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Govt aims to increase public health expenditure to 2.5% of GDP by 2025

The 15th Finance Commission held a meeting with Health Minister Harsh Vardhan and senior officials of the ministry on revising the State Specific proposals of the ministry in light of the COVID-19 experience.

The ministry pointed out that presently 35 percent of the public health expenditure is done by the Centre and 65 percent by the state governments.

Health ministry said that Rs 6.04 lakh crore will be required to fund healthcare during the FFC’s five-year award period FY22-FY26 as new areas including post-Covid health sector reforms need support. The new estimate is higher by Rs 1 lakh crore or 21 percent than the ministry’s previous estimate of Rs 4.99 lakh crore for the period.

The ministry has thus asked for additional resources to the tune of 0.4 percent of the Gross Domestic Product (GDP) per annum to the states which they felt would lead to significant progress towards achievement of the National Health Policy target.

The Chairman of the Commission, N K Singh, said looking at the peculiar state of the pandemic, the commission’s final report will have a separate chapter on health

For performance based incentives, the ministry suggested a Composite Health Index to encourage states to demonstrate performance on year-on-year basis, which will have a weightage of 20% in the performance linked pool, according to a statement issued by the government.

The Commission, which has submitted its award for FY21, is scheduled to submit its report in October on vertical and horizontal distribution of central taxes and grants for five years through FY26.

The meeting was held to discuss the specific issues of revising the state-specific proposals of the ministry in light of the COVID-19 experience, exploring the possibility of backloading in the light of fiscal strain and consideration of the suggestions of the High-Level Group of the 15th Finance Commission on health.

The National Health Policy (NHP) 2017 targets include increasing public health expenditure to 2.5 percent of the GDP, in a progressive manner, by 2025, Primary Health Expenditure to be 2/3rd of the total health expenditure and increase state sector health spending to more than 8 percent of their budget by 2020. The Commission agreed that there was a need to increase public sector health outlay and also to develop a professional cadre of health workers. -MB Bureau

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