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Health boost in Budget, it’s now up to the states...

The writer is a development economist, formerly with the Bill & Melinda Gates Foundation and the World Bank. Email:
Published : Feb 21, 2017, 12:50 am IST
Updated : Feb 21, 2017, 7:13 am IST

This growth in health allocations is the highest ever growth in nominal terms in the last 15 years.

Union Finance Minister and senior BJP leader Arun Jaitley addressing a press conference at the party office in Lucknow on Tuesday. (Photo: PTI)
 Union Finance Minister and senior BJP leader Arun Jaitley addressing a press conference at the party office in Lucknow on Tuesday. (Photo: PTI)

Finance minister Arun Jaitley needs to be congratulated for the allocation to health in the Union Budget 2017-18. Health allocations to the health ministry and the Ayush ministry have increased to Rs 50,283 crores, which represents a healthy increase of about 27 per cent over the allocation of Rs 39,533 crores made in the previous Budget. This growth in health allocations is the highest ever growth in nominal terms in the last 15 years or so! In real terms too, after adjusting for medical inflation, which is expected to remain stable in the coming fiscal year too, it should represent a healthy growth.

The increase in health allocations in this Budget, however, has not pleased many stakeholders who were expecting still higher allocations. What could be the basis for higher expectations from this Budget? One, of course, is India’s track record of low public health spending; and two, the absence of any announcement relating to the National Health Protection Scheme as well as unclear funding of some of the new programmes announced recently. Let’s examine these reasons in some detail.

w Low public health spending in India: No matter what indicator of government health spending is considered — as a share of GDP (1.3 per cent in 2014-15) or as a share in total government spending (4.8 per cent in 2014-15) or as a per capita spending (less than $20 in 2013-14) – India comes out poorly in comparison to its peers. However, government health spending in India has historically been low. It is wrong to expect a few rounds of annual Budgets to correct the distortion. Further, the Central government spends only 1/3rd  of total government health spending. This means that majority (2/3rd) of the government spending actually comes from the states. Therefore, states have an important role to play in increasing government health spending in India. With the implementation of the 14th Finance Commission recommendations, the role of states in funding of healthcare has only expanded.

At the state level, the issue with healthcare is not just about its financing. States are also responsible for getting health services delivered. That there are huge gaps in public healthcare delivery system is a well-known fact. States understand too well that healthcare delivery and financing are two wheels of the healthcare cart. Both wheels need to move in tandem in order to move straight ahead.

To get the states spend significantly more on health, delivery of health services must improve. This is not just a simple question of plugging of gaps in service delivery. The delivery system requires an architectural correction to make it responsive to the changing needs of the population, better management and higher accountability of the delivery system. This correction requires highest political commitment and strong leadership and vision in each state.

w National health protection scheme (NHPS): The Prime Minister’s Independence Day speech of August 2016 and the finance minister’s Budget speech of February 2016 probably created expectations of the government announcing NHPS, which proposes to provide financial protection against hospitalisation costs of up to Rs 1 lakh to the poor and also brings larger population under its fold. No such announcement, belied the people’s expectations. In all probability, the announcement has been deferred and not dropped. The announcement of the scheme would have been considered a populist move to woo the voters in the five poll-bound states.

Similarly, unclear funding for some new schemes may have been a reason for disappointment among some stakeholders, for example, a scheme of cash transfer of `6,000 to an expectant mother for promoting institutional deliveries and immunisation as well as the ambitious targets set for elimination of kala-azar and filariasis by 2017, leprosy by 2018, measles by 2020, and tuberculosis by 2025. Achievement of these targets is as much dependent on states’ capacities to implement and fund them. However, it is unclear whether the allocations for these schemes are budgeted.

Further, some of the Budget announcements such as amendment of the Drugs and Cosmetics Rules to ensure availability of drugs at reasonable prices and regulations of medical devices do not have much budgetary implications. Also, the idea of transforming health sub-centres across the country into health and wellness centres has just been mooted, funding for which will follow over the next few years, with likely contributions from the states.

All in all, the Central health budget is pretty decent. Now all eyes are set on states who will be announcing their budgets soon. It is to be seen which states take the lead in a monumental task of prioritising health both in financing and delivery of health services.

Tags: arun jaitley, health ministry, union budget 2017-18