India needs Rs. 3.2 trillion to fund public services by 2025

MUMBAI, INDIA: 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 percent of GDP) to fund public services by 2025, according to Accenture's new report "Delivering Public Service for the Future."

Accenture asked Oxford Economics to project total government spending on public services through 2025 in 10 countries - Australia, Brazil, Canada, France, Germany, India, Italy, Singapore, the United Kingdom and the United States.

According to the report, In India, the cost is projected to total Rs 22.9 trillion, 11 percent of GDP, by 2025. Oxford 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).

Expenditure Gap

One of the factors in the analysis of the drivers of the projected expenditure increase is wealth effects - assumptions based on historical evidence that suggests that as countries get richer, governments spend proportionally more per person on public health services such as healthcare.

 

The release added that the government has said it intends to increase its spending on health to 2.5 percent from 1.4 percent of GDP over the next five years.

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

Country Comparisons

Demand-driven spending estimates were compared against the current trajectory of public sector spending to identify the 'expenditure gap' in each country by 2025, along with its percent of GDP.

"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," said Krishna Giri, who leads Accenture's global Health & Public Service business in India.

"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," added Giri.

With the looming expenditure gap, the demand to improve public-sector efficiency has never been greater. India could save as much as Rs 3.3 trillion in annual expenditures by 2025 by increasing public-sector efficiency by 1.11 percent a year - enough to close the gap.

Citizen Satisfaction

Accenture also surveyed citizens online on their satisfaction with public services. The poll of 5,000 people, conducted across the same 10 countries by Ipsos MORI, showed that 56 percent 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 percent.

Additionally, 76 percent of Indian respondents use some form of digital channel to engage public services. When asked what they considered most important for government to focus on, 87 percent say that it is important for government to provide more services through digital channels in the future.

Click here to know more the survey!