India's Care Financing Deficit

Part 2 of the Series: Invisible Infrastructure Underwriting India’s Economic Development

This article is the second in a 3-part series anchoring the inaugural edition of the ZURI Lever – Caring Futures. Together, these articles build the case for recognising care as economic infrastructure, central to India’s growth, inclusion, and demographic resilience.

• Part 1 quantified the value of unpaid care work and made the macroeconomic case for care

• Part 2 (this article) exposes the systemic neglect of care, its underfunding, fragmented governance, lack of regulation, and unaffordable private provision.

• Part 3 turns outward to spotlight global care policy shifts and emerging models India can learn from

This 3-part series serves as a preview of a broader 6-part Caring Futures Lever Edition, which will feature deeper dives into care financing models, policy test beds, workforce resilience.

Building on the Economic Case for Care

In Part 1, we explored the economic value of care and argued that it must be recognised as foundational to India’s economic growth and long-term sustainability. 

In Part 2, here, we turn our focus to India’s care investment deficit. Although caring for the population is crucial for economic growth, India's current level of investment in this area is insufficient. We will examine how this funding deficit leads to underfunded public systems, fragmented governance in care provision, and an unregulated private sector. Addressing these gaps is vital not only for promoting equity but also for realizing India's full economic potential.

Public Underinvestment in Care-linked Schemes & Systems

India’s public investment in care remains severely inadequate despite its clear macroeconomic potential. Key schemes like the Integrated Child Development Services (ICDS), Aanganwadi services, and Palna (National Creche Scheme) remain underfunded and administratively constrained. ICDS allocations have stagnated at around 0.1% of GDP (UNICEF India, 2023). Most budgetary allocations treat care as a social welfare adjunct, not as core economic infrastructure.

The budgetary allocations for care remain marginal, not just in relative terms but in absolute scale when compared to the population in need. The mismatch between population need and funding is staggering; fewer than 0.04% of children under six years of age have access to a creche under the flagship Palna scheme (previously National Creches Scheme). 

Urban and peri-urban working families face a crisis of access to regulated, affordable care options, with many women in informal employment, domestic workers, street vendors, sanitation staff, left with no choice but to seek unsafe, makeshift solutions or leave the workforce entirely.

Despite the staggering scale and value of care work in India, more than 975 billion hours of unpaid labour annually, $955 billion at minimum wage (derived by theZURI research team based on India’s TUS 2024 data), public investment remains negligible.

Almost a trillion unpaid care work hours, neglected in plans and budgets

On the other hand, eldercare and disability care remain almost entirely privatised with no national system or framework to ensure affordability or quality. India’s ageing population (projected to cross 319 million by 2040) presents a looming care crisis for which no public infrastructure plan currently exists. In the eldercare domain, the National Programme for Health Care of the Elderly (NPHCE) remains focused on medical services, lacking integration with social or home-based care. India has yet to introduce any universal public system for long-term care, as seen in countries such as Japan or Germany.

Part 2 of the 6 part Caring Futures takes a deeper look at the eldercare financing and policy landscape in India. Track the release of the issue here

This table demonstrates not just low spending, but the lack of a coordinated vision to scale care infrastructure as a public good.

India’s Care Budget Remains Marginal

Scheme / Area	Budget Allocation (FY 2023–24)	Notes
Palna (National Creche Scheme)	₹71 crore	Just 3045 functional centres for 160 million children under 6
NPHCE (Eldercare – Health)	₹250 crore	Limited to medical services; no home or community-based integration
ICDS (Anganwadi Services)	₹20,554 crore	Stagnant allocation; ~0.1% of GDP
IPOP (Elder Welfare, Social Justice)	₹150 crore	Marginal support, mostly for shelters
DDRS (Disability Rehabilitation)	₹300 crore	Lacks outreach; reliant on NGOs and CSOs

Implication - Without strategic public investment, care will remain an invisible burden, undermining economic resilience and workforce participation

Fragmented Governance, No Coherence

Responsibility for care is spread across ministries with no coordination mechanism, leading to duplicity, access and outreach barriers & regulatory blindspots, rather lack of regulatory oversight.

Fragmented governance results in duplicated mandates and underperformance. Ministries work in silos, rarely coordinating on care as a cross-sectoral issue. This fragmentation allows critical gaps to persist, like the absence of eldercare from urban planning, or the mismatch between labour ministry guidelines and childcare needs on factory floors.

Institutional Landscape of Care Provision

Ministry / Agency	Responsibility	Schemes / Programmes
Ministry of Women & Child Development	Childcare, early childhood care, nutrition	Palna, ICDS, POSHAN, PMMVY
Ministry of Health & Family Welfare	Health-linked eldercare and disability	NPHCE, RMNCH+A, RBSK
Ministry of Social Justice & Empowerment	Elder/disability care, rehabilitation	IPOP, DDRS, ADIP
Ministry of Rural Development	Indirect care via pensions, social protection	NSAP, widow pensions
Labour, Urban Development, Skill Depts	Workplace creches, maternity entitlements	PMKVY, Maternity Benefit Act

Regulatory gaps

India currently does not have a national framework or even a binding set of quality standards for care, childcare, eldercare, special care or disability care centres outside of healthcare institutions. Absence of regulation or a regulatory framework results in poor quality, unregulated pricing and lack of accountability. While some guidelines show intent, lack of enforcement framework means they remain optional and on paper 

