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September 02, 2007

"Forget software, the real opportunity is in exporting healthcare"

Are Indian companies going to be able to provide enough jobs for the increasing millions of young Indians that are going to graduate each year? If not, the oft spoken about "demographic dividend" is likely to turn out to be more of a "demographic curse".

In this context, Businessworld has an interesting article pointing out that the big opportunity in exporting healthcare workers from India to more advanced whose populations are ageing fast healthcare costs are zooming.
As critics of the demographic dividend thesis point out, the focus is all on the supply of labour, while very little is said about demand. Admittedly, the additional supply of labour does offer the potential for employment and growth. But there is no guarantee that demand would match supply and lead to more jobs and production. The fact is, India will have to provide employment for 15 million job entrants every year and not 10 million as estimated earlier. “We haven’t done even 10 million yet,” points out Debroy. One concern here is that nearly half of India reports itself as self-employed and this is not just in agriculture. “Therefore, we shouldn’t think in terms of employer-employee relationships alone; we need to look at skills, access to credit, land markets, healthcare, physical connectivity (roads, power).”

On the other side are experts who believe that the demographically dying countries of Europe (Germany, Italy, Russia) offer India a great opportunity to export labour. The ageing population of Europe means there will be tremendous demand for healthcare workers, from doctors, nurses and attendants. In 20 years, the world will be swamped by people of over 80 years, and this will be a huge chance for Indians if we provide them with the proper skills, says eminent demographer Ashish Bose, honorary professor, Institute of Economic Growth, Delhi, and member of the National Commission on Population.

...Bose, who leads the optimists brigade, says we need a more energetic policy to tap the potential. “Forget software,” he says. “Train our young people in healthcare. Give them a crash course in languages. The next quarter century is ours because India is a demographic giant.”

Elsewhere in the same issue of Businessworld, a column titled "Better Red Than Dead" by Kenneth Rogoff, a Harvard Professor of Economics and Public Policy and former IMF chief economist, shows how desperately the West needs to lower healthcare costs. He forecasts that the inexorable rise in medical costs will in the near future test the "moral, social and political support for capitalism".
Rising incomes, population ageing and new technologies for enhancing life have caused health costs to rise 3.5 per cent faster than overall income for many decades now in the US. Some leading economists project that health expenditures, which now constitute 16 per cent of the US economy, will rise to 30 per cent of GDP by 2030, and perhaps approach 50 per cent later in the century. Countries in Europe and elsewhere have shielded their citizens from a part of this rise by piggybacking on US technological advances. Ultimately, though, they face the same upward cost pressures.

...Many societies view healthcare as a right, not a luxury. When medical expenses constituted only a small percentage of income, as was typically the case 50 years ago, an egalitarian approach to healthcare was a small extravagance. The direct and indirect costs were relatively minor and affordable.

But as health expenses start taking up a third of national income, healthcare socialism starts becoming just plain Marxism: to each according to his needs. Even China’s authoritarion capitalism will someday feel the pressure, as its rural populations, who currently have little access to doctors or hospitals, eventually explode with discontent.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.