In March second week, at the fag end of the current government’s term, Kerala very quietly launched a ₹3,464 crore World Bank- assisted Kerala Health System Improvement Programme (KHSIP), which commits the State to a 25-year-loan with a five-year grace period.
The KHSIP focusses on comprehensive Non-communicable disease (NCD) care, home-based and community-linked elderly services, an integrated trauma and emergency care network, Statewide One Health surveillance, climate-resilient health facilities, and accelerated digital health integration through eHealth, registries and data analytics.
While everything looks good on paper, public health experts have clearly pointed out the red flags when a State, whose total debt has surged by 80% in the last five years, takes on a 25-year World Bank loan and the pressure of repayment. The World Bank loans are typically denominated in USD, meaning repayment costs can rise and increase the interest burden for the State exchequer if the rupee depreciates.
The programme was approved in December 2024, with the implementation scheduled to be from 2025-2030, across all districts.
Loan from IBRD
Of the total project cost, ₹2,424 crore will come through a loan from International Bank for Reconstruction and Development (IBRD) — the World Bank arm that lends to middle-income countries, while the State will contribute ₹1,039 crore.
The project is being implemented as a Programme-for-Results (P for R) model, which means that the disbursement of loan is linked to the health system achieving specific results or milestones.
The key programme objectives include improving access to and quality of an enhanced range of health services and building health system resilience in the State. Non-communicable disease is one core area where the programme envisages an enhanced range of services, including integrated care pathways for chronic diseases like hypertension, diabetes, cancers, cardiovascular diseases and a comprehensive home-based care system for the elderly.
The other key areas the programme targets are setting up a multi-level trauma and emergency care system, One Health surveillance and building a climate-resilient health system.
The P for R model means that money will be released only on the basis of the achievement of specific disbursement-linked indicators (DLIs) and measurable milestones across NCDs, trauma, elderly care, One Health, AMR, climate, and digital health.
“The programme targets a 40% increase in persons who achieve control over hypertension and a 60% increase in cervical and breast cancer screening. All patients will be tracked 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 a quality improvement programme for hypertension and diabetes, reduction in myocardial infarction mortality by strengthening the cardiovascular care pathways are some of the DLIs we plan to achieve,” says a Health official.
Red flags
“Under the P for R model, the World Bank funds will flow in only if the State meets the targets or DLIs, which will be verified by an independent verification agency. Which means that the State must achieve measurable health outcomes to draw funds, while committing its own expenditure in the project (regardless of when the World Bank disbursals will flow in).
“When the State is utilising its own funds or programme envelope to achieve programme targets, why do you need the World Bank funding, which certainly is not coming cheap and locks the State into long-term repayment ?” a public health expert asks.
Another crucial factor is that, given the limited fiscal space of the State government, there is no guarantee that the World Bank money coming in to the treasury will be put back into the health sector, they points out.
Moreover, the CPI(M) has consistently been opposed to the World Bank -funding, which comes with various conditions. It may be recalled that the CPI(M) had stiffly opposed the Asian Development Bank-funded Modernising Government Programme (MGP) of ₹3,700 crore in the early 2000s on the very same grounds of the attached conditionalities. The manner in which the current political dispensation has embraced the World Bank funding is a marked departure from the party‘s traditional approach of caution to private capital.
In a nutshell, while the World Bank -funded KHSIP is well-aligned with the State’s health challenges, its long-term implications— fiscal and political—might need more close public scrutiny.
Published – March 31, 2026 11:37 pm IST
