India Budget 2020: With India’s GDP growth falling below the 5% mark for the first time in six years, all eyes are fixated at the Budget 2020 and measures the government will announce to revive the economy. Finance Minister Nirmala Sitharaman spent much of the last year meeting representatives of different sectors with an objective to find sector-based solutions to the ailing economy. There were announcements on a slew of measures to put the economy back on track such as slashing corporate tax and stimulus packages to the real estate and banking sectors. Understandably, economic revival will continue to be at the centre of the government agenda as it rolls out the Union Budget 2020.
However, in its bid to focus all energies on the economy, the government must not lose sight of the social sector which is perpetually in need of funds and resources. Expectedly, this would be a tightrope for the government that is also reeling under the impact of falling revenues. Notably, GST collection for the current fiscal year has grown much below the budgeted rate even as the corporate tax cuts have further dented the government coffers. Yet, the government must find ways to ensure that the social sector, particularly healthcare spending, continues to grow.
Social sector spending is critical for the development
The social sector encompasses measures the government initiatives to improve the healthcare, nutrition, hygiene, social and educational conditions of citizens. With huge disparities and deprivations existing in developing countries like India, economic growth by itself is not sufficient to achieve the necessary human development. This is why social sector spending is crucial for the overall development of the nation, particularly in the improvement of its Human Development Indices.
The availability of affordable healthcare and education are by far the two most important elements that can have a dramatically beneficial impact on the human development situation of a country. The first Global Social Mobility report of the World Economic Forum ranked India at a lowly 76 out of 82 countries in its Social Mobility Rankings. The report says that it would take seven generations for a member of a poor family to achieve average income levels in India, in contrast to just 2 generations in Denmark. The social sector remains one of the key determinants of social mobility. Public spending on the social sector is therefore of paramount importance on the road to development.
Will the social sector and healthcare get its due?
A a time when the economic slowdown has seriously impacted incomes and employment levels across the spectrum, particularly in rural areas and among the urban poor, the need to channelize more resources into social sector schemes and healthcare becomes all the more pronounced.
While the government has made a welcome commitment to raise public healthcare spending to 2.5% of the GDP by 2025, the healthcare sector would like to see a positive move towards this goal. Currently, India spends just a little over 1% of its GDP on healthcare, an allocation that stands much below other countries of similar economic stature, even lower.
Even the government’s ambitious Ayshman Bharat scheme needs a major resource push to expand the access of healthcare facilities in under-served areas. Despite receiving Rs 6,400 crore, a lion’s share of the total health budget allocation last year, Ayushman Bharat scheme still remains inadequately under-funded. We also expect a targeted announcement in the budget about setting up of the pledged 150,000 Health & Wellness Centres to boost primary healthcare as part of the PMJAY programme.
The sector would also like to see the emergence of a coherent strategy on the part of the government to increase the number of hospitals in rural and remote areas, apart from increasing the number of MBBS and PG seats in medicine to churn out more doctors over the next few years. A plan to upgrade at least 100 district hospitals into medical colleges over the next decade must be high on the government agenda.
Health insurance and sanitation
While Ayushman Bharat serves to address the out-of-pocket expenses problem for people below the poverty line, there is also a need to address the need for making health insurance affordable and accessible to middle-class Indians. Health insurance penetration remains abysmally low in India. While a large number of Indians are unable to afford hefty premiums, some are denied the benefit because of pre-existing diseases.
For example, people who might have diabetes or a heart ailment or any other disease for that matter are not covered by insurance providers making them deeply vulnerable. Similarly, OPD expenses and medicine costs remain uncovered by existing insurance packages, despite the fact that these heads account for a bulk of out of pocket expenses. We expect the government to initiate concrete measures to make health insurance more affordable and accessible to all people.
A recent report ‘The Budget Trails by the Tata Trusts and Centre for Budget and Governance Accountability (CBGA)’ found that centrally sponsored social sector schemes have seen over 85% of utilisation of funds during the period between 2017 and 2019. This shows that the funds being channeled into social sector schemes such as Integrated Child Development Services (ICDS), Sarva Shiksha Abhiyan (SSA), National Rural Drinking Water Program (NRDWP) and Swachch Bharat Mission are being adequately utilized.
This should act as a major motivator for the government to increase allocation to these sectors. Yes, increasing allocation at a time of declining revenues will cause a major dent in the government’s fiscal deficit targets. However, the current need is to revive the economy and boost social sector schemes for a population already reeling under income and employment challenges.-Authored by Kamal Narayan, CEO of IHW Council for Financial Express