Status of Care Sector Regulation - a snapshot

Sector/Service	Regulatory Instrument	Binding?	Notes
Creches / Childcare	National Minimum Standards (MoWCD, 2024)	❌ No	Advisory only; implementation voluntary and patchy
Eldercare Homes	NABH Accreditation (QCI, 2023)	❌ No	Voluntary; uptake limited to premium facilities
Disability Care Homes	RCI Certification (training only)	❌ No	No regulation of residential or community centres
Workplace Creches	State-specific mandates (e.g. TN, Gujarat)	⚠ Partial	Weak enforcement, mostly for formal employers

The result is a patchwork of guidelines without enforceability, leaving families without assurance of quality, and workers without protections or standardisation

Market Gaps and Pricing Inequities

As care provision shifts to private markets, inequity deepens. These services are priced for upper-income urban families, leaving out the vast majority of working-class households.

• Creche and daycare costs range between ₹5,000 - 15000 per month per child in India's metro cities, up to 25% of median household income.

• Eldercare - Assisted living - ₹30,000 - 70,000 per month per person in metro or tier 1 cities where these facilities are primarily available

• Disability care homes - ₹25,000 - 50,000 per month per person with disability, with no pricing or service oversight.

With no government price benchmarks, minimum service standards, or redressal mechanisms, the care market operates in a legal and ethical grey zone

This is not just about affordability, it’s about exclusion. Services are concentrated in cities, inaccessible to rural or low-income households, and exploitative for caregivers.

Legal Vacuum for Paid Care Workers

• Only 0.4% of India’s 4 million domestic workers are covered under formal labour protections.

• No national norms exist for caregiver certification, training, or minimum wages in private or semi-formal care.

• Informal home-based carers operate with no support, contracts, or recourse.

Infrastructure Planning Excludes Care

India’s national infrastructure visions, Gati Shakti, Smart Cities, and NIP, exclude care provisioning

• No mandates for childcare or eldercare near industrial hubs, SEZs, or transport networks

• No spatial integration of care facilities into master plans

Care infrastructure remains invisible in both economic and spatial blueprints.

Financial Invisibility

Although care underwrites the economy, it is absent from national accounts

• India lacks a Care Satellite Account, unlike Mexico, Colombia, Uruguay, and others.

• Time Use Survey data (2024) conducted after a gap of 5 years, quantifies unpaid care but is not integrated into budgets or planning.

Unpaid care work in India is estimated at $955 billion/year, performed overwhelmingly by women 90.2% compared to 9.8% by men (derived based on India TUS 2024 dataset), nearly 30% of GDP yet remains off the books. Policymaking continues to rely on economic measures that ignore foundational labour.

How Countries Finance Care?

Countries worldwide are recognising care as infrastructure, with central policies, financing frameworks, and dedicated institutions. Unlike India, many countries are moving toward integrated care systems with centralised financing and an institutional home for the care economy. 

The contrast is stark - where India sees fragmented welfare schemes, several similar economies see a strategic investment in productivity, employment, and social stability

Track the Caring Futures Lever Edition here for the upcoming report on Emerging Care Financing Models - How countries are financing the care economy

Here's a snapshot of what's emerging in other countries, advancing the care economy

Country	Framework / Law	Financing Mechanism	Institutional Home	Scope & Coverage
India	Fragmented schemes (Palna, NPHCE)	❌ No centralised funding	Split across multiple ministries	Patchy coverage, substantial NGO reliance, urban concentration
Uruguay	SNIC (2015)	✅ Central + local budgets	National Care Secretariat	Universal lifecycle care, trained workforce, regulated quality
Japan	Long-Term Care Insurance Act (2000)	✅ Taxes + mandatory premiums	Ministry of Health, Labour & Welfare	Nationwide public-private eldercare system
SouthKorea	LTCI (2008)	✅ Insurance + state co-pay	Ministry of Health & Welfare	Eldercare as employment multiplier
Thailand	Elderly Act (2003) + Community model	✅ Public revenue	Ministry of Social Development	Community-run centres, home support scaling
Brazil	National Care Policy (in progress)	⚠ Budget earmarked	Ministry of Women and Devt	Recognises unpaid care; expanding childcare and eldercare

The Road Ahead to address the care financing deficit - From Gaps to Guarantees

To address the care financing deficit, some of the following actionable pathways emerge as strong contenders.

1. Establish a unified national care policy with binding mandates.

2. Create a Care Satellite Account to track care in GDP and fiscal planning.

3. Integrate care into urban & industrial infrastructure blueprints.

4. Expand public provisioning with price & service guarantees.

5. Launch a national caregiver workforce strategy with training, wages, and protections.

6. Build an independent regulatory body to monitor quality, pricing & compliance to facilitate equitable private sector participation in the care economy.

Coming Up Next - Global Shifts and What They Signal

In Part 3, we explore how countries are reframing care, not as a social burden but a productivity lever, employment engine, and social stabiliser. These emerging shifts offer models, warnings, and possibilities for India.

👉 Read Part 3: Emerging Care Shifts & What They Signal for India's Care Economy

👉 Explore the full Caring Futures Lever edition at  the-zuri.org/the-zuri-levers