Corona’s attack is seen to have a direct impact on the general public. Between the decline in income and the increase in price and fuel, an increase of about 11 percent on health services means that about 66 thousand crore rupees are going to be spent. It has been said in SBI Research that we believe that there will be an increase in health expenditure due to the epidemic. This means consumption of other things is going to decrease. This will affect growth prospects, as economic growth is still dependent on consumption-based demand.
In a note Saumya Kanti Ghosh, the group’s chief economic advisor at State Bank of India (SBI), also said that retail inflation during April to 4.29 per cent from 5.52 per cent in March is confusing. The Central Statistics Office’s inflation data is primarily due to the moderating price of food items, while the basic inflation for the rural sector rose to 6.4 percent during this period.
With the epidemic spreading across the country, we need to look beyond the main inflation data. Rural core inflation rose to 6.4 percent in the month of April and may increase further in May. Increasing spending on health due to the epidemic will have a meaningful impact in rural areas.
If the commodity-wise inflation in the health sector included in the Retail Price Index (CPI), inflation of non-institutional drugs, X-rays, ECG, diagnostic tests etc. is increasing month-by-month. For example, the overall retail price index declined in April, during which food CPI declined but when food inflation is compared to overall CPI, the decline in food CPI is not really that sharp. is. Similarly, the increase in inflation in terms of fuel and health is maximum, but interestingly, the original CPI has decreased by 0.57 per cent whereas it has increased by 18 points in the respective category.
Consumer price index has increased the contribution of health inflation to inflation. According to the estimate of SBI Research, due to the increase in prices, the family health budget will be increased by at least 15 thousand crores. Oil prices have been steadily increasing since December 2020 as the government’s income is declining. It has a direct effect on every consumption item except health.
Due to Kovid-19, the expenditure on people’s hospitals has increased significantly. If we look at the current trends, if 30% of the infected people are admitted to hospital and 30% go to private hospitals and if they spend Rs 1.5 lakh during treatment, then the total expenditure on hospitalized patients. 35 thousand crores will come. The reason for this is the increase in health services.