Finance panel focus on raising health spending to 2.1% of GDP

As India battles the coronavirus disease (Covid-19) pandemic, fifteenth finance commission chairman NK Singh on Tuesday said the commission was working towards a financing model to raise federal public-health spending to about 2.1% of the country’s gross domestic product (GDP) over the next five years.

The NK Singh-led finance commission for the first time will devote an entire chapter on public health financing when it submits its final report, which is under preparation , he said.

On Tuesday, Singh led a brainstorming session on the country’s health sector and the current Covid-19 pandemic with officials from the World Bank, the Niti Aayog, health economists and sectoral experts.

India’s overall health spending has consistently lagged global averages, leading to poor health outcomes.

The total expenditure on health by the Centre and states for 2019-20 was Rs 2.6 lakh crore, or just 1.29% of GDP, according to official data. This includes salaries, gross budgetary support and transfers to states under programmes such as the Ayushman Bharat health insurance scheme. Of the total expenditure, the Centre’s share is 25%.

By comparision, the UK spends 9.6% of its GDP on health, according to the OECD.

“The public sector has an inescapable obligation towards health. The private sector alone cannot fulfil it. Of course, there will be public-private partnerships. Over the next five years, the Centre alone should be able to spend at least 2.1% of GDP on health. Let’s see,” Singh said.

Singh said the current and next fiscal years would see some strain in resources due to the pandemic.

Finance minister Nirmala Sitharaman has already indicated raising the Centre’s spending on health, Singh said, adding: “Health has witnessed historic neglect and the Planning Commission did no good, although there was some repairing.”

The Constitution, through Article 280 to 281, provides for a unique mechanism in finance commissions for division of taxes and revenues vertically — between the Centre and states, and horizontally— among all states, based on their levels of development, prosperity and regional needs.

Singh said the new public health financing model for the country would include financial incentives and grants to states for a “couple of sectoral items”. “Let’s say, if a state provides for X as public health infrastructure, then it will qualify for Y incentive.” Health facilities have to be demand-driven, he said.

These “items” could include infrastructure such as “infectious disease facility in every district etc”, Singh said.

The Singh-led finance commission has already submitted its first report to the government for the 2020-21 period. It then got an extension till October 30 to submit its final report covering financial years 2021-22 to 2025-26 (April-March).

Singh, a former politician and bureaucrat, said the Covid-19 pandemic had “strengthened” the country’s public health capacity, referring to India’s Covid-19 Emergency Response and Health Systems Preparedness Package approved by the Cabinet on April 22 for Rs 15,000 crores.

Singh has already tasked a high-level group under All India Institute of Medical Sciences (AIIMS) director Dr Randeep Guleria to make a set of recommendations, which would be part of the commission’s views on overhauling the health sector.

Tuesday’s discussions saw participation of all members of the commission, the World Bank’s country director Junaid Ahmad, Guleria of AIIMS, VK Paul, member of Niti Aayog and Indu Bhushan, the CEO of Ayushman Bharat. – Hindustan Times

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