reduced by reducing infrastructure requirements. Short-term bridge courses for foreign graduates must be institutionalised, while clinical postgraduate seats enhanced. Medical colleges could be augmented by establishing nursing colleges and paramedical colleges in the same campus.

To ensure availability and consistency of quality healthcare professionals across India, a district residency scheme for postgraduate doctors should be instituted, with postgraduate doctors rotating through district hospitals for three months.

Second, we must bring a revolution of virtual doctors through telemedicine. Cloud hospitals, through remote consultations and diagnosis, not only have the potential of augmenting the capacity of existing doctors but they can also truly democratise access to quality healthcare in remote and rural areas. A McKinsey study estimates that telemedicine could replace half of in-person consultations in India, and lead to savings of $5 billion by 2025.

For cloud hospitals to take shape in a significant manner, though, regulatory considerations, primarily validity of telemedicine and online prescriptions, and determination of legal jurisdiction for medical negligence cases across state borders are required.

Third, a massive push to ePharmacies is required to ensure medicine supply to every citizen. ePharmacies in India have already provided quality and affordable medicines to more than one crore patients, and the market is expected to grow at about 20% compound annual growth rate (CAGR) to $3 billion by 2024. It is high time that this sector, employing more than 30,000 skilled professionals attracting more than $500 million in venture capital (VC) investments, goes mainstream.

Fourth, India needs to become a centre for active pharmaceutical ingredients (APIs) manufacturing. India’s $40 billion pharma sector is heavily dependent on the import of APIs and intermediates from China, constituting more than two-third of all of India’s imports. Furthermore, India has a very high dependence on China for seven out of the top 10 imported bulk drugs.

This extreme concentration of input dependency, combined with disruption in supply chain, risks jeopardising India’s reputation as the ‘pharmacy of the world’. Policies like setting up dedicated pharma parks, incentives for R&D, and financial incentives to rapidly expand domestic production of fermentation-based APIs, key starting materials (KSMs), and intermediates at a large scale are much needed.

Fifth, even before Covid-19, primarily due to the US-China trade war, large mobile manufacturers (‘motherships’) were actively considering shifting bases from China to elsewhere. China and Hong Kong, combined with Vietnam (heavily dependent on China), control more than 72% of the global share of the about $300 billion global mobile exports market. In comparison, India, one of the largest mobile consumption market, contributes only about $1.5 billion to the global mobile export market — 0.4% of the global share.

Structural and cost disadvantages have held India back. Absence of local supply chains, high manufacturing and logistics costs, combined with financial and fiscal incentives provided by the likes of Vietnam, puts India at an extra 8-10% disability. To change this, a bespoke production-linked incentive for mobile manufacturing is needed. This should incentivise large-scale manufacturing, while catering to the needs of domestic champions as well.

As India scales up its response to combat Covid-19, it must also step back and strategise to emerge healthier, stronger and more prosperous as a nation.

(Kant and Kumar are CEO and programme director, respectively, NITI Aayog)

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