Modelling Healthcare Output in India: An Empirical Study of Production Factors
Aarnav Das Vaidya
25/09/2026
The Healthcare sector is considered one of the crucial components to drive the productivity of an economy. This research paper aimed to analyse trends and the relation between the factors of production and overall value added in the Indian healthcare sector. Using the time-series data from the Indian KLEMS database, a trend and regression analysis was conducted between 2001 and 2023. Based on the Cobb-Douglas production function, the study identified which of the factors significantly affected the total gross output of the Indian healthcare sector. The findings revealed that capital, material and service inputs positively affected the gross output of the healthcare sector. Capital was the input variable with the largest positive relationship with gross input as a 1% increase in capital input led to a 0.57% increase in gross output. Interestingly, for every 1% increase in labour, there was a 0.85% decrease in gross output. Finally, Energy input was the only input that did not have any significant impact on the overall value added. Hence, there are many ways to increase the value added in the Indian healthcare sector, such as increasing the significant factors of production or implementing policies changing the labour and energy landscape within the sector. One such policy could be improving working and living conditions in rural areas so that healthcare workers can be reallocated from urban to rural areas to reduce diminishing labour productivity. Therefore, resources should be efficiently distributed to improve the output in the Indian Healthcare system.