What do we mean by mental illness and what do we want psychiatrists to do about it? These are just the opening questions posed by Professor Dinesh Bhugra, the incoming president of the World Psychiatric Association. The Indian-born Briton is calling for a radical rethink not only of services for the mentally ill but for the entire societal and medical approach to psychological illness.

"The question is whether we focus on symptom reduction or social functioning," he says.

Controversially, Bhugra, 61, suggests the latter – getting people back to work rather than eliminating symptoms.

"I have patients who, in spite of hearing voices, are still holding down perfectly responsible jobs. By my account they are a success – they have managed to contain their symptoms and function."

He wants all medical, psychiatric and nursing students to be trained first in sociology and anthropology so they understand the culture in which they will practice and for a return to the "menu of options" available for psychiatric patients before care in the community – more day centres, emergency clinics and rehabilitation centres. All of which he believes will help rectify two urgent crises: the shortage of beds and of "demoralised" psychiatrists. Furthermore, he says, two groups need statutory regulation: psychotherapists and NHS managers, so they can be struck off when failures occur.

"Part of the characteristic of a profession is regulation. Managers at the moment may be answerable to somebody but there are no professional standards."

Another prime imperative for the government, he argues, is to tackle youth mental illness, as the onset of three-quarters of psychiatric disorders occurs between the ages of 15 and 24. "Every school should have a health professional knowing the basics about mental health. That would be a great step forward."

GPs' surgeries need a rethink too, he adds. Family doctors either need to undergo an extra six months of training in mental health or to have a psychiatrist attached to every surgery.

Part of the reason for the lack of resources – coalition spending on mental health has decreased two years in a row – is down to the psychiatric profession failing to convince successive governments of its value, argues Bhugra. This has led to mental illness being "at the bottom of the priority list – it's cancer and heart disease that's prioritised," says Bhugra. But he claims that for every £1 invested in childhood trying to prevent conduct disorders, it will save £6 of public funds in the long run.

Bhugra issues a stark warning – his "nightmarish vision" – regarding the impact of the Health and Social Care Act on psychiatric patients. "There will be a lot more fragmentation, which means bits of the service will be sold off," he states. This will work for those with mild to moderate conditions – anxiety and unipolar depression, he predicts. But, he says, people with schizophrenia and bipolar disorder "will probably languish somewhere. There isn't profit in schizophrenia. A third of patients with schizophrenia develop chronic illness, so nobody's going to look after them. This is a serious danger."

He also fears psychosexual problems will go untreated for those who cannot afford to go private, in what will become "more than a two-tier system" – private (the top tier), followed by NHS services of varying levels of quality; a second tier for mild conditions and a third or fourth tier for acute and chronic conditions.

A further area of concern, he says, is the mental wellbeing of gay people. Although Bhugra, professor of psychiatry and diversity at King's College London, and chair of the Mental Health Foundation, is "out" in his personal life, he has not spoken publicly about it before.

"Being gay is an important part of me, but a private part," explains Bhugra.

Growing up in Yumuna Nagar, a small city in northern India, he didn't have a word for his feelings. But after coming to the UK to train as a psychiatrist he realised he was gay, which he says "wasn't difficult – it gave meaning to how I felt". When Bhugra met Mike, his partner of over 30 years, he helped him to come out to friends and family.

"My father freaked out completely, my mother was really pragmatic and said, 'Who's going to look after you in your old age?'"

Bhugra will next year become the first gay president of the World Psychiatric Association, which represents and supports 200,000 psychiatrists worldwide. The significance of this appointment can scarcely be overstated in a profession whose history is tainted with the abuse of gay patients. For decades, in an attempt to "cure" homosexuality, electro-convulsive therapy (ECT) and chemical castration were administered.

"There are still countries where it's seen as an illness," he says. "We need to make a stand." He is still deciding how best to do that. In Britain, gay people are at greater risk of a range of mental health problems, and, it is believed, are more likely to take their own lives. But the law needs to be changed, Bhugra argues, to force coroners to record the sexual orientation of suicides.

Does he believe psychiatry should apologise for the harm inflicted on gay people? "There is no doubt psychiatry hasn't covered itself in glory. I think we ought to be apologising for all of the areas, not just one bit – like the treatment of women," he says. "I remember seeing a patient admitted to a psychiatric hospital when she was 16 because she got pregnant outside marriage. She died there in her 80s."

Yet, it is racism that Bhugra recalls more than homophobia. He says: "When I was dean of the Royal College of Psychiatrists, a fellow came up to me saying, 'What do we have to do to get you speaking proper English?'"

Curriculum vitae

Age 61.

Family Long-term relationship.

Home Brixton, south London.

Education Mukand Lal secondary school; Armed Forces Medical College, Poona University; licentiate, medicine and surgery, Society of Apothecaries, London; PhD/MA social anthropology, University of London; MPhil psychiatry, University of Leicester; MSc sociology, South Bank University.

Career 1989-present: variety of positions from researcher to professor, mental health and diversity, Institute of Psychiatry, King's College, London; 1986-89: senior registrar, Bethlem Maudsley training scheme.

Public life 2014-17: president, World Psychiatric Association; chair, Mental Health Foundation; former president/dean, Royal College of Psychiatrists.

Interests Bollywood films, theatre, crime novels.