India needs to look beyond the 137% spending hike to fix its public healthcare

In her Budget speech, Finance Minister Nirmala Sitharaman announced a 137% increase in allocations on “health and well-being” for 2021-22, to ₹2.24 trillion. Embedded in that declaration was a definitional change: it also included funds for sectors with a smaller, indirect intersection with health, notably drinking water and sanitation. The broader definition puts additional emphasis on preventive aspects of healthcare, which is where much of the hiked allocation will go to.

However, other fundamental aspects of healthcare have not received the same focus, even after a pandemic tested the entire system for months together. For instance, the National Health Mission (NHM), a flagship healthcare scheme, has seen a mere 4% increase in allocations for the next fiscal. The launch of the Pradhan Mantri AtmaNirbhar Swasth Bharat Yojana (PMANSBY) is welcome, but it will be assessed on how its projected spend of ₹64,180 crore over six years improves health infrastructure in the country.

Historically, India’s priority on health spending has been modest. Nearly a third of it comes from the Centre, but the ministry of health and family welfare got just around 0.3% of gross domestic product (GDP) for much of the last decade. Even including states’ health budgets, this goes up only to around 4% of GDP, shows World Health Organization (WHO) data for 2018. This was more than regional neighbours Pakistan and Bangladesh, but lagged China (5%) and developed countries such as the UK (10%) and the US (17%).

Barring one bump, central expenditure on health in relative terms has remained constant in past decade
This puts India at 179 out of 189 countries in terms of the priority given to health in public spending, said the government’s recent Economic Survey, in a chapter titled ‘Healthcare takes centrestage, finally!’ The chapter said this put India in the league of donor-dependent countries such as Haiti and Sudan, and well short of peers.

But, three days after the Survey was released, this does not reflect in the government budget. The health ministry’s allocation as a share of total spending in the next fiscal is set to be lower than even the pre-pandemic level of 2019-20. As a share of GDP, it will be nearly the same.

The pandemic has underscored the need for investment into an adequate and robust healthcare infrastructure. But the share of capital expenditure in overall central health spend is abysmally low. Nearly all of the budget goes on revenue expenditure, to meet running expenses such as salaries, maintenance and administration costs. Capital expenditure is crucial for the creation of new hospitals and other such infrastructure.

In 2019-20, capex was merely 2.7% of total expenditure, down from 4.3% in the previous year. Revised numbers for 2020-21 show this figure jumped to 5.4%, but is projected to drop again to 3.5% next fiscal. The health ministry lags the overall government in how much of its budget goes into building capital assets. While the Centre operates in a band of 10-15% of its total spend, the ministry has been operating in 2-6% band.

There is a need to prioritize greater capital expenditure to enable India’s long-term health infrastructure. The PMANSBY is, therefore, a step in the right direction. The government has not released granular details about the scheme, but some interventions listed by the finance minister included critical care hospital blocks, public health labs and emergency operation centres.

Among the major flagship schemes for healthcare, growth in expenditure has been tepid over the past few years, and is set to see only a modest rise in 2021-22. A case in point is the NHM, which envisages achieving universal access to healthcare. According to the Economic Survey, the NHM has been crucial in enabling access to institutional births and pre- and postnatal care.

Yet, the expenditure on NHM grew around 11% a year on average in the five years before the pandemic, as compared to 13% for overall health spending. Revised estimates for 2020-21, the pandemic year, show a mere 1.1% increase. The 4% increase planned for 2021-22 will take the spending to ₹37,130 crore. Allocations for Ayushman Bharat, the centrally-sponsored health insurance scheme, have been doubled from Rs3,200 crore to Rs6,400 crore for next year.

Allocation to insurance-oriented schemes doubled this year, but National Health Mission didn’t gain much
A closer examination of budgetary allocations to healthcare shows that not all segments have gained equally. Investments in health infrastructure and greater support to flagship schemes such as the NHM are essential to ensuring better health outcomes for Indians in the years to come. – Mint