In the second week of March, at the end of the current government’s tenure, Kerala very quietly launched the World Bank-assisted ₹3,464 crore Kerala Health System Improvement Program (KHSIP), which commits the state to a 25-year loan with a five-year grace period.
KHSIP focuses on comprehensive non-communicable disease (NCD) care, home and community services for the elderly, integrated accident and emergency care network, One Health nationwide surveillance, climate-resilient health facilities and accelerated integration of digital health through eHealth, registries and data analytics.
While everything looks good on paper, public health experts have clearly raised red flags as the country, whose total debt has risen by 80% over the past five years, accepts a 25-year World Bank loan and repayment pressure. World Bank loans are usually denominated in USD, meaning that repayment costs can rise and increase the interest burden on the treasury if the rupee depreciates.
The program was approved in December 2024 with planned implementation in 2025-2030 in all districts.
Loan from IBRD
Of the total cost of the project, ₹2,424 crore will come through a loan from the International Bank for Reconstruction and Development (IBRD) – the arm of the World Bank that lends to middle-income countries, while the state will contribute ₹1,039 crore.
The project is implemented as a Programme-for-Results (P for R) model, which means that the loan is tied to the achievement of specific results or milestones in the health sector.
The key objectives of the program include improving the availability and quality of the expanded range of health services and building the resilience of the health system in the state. Non-communicable diseases are one core area where the program envisages an expanded range of services, including integrated care pathways for chronic diseases such as hypertension, diabetes, cancer, cardiovascular disease and a comprehensive system of home care for the elderly.
Other key areas of focus for the program are the creation of a multi-level trauma and emergency care system, One Health oversight and building a climate-resilient health system.
The P for R model means money will only be released based on the achievement of specific Disbursement Linked Indicators (DLIs) and measurable milestones across NCDs, Trauma, Aged Care, One Health, AMR, Climate and Digital Health.
“The program targets a 40% increase in people achieving hypertension control and a 60% increase in cervical and breast cancer screening. All patients will be monitored through electronic medical records. Five districts, Wayanad, Kozhikode, Kasaragod, Palakkad and Alappuzha, are to be equipped with climate-smart health facilities. Private sector engagement through blood pressure reduction and diabetes quality improvement program cardiovascular care and improving journey quality are some of the DLIs we plan to achieve,” says a health official.
Red flags
“Under the P for R model, World Bank funds will only flow if the country meets the targets or DLI, which will be verified by an independent verification agency. Meaning the country must achieve measurable health outcomes in order to draw funds, while also committing its own project expenditures (regardless of when the World Bank payments come in).
“When the state uses its own funds or the program envelope to achieve the program goals, why do you need World Bank funds, which are certainly not cheap and obligate the state to long-term repayment?” asks a public health expert.
Another crucial factor is that given the state government’s limited fiscal space, there is no guarantee that World Bank money coming into the state coffers will be returned to the health sector, they point out.
Moreover, the CPI(M) has consistently opposed World Bank funding, which comes with various conditions. It may be recalled that the CPI(M) strongly opposed the ₹3,700 crore Asian Development Bank-funded Modernization Government Program (MGP) in the early 2000s on the same terms and conditions. The way in which the current political dispensation embraces World Bank funding is a marked departure from the party’s traditional approach of caution towards private capital.
In short, while the World Bank-funded KHSIP is well-aligned with the state’s health challenges, its long-term implications—fiscal and political—may require more thorough public scrutiny.
Published – 31 March 2026 23:37 IST
