Declining Poverty, Rising Resilience: How Ayushman Bharat Is Reducing Financial Vulnerability Among India's Poorest

An analysis of data from the Household Consumption Expenditure Survey (HCES 2022-23) reveals a significant decline in poverty since 2011-12.

Building on this, a recent study by Shamika Ravi, a credentialed economist delves into the vulnerability of households to adverse shocks, particularly medical expenses, with a focus on the bottom 50 per cent of the population.

In her article for the Indian Express, Prof Ravi, who is also a member of the Economic Advisory Council (EAC) to the Prime Minister, highlights that while most households face some level of medical spending each year, some experience severe financial strain due to hospitalisation, which often involves substantial lump-sum expenses.

The study first quantifies the proportion of Indian households facing adverse medical shocks due to hospitalisation and then assess their vulnerability by measuring the share of monthly household expenditure devoted to medical expenses following hospitalisation.

It also examines how hospitalisation impacts household consumption status by comparing the consumption decile with and without medical expenditure included. This highlights the vulnerability of households with high medical spending, potentially lowering their consumption status.

Focusing on the bottom 50 per cent of the population, the study shows that hospitalisation increased from 17 per cent in 2011-12 to 22 per cent in 2022-23, with a significant rise in rural and urban areas.

Despite this, healthcare costs related to hospitalisation have become more affordable for the poorest households. For example, the share of health expenditure among households experiencing hospitalisation dropped from 10.8 per cent to 9.4 per cent of monthly expenditure between 2011-12 and 2022-23.

The analysis also reveals that the proportion of households in the bottom 50 per cent facing a decline in consumption status due to hospitalisation dropped from 40 per cent in 2011-12 to 33 per cent in 2022-23, with a more pronounced improvement in rural areas.

This reduction in financial vulnerability is largely attributed to public health initiatives like Ayushman Bharat Yojana, which has made healthcare more accessible and affordable for the poor.

While healthcare accessibility has improved, reducing the financial vulnerability of the poorest households, the challenge of coping with medical shocks remains critical for overall well-being, the report concludes.