India’s hospital sector poised for 11–12 pc growth over next 3–5 years: Report

Mumbai, Dec 31 India’s hospital industry is set for strong and sustained growth over the next few years, with revenues expected to rise at a healthy pace of 11–12 per cent annually, a new report said on Wednesday.

The growth will be driven by rising healthcare needs, higher insurance coverage, increasing medical tourism, and fresh investments in hospital infrastructure, according to data compiled by CareEdge Ratings.

A key reason behind this optimistic outlook is India’s long-standing shortage of healthcare infrastructure. Despite being home to nearly 18 per cent of the world’s population, the country has only about 16 hospital beds for every 10,000 people.

This is far below the World Health Organisation’s recommended level of 30 beds. As a result, India faces a shortage of nearly two million hospital beds, pointing to a large and long-term demand for new hospitals and healthcare facilities.

The report also highlights a sharp imbalance between urban and rural healthcare availability. Nearly 65–70 per cent of hospital beds are located in cities, even though around two-thirds of India’s population lives in rural and semi-urban areas.

With government healthcare spending limited to about 2–4 per cent of GDP, the private sector is expected to play a major role in filling this gap. This makes private hospital chains the biggest beneficiaries of rising healthcare demand in the coming years.

Demographic changes are adding further momentum to the sector. India’s ageing population is increasing the need for treatment of chronic illnesses, preventive healthcare, and specialised medical services.

At the same time, health insurance coverage has expanded sharply, rising from around 20 crore people in 2014 to nearly 55 crore in 2024. Even so, only about 40 per cent of the population is currently insured.

CareEdge Ratings expects insurance penetration to improve to nearly 47–50 per cent by FY30, helped by schemes like Ayushman Bharat, growing health awareness, and easier digital enrolment. This is likely to lead to higher hospital admissions and stronger demand for organised healthcare providers.

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