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Rs 1.3 Lakh Crore – a.k.a. What’s Expected of the Health Budget This Year

Rs 1.3 Lakh Crore – a.k.a. What’s Expected of the Health Budget This Year

Finance minister Nirmala Sitharaman holding budget papers outside her office, February 2020. Photo: Reuters/Anushree Fadnavis/File photo.

Union finance minister Nirmala Sitaraman in a statement last month said that the 2021 budget would be historic and like “never before” – one that would pitch India into becoming the engine of global growth. Economic Times has also reported that she also said investment in health is going to be absolutely critical and would take top priority, with the government looking into not just increasing health infrastructure but also human resources for health towards making lives safer and achieving a reduction in out of pocket health-related expenses.

At the end of a traumatic year, largely caused by a pandemic, it is indeed to be expected that health expenditure would be a central aspect of the budget to be presented in February 2021.

While COVID-19-related interventions, such as ensuring equitable distribution of vaccine candidates and access to COVID-19 treatment remain relevant, it is even more important to watch out for whether the government will use this opportunity to correct some structural problems that the health sector has been facing for a long time.

Primary among these is a general neglect of health in budgetary allocations. There is consensus across the board that public spending on health in India is vastly inadequate by all measures. The National Health Policy 2017 aims to increase public health expenditure in India to 2.5% of GDP by 2025. The current such expenditure in India, combining the central and state governments, is only about 1.25% of the GDP – amongst the lowest in the world. The low priority given to health expenditure is also reflected in its share in total expenditure by the government, which is only 4%, while the global average is around 11%. According to Oxfam’s ‘Commitment to Reducing Inequality’ report, India ranked 155th – fourth from the bottom – in health spending.

This poor spending on health is reflected in inadequate resources and infrastructure, shortfall in human resources and an overall limited access to health services. According to the budget brief of the Accountability Initiative, as on November 20, 2020, 50,069 health and wellness centres were functional, accounting for 65% of the cumulative target for FY 2020-21. Further, according to the 2019 Rural Health Statistics, fewer than 10% of primary health centres are funded as per Indian Public Health Standards norms, with a quarter of the medical officer positions being vacant.

As a result, most people are forced to depend on private-sector healthcare services that are often too expensive (70% of outpatient care and 58% of inpatient care is used in private facilities) and spend out of pocket. The out-of-pocket expenditure on health care in India is more than 60% of all expenditure on health in the country, among the highest in the world – whereas the WHO’s recommended norm is 15-20%.

Therefore, even before the pandemic emerged to create a global health crisis, India’s health sector was already in crisis needing and in need of urgent interventions backed by resources. Unfortunately, the state response has been one of increasing privatisation, with PPPs being proposed to run district hospitals and medical colleges, and insurance-based schemes including private health providers through the PMJAY scheme instead of expanding public health facilities through higher government spending.

Even the special package the government announced as part of COVID-19 relief has been very stingy: only Rs 15,000 crore (0.08% of GDP), of which half is to be spent not in the current year but over the next four years. Further, the actual expenditure on health up to November 2020 is 74% of the allocation – which presumably includes these additional funds allocated for COVID-19. Without accounting for that, the expenditure would be 63% of the allocated amount, less than the corresponding period last year, when it was 66%. So COVID-19 did not really make any dent on the public health spending in India, and in fact affected other health services negatively.

The imperative to strengthen the health system is currently even more as it is faced with the challenges of responding to the COVID-19 pandemic as well as to revive itself from the hit that non-COVID health services took as a result. There have been numerous media reports of the difficulties people faced in accessing health services for various ailments as well as for routine services thanks to reduced services at hospitals diverted to treat COVID-19 patients.

Data related by the Ayushman Bharat programme, for example, showed that PMJAY utilisation (for hospitalisation among the poor) declined by 64% during the early lockdown, and by 51% during full 10-week lockdown – including 25% for deliveries and 64% for cancer care. The National Health Mission data suggests immunisation, routine check-ups of pregnant women and care for serious conditions and communicable diseases also declined in the lockdown period.

There are also fears of a higher disease burden. For example, experts have estimated that there will be 95,000 additional deaths due to tuberculosis in the next five years due to the collateral effects of COVID-19. The partial results of the fifth National Family Health Survey show that while there have been some improvements in basic health services, such as ante-natal care and institutional deliveries, in 2019 compared to 2015, malnutrition in most states is either stagnant or worsening. The full results, which will include states that have been surveyed after the lockdown, can be expected to be worse. Interventions to address malnutrition would also require additional support from the health system.

Another area demanding urgent attention in terms of better resources is remuneration for frontline workers. ASHA workers have been leading the fight against COVID-19 at the community level, risking their own safety and contributing to tracking and building awareness. They are expected to play a crucial role in the distribution of the COVID-19 vaccine doses as well. As many people have pointed out, these workers need to be recognised with regular payments instead of using the incentive-based system they are currently part of. In recognition of their role as COVID-19 fighters, it will only be fitting for this budget to introduce a fixed pay for the million-plus ASHA workers in India.

The High Level Group on Health Sector report of the 15th Finance Commission proposes a plan for phased increase in health expenditure to achieve the target of 2.5% of GDP by 2025, assuming the share of the Centre will be 35.6%. According to these estimates, by the year 2021-22, the allocation of GDP for health should be 1.92%. Therefore, the central share should be 0.68% of the GDP, which, estimated on the basis of the advanced GDP estimates released recently, would be around Rs 1.3 lakh crore – double the allocation for last year, around Rs 67,000 crore. This is what would be expected of the health budget this year.

Dipa Sinha teaches at Ambedkar University Delhi.

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