Though tax revenues have risen, the Modi government’s Budget has neglected healthcare

India had devastating first and second waves of Covid-19 and is yet to fully emerge from the third wave. Economic activities have been severely impacted by lockdown restrictions. However, in response to this crisis, fiscal support is not quite directed to health.

In fact, health has been accorded a low priority compared to the scale of the need and the close correspondence between controlling the pandemic and having the economy back on the high growth trajectory.

The overall share of health as a percentage of total government expenditure has sharply reduced from 3.45% (including the special provision for Covid 19 vaccination) and 2.37% (exclusive of the special provision) of last year’s revised estimates to 2.26% in 2022-’23. This is a parameter that shows how much weight the government attaches to health vis-a-vis other sectors.

To put this in perspective, compared to the health spending share of 2.26%, the spending on defence has increased to Rs 5.25 lakh crore this year, accounting for 13.4% of the total government expenditure. Although the pandemic has showed that the viruses have little respect for national boundaries, securing national borders continues to receive priority over health or social security.

Shrinking health spending

It is quite appalling to find that compared to last year’s revised Budget estimates, the Ministry of Health and Family Welfare’s budgetary allocation for the fiscal year 2022-’23 increased by only Rs 79 crores. This implies that, in real terms, the health outlay has actually contracted.

Not only did the share of health spending of total government expenditure fall, but the health spending pattern of the Centre has also raised a concern. To make the most of the limited public resources, it is critical that the government identifies high priority expenditures and allocates more for them.

In the context of health, this would mean greater budgetary support for primary health care as well as public health goods. However, the Union government chose to do otherwise. The following analysis would substantiate this. The total allocation on the centrally sponsored health schemes is down by almost 6% (Rs 47,634.67 crores as against 50,591.14 crores the previous year).

More importantly, the National Health Mission, which aims to strengthen the public health system for expanding its coverage of mainly primary health care in rural and urban areas, received slightly less than that of the fiscal year 2020-’21 actual expenditure. Even when the allocation for Pradhan Mantri Aayushman Bharat Health Infrastructure Mission is taken into consideration, the funding for this important initiative (0.17% of GDP) is grossly inadequate to make any major impact.

Interestingly, the much-touted flagship scheme Pradhan Mantri Jan Arogya Yojana, which has empanelled more private hospitals than public health facilities (almost two-fifth of its listed providers are private) received Rs 6,412 crores, 100% higher than the revised estimates of the previous year (Rs 3,199 crore in 2021-’22).

It is worthwhile to note that, even after three years of its implementation, the uptake of the scheme is quite low. According to an estimate, only 25% of the eligible population has been covered so far.

The proposed spending on health by the central government is estimated to be 0.34% of GDP in the fiscal year 2022-’23, too low to cover the additional resources to fight the pandemic as well as to achieve the health-related sustainable development goals including universal health coverage, pushing the health system towards out of pocket expenditure at a time when exactly opposite was needed.

Nutrition funds inadequate

In order to reduce the reliance on out of pocket expenditure for financing healthcare, the National Health Policy 2017 envisaged raising the public health spending to 2.5% of GDP by 2025. But going by the current public-health expenditure trend, it is almost certain that the government is going to give it a miss.

Like health, the nutrition schemes aimed at reducing undernutrition among children have also not received adequate resources in this year’s Budget. At a time when the National Family Health Survey showed a sharp rise in the prevalence of stunting and wasting among the children and the income of the poorest 20% of the population declined by 53% during the pandemic (2020-’21), the Budget of Ministry of Women and Child Development saw a marginal increase of 8.5%.

If adjusted for inflation, the actual allocation for programmes such as Prime Minister’s Overarching Scheme for Holistic Nutrition or POSHAN Abhiyan which strives to reduce the level of undernutrition increased by just 3.1%.

What is disconcerting is that health was deprioritised in this year’s Budget when the rise in revenue earnings has provided greater fiscal room to the government for increased spending. Put simply, even though there is additional money because of increased tax revenues, it is not channelised towards health to build a robust public health system, despite facing the worst public health crisis since Independence.

Moreover, in order to create fiscal space for health, the government could have imposed higher taxes on tobacco, alcohol and sugar-sweetened beverages and use the revenue raised to pay for increased public health expenditure.

Needless to mention, the distorted priorities of the Union government has left the already weak health system even more fragile. Without a radical change of direction to reprioritising government spending on health, the health inequities would exacerbate and a new wave of the pandemic will cause catastrophic impact once again endangering the lives of millions.

Soumitra Ghosh is an associate professor at the School of Health Systems Studies, Tata Institute of Social Sciences.